The Cost of Doing Business
Though Mr. Yap’s Final Report has been widely praised for its progressive recommendations related to the production and sale of alcohol in British Columbia, there are nevertheless recommendations contained in the Report that should be of concern to licensees.
Recommendation #11 reads:
Government should review enforcement penalties of LCLB and other jurisdictions to ensure that B.C.’s penalty levels are appropriate.
Due to the varying size and focus of licensed establishments, consideration should be given to how different types of penalties, e.g. a suspension vs. a monetary penalty, may impact a licensee and staff.
In August 2014 the government invited licensees, industry associations, police and other stakeholders to provide their input on potential changes to the Penalty Schedule.
To put Recommendations #11 and #12 into context it is worth considering the history of the current Penalty Schedule, contained in Schedule 4 of the Liquor Control and Licensing Regulation. The Schedule came into effect in 2001 along with the introduction of a new compliance and enforcement program. Prior to being legislated the penalties imposed on licensees for violations of the Act was left to the discretion of the General Manager of the Liquor Control and Licensing Branch. Though some revisions were made to the Schedule in 2006 it remains largely unchanged.
The principles underlying the Penalty Schedule are numerous, but include:
- Promoting voluntary compliance with the Act;
- Deter repeat contraventions by ensuring fines and suspensions are not treated as merely “the cost of doing business”;
- Penalties should reflect the gravity of the contravention; and
- The consequences of the penalties should be relatively equivalent across licence classes.
The use and range of administrative penalties levied by regulators against licensees varies widely from province to province. In Alberta for example fines imposed on licensees for selling to minors, offering “free liquor” specials, or serving after hours are typically between $250 and $750 – despite the relevant legislation permitting stiffer fines. In British Columbia the penalty for serving a minor is at a minimum $7500 and/or a 10-15 day licence suspension. Ontario imposes the toughest penalties on licensees, with 21 day licence suspensions commonly enforced for serving minors, and fines of up to $20,000.
Having received input from stakeholders until September 30, 2014, the government is now considering revising the Penalty Schedule. One of the government’s concerns is that the penalties as they currently stand are no longer severe enough to promote voluntary compliance with the Act and may be treated by some licensees as merely “the cost of doing business.”
Another issue the government plans to address in a revised Penalty Schedule is the perceived differential impact that different types of penalties (fines and licence suspensions) have on the varying classes of liquor licence and the staff of those establishments or operations.
While the purpose of the Penalty Schedule was to achieve uniform treatment of licensees who contravened the Act, in practice the fines and suspensions handed out by the Branch likely impact some businesses more severely than others. For example are monetary fines too readily absorbed by large establishments to be effective? Or are licence suspensions imposed on food primary licensees ineffective because the restaurant can remain open and continue serving food during the course of its suspension?
If in practice the outcomes of the current Penalty Schedule create unfairness between licence types and establishments of different sizes, the effectiveness of the administrative regime is undermined. However the government chooses to respond, licensees should expect changes to the Penalty Schedule in the New Year. Alcohol & Advocacy does not expect that the changes will result in a relaxation of the penalties imposed on licensees who contravene the Act or the terms of their licence.
*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.