Date: 2020-01-13

Appeal from a Notice of Proposal of the Registrar to revoke a liquor licence

Between:

Pan-Yen (Kelly) Chuang & Adrien Joseph Yvon Vachon o/a Fat Cat’s Pizza

Appellants

-and-

Registrar under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996

Respondent

Decision and Order

Adjudicator: Patricia Conway, Member

Place and Date of Hearing: St. Catharines, January 7 & 8, 2020

OVERVIEW

1The Appellants appeal the Registrar’s proposal pursuant to the Liquor Licence Act, R.S.O. 1990, c. L.19 (the Act) to: revoke their liquor licence under section 15 of the Act on grounds that their past or present conduct in operating the licenced premises, Fat Cat’s Pizza, affords reasonable grounds for belief that they will not operate their business in compliance with the law and with honesty and integrity, as set out in s. 6(2)(d) of the Act. The Notice of Proposal is dated June 28, 2019.

2The Appellants filed a Notice of Appeal dated July 11, 2019 in which they denied the particular allegations raised against them in the Proposal and denied that reasonable grounds for revoking their liquor licence exist.

3The Registrar relies on two particular incidents in support of the Proposal. The first incident occurred on January 1, 2019. The Registrar alleges that on that evening, the bartender overserved a patron when she knew or ought to have known the patron was intoxicated and failed to ensure that the patron was returned safely to her home. Tragically, the patron was found early the next morning in the vestibule of her apartment building without vital signs. A post-mortem was carried out and the cause of death was identified as ethanol toxicity. The Registrar submits that the Appellants are vicariously liable for the conduct of the bartender, their employee; they breached section 29 of the Act by supplying liquor to a person who was or appeared to be intoxicated and also breached section 45(1) of Regulation 719 under the Act, by allowing drunkenness within the licenced premises; and that the subsequent death of the patron is an aggravating circumstance that requires a strong deterrent penalty.

4The second incident occurred on May 12, 2019. The Registrar alleges that a bartender at Fat Cat’s failed to comply with several of the provisions of Regulation 719, including serving patrons after 2 a.m., and failing to remove signs of service by 2:45 a.m. The Registrar submits that these offences are aggravated because the bartender lied to a compliance officer of the Alcohol and Gaming Commission (AGCO) regarding the incident.

5The Registrar in addition submits that the Appellants had received prior warnings and education for similar conduct including permitting drunkenness, permitting disorderly conduct, promoting immoderate consumption of liquor, failure to clear evidence of service and sale/service of liquor outside of prescribed hours.

6The Registrar submits therefore that the Appellants have shown themselves to be ungovernable and revocation of the licence is necessary to protect the public.

ISSUE

7The issue for determination is whether these incidents, together with the Appellants’ manner of dealing with them (i.e., their past conduct) affords the Registrar reasonable grounds to believe that the Appellants will not operate their business in compliance with the law and with honesty and integrity.

8If the answer to this question is yes, what is the appropriate sanction in all of the circumstances.

RESULT

9For the reasons set out below, I have determined that the alleged breaches of the Act have been proven, and that these breaches do afford the Registrar reasonable grounds to believe that the Appellants will not operate their business in compliance with the law and with honesty and integrity. However, the overall past conduct of the Appellants over more than nine years of operations and the steps they have taken to prevent recurrence of breaches of the Act are mitigating factors that should be taken into account. Looking at the whole of their conduct, I find that revocation of their licence is too harsh a remedy, so I will not direct the Registrar to revoke the licence

10The evidence does satisfy me that a penalty is necessary to act as a deterrent both to the Appellants and to other licence holders. I am directing the Registrar to suspend the licence for 90 days, commencing from a date to be set by the Registrar.

11In addition, more needs to be done by the Appellants to exercise sufficient control over the employees to ensure their compliance with the Act. I am therefore adding conditions to the licence pursuant to section 23(12) of the Act. These conditions were suggested by their counsel in closing submissions.

Law

12Under section 15(1) of the Act, the Registrar may issue a proposal to revoke or suspend a licence to sell liquor on several grounds, including any ground under subsection 6(2). In this case, the Registrar seeks revocation under subsection 6(2)(d) of the Act, which provides as follows:

(d) the past or present conduct of the persons referred to in subsection (3) affords reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty;

13Subsection (3) of section 6 states that subsection (d) applies to an “applicant”. In this case, the “applicants” are the Appellants, the holders of the licence which applies to Fat Cat’s Pizza, the licenced premises. I will hereafter refer to the Appellants as either Appellants or licencees, and I will refer to them individually as Ms. Chuang and Mr. Vachon.

EVIDENCE and ANALYSIS

(i) The Appellants sold or supplied liquor to a person who appeared to be intoxicated and the Appellants permitted drunkenness on the premises.

14It is well established that employers are vicariously liable for the acts and omissions of their employees: see Elmdale Tavern (Re), [1996] O.L.L.B.D. No.171.

15Section 29 of the Act provides that “No person shall sell or supply liquor or permit liquor to be sold or supplied to any person who is or appears to be intoxicated.”

16Subsection 45(1) of Regulation 719 under the Act provides as follows:

The licence holder shall not permit drunkenness, unlawful gambling or riotous, quarrelsome, violent or disorderly conduct to occur on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder.

17The most cogent evidence of the events of January 1, 2019 is video footage from the various security cameras in the bar and take-out area of the restaurant on that evening, and footage from two security cameras immediately outside the bar area and the take-out area. The footage shows a patron sitting at the bar from shortly before 8 p.m. until shortly after 11:30 p.m. During that time, she is served six twenty-ounce glasses of beer by the bartender. After four drinks, she is visibly animated, gesturing broadly. She leaves her chair and walks out of the bar, moving unsteadily, holding the backs of chairs. At approximately 10:30 p.m. she is shown returning and is visibly having difficulty with her balance. After that clear indication of intoxication, she remains in the bar for another hour and is served two more large glasses of beer. When she finally leaves the bar she is staggering. The bartender should have been aware of her condition because before she leaves the patron is shown unable to work the debit machine so that the bartender must do it for her. The bartender is shown on camera gazing out the front window to where the patron is visible outside. The patron is shown staggering into other patrons and cars, holding onto patrons, and falling against cars as she tries to walk.

18On the evidence of the videotapes alone, I have no difficulty finding that the offences of over-service and permitting intoxication on the licenced premises have been proven.

Are there aggravating circumstances that should be considered in determining the appropriate sanction

19In addition to the video footage, two of the patrons at the bar that night gave evidence. Both were straightforward and believable. Mr. Green testified that after the patron went off camera, she stumbled into several cars and eventually fell, breaking her glasses. He and the second patron, Ms. Robertson, went to her assistance and the two dragged her across the street to her apartment building and left her in a small vestibule where she leaned against a heater.

20Police Sergeant Pierini of the Niagara Police Services gave evidence that early the next morning he was called to investigate a sudden death of a woman found in the vestibule of her apartment building without vital signs. It was the same patron. She was found in the early hours of the morning, in the same clothes she had worn to the bar, and there was evidence that she had been incontinent. Detective Sergeant Pierini of the Niagara Police Service was assigned to investigate the sudden death to determine if there was any foul play. He testified that from his investigation he believed that the patron had not left the vestibule after she arrived there from the bar. I am satisfied from his evidence and that of Detective Constable Phillips whose account was similar, that this is what happened. After being left in the vestibule, the patron lost consciousness and at some point during the early morning hours she died. When her blood alcohol was measured at the hospital some five hours after she left the bar, it was at a near toxic level and the cause of death was determined to be ethanol toxicity. To put it baldly, she was allowed to drink herself to a toxic level while in the bar.

21I have set out this evidence and my findings on it because I accept the Registrar’s submission that the manner of the patron’s death should be considered in assessing the whole of the licencees’ past and present conduct to determine if the Registrar has reasonable grounds to believe that they will not conduct their business lawfully and with honesty and integrity and also in determining the appropriate sanction.

22In accessing the licencees’ behaviour it is important to scrutinize what they did following this event. It is the Registrar’s submission that they did nothing; they tried to deflect blame onto others and made no effective changes to ensure that such an incident could not happen again. The Appellants’ counsel argues that they took effective steps to prevent any recurrence, that they “did all they could”. I will consider that issue shortly, but now turn to the second specific incident relied on by the Registrar.

The Appellants served alcohol after hours and failed to remove the signs of service.

23Section 29 of Regulation 719 provides that “[t]he licence holder shall ensure that evidence of liquor that has been served and consumed on the premises is removed within forty-five minutes after the end of the period during which liquor may be sold and served under the licence.”

24Justin Black, a compliance officer with the AGCO, testified that the AGCO received an anonymous complaint that there was after-hours service taking place at Fat Cat’s Pizza. He carried out a spot check at the bar on May 12, 2019, arriving at 2:45 a.m. when signs of service should have been removed and no further service should have been taking place. He testified that he found a full glass of beer on the bar, a patron drinking from a shot glass and the bartender standing behind the bar. He testified that the bartender’s speech was slurred. The bartender stated that the patron was drinking coke and that she had not noticed the full glass of beer. However, a viewing of the security camera footage showed Mr. Black that she had served the patron alcohol after 2 a.m. and had also poured the beer and was herself consuming after 2 a.m. I am satisfied from Mr. Black’s evidence that the offences of serving patrons after hours and failure to clear the signs of service have been proven.

25In addition, the conduct of the bartender raises concerns. It is not an offence under the Act for the bartender to drink while on duty. However, the Act does require that service be responsible. This requires the bartender to be alert, vigilant and to exercise good judgment. These qualities may quickly be impaired by alcohol. Further, a licencee must cooperate with and assist the AGCO in its investigations. The bartender in this case was deceitful, trying to defect blame and to mislead Mr. Black. While no charges were laid by the AGCO resulting from the bartender’s attempting to mislead its inspector, I note this conduct as part of my assessment of the overall conduct of the licencees for purposes of determining the appropriate penalty and whether to impose conditions on the licence as a term of their continuing to operate.

(ii) The Appellants did not have any prior incidents of misconduct related to over-service of liquor, permitting drunkenness, after-hours service or failure to clear the signs of service; nor had they received any warnings or education in the past from the AGCO.

26Notwithstanding its allegation in its Notice of Proposal, the Respondent led no evidence of any misconduct by the licencees before the January 1, 2019 incident. Mr. Black testified that he was not aware of any warnings or education of the licencees by the AGCO prior to January 1, 2019. The January 1, 2019 incident resulted in a letter from the AGCO dated March 23, 2019 asking the licencees to explain and comment on the incident. Ultimately this incident together with the May 12, 2019 incident led to the Notice of Proposal, but there is no substance to the allegation that previous incidents occurred.

27Ms. Chuang testified that Fat Cat’s Pizza carried on business at the same location for 9 years prior to the January 1, 2019 incident. In looking at past conduct to assess if the Registrar has established reasonable grounds for believing that the licencees will not conduct their business lawfully and with honesty and integrity, I must take into account this long period of operation without incident.

(iii) There have not been any further incidents of failure to clear the signs of service.

28Ms. Chuang testified that there have been no further incidents at the bar that led to warnings or education by the AGCO since May 12, 2019.

29The Registrar asked for leave to present evidence related to an alleged incident that took place on November 30, 2019 related to the Appellants’ failure to comply with the Act and its Regulations. The Respondent submitted that the evidence only became relevant when Ms. Chuang testified that there were no incidents with the AGCO after May 12, 2019.

30The Appellant objected to the introduction of evidence related to the November 30, 2019 incident because it was not set out in the Notice of Proposal and submitted that his clients would be prejudiced should evidence of this incident be allowed as they had no opportunity to assess it and prepare a response.

31After hearing submissions from both parties, I determined that the evidence was relevant as it was central to the issue I must determine. I advised the parties that I would hear the evidence but would ensure that the Appellants had a fair opportunity to respond. The hearing was held down for a short while to permit the Appellants an opportunity to review the Respondent’s evidence and respond to it.

32The Respondent called Mr. Ferguson, a compliance officer with the AGCO, to testify regarding this new incident. Mr. Ferguson testified that on November 30, 2019, at 2:49 a.m., he visited Fat Cat’s Pizza and found the bartender behind the bar. There was an empty glass on the bar and one patron sat at the bar with a partial pint of a brown substance with a foamy top in front of him. Mr. Ferguson testified that he spoke to the bartender and informed her of the time. He said that she appeared nervous. He testified that he felt she may have lost track of time, and he also felt that she meant to be compliant. In cross-examination he admitted that he had no certain knowledge that the substance in the glass was beer, but it appeared to be. He also agreed that he failed to enter the time of his inspection in his notes. I conclude that the exact time Mr. Ferguson entered the bar is not clear. Given this frailty in the evidence, I am not prepared to make a finding that there was a breach of the Regulation regarding clearing signs of service on this occasion

The conduct of the licencees

33The issue I must determine is if the incidents of January 1, 2019 and May 12, 2019 provide a reasonable basis to believe that the licensees will not carry on their business in compliance with the law and with honesty and integrity. This requires a close examination of the conduct of the licensees in dealing with the AGCO in response to the incidents. It also requires examining the steps they have taken, if any, to ensure that no further infractions of their duties and responsibilities under the Act occur.

34Mr. Vachon did not give evidence. Ms. Chuang testified that she is solely responsible for the operations of the bar. Mr. Vachon is responsible for the food.

35Counsel for the AGCO submits that the licensees’ reactions to the two incidents demonstrate that the licensees are ungovernable. She submits that they deflected responsibility and blamed others. She also submits that although the licensees have taken some preventative actions, these are all reactive, i.e. they will alert the licensees to contraventions after they happen but will not prevent them from happening.

36Counsel for the licensees argues that the licensees have a blemish-free record apart from these two incidents and that the licensees have put in place practices and policies to ensure there is no recurrence of transgressions of the Act. I will now review the evidence with respect to those two issues.

The licencees’ response to the incidents

37The Registrar submits that the licencees were tardy in responding to the January 1 2019 incident and when they did respond, were not cooperative, sought to deflect blame onto others, and took no effectual steps to prevent a recurrence of over-service and failure to remove drunken patrons from the premises. My analysis of the evidence arrives at a different conclusion.

38With respect to the January 1, 2019 incident, Ms. Chuang testified that she did not know until March that Fat Cat’s Pizza was implicated in the death of the patron. The police who investigated in January 2019 told her only that the patron had been found dead. She cooperated with the police by providing them with copies of security tapes. When she learned of the AGCO’s investigation, in early March 2019, she was in Taiwan taking care of her mother. She testified that from Taiwan there was little that she could do, and that she could not leave Taiwan until her mother was under proper care. I am satisfied that this was a reasonable decision. She testified that she directed her manager to cooperate with the AGCO, and emailed the bartender instructing her to provide the statement requested by the AGCO setting out her observations of the patron on January 1, 2019. This was done. Mr. Black testified that the licencees were cooperative. From this evidence, I conclude that there was cooperation by the licencees with the AGCO.

39Ms. Chuang testified that as soon as she returned to Canada in April, she found a copy of the security tapes for January 1, 2019 and turned it over to the AGCO. She testified that the bartender had by then left her employer and moved away. In her testimony at the hearing Ms. Chuang was forthright and candid in admitting that the bartender overserved the patron and failed to protect her and see that she left the bar and arrived safely home. She admitted that these were contraventions of her duties and responsibilities under the Act, and that she as employer and licensee was liable for the acts of her employees.

40With respect to the May 12, 2019 incident, Ms. Chuang admitted contraventions of the Regulation under the Act to Mr. Black as soon as she reviewed the security footage for that evening. She testified that she admonished the bartender responsible and fired her immediately after viewing the video footage of Mr. Black’s visit. Ms. Chuang was very clear that every aspect of the bartender’s behaviour during the incident was unacceptable to her as employer and licencee. She testified that she prefers to hire experienced servers who have their smart serve qualification (a requirement under the Regulations). She said that she and her manager, Ms. Woodard, train all new employees for a week and require all new employees to sign three documents which together form what her counsel called a “contract” wherein they promise to adhere to specific provisions of the Act and Regulations including never overserving, never permitting drunkenness. She testified that the employees are made to understand and acknowledge that failure to follow these requirements will lead to their dismissal. I found Ms. Chuang believable when she expressed her disappointment in her bartenders for having breached these requirements, and her commitment to preventing future failures to comply with the Act and Regulations.

41Ms. Chuang testified that she has taken steps to ensure that monitoring of patrons has improved. More security cameras have been installed; the surveillance tapes are kept for a longer time, facilitating their review if necessary. A software program has been installed on employees’ cellphones that allows both her and the servers to view the activity in the bar on their cellphones at any time. She has instructed the pizza take- out staff to watch for any signs of intoxication in the people passing through to enter or leave the bar, and to inform the servers. She has shown the January 1, 2019 tape to her employees and has discussed with them what went wrong that night and has had them point out the signs of intoxication that should have been observed and offer comments on what should have been done to help the patron. She has impressed on her servers their duty to be observant and diligent. She entered into evidence an informal policy statement that covers the duties and responsibilities of a server. She testified she reviews this policy statement with all new employees, and each employee is given a copy.

42She has instituted a practice of meeting with the servers every two weeks to go over with them any issues that have arisen and any customers that require careful watching. She has what she called a “Wall of Shame” where photos are posted of patrons who have been ejected from the bar and prohibited from returning because of their behaviour.

43Counsel for the Registrar argued that all of these steps are reactive. I disagree. Adding more cameras and ensuring an unobstructed view of the patrons via the cameras is proactive in my view. Servers can see patrons’ faces clearly on the cameras. Thus, although serving one group of patrons, they can monitor the behaviours of other patrons who are behind their backs or outside their direct line of vision. Servers can communicate with one another by cell phone when one of them sees a problem that may not be visible to someone else. Ms. Chuang can see what is happening all the time and the servers know that she can. Sharing observations about the signs of intoxication in different patrons and discussing strategies for managing patrons is educative and proactive in my view.

44Counsel for the Respondent referred me to a letter from a paralegal written on behalf of Fat Cat’s Pizza and sent to the AGCO in response to their request for a written explanation regarding the January 1, 2019 incident. The AGCO’s letter is dated March 23, 2019, while Ms. Chuang was in Taiwan. The response is dated May 19, 2019, after her return. I agree with the Registrar’s submission that the May 19, 2019 letter tries to deflect responsibility for the patron’s death from Fat Cat’s Pizza. It is one more piece of evidence that I consider in my deliberations. I place greater weight on the fact that Ms. Chuang took full responsibility for what happened in her testimony before me and expressed what I believe was genuine remorse.

CONCLUSION

45I have found that the licensees contravened section 29 of the Act and section 45(1) of the Regulation on January 1, 2019 by serving alcohol to a person who appeared to be intoxicated and by permitting a person who appeared to be intoxicated to remain on the licenced premises. I am also satisfied that on May 12, 2019 the licensees contravened section 29 of Regulation 719 by continuing to serve alcohol to patrons after 2 a.m. and by failing to remove all signs of alcohol by 2:45 a.m. I find that these incidents afford the Registrar reasonable grounds to believe that the licencees will not conduct their business in accordance with the law and with honesty and integrity.

46In determining the appropriate sanction, I must look at the whole of the licencees’ conduct, not just the incidents that led to the proposal.

47I have found that the licensees take full responsibility for their part in the tragic death of one of their patrons and have the determination to ensure that this will not happen again. The licensees have invested in improving their ability to observe the patrons while they are in the bar. They have taken steps to impress on their employees the importance of patron safety, and to keep this in the forefront of their minds as they serve. I also take into account that these incidents followed nine years of operations during which there were no recorded incidents of breaches of the Act. Overall, I conclude that a lengthy suspension is required to impress on the appellants and other licencees the seriousness of their misconduct.

48I do understand the Registrar’s submission that more must be done by the licencees to ensure that a culture of self-reporting of any problems or contraventions of the Act or Regulations is cultivated within the organization. More is needed to ensure that the protection of the patrons of Fat Cat’s Pizza is made of paramount importance. I note, for example, that the November 30, 2019 incident was not reported to Ms. Chuang. Although it was a minor incident, it pinpoints the problem that Ms. Chuang continues to rely on self-reporting of infractions or incidents by her employees. I am therefore imposing terms on the licence pursuant to s 23(12) of the Act.

ORDER

49The seriousness of the consequences of the contraventions of the Act and Regulations I have found occurred on January 1, 2019 require a significant deterrent element to the sanction I prescribe, in the public interest. The Appellants suggested a 60-day suspension. The Respondent did not recommend any suspension period but noted the range of suspension lengths in decisions where the death of a patron occurred. I find that a 90-day suspension period is called for, and so direct the Registrar a 90-day period is to commence when the Registrar orders.

50I also find that protection of the public requires imposition of a condition on the licence to ensure more hands-on supervision of their employees by the licensees. Pursuant to the powers of the Tribunal under s 23(12) of the Act, I therefore impose a condition on the licence requiring that an experienced bar manager be present behind the bar from the hours of 7 p.m. until close of business on Thursday, Friday and Saturday nights. This will protect patrons by ensuring that bartenders are supervised during periods when the bar is busiest.

51In addition, I find that the informal policy document prepared by the licencees does not go far enough. I order that the licencees develop a formal policy to be approved by the Registrar that incorporates all the licencees’ duties and responsibilities to the public in the service of alcohol under the Act and Regulations. Adherence to the policy, once a­­pproved by the Registrar, will become a further condition of the licence.