Amici Curiae: OCA Says “Hell’s Yes, Maybe” and a Canadian Mining Industry Update

Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s), 2013 ONCA 157

On March 18, the Ontario Court of Appeal delivered a judgment that Hells Angels members might not be barred from obtaining liquor licenses. The Court ordered the Alcohol and Gaming Commission of Ontario to reconsider its decision to revoke a license originally given to Raymond Barletta, because it applied a more stringent test than necessary. Although the Hells Angels MC organization is considered a criminal organization in Canada “as defined in s. 467.1 of the Criminal Code, [] being a member is not a crime.” Barletta has operated the Famous Flesh Gordon’s strip club in London, Ontario with a liquor license since 2001.

The principal issue was whether Barletta’s membership in the Hells Angels (and president until 2008), sufficient, in itself, to revoke his liquor licence. The Court found that, while a member, Barletta “had apparently acted lawfully, with honesty and integrity, and had operated his licensed establishment properly for almost ten years.” The matter will be reheard by the Licence Appeal Tribunal.

Mining Industry Update

The mining sector is currently in a lull, as junior mining companies scramble to secure financing. Jim Kofman, vice chairman of Cormack Securities Inc., points out that financing is still available, but “it’s incredibly selective.” Typically, smaller companies are acquired by large companies, making for an active M&A market. But when the largest of companies are no longer in purchasing mode, the effects trickle down to all segments of the market, reducing the number of mergers & acquisitions and drying up investment dollars. Last year, there were 76 announced deals, with a value of $4.9 billion, compared to 101 deals in 2011, with a value of $26.8 billion.

On the other hand, this period of slowdown might very well be a cooling down period before the next big rush, as Kevin Thomson of Davies Ward Phillips & Vineberg LLP suggests. He recently told the National Post, “There are a lot of tire kicking discussions. This has been going on in the Canadian marketplace for the last 15, 16 or 17 months.

In the meantime, junior mining company boards will continue to struggle, as they have been facing a torrent of proxy battles (in which competing shareholders struggle to gain control and oust existing directors). A study conducted by Fasken Martineau DuMoulin LLP found that 51% of the 87 proxy battles in Canada between 2008 and 2012 were within junior mining companies.