Appeal from decision of Licence Appeal Tribunal to revoke liquor licence of strip club operated by Hells Angels member

Administrative law – Decisions of administrative tribunals – Alcohol and Gaming Commission – Permits and licences – Revocation – Judicial review – Evidence – Standard of proof – Compliance with legislation – Standard of review – Reasonableness simpliciter – Failure to provide reasons

751809 Ontario Inc. (c.o.b. Famous Flesh Gordon’s) v. Ontario (Registrar, Alcohol and Gaming Commission), [2014] O.J. No. 5628, 2014 ONSC 6707, Ontario Superior Court of Justice, November 26, 2014, H.E. Sachs, I.V.B. Nordheimer and R.M. Pomerance JJ.

Robert Barletta, the appellant, was the owner and licensee of Famous Flesh Gordon’s, a London, Ontario, strip club.

After the Hells Angels were found to be a criminal organization in legal proceedings, the Registrar of the Alcohol and Gaming Commission (the “Registrar”) applied to revoke Mr. Barletta’s liquor licence on the basis of his affiliation with the Hells Angels. Mr. Barletta was first issued a liquor licence in 2001. He had no criminal record or history of any liquor licence infractions. There was no evidence of any illegal activity at Famous Flesh Gordon’s.

The Registrar applied to the Board of the Alcohol and Gaming Commission (the “Board”) on the basis of section 6(2)(d) of the Liquor Licence Act, R.S.O. 1990, c. L.19, which entitles a person to be issued a licence to sell liquor except if “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.” The Board dismissed the application for revocation. In reaching its decision, the Board made two determinations of law. First, it held the Registrar had to prove a violation of section 6(2)(d) on a balance of probabilities. Second, it restricted its consideration of Mr. Barletta’s conduct to Ontario liquor laws.

The Registrar appealed the Board’s decision to the Divisional Court, which dismissed the appeal, and to the Court of Appeal, which overturned the Divisional Court’s decision. The Court of Appeal found the Board erred by applying the wrong standard of proof. The Court of Appeal held “reasonable grounds for belief,” a lesser onus than balance of probabilities, applies. Further, the Court of Appeal found the Board construed the test for applying section 6(2)(d) too narrowly because there was nothing in the language of the legislation to restrict the consideration to the licensee’s conduct under Ontario liquor laws. The Court of Appeal allowed the appeal and remitted the matter for a re-hearing in accordance with its reasons. An application for leave to the Supreme Court of Canada was dismissed.

At the second hearing, the Licence Appeal Tribunal applied the principles mandated by the Court of Appeal and found that Mr. Barletta’s past conduct as a member of a criminal organization provided reasonable grounds for belief that revocation of his liquor licence was appropriate. The Tribunal also dismissed Mr. Barletta’s offer to accept conditions on his licence as an alternative to revocation because it did not believe that any conditions would overcome the concerns raised regarding his membership and role in a criminal organization.

Mr. Barletta appealed to the Divisional Court. The sole issue on appeal was whether the Tribunal erred in law by failing to articulate adequate reasons for rejecting an order imposing conditions as an alternative to revocation.

The Divisional Court dismissed the appeal. It held that read as a whole, in the context of the outcome in the record, the Tribunal’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. On that basis, the Tribunal provided sufficient reasons that adequately addressed the question of conditions as an alternative to revocation.

This case was digested by Joel A. Morris of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact him directly at jmorris@harpergrey.com or review his biography at http://www.harpergrey.com.

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