CSI BC: Illicit Liquor Edition

We have all had the experience: that niggling suspicion that the bar or nightclub we’re in is watering down its booze – or maybe that the liquor coming out of the bottle isn’t of the same quality as the label would suggest. Personally I’ve only ever felt that way in questionable nightclubs, but as the decision of the General Manager of the Liquor Control and Licensing Branch in re 395047 B.C. Ltd. dba Boston Pizza makes clear, even family-friendly chain restaurants can fall into the trap of cutting corners with their liquor supply.

The facts in re Boston Pizza relate to a Boston Pizza franchise in Cranbrook, B.C. with a food primary liquor licence. 395047 B.C. Ltd. operated the Boston Pizza pursuant to a franchise agreement with Boston Pizza International Inc.

In January, 2006 a liquor inspector attended the restaurant and seized a quantity of liquor from the display shelves behind the bar as well as the liquor storage area. The seized liquor was subsequently sent to a government laboratory in Ottawa for analysis, and the restaurant’s liquor purchasing records were examined. The Branch alleged that the licensee was in contravention of s. 38 of the Liquor Control and Licensing Act by keeping for sale or selling liquor not purchased from the Liquor Distribution Branch as well as contravening s. 38.1 of the Act by diluting or adulterating liquor.

It was a term of Boston Pizza’s licence that all of its liquor purchases be made at the government liquor store in Cranbrook.  Government liquor stores keep a record of all purchases made by licensees.  The licensee was also required to keep at its premises an up-to-date register of all liquor purchased. When the liquor inspector attended the restaurant to do an illicit liquor check the manager of the local government liquor store attended as well.

The liquor inspector took possession of several bottles of liquor displayed behind the bar and kept in the liquor storage area. The seized liquor included a variety of rums, whiskies and wines.  The seized liquor were brands that were either not available in British Columbia, not available at the government liquor store in Cranbrook, or were available in Cranbrook but the manager of the government store had no record of the licensee purchasing them.  None of the liquor seized was identified in the licensee’s liquor register.

The lab results confirmed that certain of the rums and whiskies submitted for analysis were not consistent with the brands identified on the respective label.  This suggested to the liquor inspector that the licensee was either marrying different brands of whisky and rum together or was filling “premium” whisky and rum bottles with less expensive brands of liquor.

The licensee/franchisee provided the Branch with a series of excuses or justifications for the illicit liquor being on his shelves and in his store room, including:

  1. Certain of the seized liquor had been purchased in Alberta for personal use and was not actually for sale at the establishment;
  2. One of the varieties of rum seized had been confiscated from youth in a nearby parking lot and it too was not for sale; and
  3. With respect to certain of the seized wines, the licensee submitted that the liquor store shipped this variety of wine to the restaurant by accident.

Needless to say these submissions by the licensee were not well received by the Branch. In his reasons the enforcement hearing adjudicator found the evidence “overwhelming” that the licensee had in its liquor display and storage area liquor that was not purchased at the Cranbrook government liquor store, in violation of the terms and conditions of the restaurant’s licence.  Additionally the evidence supported a finding that the illicit liquor held on site was sold or being kept for sale by the licensee in contravention of the Act.

Based on the lab results, the Branch found it to be an “inescapable conclusion” that certain varieties of rum and whisky being sold at the restaurant had been adulterated or tampered with.  While there was no direct evidence on how that situation came to be, the licensee had an obligation to maintain control of the liquor in its possession to such a degree as to eliminate any possibility of the product being adulterated.

In arriving at a penalty, the Branch found that a suspension of the restaurant’s food primary license was necessary.  What should be of particular interest to owners and managers of franchised bars and restaurants is that in arriving at its decision to suspend the restaurant’s licence the Branch took into account that the “licensee operated a well-known franchise” with “many locations” throughout British Columbia and Canada.

Moreover the Branch took into the consideration the public’s reliance on established and well known operators to provide a high degree of security and consistency.  In selling illicit and adulterated liquor, the licensee “endangered the public and abused its confidence”.  Accordingly a hefty 14 day licence suspension was ordered.

I contacted Boston Pizza before publishing this post, and its legal department confirmed that the licensee’s actions as described in re Boston Pizza constituted a breach of the licensee’s franchise agreement. Boston Pizza also confirmed that the licensee 395047 B.C. Ltd. no longer operates the Boston Pizza restaurant in Cranbrook.

If your business is being investigated for contraventions of the Liquor Control and Licensing Act, or you have concerns about the impact of a breach of the Act on your franchisee agreement, consult with legal counsel at your earliest opportunity.

*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.

Dan Coles
Retired bartender. Young lawyer. From the East, living in the West. Interested in British Columbia's producers and purveyors of wine, beer and spirits.