Thursday, July 18, 2013

Court Rules That Bikers Can Operate Strip Joints

The Ontario Court of Appeal recently considered whether being a member of a motorcycle club that is recognized as a criminal organization, is sufficient to disentitle a person from holding a liquor licence in Ontario.
Robert Barletta is a "full patch" member of the Hells Angels.  He is a founding member of the London, Ontario chapter of the Hells Angels and was its President for at least 5 years.  Mr. Barletta has no record of criminal convictions or infractions of the Liquor Licence Act ("Act").   Since 2001 he has owned and operated a well known strip joint in London called Famous Flesh Gordon's and has done so since 2001. 
In 2010, the Registrar of the Alcohol and Gaming Commission of Ontario ("Commission") applied to the Board of the Commission to revoke Mr. Barletta's liquor licence for Flesh Gordon's.  The sole issue before the Board was whether Mr. Barletta's membership in the Hells Angels was in itself sufficient to strip him of the privilege of holding a liquor licence. The Hells Angels meet the definition of a "criminal organization" under the Criminal Code.
The Board concluded that membership in the biker gang was not enough to revoke Mr. Barletta's liquor licence. The Divisional Court dismissed the Registrar's appeal from the Board's decision.  The Registrar appealed to the Court of Appeal. 
The Court of Appeal allowed the Registrar's appeal and referred the application back to the Board to be dealt with in accordance with its reasons.
There were 3 issues before the Court of Appeal.
First Issue - Did the Board Apply the Proper Standard of Proof?
The standard of proof provided by the Act is that of "reasonable grounds for belief":
The Act provided that an applicant is entitled to be issued a liquor licence unless his past or present conduct affords reasonable grounds for belief that he will not carry on business in accordance with the law and with honesty and integrity.
"Reasonable grounds for belief" is a lower standard of proof than "balance of probabilities".  The Supreme Court of Canada has held the reasonable grounds to believe" standard requires something more than mere suspicion, but less than the standard applicable in civil matters of proof on the balance of probabilities.  In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information.  
The Court of Appeal held that there was no doubt that the Board had applied a higher standard of proof than the Act called for.  Requiring proof on the balance of probabilities, rather than on reasonable grounds to believe, was an error of law.   Moreover, it was an error on a question of law of general importance to the legal system, one which is outside the area of expertise of the Board as an administrative decision maker.  Accordingly, the Board's choice of standard proof cannot attract any deference by the Court of Appeal.
Second Issue - Did the Board Apply the Test Called for by the Act?
The Act provides that an applicant is entitled to be issued a liquor license except if "the past or present conduct of the person affords reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty." 
The Court of Appeal found that the Board had misconstrued this test by limiting its examination of Mr. Barletta's conduct to his conduct in operating Flesh Gordon's.  The Court of Appeal held that there was no such limiting language in the Act.  The words of the Act are not limited to conduct in operating a strip joint or in any other way.  In addition, there was no requirement that Mr. Barletta must have engaged in past criminal activity.  The Court of Appeal held that past conduct that was not criminal could also provide necessary grounds for belief.  Finally, the Court of Appeal held that the Board can look beyond Mr. Barletta's past or present observation of the regulatory laws for his strip joint.  The requirement that he carry on business in the future in accordance with law and with integrity and honesty is not limited to complying with the regulatory laws applicable to licenced establishments.  
Third Issue - Was Revocation the Only Reasonable Conclusion that the Board Could Have Reached?
The Court of Appeal held that revocation of the licence for Flesh Gordon's was not the only possible result of the application.  There was no doubt that the evidence about the Hells Angels as a criminal organization however, it was a fact that while he was a member, Mr. Barletta had apparently acted lawfully, with honesty and integrity and operated the strip joint properly for almost 10 years.  Accordingly, the court held that the proper remedy in the appeal was to remit the Registrar's application to revoke Mr. Barletta's license back to the Board for reconsideration in accordance with the court's reasons.  

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