CITATION: 751809 Ontario Inc. (Famous Flesh Gordon’s) v. Alcohol and Gaming (Registrar), 2014 ONSC 6707
DIVISIONAL COURT FILE NO.: 486/14
DATE: 20141126
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Nordheimer and Pomerance JJ.
BETWEEN:
751809 ONTARIO INC. operating as FAMOUS FLESH GORDON’S
Appellant
– and –
REGISTRAR OF ALCOHOL AND GAMING
Respondent
Alison Craig, for the Appellant
Scott C. Hutchison and S. Walker, for the Respondent
HEARD at Toronto: November 14, 2014
H. Sachs J.:
Overview
[1] This is an appeal from a decision by the Licence Appeal Tribunal (the “LAT”) to revoke the liquor licence of a London strip club called “Famous Flesh Gordon’s”. The licensee, Robert Barletta, is a long-time member and former local president of the Hells Angels. After the Hells Angels was found to be a criminal organization by the courts, the Registrar of the Alcohol and Gaming Commission (the “Registrar”) applied to revoke the appellant’s liquor licence on the basis of Mr. Barletta’s affiliation with the Hells Angels.
[2] The matter was first heard by a panel of the Board of the Alcohol and Gaming Commission (the “Board”), which refused the Registrar’s revocation request. The Registrar appealed, first to the Divisional Court, which dismissed its appeal, and then to the Court of Appeal, which allowed the appeal and directed that the matter be re-heard by the Board. The second hearing proceeded before the LAT; it ordered the Registrar to revoke the Appellant’s licence.
[3] The appellant appealed the LAT decision. After hearing the appeal, we dismissed it with reasons to follow. These are those reasons.
Factual and Procedural Background
The Licensee
[4] Robert Barletta is the owner and licensee of Famous Flesh Gordon’s. In addition to being a former president of the Hells Angels chapter in London, Ontario, he is also the registered owner of the local Hells Angels clubhouse (which is in a different location from Famous Flesh Gordon’s).
[5] The uncontested evidence before the LAT was that Mr. Barletta has been a “full-patch” member of the Hells Angels since 2002. The Hells Angels is a criminal organization dedicated to the facilitation or commission of serious criminal offences. As a full-patch member, Mr. Barletta is required to be 100% devoted to the Hells Angels, putting its interests above all else. He is also required to have a good criminal network, and to refrain from cooperating with law enforcement authorities. Although Mr. Barletta does not have a criminal record, most of the other members of the London chapter of the Hells Angels have at least one prior conviction and some members have faced criminal charges as recently as July 2014.
[6] Mr. Barletta was first issued a liquor licence in 2001. He has no criminal record or history of any liquor licence infractions. No evidence of any illegal activity at Famous Flesh Gordon’s was presented at either of the hearings held during the revocation process.
The Basis for the Revocation Proposal
[7] Sub-section 6(2)(d) of the Liquor Licence Act, R.S.O. 1990, c. L.19 (the “Act”) states that a person is entitled to “be issued a licence to sell liquor except if…(d) the past or present conduct of the [person]…affords reasonable grounds for the belief that the applicant will not carry on business in accordance with the law and with integrity and honesty…”
[8] The 2010 proposal for revocation (as amended) states that “the Registrar has reason to believe, based on Robert Barletta’s membership, participation, and influence in the [Hells Angels] and his association with members of the [Hells Angels], a criminal organization, that Robert Barletta will not carry on business in accordance with the law and with integrity and honesty.”
The First Hearing Before the Board
[9] The Board dismissed the Registrar’s proposal for revocation, because there was no evidence of any illegal activity at Famous Flesh Gordon’s itself and no record of licence infractions.
[10] In reaching its decision, the Board made two determinations of law. First, it held that the Registrar had to prove a violation of s. 6(2)(d) on a balance of probabilities. A lesser standard of proof would be incompatible with the harsh consequences of revocation, namely, depriving the licensee of his livelihood (Board’s Decision, para. 55). Second, it restricted its consideration of the licensee’s conduct to “the requirements and responsibilities of the Ontario liquor laws.”(Board’s Decision, para. 60).
[11] As an alternative to revocation, the Board recommended the imposition of three licence conditions: a ban on gang colours or insignia in Famous Flesh Gordon’s; the permanent exclusion from the premises of anyone affiliated with a criminal organization; and the installation of video surveillance, the product of which would be shared with the police on request.
The Appeals from the Board’s Decision
[12] The Registrar appealed the Board’s decision to the Divisional Court pursuant to s.11 of the Act (now replaced by s. 11 of the Licence Appeal Tribunal Act, 1999, S.O. 1999, Ch. 12, Sch. G. (“LATA”)). The Divisional Court dismissed the appeal.
[13] In March of 2013, the Court of Appeal overturned the Divisional Court’s decision. First, it found that the Board had erred in law by applying the wrong standard of proof. Section 6(2)(d) explicitly refers to “reasonable grounds for belief”, a lesser onus than balance of probabilities. Second, the Court of Appeal found that the Board had construed the test for applying s. 6(2)(d) too narrowly. It held that there was nothing in the language of the Act to restrict the examination of the licensee’s conduct to the operation of his bar.
[14] The Court of Appeal concluded that revoking Mr. Barletta’s liquor licence was not the only reasonable response to the Registrar’s proposal. Therefore, it allowed the appeal and remitted the matter back for a re-hearing in accordance with its reasons.
[15] In January 2014, the Supreme Court dismissed Mr. Barletta’s motion for leave to appeal.
The Second Hearing Before the LAT
[16] The second hearing took place in September 2014. It proceeded on the basis of an Agreed Statement of Facts. The LAT found that Mr. Barletta, as the former club president, was 100% dedicated to the Hells Angels and must have been aware of their criminal activities. In fact, as president, he would have ensured that his chapter got its “cut” from those activities. While there was no proof that the Hells Angels operated illegally in Famous Flesh Gordon’s, the LAT applied the broad interpretation of s. 6(2)(d) mandated by the Court of Appeal and found that the whole of Mr. Barletta’s past conduct was relevant to his compliance with law and his integrity and honesty. It followed that his membership and role in a criminal organization provided “reasonable grounds for belief” that revocation of his liquor licence was appropriate, regardless of his clean record as a licensee.
[17] The LAT also dismissed Mr. Barletta’s offer to accept conditions on his business as an alternative to revoking his liquor licence. Its reasons for doing so are set out at para. 15 of its Decision:
The Tribunal does not believe that any conditions will overcome the concerns that are raised when the owner and operator of these premises is a leader of a criminal organization such as the [Hells Angels]. As noted by the Registrar, the concern is not over the customers of this establishment; it is about the licensee.
Court’s Jurisdiction
[18] Section 11 of the LATA provides for an appeal to this Court from a decision of the LAT on a question of law.
Issue Raised on this Appeal
[19] As articulated by counsel during the hearing of this appeal, the sole issue before us was whether the LAT erred in law by failing to articulate adequate reasons for rejecting an order imposing conditions as an alternative to revocation.
Standard of Review
[20] The appellant argued that the standard of review to be applied in assessing the sufficiency of reasons for a decision by the LAT in liquor licensing cases is correctness.
[21] The respondent submitted that the standard of review is irrelevant because the LAT’s reasons were clearly sufficient on either standard. In the alternative, it submitted that the applicable standard of review was reasonableness.
[22] In Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708, the Supreme Court had this to say about assessing the adequacy of reasons of tribunals to whose decisions deference is owed:
[14] Read as a whole, I do not see Dunsmuir as standing for the proposition that ‘adequacy’ of reasons is a stand-alone basis for quashing a decision, or as advocating that a reviewing court undertake two discrete analyses – one for reasons and a separate one for the result. It is a more organic exercise – the reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes. (citations omitted)
[23] The appellant submitted that since the LAT is not a tribunal to which the courts owe deference, the above reasoning does not apply.
[24] In making this submission, the appellant relied on the recent decision of this court in 2130845 Ontario Inc. o/a Heart & Crown v. Ontario (Alcohol and Gaming Commission, Registrar), 2014 ONSC 3595 (“Heart & Crown”).
[25] The Heart & Crown panel held that the LAT does not have a “specialized expertise in a particular domain of the law”, because it hears disputes arising under 21 different statutes. As a generalist tribunal, the LAT “bears more resemblance to a court of law”. It follows that the sufficiency of its reasons should be reviewed on a correctness standard. (Heart & Crown, at paras. 18-24).
[26] In reaching this conclusion, the Heart & Crown panel acknowledged that there was divergent authority on this issue in the Divisional Court. Specifically, in Prestige Toys Ltd. v. Ontario (Motor Vehicle Dealers Act, Registrar), 2009 43657 (ON SCDC), [2009] O.J. No. 3437, Karakatsanis J. held for a unanimous panel that the LAT sat at the top of a “specialized adjudicative regime” (at para. 15). She concluded that the courts should defer to the LAT’s application of a provision in the Motor Vehicle Dealers Act that is identical to s. 6(2)(d) of the Act (i.e. it allowed revocation where there were “reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty”), and review it for reasonableness (ibid.).
[27] In Ontario (Motor Vehicle Dealers Act, 2002, Registrar) v. Zabian, [2013] O.J. No. 4869, another panel of this Court directly addressed the standard of review applicable to the sufficiency of the LAT’s reasons. It found that Newfoundland and Labrador Nurses Union applied (at paras 14 and 24-25).
[28] In Heart & Crown, the panel rejected the approach taken in Prestige Toys. It did so partly because that case (like Zabian) dealt with a different statute, and partly because another panel of the Divisional Court had applied a standard of correctness to questions of law arising under the Liquor Licence Act and Regulations (Shooters Sports Bar Inc. v. Ontario (Alcohol and Gaming Commission), [2008] O.J. No. 2112).
[29] With respect, it makes no sense to reason that the Legislature would have intended one standard of review to apply to the LAT’s decisions under one of the 21 statutes specified in the LATA (the Motor Vehicle Dealers Act) and a different standard to apply to its decisions under a separate but identically-worded provision (the Liquor Licence Act).
[30] While it is true that, as the Heart & Crown panel observed, the LAT reviews decisions arising under twenty-one different statutes, it does not follow that it lacks expertise relating to licensing issues in this province. The twenty-one statutes specified in LATA are similar in substance and structure. For example, ten of them contain provisions similar to s. 6(2)(d) of the Act. Thus, unlike the courts, the LAT is an adjudicative body that has developed specialized expertise in substantively-related licensing issues across the various regulatory schemes implemented by the Legislature.
[31] For these reasons, I find that the standard of review applicable to the LAT’s decisions is reasonableness.
Were the LAT’s Reasons Sufficient?
[32] On the question at issue, namely whether the LAT adequately addressed the question of conditions as an alternative to revoking the licence, para. 15 of the LAT’s decision is key. For ease of reference, I will reproduce it again:
The Tribunal does not believe that any conditions will overcome the concerns that are raised when the owner and operator of these premises is a leader of a criminal organization such as the [Hells Angels]. As noted by the Registrar, the concern is not over the customers of this establishment; it is about the licensee.
[33] Essentially, the LAT found that the conditions suggested could potentially reduce any identifiable risk of criminal activity taking place at the premises. However, as the Court of Appeal made clear, s. 6(2)(d) requires more than simply owning an establishment where no criminal activity takes place. It requires that Mr. Barletta, as the licensee, be someone who can reasonably be expected to carry on the business in accordance with the law, and with integrity and honesty. None of the conditions proposed by the appellant addressed this concern. Surveillance cameras in the premises, a prohibition against gang colours at the premises, and keeping Hells Angels out of the establishment may contribute to regulating the behaviour of the customers at Famous Flesh Gordon’s. But they do not change the fact that Mr. Barletta is a committed member of a notorious criminal organization whose stature within that organization requires him to have a good criminal network, to put the interests of the Hells Angels above all else, and to refrain from cooperating with authorities or sharing information that could harm the club.
[34] The appellant submitted that Mr. Barletta’s past conduct shows his willingness to cooperate with authorities. With respect, I do not read the record in that way. The record shows that, on one occasion, the police attended at some premises and told Mr. Barletta that they wished to identify two full-patch members who were with him. Mr. Barletta was cooperative, and the police were able to speak to and identify the members. On another occasion, Mr. Barletta told the police that he and a group of other Hells Angels’ members were on their way to Windsor. Whatever slight cooperation that this behaviour may exhibit, it does not suggest that Mr. Barletta would be prepared to assist the authorities if they were seeking to stop or prevent criminal activity from occurring. Further, the record discloses that Mr. Barletta adamantly refused to acknowledge to the police that the building at 14 Swinyard Street, in London, Ontario is the Hells Angels clubhouse (an uncontested fact in this proceeding), and that, on another occasion, he refused to remove his gang colours at a liquor establishment in London and was served with an offence notice under the Trespass to Property Act.
[35] Read as a whole, and in the context of the outcome and the record, the LAT’s reasons allowed a reviewing court to understand why it made the decision it did and to determine that its decision was within the range of acceptable outcomes. Consequently, the decision is a reasonable one.
[36] For these reasons, the appeal was dismissed.
SACHS J.
NORDHEIMER J.
POMERANCE J.
Released: 20141126
CITATION: 751809 Ontario Inc. (Famous Flesh Gordon’s) v. Alcohol and Gaming (Registrar), 2014 ONSC 6707
DIVISIONAL COURT FILE NO.: 486/14
DATE: 20141126
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Nordheimer and Pomerance JJ.
BETWEEN:
751809 ONTARIO INC. operating as FAMOUS FLESH GORDON’S
Appellant
– and –
REGISTRAR OF ALCOHOL AND GAMING
Respondent
JUDGMENT
SACHS J.
Released: 20141126