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Tribunal d'appel en matière de permis
2270813 ONTARIO INC. o/a OUR DOG HOUSE BAR & GRILL APPEAL FROM DECISIONS OF THE REGISTRAR OF ALCOHOL AND GAMING UNDER THE LIQUOR LICENCE ACT, R.S.O. 1990, c. L. 19 TO PROPOSE TO REVOKE A LIQUOR LICENCE, AND TO IMMEDIATELY SUSPEND A LIQUOR LICENCE
LAURIE SANFORD, Vice Chair
IVAN MARINI, Counsel, representing the Applicant PHILLIP MORRIS, Counsel, representing the Registrar of Alcohol and Gaming under the Liquor Licence Act
DATES OF HEARING:
September 22, 23, 2011
DECISION On August 24, 2011, the Acting Registrar of Alcohol and Gaming (the “Registrar”) under the Liquor Licence Act, R.S.O. 1990, c.L.19 (the “Act”) issued a Notice of Proposal proposing to revoke the liquor licence of the Applicant, 2270813 Ontario Inc. o/a Our Dog House Bar & Grill (“Our Dog House”) under subsection 6(2)(d) of the Act. On the same date, the Registrar issued an order immediately suspending the liquor licence of Our Dog House under subsection 15(6) of the Act. This is an appeal by way of a Request for Hearing by Our Dog House to the Licence Appeal Tribunal (“Tribunal”) from both the Notice of Proposal and the immediate suspension order. The hearing proceeded and the Tribunal heard the evidence of both parties and submissions of counsel as to how the evidence ought to be viewed by the Tribunal. On September 23, 2011, the Tribunal directed the Registrar not to carry out his Proposal to Revoke the liquor licence of Our Dog House and stipulated that the order to immediately suspend the licence had expired. These are the reasons for this decision. Our Dog House is owned by Ms. Linda Muraca and Mr. Denis Dreher. Both owners gave evidence. In the fall of 2010, Mr. Dreher suggested to Ms. Muraca that they consider buying a small local bar. The owner of that bar, a woman who shall be
2 referred to as Ms. MB, wanted to sell the business as she and her husband, Mr. RB, were moving to the United States of America. After doing some research into the business, Mr. Dreher and Ms. Muraca decided to buy it. The premises were leased so what they were purchasing was the equipment and supplies on the premises and the right to acquire the liquor licence. Ms. Muraca, by virtue of her work experience as a business manager in a number of motor vehicle dealerships, had some experience with purchase and sale documents so she handled the negotiations. The parties reached an oral understanding that the business would be sold for $70,000 and on January 28, 2011, there was a party held at the bar to introduce Mr. Dreher and Ms. Muraca to some of the regular patrons as the new owners. Keys to the premises were ceremonially handed over to Ms. Muraca and Mr. Dreher. Despite this ceremony, the liquor licence could not be transferred because there were sales taxes outstanding. As well, a formal bill of sale had not been signed between the parties. Therefore, in February, March and April, 2011, Ms. Muraca and Mr. Dreher ran Our Dog House on behalf of the Ms. MB while they negotiated a new lease for the premises and arranged, as part of the purchase price, to pay the outstanding sales taxes. On April 13, 2011 the final instalment of the purchase price was paid to Ms. MB and the parties applied to the Alcohol and Gaming Commission of Ontario (“AGCO”) for a transfer of the liquor licence. On May 12, 2011, the AGCO issued an “Authorization to Contract Out”, which is an interim authority to operate with the existing liquor licence while the application for the new licence is being made. The Authorization to Contract Out held both Ms. MB and the new owners responsible for meeting the obligations of the Act. The Authorization to Contract Out was valid until February 21, 2013. After receiving the Authorization to Contract Out, Ms. Muraca and Mr. Dreher began to operate the bar on their own behalf. Ms. Muraca believed that in order to complete the purchase of the business and the application for a transfer of the liquor licence, Our Dog House required two documents: a final bill of sale for the business and a confirmation of purchase, which the AGCO had requested. Obtaining these two documents was difficult because by this time Ms. MB and Mr. RB were in America and because Mr. RB insisted on preparing the paperwork without a lawyer. Mr. RB was to prepare the final bill of sale and Ms. Muraca prepared the confirmation of purchase. In June, 2011, Mr. RB and Ms. MB returned from America, apparently permanently, and moved into Mr. Dreher’s home as his guests until they could find a place of their own. In July, Mr. RB presented Ms. Muraca with a bill of sale he had prepared. It was dated July 7, 2011. Ms. Muraca believed the document contained a number of errors. The address of the seller, Ms. MB, was incorrect, the purchase price incorrectly shown as $80,000 and the bill of sale contained a provision which Ms. Muraca interpreted as giving Mr. RB the right to cancel the deal at any time. For these reasons, Ms. Muraca refused to sign this bill of sale. She testified that Mr. RB acknowledged that the purchase price was in error and said he would prepare a corrected bill of sale as soon as possible. So, Ms. Muraca remained confident that the sale as it had been agreed to would be formally acknowledged in time.
Towards the end of July, Mr. Dreher asked Ms. MB and Mr. RB to find a home of their own and to move out of his place. Shortly after, Ms. MB, Mr. RB and their friend, a Mr. RY, moved into a house a short distance down the street from Our Dog House. Both Mr. Dreher and Ms. Muraca acknowledge that their relationship with Mr. RB had begun to deteriorate by this time. In their testimony, Mr. RB emerges as an erratic individual. He left Canada owing sales tax on his wife’s business and rent on the premises. On his return to Canada, he would periodically demand a higher purchase price for the bar and once, in June, he entered Our Dog House and removed the liquor licence from the wall. He later returned it but Ms. Muraca and Mr. Dreher, believing that they had a valid second licence, began to keep one licence in a less accessible place on the wall. It is a violation of the Act to operate a bar without a liquor licence on display. Periodically, Mr. RB and Mr. RY would come into Our Dog House and assert that Mr. RB was still the owner of the establishment. Up to this point in the chronology, Ms. Muraca’s evidence is not materially in dispute. However, there are two sharply different versions of the events which took place on August 8, 2011 and, by implication, of the events in the days leading up to it. According to Ms. Muraca, Mr. RB came into Our Dog House on August 6, 2011, which was a Saturday. She was not in the bar at the time but Mr. RB dropped off a revised bill of sale and the confirmation of purchase Ms. Muraca had prepared. Both documents were signed by Ms. MB and were post-dated to August 8, a Monday. Ms. Muraca telephoned Mr. RB on that evening. In the conversation, Mr. RB proposed that she drop Mr. Dreher as a partner and take Mr. RB on in his place. He had previously made a similar suggestion to Mr. Dreher. However, when Ms. Muraca refused this suggestion and asked for time to review the bill of sale, Mr. RB gave her until Sunday, August 7. On Sunday night, according to Ms. Muraca, Mr. RB went into Our Dog House and again removed a liquor licence from the wall. When Ms. Muraca looked at the bill of sale, the purchase price had been corrected to $70,000 but the mistake in the address and the objectionable clause which Ms. Muraca believed gave Mr. RB the right to cancel the sale remained in the document. Ms. Muraca testified that it was for these reasons she refused to sign it. The bill of sale was produced and it is unsigned by Ms. Muraca. She called Mr. RB on August 8 and said she needed time to consult a lawyer. Later that day, Mr. RB’s friend, Mr. RY, called her to say that Mr. RB was going to a lawyer to talk about the bill of sale, among other things. Ms. Muraca’s testimony was that she offered to accompany Mr. RB to the lawyer but this offer was refused. Ms. Muraca made a brief visit to the home of Mr. RB on August 8, at his invitation. However, according to her testimony, he was not there and she left after exchanging sharp words with Mr. RY and without going into the home. She returned to Our Dog House where she remained working with Mr. Dreher until the bar closed. Ms. Muraca spoke to her lawyer about the bill of sale on Tuesday, August 9 but her lawyer told her that he no longer practiced in the this area and advised her to retain someone with the necessary expertise. Ms. Muraca produced a letter from the lawyer involved confirming this discussion. The confirmation of purchase was acceptable to Ms. Muraca as it was signed without alternation. Therefore, both Mr.
4 Dreher and Ms. Muraca signed it, dating it August 8 to correspond to the date Ms. MB had used, and sent it to the AGCO on August 9. On August 10, 2011, Our Dog House was issued a liquor licence. Neither Mr. RB nor Ms. MB nor their friend Mr. RY gave evidence. The Registrar called Detective Steve Stone, a 39 year veteran of the Hamilton police force who has been seconded to the Provincial Biker Enforcement Unit for four years. This unit investigates and monitors outlaw motorcycle gangs, including the Hells Angels. Detective Stone testified that around 5:00 or 6:00 in the evening of August 8, 2011, a neighbour of Mr. RB and Ms. MB called the police to report a domestic disturbance. When the police arrived, no one was home. However, they tracked Mr. RB down and when they spoke with him, he stated that some patrons of Our Dog House had been to his house and there had been an argument. The situation was resolved, he advised. The police followed up at the Our Dog House and spoke to Ms. Muraca and Mr. Dreher who had no knowledge of the incident. On August 9, 2011, Mr. RB, Ms. MB and Mr. RY went to the police station and made statements. The statements of Mr. RB and Ms. MB were taken under oath but that of Mr. RY was not sworn. The Registrar introduced DVD copies of these statements into evidence. The use of recorded copies of statements raises issues of admissibility, of credibility and of weight, each of which will be dealt with below. The DVDs were admitted on the basis that Mr. RB, Ms. MB and Mr. RY were not available to testify and subject to submissions that Mr. Marini, counsel for the Applicant, wished to make as to weight. According to Detective Stone Mr. RB, Ms. MB and Mr. RY have been relocated out of the province and are being monitored by police. However, Detective Stone testified that he had not been asked to produce them as witnesses in this proceeding and he had not explored the possibility of having them testify via video conference. Mr. RB in his statement testified that around 6:00 on the evening of August 8, two members of the Hells Angel gang came to his house. He recognised them, he said, because he had been to the Hamilton club house of the gang. He also stated that he had in the past been affiliated with their organisation in Montreal and with the Lobos motorcycle gang in Windsor, which, according to Detective Stone, has been acquired by the Hells Angels. He said that he has distanced himself from the organisation but he was not asked when this distancing took place. Mr. RB said in his sworn statement that the two members of the Hells Angels broke into his home and hit him and Mr. RY. They asked him where the licence was. The Registrar assumes this is a reference to the liquor licence Mr. RB removed from Our Dog House on August 7. Mr. RB testified that the Hells Angels gang members gave him two documents relating to the sale of Our Dog House, one which he had prepared and one which Ms. Muraca had prepared. The Registrar assumes these documents are the bill of sale and the confirmation of purchase but Detective Stone was unsure which documents were involved. Mr. RB testified that the Hells Angels gang members gave him the documents, told him not to bother reading them and told him to get his wife to sign them as well. Thoroughly intimidated, Mr. RB testified, “So, we signed.”
5 Then one of the Hells Angels accused him of using that gang member’s name and of using the club’s name. The gang member said Mr. RB was being “taxed” $5,000 and the other gangster said they would return in a week. Mr. RB testified that he was told that if he didn’t have the money, they would take his truck. Then they left, apparently without the licence. Detective Stone testified that some people will claim an association with the Hells Angels for their own purposes and this is regarded by the gang as a serious offence. Ms. Muraca testified that Mr. RB had boasted to her of his association with the gang. The reference to a “tax”, Detective Stone testified, is the gang’s term for a fine or punishment. One of Mr. RB’s children was in the back yard, obviously upset, and seeing this, one of the neighbours called the police. Mr. RB testified that when he learned the police had been called, he concluded that “it worsened the situation because at this point now, you know, the Hells Angels figured we’ve called the police on them.” Detective Stone testified that going to the police is regarded as a very serious matter by the Hells Angels and as a result, it is rare that people who have been threatened by the gang will report the matter. Mr. RB and his family and his friend Mr. RY left the home and when the police tracked him down, he made up a story of an argument with some patrons of the bar. After the police left, Mr. RB testified that he knew he was in trouble. He feared for his life and his children’s’ lives. He made some phone calls and his friend Mr. RY was out all night “trying to find out what possibly was going on and how much damage had been created, you know, against the club and how, how much, you know, what we were facing, like were we just facing a beating or were we facing, you know, more than a beating.” Mr. RB called the Windsor Hells Angels club to see if they could persuade the Hamilton club to stand down but they told him it was outside their jurisdiction. Mr. RY contacted the landlord of the Hells Angels club house in Hamilton and Messrs. RB and RY concluded, from the questions he asked, that the situation had become life-threatening. So, Mr. RB decided to go to the police and seek their help. Ms. MB and Mr. RY in their statements corroborate his account. It is impossible to determine the credibility of Mr. RB, Ms. MB or Mr. RY on the basis of the DVD statements. None of them were questioned. Rather they were invited and encouraged to make their statements. They were not cross-examined by anyone. Detective Stone testified that he made no judgement as to the credibility of their statements. Yet, on August 10, 2011, he arrested both Ms. Muraca and Mr. Dreher and, after questioning Ms. Muraca, he charged them both with conspiracy to extort legal documents from Ms. MB and Mr. RB. At that time, he testified, he had not seen a transcript of the DVD statements and was unable to determine if they contained any untruths. There was no evidence produced that the statements of Mr. RB, Ms. MB or Mr. RY were subjected to critical analysis at any time by either the police or the Registrar.
6 On the face of Mr. RB’s statement, there are a number of implausible assertions. It is possible that Mr. RB could clarify these on examination but because he was not questioned or cross-examined, they remain unresolved. Detective Stone testified that background checks on Mr. Dreher and Ms. Muraca revealed that neither of them is known to the police and neither has been criminally convicted. Nevertheless, Mr. RB’s statement invites one to conclude that these people have abandoned the law abiding habits of a lifetime to retain the Hells Angels to extort some legal documents. While it is true that desperate people will occasionally do desperate things, there is no evidence that either Mr. Dreher or Ms. Muraca was desperate to obtain these documents. Their authorization to contract out was valid until 2013 and, despite the erratic positions taken by Mr. RB in the negotiations, they remained confident that eventually they would obtain the necessary paperwork. Mr. RB’s statement is that the Hells Angels intimidated him into signing the bill of sale that he had prepared and was, presumably, satisfied with. Moreover, Mr. RB’s statement requires one to conclude that Ms. Muraca retained the Hells Angels to extort from Mr. RB and Ms. MB a bill of sale which she then refused to sign. She referred the document to a lawyer because she was troubled by one of its provisions. It is also relevant that Mr. RB refers to “us” signing the documents but his signature does not appear on either the bill of sale or the confirmation of purchase. Mr. RB ‘s statement also contains an implausible account of the conduct of the Hells Angels. According to Detective Stone, the Hells Angels operates as a business, albeit a criminal one. According to Mr. RB, the gang imposed a tax or fine on him of $5,000 for using their name and threatened to seize his truck if he did not pay within a week. However, his statement asks us to believe that the Hells Angels at the same time extorted from him a bill of sale transferring an asset of value – the bar equipment and liquor licence – that they might otherwise have had available to them to secure the tax. Finally, it is relevant that none of the three people involved in this incident make any reference to any threatened repercussions if they reported the incident to the police. While it might be expected that Mr. RB was close enough to the gang to understand that he was not to report the evening’s events to the police, it is less plausible that his wife, who has no known association with the gang, or his friend, who has merely done some construction work for the gang’s landlord, would not have received a warning of the possible consequences of reporting the extortion to the police. It is also implausible that this warning would not have been stark enough to have remained in their memories. The Registrar was not able to produce any independent evidence of a connection between either Mr. Dreher or Ms. Muraca and the Hells Angels. On the basis of the testimony that the Tribunal heard, the only person involved in this matter who has or had any association with the gang is Mr. RB. Ms. Muraca was a credible witness who gave her evidence is a straightforward manner. Her testimony was plausible and internally consistent. Mr. Morris, counsel for the Registrar, emphasised a discrepancy between her testimony at the hearing and her statement to Detective Stone on August 10. In her testimony, she stated that she drove her car to the home of Mr. RB and Ms. MB on the evening of August 8. She did not leave the sidewalk as Mr. RB was not there. She testified that she and Mr. RY got into
7 a brief argument lasting about three or four minutes. However, in her statement to Detective Stone she denies “visiting” Mr. RB and Ms. MB on August 8 or attending “at the residence” of the couple. She explained the discrepancy by saying she understood the questions to be asking whether she had been inside the couple’s home on the night in question. Depending on how much she had been told of the nature of the charges she faced, this was not an unreasonable distinction to make. In any event, it is a comparatively minor discrepancy and there is no evidence she knowingly misled the police. By contrast, Mr. RB, according to his statement, did knowingly mislead the police in his original interview with them. Mr. Marini argued in closing submissions that no weight should be given to the recorded statements of Mr. RB or Ms. MB or Mr. RY because he had not been able to crossexamine any of them. It is true that cross-examination is central to our system of justice and that it is the crucible in which the truth of a statement is tested. However, in this case, the statements of Mr. RB, Ms. MB and Mr. RY are of use. Not only do these statements provide the background for the Registrar’s proposal to revoke the liquor licence of Our Dog House, but the implausiblities contained in Mr. RB’s statement underscore the credibility of Ms. Muraca and her testimony. For these limited purposes, the Tribunal finds the statements of use. The Tribunal accepts the evidence of Ms. Muraca and prefers it whenever there is a conflict between the two accounts. Subparagraph 6(2)(d) of the Act reads:
(2) Subject to subsection (4) or (4.1), an applicant is entitled to be issued a licence to sell liquor except if, . . . (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;
Our Dog House is entitled to a licence unless the Registrar can demonstrate that, subparagraph 6(2)(d) applies. The Tribunal finds that the Registrar has not met the onus on him to demonstrate, on a balance of probabilities, that the owners of Our Dog House retained the Hells Angels to extort legal documents from Ms. MB or Mr. RB. The Registrar did not assert any other grounds for a revocation of the licence of Our Dog House. It follows that the Registrar has not demonstrated that Our Dog House is disentitled to registration on the grounds set out in subsection 6(2)(d) of the Act.
8 For these reasons, the Tribunal directed the Registrar not to carry out his proposal to revoke the licence of Our Dog House. The interim suspension of the licence was vacated at the conclusion of the hearing under subsection 15(7) of the Act.
LICENCE APPEAL TRIBUNAL
Laurie Sanford, Vice Chair
Released: October 4 , 2011
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