Toronto (City) v. Alcohol and Gaming Commission of Ontario

Ontario Superior Court of Justice – Divisional Court

Toronto (City) v. Alcohol and Gaming Commission of Ontario

Date: 2004-06-20

Naomi Brown, for the applicant;

Richard E. Kulis, for the respondent, Alcohol and Gaming Commission of Ontario.

(220/05)

Introduction

[1] Linhares de Sousa, J.: The matter before the Court is an application for judicial review brought by the City of Toronto (the "City") pursuant to s. 2(1) of the Judicial Review Procedure Act. The City seeks judicial review of a decision of the Board of the Alcohol & Gaming Commission of Ontario (the "Board") dated May 6, 2005, denying the City party status to a hearing before it. The hearing concerned Notices of Proposal to revoke the liquor licence of the Respondent McCaul Trading Company Ltd. ("McCaul"), operating as Navaron Restaurant, and a Notice of Proposal to refuse to transfer the said licence to the Respondent Sunus International Inc. ("Sunus").

[2] Pursuant to s. 11(1) of the Alcohol and Gaming Regulation and Public Protection Act, 1966, S.0.1996, c. 26, a party to a hearing before the Board of the Alcohol and Gaming Commission of Ontario ("AGCO") may appeal from a decision of the Board to the Divisional Court on a question of law only. Because the City was not granted party status to the hearing before the Board and therefore does not come within the operation of that subsection, the City is seeking judicial review of the Board's decision. The City seeks an Order setting aside the Board's decision and an Order directing the Board to grant the City standing as a party to participate fully at the hearing.

[3] On the day of the hearing before this Court, the City's application was dismissed with written reasons to follow, without calling upon the Respondent to present oral argument. The decision of this Court was one of urgency in view of the impending hearing before the Board. What follows are those reasons. The issue of costs was also resolved on that day with the Respondent waiving any request for costs of the application.

Issues on the Application for Judicial Review

[4] The issues raised in the application for judicial review are the following:

(a) What is the standard of review to be applied to the Board's decision regarding the question of standing before its hearings?

(b) Did the Board members have the jurisdiction to make decisions regarding the conduct of proceedings before them, specifically to make decisions about party standing?

(c) Did the Board err in law in failing to grant the City party status to fully participate in the hearing before it?

(i) Is the City entitled by law to be granted party status to the hearing before the Board?

(ii) Alternately, in refusing to grant the City's request for party status, did the Board err in exercising its discretion in this regard?

Background Facts

[5] To a substantial degree, the background facts of this case were not disputed. Briefly stated they can be summarized as follows. Between January and February of 2005, the Deputy Registrar of the AGCO issued three Notices of Proposal to Revoke the liquor licence of McCaul which owned and operated a restaurant known as the Navaron Restaurant (the premises) at 268 Dundas Street East, in the City of Toronto. McCaul carried on business at the premises until March 2005, at which time Sunus purchased the business. Sunus continued to operate the establishment from that time on. On March 11, 2005, a fourth Notice of Proposal was issued to refuse to transfer the licence originally granted to McCaul to Sunus.

[6] The notices were issued on the basis of allegations that the past and present conduct of the owner, occupants and patrons of the establishment affords reasonable grounds for the belief that the continued operation of the liquor licence will not be operated in accordance with the law, and that the continued operation of the licence is not in the public interest having regard to the needs and wishes of the residents of the municipality in which the establishment is located.

[7] The evidence indicated that dating back to the fall of 2004, AGCO had held a disciplinary hearing regarding McCaul's regulation violation under the Liquor Licence Act (LLA) resulting in a 21 -day suspension of its liquor licence. Specifically, the suspension was for permitting a person to hold, offer for sale, sell, distribute or consume a controlled substance, as defined in the Controlled Drugs and Substance Act (Canada) (CDSA) on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder. Subsequent to the suspension, after investigation by members of the Toronto Police Services who attended at the premises, charges were laid against McCaul for alleged additional violations of the LLA such as over-service of alcohol, public drunkenness and assaulting a peace officer. Charges of violations of the LLA have also been laid against the current owner of the business, Sunus.

[8] The evidence further showed that the Toronto Police Services as well as numerous local businesses and residents living within the vicinity of the premises had conveyed their concerns about the premises. Specifically, concerns were raised relating to problems of drunkenness, illegal drug consumption and dealing, prostitution and violence that had been taking place both inside and outside the premises, all of which appeared to be escalating. As a result, the City began to receive requests that the City oppose the continuation of the liquor licence issued in respect to the premises.

[9] At meetings on October 26, 27 and 28, 2004, the City's Council concluded that the past and present conduct of the owner, the occupants and the patrons of the licensed establishment afforded reasonable grounds to believe that the continued operation of the liquor licence issued for the premises would not be in accordance with the law and would not be in the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located. The Council therefore passed a resolution directing the City Solicitor to advise the AGCO that it opposed the current operation of the existing liquor licence for the premises. The resolution further requested the Registrar of the AGCO to issue a Notice of Proposal under the LLA to review the liquor licence issued for the premises as not being in the public interest. Finally, the resolution also authorized the City Solicitor to seek standing to participate in such proceedings to oppose the continued operation of the liquor licence at the premises.

[10] In fact, the City had been and continued to be instrumental from the outset in gathering and providing information to the AGCO in support of the Notices of Proposal, including copies of information respecting new charges laid by the police in connection with the premises. Both the City and the Toronto Police Services were concerned for the public safety and general welfare of the residents living in the vicinity of the premises, based on the past problems as well those that persisted notwithstanding the change of ownership.

[11] Pursuant to s. 7.1(1) of Regulation 719 passed under the LLA, the City gave to the AGCO a copy of the City's Resolution. Section 7.1(1) of Regulation 719 reads as follows:

"In the absence of evidence to the contrary, the board of the Alcohol and Gaming Commission of Ontario shall consider a resolution of the council of the municipality, in which are located the premises for which a person makes an application to sell liquor or holds a licence to sell liquor, as proof of the needs and wishes of the residents of the municipality for the purposes of clause 6(2) (h) of the Act. "

[12] Section 6(2)(h) of the Act enunciates, among others, the principle that an applicant for a licence to sell liquor is entitled to be issued a licence to sell liquor except if the licence is not in the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located.

[13] As was their right under the LLA, both McCaul and Sunus requested a hearing before the AGCO to consider all four of the Notices of Proposal issued by the Registrar. Prior to the scheduling of the hearing, the City made two requests to the AGCO that the City be granted party status at the hearing. The City's requests were denied. Counsel for the City appeared before the Board of the AGCO on May 6, 2005, the scheduled date of the hearing, and again sought party status to fully participate in the hearing. The City argued its request on the following basis:

(a) There was great concern with respect to the safety and health of the residents in the area and it wanted to make submissions on behalf of the City regarding public interest.

(b) It wanted to call officers from the Toronto Police Services as witnesses to testify to the matter and provide a history of the impact on the community from the Police Services' perspective;

(c) It wanted to call the ward councillor to testify with respect to objections he had received from the various residents and;

(d) It wanted to call residents to testify about the negative impact that the continuation of this licence had on their community.

[14] The City's request was objected to by counsel for McCaul and Sunus. He argued against the request as follows:

(a) There was no valid municipal basis for the City to have such standing;

(b) The City's resolution lacked specifics in respect of the complaints forming its basis;

(c) Municipal intervention at this point was unwarranted and unnecessary because the nature of the proceedings were solely disciplinary under the LLA and not within municipal jurisdiction;

(d) The City was attempting to do indirectly what it could not do directly and;

(e) Any problems with by-laws, zoning or noise should be prosecuted by the City.

[15] Counsel for the Registrar submitted that it was the continued intent of the Registrar to advance evidence, including the City's resolution, and call witnesses in support of the Registrar's Notice of Proposal to Revoke the liquor licence in the event that the City was not granted party status.

[16] After hearing the submissions of all counsel on the issue of the City's standing, the Board refused the City's request.

[17] At page 31 of the transcript of that hearing (see Application Record Tab 2) the Board ruled:

"This is the registrar's case to make out. We do understand that there is a resolution from the City and that those resolutions under the Act are to be considered, absent proof of evidence to the contrary, as evidence of the needs and wishes of the residents and that will be no doubt before us.

"However, there is nothing to preclude the Registrar from working with the City to bring forth those witnesses and Mr. Kulis had indicated, as well, in his submissions, that in the event that the City was not granted party status, he would be working with the City to bring forward that evidence.

"And, again, given that it is in this instance very much with these disciplinary matters the Registrar's case to make, this panel has determined that that evidence will come forward, we believe, through the Registrar and in this instance we are not prepared to grant the City party status."

[18] Following these reasons and result, the City brought this application for judicial review of the Board's decision.

Standard of Review

[19] Preliminary to the consideration of the question of the standard of review to be applied by the Court on this application, it is helpful to briefly discuss the legislative framework of the Board's decision, which is under review. Firstly, the Registrar of the AGCO, under ss. 15(1) and 17 of the LLA has the jurisdiction to issue the Notices of Proposal to suspend or revoke liquor licences and to refuse to transfer liquor licences. A reading of s. 23 of the LLA and s. 10 of the Alcohol, Gaining and Charity Funding Public Interest Act (AGCFPIA) indicates that the Board members of the AGCO also have the jurisdiction to hold hearings to determine whether or not a liquor licence should be suspended or revoked or that licences should not be transferred. Furthermore, the proceedings before the Board are of a regulatory nature designed to maintain standards of behaviour and regulate the conduct of those who are licensed to carry on a business in the liquor service sector. Pursuant to s. 3(1) and (3), the AGCO exercises its powers in the public interest.

[20] With respect to its proceedings, pursuant to s. 25.0.1 of the Statutory Powers Procedure Act, R.S.O. 1990, chapter S-22 (SPPA) and s. 4 of the AGCFPIA, the Board has the power to determine its own procedures and practices. Furthermore, as established in ss. 4 and 10 of the AGCFPIA, in exercising its powers the Board members can determine all questions of fact or law that arises in matters before it and can issue guidelines governing the exercise of any of the powers and duties conferred on it.

[21] With respect to the specific question under review, s. 10(4) of the Alcohol and Gaming Regulation and Public Protection Act, 1996 (AGRPPA) specifies the Registrar of the AGCO, the person who required the hearing and "such other persons as the panel may specify are parties to the hearing". Section 5 of the SPPA also provides that the parties to a proceeding shall be the persons specified as parties by or under the statute under which the proceeding arises or, if not so specified, persons entitled by law to be parties to the proceeding. Therefore, in reply to the second issue enunciated earlier, it is clear that the Board members of the AGCO have the jurisdiction to make decisions regarding the conduct of proceedings before them and specifically to make decisions about party status.

Position of the Parties

[22] The City takes the position that the applicable standard of review in this application is that of correctness. It argues this applying the pragmatic and functional approach, and having examined whether the following four factors are in place to lead to that conclusion:

(a) The presence or absence of a privative clause, or statutory right of appeal;

(b) The expertise of the tribunal relative to that of the reviewing court on the issue in question;

(c) The purposes of the legislation and provision in particular; and

(d) The nature of the question law, fact, or mixed law and fact.

[23] The City argues that the applicable legislation, AGRPPA does not contain a privative clause. In fact, the legislation specifically stipulates that a right of appeal to the Divisional Court exists only on questions of law. Furthermore, the courts have found that the AGCO possesses no special expertise on the issue of party status (See French v. Alcohol and Gaming Commission (Ont.), [2003] O.A.C. Uned. 496; [2003] O.J. No. 4962 (Div. Ct.), at p. 2 and Alcohol and Gaming Commission (Ont.)v.Hosseini-Rad, [2004] O.J. No. 1273; 185 O.A.C. 68 (Div. Ct.) at p. 2.). Consequently, the appropriate standard of review is that of correctness.

[24] The AGCO argues that a pragmatic and functional approach must be followed in order to resolve the issue. On that basis, it argues that the standard of review of the present Board decision is reasonableness simpliciter. Put another way, has the Board, in exercising the discretion given to it under the legislation to determine who the parties to its proceedings are, exercised that discretion reasonably?

[25] Relying on the decision of Ryan v. Law Society of New Brunswick, 2003 SCC 20, [2003] 1 S.C.R. 247; 302 N.R. 1; 257 N.B.R.(2d) 207; 674 A.P.R. 207; [2003] S.C.J. No. 247, at p. 271, the ACGO argues that the question that must be asked every time the pragmatic and functional approach directs reasonableness as the standard is whether the reasons for the decision, taken as a whole, are tenable as support for the decision. In this case, they clearly all, given the fact that the City had, through the Registrar and through existing legislation a satisfactory way of putting the municipality's area of concern before the tribunal.

[26] After considering the arguments of counsel and examining the case law on this question, I come to the conclusion that the appropriate standard of review is that of correctness. There is no privative clause in the legislation. Furthermore, as discussed above, the question of party status is provided for in the appropriate and relevant legislation and entails a reading and an interpretation of that legislation. The AGCO has no special expertise in respect to this. This conclusion is also supported by the jurisprudence.

[27] In Ontario (Registrar of Alcohol and Gaming) v. Hosseini-Rad, supra, Ferrier, J., was dealing with the same legislation as in this case. Ferrier, J., allowed the appeal before him and found that the Board erred in law in purporting to grant the licence to Mr. Hosseini-Rad, contrary to the clear wording of the legislation that did not provide for any discretion once certain facts existed, namely the making of a false statement under the LLA. At para. 6 of his decision, Ferrier, J., stated:

"[6] Given that this is an appeal on a question of law involving issues of statutory interpretation in which the Board has no greater expertise than this court concerning the matters in issue and there is no privative clause, we are of the view that the standard of review is correctness."

[28] In French v. Ontario (Alcohol and Gaming Commission), supra, this Court was asked to quash an order of the AGCO granting intervenor status to the Liquor Control Board of Ontario in two motions that were to be heard before it. In determining what standard of review to be applied, the Court ruled at para. 5 :

"[5] It is common ground that the standard of review is correctness. There is no privative clause in the legislation and no special expertise by the Board in respect of this issue."

[29] The Court went on to find that the decision to grant intervenor status was incorrect in the circumstances of the case where it was determined that the Liquor Control Board of Ontario could not make a positive contribution to the hearings.

Is the City Entitled by Law to be Granted Party Status?

Position of the Parties

[30] The City argues that it is entitled by law to party status, relying on s. 5 of the SPPA. They further argue that the rules of natural justice demand that any person whose right or obligations may be affected by a decision of the tribunal ought to be given an opportunity to be heard. The issue before the Board, as to whether the licences of McCaul and Sunus ought to be revoked and transferred, touch on the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located. The appropriate legislation (specifically, s. 7.1(1) of Regulation 719) intended the municipality to represent the public interest and to advocate on behalf of the residents in the vicinity of the premises at issue. The City is therefore entitled by law to party status.

[31] The City further relies on past instances when the AGCO has found that the municipality was a necessary party in respect of the public interest component of a proceeding dealing with a proposal to revoke a liquor licence. It relies on the case of Hip (Re), [1997] O.L.L.B.D. No 122, at para. 4.

[32] The AGCO counter agues that the jurisdiction to add parties to proceedings before the Board is discretionary. This is clear from the specific wording of the legislation, in particular, s. 10(4) of the AGCFPIA. Consequently, s. 5 of the SPPA does not apply due to the specific reference found in the AGCFPIA.

[33] In addition, this Court, in the decision of French v. Ontario (Alcohol and Gaming Commission), supra, at para. 6 specifically found that the Board has the "discretion" to determine intervenor status which is certainly analogous to the issue of party status in this matter.

[34] Finally, in s. 7.1(1) of Regulation 719 passed under the LLA, the Legislature turned its mind to the role of the municipality in matters of this kind. That subsection does not make the municipality a party to the proceedings. It gave evidentiary "weight" or "value" to municipality resolutions. The resolution can instead be used to express the opinion of the City in the absence of evidence to the contrary.

[35] I find the arguments of the ACGO persuasive and supported by the jurisprudence. A proper reading of the legislation clearly makes the jurisdiction of the Board to add parties to the proceedings before it a discretionary one to be decided in each case. Because the City was given party status in respect of the public interest component of a similar proceeding in Hip (Re), supra, does not entitle it by law to party status in these hearings or in all similar proceedings.

[36] While the City may have an interest and obligation, regarding the question of public interest in the Board hearings, the legislation recognizes and creates a mechanism, short of party status, whereby the City may participate in the proceedings. This is clearly the evidentiary status given to municipal resolutions passed under s. 7.1(1)ofRegulation719. If they were by law entitled to party status would this be necessary?

[37] Finally, all of the jurisprudence which had occasion to examine this issue in similar proceedings and to which this Court was referred, does not support the conclusion that the City has an entitlement "by law" to party status (See French v. Ontario (Alcohol and Gaming Commission), supra; Lafarge Canada Inc. v. 1341665 Ontario Ltd. et al., [2004] O.J. No. 1572; 2004 ONSCDC 9072, 185 O.A.C. 35 (Div. Ct.); and Hip (Re), supra.)

Did the Board Err in Refusing to Exercise its Discretion to Grant the City's Request for Party Status?

Position of the Parties

[38] The City argues that the Board used too narrow an interpretation in considering eligibility for party status contrary to its previous practice. As can be seen from other cases before it, it is very common for the Board to grant party status to a municipality when the public interest is in issue pursuant to s. 6(2)(h) of the LLA. In refusing its application, the City argues that the Board essentially applied too narrow a test of requiring a direct legal interest. According to the City, its increased participation may assist the tribunal to come to a more balanced and informed understanding of the facts and issues in dispute and thereby enable it to make a better decision in the case.

[39] The City argues that the Board erred in failing to attach sufficient weight and legislative context to municipal Council's resolution. According to the City, the legislative scheme by virtue of s. 6(2)(h) of the LLA and s. 7.1(1) of Regulation 719, explicitly contemplates that the municipality advocate the public interest. As such, the City ought to have been granted party status to permit its advocacy.

[40] Finally, the City argues that the Board erred in law in relying heavily on the fact that the proceedings before it were primarily disciplinary in nature. Based on the proposals before it the public interest is very much at issue in the hearing before the Board. The City maintains that it is clearly in a better position than the Registrar to represent the public interest. It has a broader perspective; the City and the Registrar do not always share the same concerns, perspecttives and priorities and they do not always agree on what is the public interest. It was, therefore, insufficient and wrong to rely on the fact that the Registrar was not precluded from working with the City to bring forth the witnesses proposed by the City and to conclude that the City's evidence would therefore come forward.

[41] Counsel for the AGCO argues that the Board exercised reasonably its discretion in considering the City's application. It is evident from its reasons that it gave due weight to the City's rights and obligations with respect to its concerns for public interest that is recognized as a significant issue in the hearing before the Board. It did not in any way deny or give insufficient weight to the City's Resolution. It did not in any way prevent any police or resident witnesses from giving evidence at the hearing. In fact it recognized that the Registrar, based on the Registrar's own submissions, would be considering the calling of these witnesses. It did not prevent the City's lawyers from advising these witnesses at the hearing and finally it did not exclude any material reference in the Notices of Proposal from the Board hearing. In short, everything that the City wanted to introduce in evidence would still be able to be introduced and probably would be introduced through the Registrar.

[42] I find the arguments of the AGCO persuasive. I can find no error in the conclusion and the reasons given by the Board. It exercised its discretion reasonably, as the law required it to do, and therefore correctly by giving due and balanced weight to the relevant factors such as the City's unique position and perspective on questions of public interest, the evidentiary significance of its resolution at the hearing, the past collaboration between counsel for the City and the Registrar and the anticipated continued collaboration between counsel for the City and the Registrar regarding the evidence and the witnesses to be marshaled for the hearing. Based on all of this I can find no error in the Board's determination that all of the evidence that the City would have wanted to put before the Board would come forward through the Registrar, thus justifying their decision to deny the City party status.

[43] For these reasons, the application for judicial review is dismissed without costs.

Application dismissed.