Court of Appeal Rules Maximum Penalty for Breach of Liquor Licence Reasonable

Posted on: January 5, 2014

The B.C. Court of Appeal released its decision on New Year’s Eve regarding the 3 day liquor licence suspension imposed on Kelowna’s Liquid Zoo night club for breach of the terms of its liquor licence. All three Judges who heard the appeal agreed that the suspension was reasonable and that the penalty fell within the range of possible and acceptable penalties.

The range of suspension for a first contravention of the type imposed upon the Liquid Zoo is 1 – 3 days (Schedule 4, Liquor Control and Licensing Regulation). However, under the Act, a longer suspension may be imposed if it is in the public interest.

Liquid Zoo’s liquor licence contained some additional provisions that were added because of the club’s previous history which included gang activity and business dealings with gang members. These provisions include a requirement that no customers/employees enter the club if they have any gang affiliated items and, if such items are later revealed after entry, that person be immediately removed from the club.

Liquid Zoo’s contravention and subsequent suspension arose from the presence of a customer in the club who was wearing a cap which stated “Kingpin Crew MC” which is a motorcycle gang with ties to the Hells Angels.

In reaching its decision, the Court of Appeal confirmed that the decision of the hearing adjudicator who imposed the suspension was reasonable and should be given deference unless the adjudicator’s reasoning was seriously flawed. In this case, the adjudicator found Liquid Zoo’s contravention to be serious and at the heart of the LCLB’s concern regarding gang affiliation with the club. As the findings of adjudicator were not seriously flawed and the suspension imposed was within the range of acceptable penalties, the Court of Appeal ruled that the suspension was reasonable and properly imposed.

In a judicial review of a contravention such as this, the findings of the adjudicator regarding the seriousness of the contravention, threat to public safety and well-being of the community will be given deference. If a liquor licence holder is issued a suspension due to a contravention, a judicial review of the adjudicator’s decision is not a second “kick at the can” such that the Judge who hears the review can simply substitute what they believe is fair in place of the decision of the arbitrator. The question for the judge is not “how should I impose what I believe the appropriate penalty to be”, but whether the penalty imposed by the adjudicator falls within the range of possible and acceptable outcomes based upon the facts and applicable law.

-Denese Espeut-Post (January 5, 2013)

Holman Farms Foreclosure

Posted on: March 15, 2013

Imagine going from owning 22 properties throughout the South Okanagan, 7 wineries and a distillery to receivership, liquidation and a financial loss of all your equity and then some.  That is the unfortunate fate of the Holmans, the former owners of the Holman Farms, Lang Vineyards and other associated wineries.  According to a March 14, 2013 article in the Penticton Herald, Battle continues over controversial foreclosure, a bank foreclosure resulted in a significant financial loss given the appraised value of various business assets that were sold to pay outstanding debt.  They lost their businesses, they lost their financial growth, they lost their home.

This, of course, is a sad state of affairs that business owners do not anticipate when they nourish and grow their entrepreneurial dreams and start their business.  However, the reality is that many businesses fail for various reasons.  Those who own a business can learn from those who have failed despite considerable effort and planning. Keith Holman is quoted as stating “You’d better realize if you start getting the bank on you, you’d better get to [the] lawyers and be very careful about what you sign.”  I would take this one step further and say that you should not wait until the bank is on you.  Develop a relationship with a lawyer you trust who can act as your advisor throughout the life of your business.  It may cost you some time and some of your start up funds, but these will far outweigh the potential costs you will experience if you become involved in a contractual dispute or court battle.


The Economic Impact of the Canadian Wine Industry

Posted on: March 13, 2013

I spent some time on the BCWineChat website considering tonight’s topic regarding the Economic Impact of the Canadian Wine Industry.  I understand the catalyst for this topic was the recently published Economic Impact Study on the Canadian wine industry completed by Frank, Rimerman and Co. LLP, a US-based certified public accounting firm which provides various services including wine industry research and consulting.  As a non-accountant with minimal knowledge of the methodology of the economic analysis of an industry, to me, the study confirms what I believe most people feel is the case, the wine industry undoubtedly has a serious impact on our provincial and national economy.  With a full national economic impact of $6.8 billion in terms of revenue, taxes and wages, of which $3.69 billion can be attributed to 100% Canadian wine, I think everyone in the industry should take a much deserved bow/curtsey and be congratulated on a job very well done.  The Canadian wine industry and more specifically, the BC wine industry, has come a long way since the time of Prohibition when alcoholic beverages were banned altogether. The industry has developed into an important economically significant commercial enterprise.  The industry adds value to our collective wealth and resources, promotes tourism, creates jobs and generates revenues.

Often economic impact studies are completed at the time legislative changes are proposed or requested at the behest of a person lobbying for change.  This study was commissioned by the Canadian Vintners Association, Winery and Grower Alliance of Ontario, BC Wine Institute and Winery Association of Nova Scotia.  Given the study results, it would be nice to see the promotion and growth of the industry further supported by federal government legislative changes which enforce the principles of economic unity among the provinces and territories as it relates to intoxicating beverages and support of interprovincial commerce and the shipment of wine between provinces beyond the personal consumption exemption. Additional support from the provinces would also be a welcome outcome, as various provincial governments enact legislative changes which modernize our liquor laws and fully recognize how the industry has and continues to change and develop from the days of Prohibition.  Much like the “living tree doctrine” I learned in a law school class some time ago, like our Constitution, the wine industry should be treated as organic and must be handled in a broad and progressive manner, adapting to the changing times.

I for one am pleased to see quantifiable and tangible economic impact for our wine industry and hope the corresponding outcomes are reflective of the results. To join the discussion and to share your thoughts on the study, head to Twitter tonight, Wednesday March 13th, from 8-9pm and search #BCWineChat.

Is it breaking the law to help a good cause?

Posted on: October 28, 2012

There is nothing like the controversy and confusion surrounding the forced cancellation of the Belfry Theatre’s annual Crush fundraising event to really hammer home how difficult to understand B.C.’s liquor licensing and distribution laws really are.  I believe that there are several people out there who have handled or distributed liquor (whether in their personal or professional capacity) and honestly thought they were doing everything right, only to find out the government disagreed.  As a result, stores may close, restaurants may go out of business or charities may lose fundraising opportunities essential for supporting their operations and charitable goals.
At the root of the unfortunate circumstances affecting Belfry Theatre and other situations with similar outcomes is the question, “what do the liquor laws really say?”  Another very good question which applies in many cases is “why was I allowed to do it before?”  In June 2012, amendments were made to LCLB policy regarding special occasion liquor licences (SOL).  Specifically, the policy permits the holder of a SOL to auction liquor at a licensed special occasion to raise money for a charity, but requires that liquor be purchased by the SOL holder or donated by a manufacturer or agent (special rules apply here). So, as in the case of Belfry Theatre, donations of liquor by private individuals falls outside of the four corners of this policy.  Without getting into the fact that policy does not equate to law, the BC government issued a press release on October 26th (titled Liquor law clarified to help non-profit organizations) stating a “common sense” approach would be taken regarding its interpretation of its own policy and permit non-profit organizations to auction gift baskets or similar items with commercially produced liquor as one component of the basket.  However, a similar “common sense” approach will not be applied for those non-profit organizations wanting to leave the gift baskets behind and auction wine alone.  Legally speaking, what is it about a “gift basket” that all of the sudden makes it okay for charitable organizations to auction liquor?  The statement makes it very obvious how easily policy can be changed…I am pretty sure that the liquor laws that govern all of us (government and individuals alike) do not mention “gift basket” or define exactly what will make up an acceptable gift basket for auctions.  Clear as mud?