Club owner who broke rules 14 times loses licence appeal

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This article was published 05/04/2024 (596 days ago), so information in it may no longer be current.

A Winnipeg nightclub owner is likely prohibited from opening another liquor licensed business in Manitoba, after racking up an unprecedented 14 strikes against provincial rules in a five-year span.

Obsidian Ultra Lounge owner Qizheng (Leon) Yang appealed the Liquor, Gaming and Cannabis Authority of Manitoba’s decision to cancel his licence, after the bar was either overcapacity or staff overserved alcohol to customers during drop-in inspections.

The appeal was unanimously denied by a panel of three LGCA board members in a written decision released Thursday.

“To overturn (LGCA) executive director (Kristianne) Dechant’s compliance order, in the panel’s view, risks sending a message to licensees across the province of Manitoba that a breach of the act to justify tight financial times is an acceptable practice, which in turn diminishes the authority and respect of the LGCA as a whole,” panel chair Sofia Mirza wrote. “This is a precedent that the panel is not willing to set.”

Yang, 26, didn’t want to discuss what the future holds for him and his Pembina Highway bar.

“I understand and respect the decision,” he told the Free Press, before declining further comment.

Obsidian is the second Manitoba nightclub to have its licence cancelled since the province’s current regulator formed in 2014.

A March 6 appeal hearing was told the basement bar has had 14 strikes, when all compliance orders and breaches are tallied, since opening in 2019.

Six compliance orders were issued to Obsidian in 2023 alone.

Penalties escalated, ranging from training for Yang and his staff to fines or weeks-long suspensions, but violations continued.

Panel members were told the licence cancellation would put Yang out of business, and he would not be permitted to open another licensed establishment.

“It’s difficult to speak in absolutes, but I would say that this individual would be highly unlikely to receive a licence in the future,” LGCA spokeswoman Alison Mitchell wrote in an email Thursday.

“We recognize that regulatory frameworks change and individuals are capable of rehabilitation, but the onus would be on the individual to show that he could be governable.

“Given the extreme pattern of non-compliance, however, it’s difficult to imagine a situation where he would be granted a licence.”

Obsidian has been closed since the latest breach occurred Feb. 4, when inspectors counted up to 245 customers, the hearing was told.

A couple of hours earlier, inspectors warned Yang the bar was nearing its authorized capacity of 150, while up to 100 people were waiting in line outside.

After the breach, Yang told inspectors an event promoter, who was pocketing a $10-per-person cover charge, instructed him to let in as many customers as possible.

The promoter promised to pay any fine levied by the LGCA, according to Yang.

“To assume that a monetary expense may suffice to replace life safety considerations, speaks to the appellant’s ungovernability and is a position that the panel cannot find acceptable,” Mirza wrote.

While thousands of licensees respect the rules and regulations, Obsidian’s owner treated fines as a cost of doing business, showing a “complete disregard” for public safety, Mitchell wrote.

At the hearing, Yang disputed the penalty, but not the facts presented by the LGCA.

It was the first time the LGCA cancelled a licence due to “ungovernability,” Dechant told the panel, while noting the unprecedented number of chances afforded to Obsidian.

“We cannot tolerate… blatant disregard for liquor laws in our province,” she said. “This licensee is not suitable to hold a liquor service licence within Manitoba’s regulatory framework.”

At a November meeting with LGCA officials, Yang cited financial reasons, when asked why violations kept happening. He was warned he could lose his licence.

Yang told the hearing he owed thousands to contractors and for rent and taxes. Renovations that were carried out in a bid to increase the bar’s capacity and avoid further breaches went over budget, he said.

Yang acknowledged the club would take in more money from liquor and food sales if it was overcapacity.

A new city permit, which increased Obsidian’s capacity to 250, was issued a few days after the club was forced to close in February.

Yang was apologetic while appealing for leniency at the hearing. He told the panel he “lost everything,” and his 55 employees lost their jobs, when the age-restricted liquor licence was cancelled.

The panel rejected his plea for the penalty to be reduced to an eight-week suspension and strict operating conditions. He promised to bring in two new co-directors to help him comply with regulations.

If a business changes hands after being penalized, new owners and licence applicants are assessed on their own merit, said Mitchell.

Thorough background checks take place when an applicant seeks a licence, she added.

chris.kitching@freepress.mb.ca

Obsidian Ultra Lounge decision