Category Archives for Liquor Control and Licensing Act

Contravention Notice:  Failing to promptly produce and submit a record

A licensee in British Columbia may receive a Contravention Notice from the Liquor Control and Licensing Branch for a variety of reasons; serving minors and over-serving patrons are two of the most common. However, another issue arises with more frequency than most managers and owners probably realize: failing to promptly produce a record or thing for inspection.

On February 7, 2017 the General Manager of the Liquor Control and Licensing Branch released its reasons in Re Liquid Zoo Show Lounge EH16-095. In Re Liquid Zoo the Branch fined the licensee $10,000 for its failure to promptly produce requested information.

The Liquid Zoo is a strip club and lounge in Kelowna that operates under a liquor primary licence. The Liquid Zoo’s licence contains a number of unique “special” terms and conditions that include onerous requirements concerning the mandated use of video surveillance throughout the establishment, and providing liquor inspectors and police with unhindered access to the same.

On July 14, 2016 a liquor inspector issued the Liquid Zoo a Notice to Provide Records that required the licensee produce employee records and certain days’ worth of video surveillance footage. The licensee failed to produce the requested information promptly and the liquor inspector issued a contravention notice.

Section 73 of the old Liquor Control and Licensing Act, and section 42 of the new Act, give the Liquor Control and Licensing Branch broad powers to demand from licensees records that the licensee is required to keep under the Act as well as any other “record, thing or sample.” Put simply, to further an investigation into a suspected violation of the Act, or a term or condition of licence, a liquor inspector can ask the management of a bar, restaurant or manufacturer to produce just about anything.

Section 34 of the old Regulation, now section section 80 of the new Regulation, sets out the type of record-keeping licensees are required to maintain for a period of at least 6 years. These records include: liquor purchase and sale records, food sale records, contacts with other licensees, management contracts, employee records (including name, salary, addresses, shift schedules) and records of incidents.

Licensees should note that in Re Liquid Zoo the liquor inspector declined to state the specific nature of the alleged contravention of the Act being investigated. In his reasons the General Manager’s delegate held that “ the fact that the [ contravention notice ] did not identify the specific nature of a possible contravention does not affect the reasonableness of the timeline or the validity of the request.” He went on to find that “the [ contravention notice ] is clear on its face as to what was required” and that “it is the licensee’s responsibility to ensure that he provides all the records required by the branch.”

Alcohol & Advocacy has written about the importance of complying with a liquor inspector’s demands for documents promptly and thoroughly before. It is a subject the Branch takes very seriously. The Branch deems a failure by a licensee to provide records  a “serious contravention that undermines the regulatory compliance and enforcement regime.” Without access to records associated with the operation of a licensed establishment, the Branch considers itself unable to identify serious contraventions that pose an unacceptable risk to public safety.

If a liquor inspector asked your manager or bookkeeper to produce employee records, sales information, or an incident report from six years ago could they? If the answer is “no” you should revisit with your staff how your licensed establishment is managed and operated. If you have questions about how to avoid receiving a contravention notice, or complying with the Liquor Control and Licensing Act contact Dan Coles at Owen Bird.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Wolf in the Fog caught in Minors as Agent Program Investigation

Recently the Liquor Control and Licensing Branch released its reasons in Re Wolf in the Fog EH16-096, confirming that even high-end restaurants will be targeted by British Columbia’s liquor inspectors conducting minors as agent program (MAP) investigations.

The Wolf in the Fog is a fine dining establishment located in the popular surf and tourism town of Tofino, British Columbia. In 2014 it was the recipient of the “best new restaurant in Canada” award and in 2015 it was ranked 38th in the country. In the words of its management, the establishment is not “a dive bar, diner or casual family restaurant.”

The Wolf in the Fog operates under a food primary licence.

On February 23, 2017 the Liquor Control and Licensing Branch’s delegate conducted a hearing into the allegation that on July 6, 2016 an employee of the Wolf served alcohol to a 16 year-old, who at the time was acting as an agent of the Branch as part of the Branch’s ongoing MAP inspection. Supplying liquor to a minor is a contravention of the Liquor Control and Licensing Act that under the old Act carried a minimum monetary penalty of $7,500.

At the hearing the representatives of the Wolf did not dispute that its employee served a minor. Rather, they submitted that the establishment had taken all necessary steps possible to prevent the contravention from occurring. In legal parlance this is known as a due diligence defence.

The Wolf outlined for the Branch the following steps it takes to prevent its staff from serving minors:

  • All new hires are required to have Serving-It-Right training
  • The employee manual contains information dealing with the need to identify minors
  • A whiteboard that contains the day’s food special contains a reminder of the date on which anyone being served alcohol must be born before
  • Management-led meetings held at the start of each shift confirm the importance of not serving minors
  • Shift managers supervise staff to ensure they ask patrons for identification

However, on cross-examination the Wolf’s representatives conceded that:

  • Management does not go through the employee manual with new employees, instead the new employees merely sign a form verifying their review of the same
  • Employees are in fact hired without Serving-It-Right; those without SIR act as hosts
  • There are no testing protocols or written policies with respect to testing staff on their knowledge about liquor law
  • No signage around the establishment warns against serving minors – as those signs would disrupt the fine dining aesthetic
  • The employee who served the minor was suspended rather than being fired

The Branch concluded that the Wolf’s training regime fell short of being adequate. The Branch highlighted the licensee’s concession that there were “no written policies regarding training standards or processes.” Overall the Branch found the licensee’s training regime to be largely ad hoc and therefore not duly diligent. The Branch’s delegate ordered that the Wolf pay a $7,500 penalty.

The Branch’s decision in Re the Wolf in the Fog is a reminder to all licensees that liquor inspectors can and do investigate licensed establishments of all stripes: from nightclubs to high-end restaurants in remote locations.

At the hearing a liquor inspector advised the Branch that the reason for the minors as agent program inspection was because at an earlier inspection conducted in April of that year the liquor inspector was concerned about the number of young people being served alcohol without being asked for identification. MAP inspections are usually conducted in response to complaints or perceived risk.

Licensed establishments that are consistently operated in accordance with the terms of licence and the Act are unlikely to be subject to significant attention from liquor inspectors. On the other hand, as evidence by the liquor inspector’s comments in Re Wolf in the Fog, if your establishment is perceived as being casual about its obligations it will invite greater scrutiny from liquor inspectors.

If your bar or restaurant is facing enforcement action by the Branch, or has recently received a notice of contravention, contact Dan Coles at Owen Bird.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Liquor Law Enforcement in Resort Communities

Licensees who operate in vacation destinations or resort communities know that that many of their patrons are visiting from away, and are in town to relax. Customers may be from foreign jurisdictions where the laws and culture surrounding the service and consumption of alcohol are very different than they are here in British Columbia; alternatively their customers may very well know the local laws and restrictions but feel that the laws should be as relaxed as they are.

Regardless of what category your guests fall into, or where your licensed establishment is located, British Columbia’s liquor laws never go on vacation. Unfortunately for one food primary licensee it had to learn this lesson the hard way, and is serving a six day licence suspension commencing at the close of business February 10, 2017.

The Branch’s reasons for its decision in Re Big White Mountain Mart Ltd. can be found here.

The Big White Market Deli is a licensed deli in the resort community of Big White outside of Kelowna, BC. The Deli is located adjacent a grocery store (that is also operated by the licensee) that includes a Rural Agency Store that sells alcohol. Rural Agency Stores are full-service general grocery stores authorized by the Liquor Distribution Branch to sell liquor in communities where liquor service is not readily available.

On the evening of April 9, 2016 a liquor inspector attended the Deli and saw a group of people seated around a table with an open 24 of Molson Canadian. Two of the men at the table had open cans of Molson Canadian directly in front of them. A server who brought food over to the table made no attempt to have the patrons remove the beer.

According to the Deli’s manager, customers of the RAS routinely purchase beer next door, and bring it over to the Deli to drink. In his submissions before the Liquor Control and Licensing Branch the manager described Big White as having a relaxed culture with respect to the consumption of alcohol. More specifically he testified that “people see Big White as a resort with no laws. It is like the wild, wild west.”

While the Branch did not comment on the public’s perception of the enforcement of liquor laws in Big White, the Branch did find that in a resort area where there is a “heightened risk for non-compliance” licensees must demonstrate greater efforts in diligently upholding the terms and conditions of their liquor licence. In this instance permitting patrons to bring a case of beer into the establishment, leave it open in plain sight, and consume beer without any reaction from the server was found to be unacceptable and a contravention of s.42(2) of the Liquor Control and Licensing Regulation that prohibits liquor not purchased from the licensee from being consumed in that establishment.

At the hearing before the Branch the licensee raised various issues that are common to licensees who operate in resort towns, such as: employing a transient and seasonal workforce and operating in a community where liquor laws are routinely ignored. Though the Branch did not find these submissions mitigating, other licensees who could find themselves in a similar situation should consider how their establishment deals with these risks:

  • If your work force is seasonal, how do you ensure they take their obligations under the Act seriously? In Re Big White the employees responsible for permitting the contravention to occur in April, 2016 are likely no longer with the company when the suspension is being served in winter 2017;
  • If your establishment is surrounded by businesses that take a relaxed approach to British Columbia’s liquor laws, how do you ensure your establishment remains vigilant?

If your establishment is currently facing enforcement action, or is being investigated by the Branch for a contravention of the Act or terms and conditions, contact Dan Coles at Owen Bird.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

2016 BC Liquor Control and Licensing Act Contravention Statistics

From time-to-time the Liquor Control and Licensing Branch releases compliance and enforcement statistics. The most recent statistics on licensee contraventions of BC’s liquor laws are for the period between January and October, 2016. Alcohol & Advocacy has previously written on this issue for the period between January, 2010 and  December, 2013, and that article can be found here.

The Branch has reported that in the first 10 months of 2016 provincial liquor inspectors identified over 500 contraventions.  Unsurprisingly, the most common contravention was the sale of liquor to a minor (86 counts). More notable was the disclosure that contravening a term or condition of a liquor licence was a close second (81 counts).

While some of the terms and conditions applicable to a liquor licence are set out on the face of the licence itself, the vast majority of them are contained in the handbook published by the Branch for each class of liquor licence and permit. The terms and conditions set out in the handbook must be followed at all times by the licensee, in addition to the laws contained in the Liquor Control and Licensing Act and the Regulation.

Examples of breaches of the terms and conditions of a licence that can cost an establishment a fine from $1,000 – $3,000 or a 1-3 day licence suspension (for a first offence) include:

  • “Bottle Service” – Bottle service (as seen on TV) is not permitted in British Columbia. Pitchers of beer and bottles of wine may be served to two or more customers but the service of whole bottles of distilled liquor is strictly prohibited.
  • Mandatory Display Materials – As a licensee you are required to display at least one social responsibility poster or tent card in a prominent location where you sell or serve liquor in your establishment.
  • Drinking Games – Contests and activities that involve the consumption of liquor (beer pong, flip cup, etc.) are strictly prohibited in licensed establishments.
  • Contests and Liquor as a Prize – Your bar or restaurant may host contests and games of skill however you cannot offer liquor as a prize and cannot give away tokens or vouchers redeemable for liquor. Importantly, patrons must be able to enter any contest without making a purchase or ordering a drink.
  • “Free Drinks” – While you may occasionally treat a customer to a free drink (such as on their birthday or a glass of champagne on New Year’s Eve) establishments cannot provide multiple free drinks to customers. You cannot provide free drinks as part of an ongoing business practice or offer complimentary drinks if a patron reserves a VIP table or otherwise makes a special reservation. Licensed establishments must adhere to minimum drink prices in British Columbia.

As more and more licensees use social media to promote their tasting rooms and events, and manufacturers get more comfortable selling their products online, it remains important for owners and managers to keep in mind that a contravention does not have to be linked to your physical establishment. That means your establishment’s web presence (including Twitter, Facebook and Instagam) is subject to inspection and accountable to British Columbia’s liquor law regime.

If your establishment is currently facing enforcement action, or is being investigated by the Branch for a contravention of the Act or terms and conditions, contact Dan Coles at Owen Bird.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

 

Persephone Brewing ordered to move from Agricultural Land Reserve

Craft beer darling, and Sunshine Coast favourite Persephone Brewing Company has been given two years to relocate its facilities off its current premises in British Columbia’s Agricultural Land Reserve (ALR). On December 19th, 2016 the Agricultural Land Commission (South Coast Panel) released the reasons of its decision not to permit Persephone to continue to operate at its 11 acre property located at 1053 Stewart Road in Gibsons, BC. The reasons can be found here.

Although branded as a “farm-based brewery” the Commission found that Persephone’s operations fail to meet the requirements of a “farm use” and was therefore operating in contravention of the Agriculture Land Commission Act and Regulation.

The decision of the Commission pits two consumer groups whose interests are traditionally aligned: craft beer enthusiasts and local produce supporters, against the other creating an unusual and somewhat uncomfortable dynamic.

Persephone Brewing’s operations include a tasting room, outdoor seating area, and a food truck. The property also functions as a farm: hops are grown on the property, as well as some produce. Importantly, and also the source of controversy, the property is located within the ALR.

The ALR was originally set up to preserve British Columbia’s limited agricultural land resource, and operates as a land-use zone in which agriculture is recognized as the primary use.  The ALR comprises just 5% of BC’s total land base and is the area with the greatest agricultural capacity. As a finite and valuable resource, the province has decided to protect this land from gradual erosion by non-farming uses.

Though farming and ranching activities on the ALR are encouraged, some non-agricultural uses are permitted if they are considered compatible with agriculture and have low impacts on the land base, examples include pet kennelling or breeding and equestrian facilities. Recently the operation of a brewery, distillery or meadery was designated as a farm use in the ALR provided “at least 50% of the farm product used to make the beer, spirits or mead produced each year is grown on the farm on which that brewery, distillery or meadery is located.” 

Unlike wineries and cideries, breweries cannot purchase product under contract from another grower to meet the 50% threshold. However, there is no requirement for a brewery to grow product on the parcel of land on which the brewery or distillery is located. To meet the 50% threshold a farm-based brewery can be comprised of several parcels of land owned or operated by the farm business where on one parcel the brewery operates and on another the grains are grown.

The 50% threshold is measured by the quantity of farm product processed calculated on an annual basis. According to the ALR policy, for beer the farm product will be grain and not hops due to the small quantities of hops involved in the beer making process. In the case of beer water is not considered a farm product, and the in case of distilled products neutral grain spirit (imported alcohol) is not a farm product. The 50% threshold will be based on the farm product used to make the alcohol (grains, corn, potatoes, sugar beets, etc.) and not the botanicals or other flavouring used in the final product due to their smaller proportions.

In its reasons the Commission confirmed Persephone has been operating on the property since 2013, which pre-dates the inclusion of breweries as a permitted farm use in the ALR. Prior to the Regulation amendment in 2015 the Commission had consistently told land owners and brewers that breweries were not permitted on the ALR.

Persephone submitted to the Commission that it currently grows hops on the property which are used in the brewing process, but conceded that all the barley used by the brewery is sourced from other locations not associated with the farm.  On that basis the Commission found that Persephone Brewing has historically been, and is currently, operating in contravention of the Agriculture Land Commission Act and Regulation and refused Persephone’s request to continue operating on the ALR. To provide Persephone with a reasonable amount of time to relocate its operations the Commission will defer enforcement of the decision for two years.

The Commission’s decision raises interesting questions: is the current 50% threshold too high? Should the Regulation be amended to permit farm-based breweries to contract for barley from elsewhere in BC? Are breweries a good gateway to get the public interested and engaged in farming? Or are breweries best kept off fertile lands reserved for agriculture?

Apparently Persephone has no intention of leaving the property and intends to seek an appeal of the decision. Alcohol & Advocacy will be monitoring the situation closely.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel

Overcrowded Bars and the Importance of Due Diligence

On October 20, 2016 the Liquor Control and Licensing Branch suspended the food primary liquor licence of Johnnie Fox’s Irish Snug for a period of ten days. The reasons for the Branch’s decision in Re 641486 B.C. Ltd. dba Johnnie Fox’s Irish Snug can be read here.

Johnnie Fox’s is a small Irish pub style restaurant on Granville Street in Vancouver. It has a licensed capacity of 59 persons, and regrettably has a history of overcrowding. The licensee’s compliance history with the Branch shows two contraventions for overcrowding: one on April 6, 2013, and one on March 17, 2015. The licensee received a $5000 monetary penalty for each of these as “first” contraventions.

In Re 641486 B.C. Ltd. dba Johnnie Fox’s Irish Snug Johnnie Fox’s was again facing enforcement action for an alleged contravention of Section 6(4) of the Liquor Control and Licensing Regulation for overcrowding beyond the licensed person capacity, and more than the occupant load.

The Facts

The evidence before the Branch was not complex, and was not contested by Johnnie Fox’s.

On March 12, 2016 two liquor inspectors attended Johnnie Fox’s to perform a routine inspection. The restaurant was very crowded – something visible from the front of the restaurant given its long and narrow shape. Both liquor inspectors had mechanical counters on their person, and after speaking with a staff member near the door, who advised that by his count the number of occupants was 57 (or maybe 59) the inspectors each performed their own count. The liquor inspectors counted 82 and 81 persons respectively – numbers well in excess of the 59 patrons permitted under Johnnie Fox’s licence.

After the liquor inspectors approached the bar manager about this issue a second round of counts were carried out, one by the bar manager and one by an inspector.  Those counts showed 66 and 70 persons present. The liquor inspectors testified before the Branch that because patrons frequently leave establishments during the course of an inspection (after paying a bill, or to step out for a smoke) such discrepancies are not unusual between counts.

Understanding Due Diligence

At the hearing Johnnie Fox’s accepted the person count recorded by the liquor inspectors on the notice of enforcement action, thereby confirming that a contravention of Section 6(4) of the Regulation occurred.

With the facts admitted, the Branch had to consider the defence of due diligence raised by Johnnie Fox’s. A licensee is entitled to such a defence if it can show that it was duly diligent in taking reasonable steps to prevent the contravention from occurring.

Johnnie Fox’s typically has a doorman assigned to stand at the door to maintain appropriate numbers in the restaurant between 6 pm and 2:00 am at the weekend. On the night in question the doorman left at 9:00 pm. The reason why he left was not entirely clear; there was some evidence that he left as a result of an “emergency”, but the balance of the evidence indicated that he was directed by a supervisor to work the door at a different bar that was short-staffed.

Johnnie Fox’s operations manager gave evidence that he had recently updated the employee contract, introduced some other policy documents, and that he provided training to the weekend doormen. One of the policies required that doormen record head counts in the restaurant logbook every hour. Though the Branch was largely impressed with the policies and training in place at Johnnie Fox’s the policy did not satisfactory address situations when the assigned doorman has to unexpectedly leave, which was the case on the night of the contravention. Importantly, the Branch found it problematic that the evidence surrounding why the doorman left part way through his shift was confused and inconsistent.

It is interesting to note that the licensee’s witnesses and its submissions made much of the fact that the Rugby Sevens tournament was going on at the time, and that this unexpected event contributed to the overcrowding in the restaurant.  On this issue the Branch found that as part of its responsibility to ensure compliance with the relevant liquor laws Johnnie Fox’s ought to have been aware of, and prepared for, the event.

Continue reading

Liquor Law Reform in Canada

In the 1920s, as Prohibition in Canada was on the retreat, the federal government and each of the provincial governments were in agreement that liquor sales and consumption needed to be tightly controlled. To facilitate this agenda each province created a liquor control board that monopolized the wholesale purchasing, pricing, and retailing of alcoholic beverages under a heavily regulated regime.

Though much has changed in the 90-odd years since Prohibition ended in most provinces (with the exception of Prince Edward Island which waited until 1948 to repeal its Prohibition laws) the fundamental principle that it is government’s role to control how and where Canadians purchase alcohol – and at what price, remains largely intact. Alberta, which privatized its liquor distribution system in 1993, remains the notable outlier in the Canadian regulatory landscape.

The arguments for and against the deregulation of liquor licensing regimes across the provinces are varied and complex. From time-to-time significant liquor law reforms are considered in all Canadian provinces. Different governments have responded to public demand for deregulation in a variety of ways. Ralph Klein’s conservative Alberta government privatized liquor retailing in Alberta without any serious legislative debate or discussion. More recently Saskatchewan’s premier Brad Wall campaigned on a promise to implement an expanded private retailing system that would open new stores and privatize existing locations. Ontario and British Columbia have taken a different approach altogether preferring incremental changes driven by the reports of government commissions.

Regardless of which approach provincial governments embrace, at each juncture along the road towards reform they are faced with controversial and competing policy concerns:

  • Can socially responsible retailing be balanced with consumer access and convenience?
  • How can the government keep liquor prices competitive without forgoing needed tax revenue?
  • Should government support the “craft” beer and “local” wine and spirits movement through preferential treatment of those products?
  • How far can laws and policies be relaxed before communities and minors get exposed to the harmful effects of alcohol?

Casual observers of the liquor industry, particularly in British Columbia, are often quick to point to Alberta as a shining example of the benefits of privatizing the retailing, warehousing and distribution of alcohol. At first blush it’s tempting to accept that government’s exit from the control of liquor sales and distribution will necessarily reduce the cost of beverage alcohol, and improve the consumer experience. This has not been Alberta’s experience; liquor prices increased in Alberta after privatization for most products, and prices continue to remain higher than in many publicly operated retailing environments.

Do these concepts interest you?

On November 3-4, 2016 in Halifax, the Schulich School of Law at Dalhousie University and Food Lawyers of Canada are bringing together government officials, academics, lawyers and manufacturers to explore the law’s changing role in regulating food and beverage alcohol. I will be presenting on the history of liquor law and regulation in Canada, and discussing a question important to readers of Alcohol & Advocacy: can meaningful liquor law reform happen in British Columbia through ongoing consultation? Or are legal challenges like those before the courts in Toronto Distillery Co. v. The Liquor Control Board of Ontario and R. v. Comeau necessary to force the regulator’s hand?

Tickets are still available.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Liquor Law Appeals Part 1 – Judicial Review

British Columbia’s liquor licensing regime is administered by the general manager – an individual appointed under the Public Service Act by the cabinet minister responsible for the Liquor Distribution Branch, which is currently part of the Ministry of Small Business portfolio. The general manager, and the staff he or she delegates powers and responsibilities to, have significant impact on the way liquor laws are developed and applied in British Columbia.

Every day the Liquor Control and Licensing Branch makes decisions that affect the way liquor is manufactured, sold and served throughout the province. Alcohol & Advocacy has previously discussed the administrative regime here.

Many of the day-to-day decisions the general manager makes are not controversial – like issuing a liquor licence to a new restaurant, or amending the terms of a liquor primary licence to increase the establishment’s hours of service. Other times, the general manager’s decisions will be controversial, like refusing to issue a liquor licence or suspending a licence for a significant period of time. These latter decisions have a significant and negative impact on the affected business, and owners are managers are often left wondering what to do next?

Most licensees in British Columbia will be surprised to learn that the Liquor Control and Licensing Act does not provide licensees with the right to appeal decisions of the general manager. Prior to 2002, there was a Liquor Appeal Board that heard appeals of the general manager’s decisions, but in the early part of 2002 the Act was amended, and the Liquor Appeal Board was eliminated.

Licensees may regain the ability to appeal decisions of the Branch when the new Liquor Control and Licensing Act comes into force. Recommendation #15 of the 2014 Yap Report recommends:

Applicants and licensees seeking a review of LCLB decisions should have access to a new and separate decision-making body outside the licensing branch. The Ministry of Justice should review current processes and determine how best to provide independent decision-making for those seeking appeal.

According to the Branch’s website this recommendation is in “progress” and at this time the Branch has not released any further information.

Under the current liquor law regime in British Columbia a licensee who believes it has been unfairly treated by the Liquor Control and Licensing Branch or the Liquor Distribution Branch must apply to the B.C. Supreme Court for a judicial review of the decision to obtain relief. That means hiring a lawyer familiar with not only British Columbia’s liquor laws, but also the practice of administrative law.

If your business has received a negative decision from the Branch, contact a lawyer who practices in the area of liquor law immediately to better understand your rights. Your failure to act promptly may result in an inability to later challenge the decision.

What is a Judicial Review?

Many business owners, and even lawyers who do not regularly practice administrative law, don’t fully appreciate what a judicial review is. A judicial review is not a rehearing of the adverse decision, nor is it an opportunity for a “do over” from the initial hearing or application where new evidence or arguments can be raised. Put another way, the judge hearing the judicial review is not concerned about whether he or she would have decided the issue differently. Instead the judge is limited to deciding whether the Branch had the authority to make the decision at issue,  and whether the tribunal exercised that authority properly.

If the judge hearing the case agrees with the licensee, and finds that there was a procedural or substantive error, the remedy provide by the court is normally limited to sending the matter back to the Branch for a re-hearing or reconsideration rather than the court itself making a final determination of the issue. This means that even if a licensee “wins” the judicial review, they may face the same outcome when the issue is presented to the general manager again – albeit with some instruction coming from the court.

The government of British Columbia delegated authority over the licensing and regulation of liquor in British Columbia to the Liquor Control and Licensing Branch, and in doing so authorized the Branch to interpret and enforce those liquor laws. A judge hearing an application for a judicial review of a decision of the Branch is required to recognize that the Branch is a specialized decision maker with expertise in interpreting and applying British Columbia’s liquor laws under the Act. Because of that expertise, and the government’s express delegation of authority, the courts will not lightly interfere with the Branch’s decision making.

For a judge to interfere with a decision of the Branch, a licensee must prove that the general manager acted without authority, acted unreasonably, or did not treat the licensee fairly. These are high thresholds to meet. A mere technical error by the general manager, or a decision that is harsh – but not unreasonable, will not be sufficient for a judge to set-aside the Branch’s decision and order a new hearing.

How to approach Judicial Review?

Administrative tribunals, like the one established under the Liquor Control and Licensing Act to hear and decide enforcement issues, are intended to be less formal than traditional court proceedings. This is a good thing: it allows hearings to be conducted more swiftly than trials, and makes the process more accessible for licenses who wish to represent themselves before the Branch. However just because the enforcement hearing process is less formal than the court process does not mean a licensee can afford to approach the hearing casually.

It is of paramount importance that a licensee put its best foot forward at an enforcement hearing. This means hiring knowledgeable counsel early in the process.

In Liquor Law Appeals Part 2 Alcohol & Advocacy will examine a recent decision of the Court of Appeal in The Cambie Malone’s Corporation v. British Columbia (Liquor Control and Licensing Branch), and consider how the Court of Appeal applied the concepts of judicial review to enforcement action taken by the Branch against pubs in Victoria and Nanaimo.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

How to Lose your Liquor Licence for 15 days

On May 20, 2016 the general manager of the Liquor Licensing and Control Branch issued its decision in Re Caprice Hospitality Inc. dba Caprice Nightclub ordering a 15 day suspension of the popular Vancouver nightclub’s liquor primary licence. The decision can be found here.

15 days is a significant period of suspension for a liquor licence, and no doubt the ramifications will be felt by the nightclub’s staff, suppliers and of course clientele. While the suspension was significant, the licensee was fortunate its licence was not cancelled – which was a penalty available to the general manager’s delegate. The series of events at the heart of this suspension occurred the previous summer on June 27, 2015.

The Caprice Nightclub’s liquor licence allows it to sell liquor between 9:00 a.m. and 3:00 a.m. from Monday to Sunday. All patrons in liquor primary establishments are required to leave the premises within 30 minutes of liquor service ending. Moreover, the establishment must close immediately after this time and the premises cannot be used for any other purpose (e.g. “after parties”) between closing time and 6:00 a.m.

At approximately 4:00 a.m. on June 27, 2015 three uniformed members of the Vancouver Police Department were patrolling the Granville Street Entertainment District. They heard loud music coming from the Caprice, and through an open window they observed a number of people inside. They also saw a Caprice staff member open the door and let people in. Some of those individuals were wearing backpacks.  As more people started approaching the door the staff member noticed the VPD officers coming his way, prompting him to duck inside the club and slam the door shut on the people attempting to gain entry. The VPD officers spoke to the people trying to gain entry and were advised they were attempting to get into an “after-party.”

Police banged on the door to the Caprice with no answer. However the officers noticed that the music inside was then turned down, and eventually turned off completely. One officer, looking through a window, saw a group of people leaving through the back door of the club.

Eventually, after significant banging on the door by the police, a male opened the door to the nightclub and identified himself as the owner/manager. He blocked the entrance to the club and refused the VPD’s demand for entry to complete a licensed premises inspection. He also initially refused to provide the VPD with identification confirming who he was, and that he was in fact the owner or manager of the club. Rather than escalate the situation the VPD determined that they would report the incident to the Liquor Enforcement Branch for follow-up and they left the Caprice’s premises at approximately 4:25 a.m.

Two weeks’ later a liquor inspector, branch regional manager and a detective with the VPD met with a representative of the Caprice Nightclub. The nightclub’s representative provided the liquor inspector with video footage from inside the nightclub at the time of the alleged contravention. The footage confirmed that there were people inside the nightclub after 3:30 a.m. Management of the Caprice also confirmed that the staff member facilitating after-hours entry into the club was neither an owner nor a manager of the Caprice.

At issue before the tribunal was whether or not the police officers had reasonable and probable grounds, as required under the relevant section of the Liquor Control and Licensing Act, to request entry into the nightclub.

Counsel for the Caprice argued before the Branch that s.67 of the Liquor Control and Licensing Act, which allows a peace officer to enter and search a premises, required reasonable and probable grounds of illicit liquor – meaning liquor that not purchased in accordance with the Liquor Distribution Branch process (e.g. liquor purchased out of province, or at a duty free outlet) – as opposed to liquor being unlawfully possessed by reason of being outside the licensed hours of service. The Caprice submitted that the VPD did not have reasonable grounds to believe that illicit liquor was on the premises, and therefore had no authority to demand entry into the nightclub.

The Branch’s delegate confirmed that s.67(3) of the Act applies in situations where liquor is being unlawfully possessed, regardless of whether it is illicit. However, after hearing all of the evidence the general manager’s delegate found that the VPD did have a reasonable belief that there was illicit liquor being transported into the nightclub in backpacks, as well as a reasonable belief that liquor was being consumed outside of the terms of the Caprice’s licence.

Refusing entry of police officers to a licensed establishment is an extremely serious contravention. The seriousness is demonstrated by section 69 of the Regulation which requires the general manager of the branch to cancel a liquor licence unless he is satisfied that it is in the public interest to refrain from doing so. In light of the licensee’s exemplary record with the Branch and history as a responsible member of the industry, the minimum penalty of a 15 day licence suspension was ordered.*

If your establishment’s liquor licence is at stake and you require representation before the Liquor Control and Licensing Branch, the courts, or simply a better understanding of British Columbia’s liquor laws contact Dan Coles at Owen Bird.

*The May 20, 2016 Decision of the General Manager Liquor Control and Licensing Branch ordered the 15 day suspension to commence at the close of business on Friday June 24, 2016 and continue each succeeding business day until the suspension is completed. The Liquor Control and Licensing Branch has confirmed with Alcohol & Advocacy that the licensee has filed a judicial review of the decision, and that the suspension has been stayed pending the resolution of the judicial review.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

Gangsters and Strippers and Liquor Law: The Story of Famous Flesh Gordon’s

Alcohol & Advocacy has previously considered what it means to be a fit and proper person for the purpose of holding a liquor licence in British Columbia: the criteria are broad and the discretion is great. Many of the criteria relate to an assessment of what the licence applicant has actually done, such as having a criminal record or committing violations of the Liquor Control and Licensing Act. But what about the less objective criteria – such as being “of good reputation and character” or being “associated” with people involved in criminal activities? How do regulators interpret those requirements?

After a lengthy court process, including a failed attempt at leave to the Supreme Court of Canada, on November 26, 2014 the Ontario Court of Justice released its reasons in Famous Flesh Gordon’s v. Alcohol and Gaming Commission. The Flesh Gordon’s decision, albeit under Ontario’s Liquor Licence Act, addressed the question of whether a liquor licensee who has no criminal record, can have their licence revoked on the basis of bad character.

Famous Flesh Gordon’s was a strip club in London, Ontario. The licensee, Robert Barletta, was a long-time member, and former local president, of the Hells Angels. After a separate court ruling found the Hells Angels to be a criminal organization (a defined term in the Criminal Code) , Ontario’s Registrar of the Alcohol and Gaming Commission applied to revoke Mr. Barletta’s liquor licence on the basis of his affiliation with the Hells Angels.

Initially the Board of the Alcohol and Gaming Commission refused the Registrar’s revocation request. The Registrar appealed that decision, and lost, and it was forced to appeal again to Ontario’s highest appellate court to get an order that that Board re-hear the revocation application. On the Registrar’s second attempt at revocation it was successful, only to have Mr. Barletta appeal that decision. Clearly this was a hotly contested and legally complex dispute.

So why all the appeals? What makes the Flesh Gordon’s case interesting is that Mr. Barletta did not have a criminal record or history of liquor licence infractions – not a single one. Moreover no evidence of any illegal activity at Famous Flesh Gordon’s was presented by the Registrar at either hearing held during the revocation process.

Though the Registrar could not point to any actual evidence of criminal wrongdoing, or failure by Mr. Barletta to carry on his business with “integrity and honesty”, as is required by the Liquor Licence Act, the uncontested evidence was that Mr. Barletta had been a “full patch” member of the Hells Angels since 2002. The Registrar’s evidence was that the Hells Angels are a criminal organization dedicated to the facilitation or commission of serious criminal offences, and that as a full patch member Mr. Barletta was required to be devoted to those causes and maintain a network of criminal contacts.

In Famous Flesh Gordon’s the Superior Court of Justice, Divisional Court dismissed Mr. Barletta’s appeal, and confirmed the revocation of his licence. The Court found that the relevant section of the Liquor Licence Act required more than simply owning an establishment where no criminal activity takes place: it requires that the licensee be someone who can reasonably be expected to carry on the business in accordance with the law, integrity and honesty. As a member of the Hells Angels, Mr. Barletta did not meet this description. Mr. Barletta’s submissions that “conditions” such as installing video cameras in the premises, and a prohibition against “gang colours” would mitigate the Board’s concerns, but the Court was not swayed.

Ontario’s director of legal services for the Alcohol and Gaming Commission has called the Flesh Gordon’s decision precedent setting for other provincial regulators. Licensees in British Columbia should take notice of the Flesh Gordon’s decision as it confirms that regulators are entitled to take a broad view of what it means to be a fit and proper person, and are not restricted to actual evidence of infractions or illegality to revoke a liquor licence.

If you have questions or concerns about the status of your liquor licence contact Dan Coles at Owen Bird.

*Alcohol & Advocacy publishes articles for information purposes only. They are not a substitute for legal advice, and persons requiring such advice should consult legal counsel.

1 2 3 4