Rainger v General Distributors Limited - Countdown Hauraki [2019] NZARLA 52 (18 April 2019)

Last Updated: 2 May 2019

[2019] NZARLA 52

IN THE MATTER of the Sale and Supply of Alcohol Act 2012

AND

IN THE MATTER of an appeal pursuant to s 154 of

the Act against a decision of the Auckland District Licensing Committee regarding the renewal of an off-licence for premises located at 367-373 Lake Road, Hauraki Corner, Auckland, known as “Countdown Hauraki”

BETWEEN WILLIAM RAINGER

(Medical Officer of Health) Appellant

AND GENERAL DISTRIBUTORS LIMITED

Respondent

BEFORE THE ALCOHOL REGULATORY AND LICENSING AUTHORITY

Chairperson: District Court Judge K D Kelly Member: Ms J D Moorhead

HEARING at Auckland on 26 March 2019

APPEARANCES

Mr C P Browne and Mr A G Holden – for appellant

Ms A A Arthur-Young and Miss L J Eaton – for respondent

Mr M O’Flannigan and Ms C Sturzaker – for the Licensing Inspectorate – to assist

DECISION OF THE AUTHORITY

Introduction

[1] On 11 September 2018, following a hearing on 23 August 2018, the Auckland District Licensing Committee (DLC), granted the renewal of an off-licence in respect of premises located at 367-373 Lake Road, Hauraki Corner, Auckland known as ‘Countdown Hauraki’.

[2] The Medical Officer of Health now appeals the decision of the DLC in respect of the condition imposed on the licence pursuant to s 112(2) of the Act which describes one area within the premises as a permitted area for the display and promotion of alcohol (‘single alcohol-area’, or ‘SAA’).

[3] The hearing of the renewal application (which was filed in October 2015), was put on hold for almost three years as a consequence of the High Court and Court of Appeal hearings in J & C Vaudrey Ltd v Canterbury Medical Officer of Health;1 Christchurch Medical Officer of Health v J & C Vaudrey Ltd;2 and Medical Officer of Health (Manawatu) v G & B Hasler.3 As a result, this appeal relates to the renewal period from 8 December 2015 to 8 December 2018. While the DLC renewed the off- licence before the expiry of that renewal period, a subsequent renewal application has since been filed with the DLC for the period 8 December 2018 to 8 December 2021. The Authority understands that this renewal application has not yet been heard by the DLC pending the determination of this appeal.

[4] The application for renewal4 was opposed by the Medical Officer of Health on the basis that the SAA condition proposed by General Distributors Ltd (GDL) did not limit, so far as reasonably practicable, the exposure of shoppers to displays and promotions of alcohol, and advertisements for alcohol.

[5] The Medical Officer of Health formed the view that the SAA did not limit exposure so far as reasonably practicable because the SAA has end-of-aisle displays that face outwards into a pedestrian shopping route (commonly referred to as the ‘race course’). Before the DLC, the Medical Officer of Health proposed an alternative SAA or that the SAA be reduced in size by the removal of the end-of-aisle displays.

[6] In a split decision, two members of the DLC considered that the end-of-aisle displays did not need to be excluded from the proposed SAA. The third dissenting member of the DLC considered that the end-of-aisle displays should be excluded from the proposed SAA and that a condition be added to the licence pursuant to s 117 of the Act to that effect.

The Proposed Single Alcohol Area

[7] Countdown Hauraki is a supermarket for the purposes of s 32(1)(e) of the Act. There is no dispute that it is eligible to be issued an off-licence. The SAA proposed by GDL on renewal was unchanged from that which applied for the licence period prior to renewal.

[8] The store is small compared to other supermarkets. Following a site visit, the DLC appears to have accepted the evidence of Mr Radich, the Alcohol Responsibility Manager for Woolworths New Zealand Limited5 that there are limited options for the SAA in the store.6 Subject to the alternative SAA proposed by the Medical Officer of Health, this is largely accepted by the parties.

1 J & C Vaudrey Ltd and anor v Canterbury Medical Officer of Health [2016] NZCA 539 (16/11/16)[2016] NZCA 539; , [2017] 2 NZLR 334

2 Christchurch Medical Officer of Health v J & G Vaudrey Ltd (sic) [2015] NZHC 2749

3 Medical Officer of Health (Manawatu) v G & B Hasler [2018] NZHC 2018

4 for the renewal period from 8 December 2015 to 8 December 2018

5 GDL is a wholly owned subsidiary of Woolworths New Zealand Limited

6 DLC decision at [40(i) & (j)]

[9] Independent site visits by members of the Authority confirm that the premises are small relative to other premises the Authority has visited, and that there are limited options for a SAA.

[10] As already noted, the proposed SAA is that which applied prior to renewal. It is described by the DLC as follows:7

The applicant proposed a SAA which is located in the back two-thirds of the first aisle of the premises. The proposed SAA includes a chiller and racking on both sides of the aisle and two end of aisle displays facing the rear of the store.

[11] A notable feature of the SAA, as it is now, is that the end-of aisle displays are ‘dense ends’, that is, they encapsulate the alcohol product being displayed.8 The sides of the displays which face into neighbouring aisles which do not comprise part of the SAA are closed off by panels on which non-alcohol products are displayed. The effect of these dense ends is that the end-of aisle displays are restricted from view from neighbouring aisles. As the DLC put it:9

The alcohol is surrounded by shelving for other products, including two shelving areas to screen the end of aisle displays so that the end of aisle displays do not become visible until shoppers turn the corner and stand in front of the SAA.

[12] From its site visit, the Authority considers this to be an accurate description of the end-of-aisle displays. They are not visible from the race track until one is virtually in front of the displays.

Agency Reports

[13] The Police vetted the application but offered no opposition to it.10
[14] The Licensing Inspector, Mr Bryce Law, said in his s 129 report that he inquired into the application and, based on the information provided, considers that the application meets the criteria in the Act and he does not oppose the application.11
[15] In respect of the proposed SAA, Mr Law specifically said, “I do not oppose the design and layout of the single alcohol area within the premises”.12
[16] Mr Sunder Lokhande for the Medical Officer of Health, Auckland Regional Public Health Service, however, opposed the application saying:13

The purpose of a single alcohol area as stated under section 112(1) of the Sale and Supply of Alcohol Act 2012 is to limit alcohol exposure to shoppers, by reducing exposure to displays and promotions of alcohol, and advertisements for alcohol, so far as [is] reasonably practicable.

The MOH has concerns that the proposed ‘single alcohol area’ (SAA) within the plan provided, does not meet the requirements outlined in section 112(1).

7 DLC decision at [5]

8 the renewal application did not have ‘dense ends’ on the end-of-aisle displays but this was subsequently changed

9 DLC decision at [10(d)]

10 letter from Rachael De’Ath, Alcohol Harm Prevention Unit, Waitemata Police, dated 10 October 2015

11 report dated 8 January 2015 at [8.1]

12 report dated 8 January 2018 at [5.6]

13 letter from Sunder Lokhande dated 25 November 2015

This concern specifically relates to the proposed end-of-aisle displays which have been included as part of the proposed SAA.

The end of aisle displays place alcohol directly on the main thoroughfare of the store and contradicts the intent of section 112(1).

Rather than limiting the exposure of shoppers to displays and promotions of alcohol, the placement of alcohol directly on the main route for shoppers would mean that there is direct exposure of alcohol products and promotions. Shoppers would be unable to avoid these displays while they travel along this thoroughfare to shop for essential items such as meat, seafood and dairy products.

The MOH is prepared to withdraw his opposition if the proposed end-of-aisle display of alcohol is removed permanently.

[17] There are no public objections to the renewal application.14

DLC decision

[18] The majority of the DLC decided that the location of the proposed SAA limits (so far as is reasonably practicable) the exposure of shoppers to displays and promotions of alcohol, and advertisements for alcohol15 saying:

• [39] Having considered the submissions and evidence of all the parties two Committee members favoured the position of the applicant and did not consider that the end-of-aisle displays should be excluded from the proposed SAA. The two Committee members who favoured the position of the applicant gave genuine thought and attention to the purpose set out in section 112(1) in relation to the location of the end-of-aisle displays and the exposure of shoppers .... Furthermore, the Committee members undertook a balancing exercise of all the relevant matters.
  
• [40] The reasoning for their position includes the following:16
  
  • (a) The Act does not require that alcohol be excluded from viewing by shoppers;
    
  • (b) The sacrifices which the applicant must make outweigh the benefits to be gained from excluding the end-of-aisle displays from the proposed SAA;
    
  • (c) The exposure of shoppers to the end-of aisle displays is limited in nature when compared to the supermarket as a whole;
    
  • (f) Shoppers can avoid walking past the end-of-aisle displays;
    
  • (g) Removing the end-of-aisle displays from the SAA will not result in a material reduction in exposure to displays and promotion of alcohol;
    
  • (h) Removing the end-of-aisle displays from the SAA would result in a limited reduction in exposure to displays and promotion of alcohol;
    
  • (i) The SAA is small;
    

14 Licensing Inspector’s report dated 8 January 2015 at [4.2]

15 DLC decision at [39]

16 these reasons are itemised (a) – (c) and (f) to (n) by the DLC, omitting (d) and (e)

(j) The premises are small and as such there are limited option for the SAA;

(k) The dense end style racking for the end of aisle displays limit exposure;

(l) As customers pass the SAA, they will see alcohol on the shelving inside the aisle, whether or not there are end of aisle displays;

(m) The alcohol shelving is surrounded by shelving for non-alcoholic products, including two shelving areas to screen the end of aisle displays. This shelving limits has the effect of limiting [sic] exposure to customers in the entrance aisle or beyond the second aisle of the premises; and

(n) The legislation does not place upon sections 112 to 114 the full burden for regulating the sale and supply of alcohol in order to achieve the object of the Act. The Act’s regulation is effected through many other provisions (e.g. restrictions on the kinds of alcohol products to be sold by supermarkets, trading hours).

[19] In respect of the dissenting view the DLC’s decision reads:

• [41] Ms Fryer was of the opinion that, on balance after carefully considering and weighing up the evidence of both parties, the MOH position was favoured over that of the applicant and considered that the end-of-aisle displays should be excluded from the SAA. Ms Fryer considered that the SAA was not consistent with the statutory purpose of limiting as far as practical the exposure of shoppers in supermarkets to displays and promotion of, and advertisements for alcohol. The reasoning for this position includes the following:17
  
  • (a) The proposed single area is unsuitable in light of an alternative position for alcohol currently displayed on the end of aisles which would limit exposure materially better than what is proposed and which would be reasonable practicable to implement;
    
  • (b) Supermarkets design is intended to maximise shopper exposure to supermarket products;
    
  • (c) The position and amount of shelf space a product occupies determines how much shoppers are exposed to it and this impacts on product sales;
    
  • (d) Supermarket shoppers make decisions quickly and with little to no conscious thought;
    
  • (e) General drivers of sales apply, such as, the end of aisle makes product highly visible, easy to “grab” without going into an aisle which is convenient and time saving and end of aisle provides a greater promotional space;
    
  • (f) Co-location of alcohol near commonly purchased products will also increase foot traffic and in turn increase alcohol sales;
    

17 these reasons are also itemised (a) – (f) and then (h) to (j) by the DLC, omitting (g)

(h) Where end of aisle displays are used in conjunction with regular shelf space there is greater exposure and sales within aisles also increase;

(i) End of aisle displays are most effective at increasing sales when used to promote products at a special price;

(j) End of aisle displays which are rear facing (facing the back of the supermarket) are more effective at increasing sales than forward facing end of aisle displays (those facing the checkout end of the supermarket.

Grounds of Appeal

[20] The Medical Officer of Health has appealed the decision of the DLC on the following grounds:

• (a) the decision is wrong in fact and law;
  
• (b) the decision is contrary to, or fails to properly apply, ss 105, 112, 113, and 117 of the Act in accordance with the decisions of the High Court and Court of Appeal in:
  
  • (a) J & C Vaudrey Ltd v Canterbury Medical Officer of Health;18
  • (b) Christchurch Medical Officer of Health v J & C Vaudrey Ltd;19
  • (c) Medical Officer of Health (Manawatu) v G & B Hasler;20 and
  • (d) Medical Officer of Health v Lion Liquor Limited.21
• (c) the decision is contrary to the object of the Act (s 4) and to the purpose of the single area provisions (s 112(1));
  
• (d) the decision makes factual findings not available to the DLC on the evidence including:
  
  • (a) if a condition were made prohibiting the display of alcohol of end-of-aisle displays, there would, necessarily, be a reduction in the amount of alcohol displayed and there would need to be a relay of the entire store;
    
  • (b) the sacrifices which the applicant must make outweigh the benefits to be gained from excluding end-of-aisle displays from the proposed SAA;
    
  • (c) shoppers can avoid walking past the end-of aisle displays;
    
  • (d) removing the end-of-aisle displays from the SAA will not result in a material reduction in exposure to displays and promotions of alcohol; and
    

18 above, n 1 19 above, n 2 20 above, n 3

21 Medical Officer of Health v Lion Liquor Limited [2018] NZHC 1123

(e) the decision relies upon matters which are irrelevant to its decision under ss 105, 112-114 and 117 including the matters recorded in paragraphs [40] (f) and (h) – (m) [reproduced at [18] above].

[21] By way of relief under s 158 of the Act, the Medical Officer of Health seeks that the decision of the DLC be reversed or modified to remove and prohibit the end-of- aisle displays. More particularly, before the Authority, Mr Browne, counsel for the Medical Officer of Health submits that the Authority should modify the DLC’s decision:

• (a) by describing a SAA smaller than the proposed SAA by removing the end- of-aisle display areas from the proposed SAA;
  
• (b) if GDL agrees, by increasing the length of the SAA within the internal aisle to provide equivalent shelf space for the aisle-end space that has been removed; and
  
• (c) imposing a s 117 condition on the licence that end-of-aisle displays cannot be used to display or promote alcohol.
  

[22] The Medical Officer of Health acknowledges that increasing the length of the SAA within the internal aisle would require GDL’s consent as the Authority cannot unilaterally describe a SAA beyond the perimeter of the original proposal. Should GDL not consent, then it is submitted that the Authority should describe a smaller area within the proposed SAA.22
[23] In either case, the s 117 condition is considered necessary to prevent the area of the SAA from being reconfigured, once the SAA condition is imposed, with the result that end-of aisle displays are built within the SAA.

[24] Alternatively, the Medical Officer of Health submits that the Authority should reverse the decision of the DLC and decline the application, although this is not sought by the Medical Officer of Health and is not considered necessary to ensure the SAA meets the purpose in s 112(1) of the Act.

Law

[25] Section 112(1) and (2) of the Act provide:

• (1) The purpose of this section and sections 113 and 114 is to limit (so far as is reasonably practicable) the exposure of shoppers in supermarkets and grocery stores to displays and promotions of alcohol, and advertisements for alcohol.
  
• (2) The licensing authority or licensing committee concerned must ensure that, when it issues or renews an off-licence for premises that are a supermarket or grocery store, it imposes on the licence a condition describing one area within the premises as a permitted area for the display and promotion of alcohol.
  

[26] Section 113(1) – (5) then says:

• (1) The licensing authority or licensing committee concerned must have regard to section 112(1)––
  
  • (a) when describing an alcohol area; and
  • (b) when taking any other action under this section; and
    

22 J & C Vaudrey Ltd v Canterbury Medical Officer of Health, above n 1 at [54] – [55]

(c) when forming any opinion for the purposes of this section.

(2) An alcohol area must be described by means of a plan of the footprint of the premises concerned (or, in the case of premises on more than one level, a plan of the footprint of the level on which the area is or is to be located) showing—

• (a) the proposed configuration and arrangement (or, in the case of the renewal of a licence, the existing or any proposed new configuration and arrangement) of the premises or level; and
• (b) the perimeter of the area.
  

(3) The area may be so described that it is divided into 2 or 3 sub-areas; and in that case,—

• (a) the perimeter of each sub-area must be separately described; and
• (b) the licensing authority or licensing committee concerned must designate one sub-area as the core area and one sub-area as the secondary area, and (if the area is divided into 3 sub-areas) must designate one sub-area as the overflow area.
  

(4) The perimeter of the area or any sub-area may pass through the proposed locations (or, in the case of the renewal of a licence, any existing or proposed new locations) of any display units.

(5) The authority or committee must describe an alcohol area within the premises only if, in its opinion,—

• (a) it is a single area; and
• (b) the premises are (or will be) so configured and arranged that the area does not contain any part of (or all of)—
  
  • (i) any area of the premises through which the most direct pedestrian route between any entrance to the premises and the main body of the premises passes; or
  • (ii) any area of the premises through which the most direct pedestrian route between the main body of the premises and any general point of sale passes.
    

[27] Section s 117 of the Act, in turn, reads:

(1) The licensing authority or licensing committee concerned may issue any licence subject to any reasonable conditions not inconsistent with this Act.

(2) The generality of subsection (1) is not limited or affected by any other provision of this Act.

Submissions for the Medical Officer of Health

[28] Mr Browne for the Medical Officer of Health submits that the minority view of the DLC is the correct view and that the proposed SAA is inconsistent with s 112(1) particularly in light of the alternative proposal for substituting the end-of-aisles display area with an increase in the in-aisle area of the SAA. Limiting exposure, so far as is reasonably practicable, Mr Browne submits requires the removal of end-of-aisle displays from the SAA. It is also submitted that the DLC erred in finding that:

• (a) removing the end-of-aisle displays will not result in a material reduction (or would only result in a limited reduction) in exposure to displays and promotion of alcohol;

• (b) if a condition were made prohibiting the display of alcohol on end-of-aisle displays, there would, necessarily, be a reduction in the amount of alcohol displayed and the entire store display; and
  
• (c) the sacrifices which the applicant must make outweigh the benefits to be gained from excluding the end-of aisle displays from the proposed SAA.
  

[29] In respect of whether removing the end-of-aisle displays will materially reduce exposure to displays and the promotion of alcohol, Mr Browne submits that the DLC’s reasons for this finding are not clear but, in any event, its conclusion is wrong given the evidence before the DLC. Differences between the evidence for GDL and the Medical Officer of Health, Mr Browne submits, should be resolved in favour of the Medical Officer of Health because:

• (a) Dr Lang for the Medical Officer of Health is an independent witness whose evidence is supported by independent studies and research, while Mr Radich for GDL is an interested witness whose evidence is anecdotal and inherently implausible;
  
• (b) GDL’s evidence focuses on the claimed effect on sales while the evidence for the Medical Officer of Health focuses on exposure;
  
• (c) limiting exposure is an intended benefit in itself such that if the removal of end-of-aisle displays limits exposure the result is consistent with the object of the Act;
  
• (d) a number of observations by Mr Radich for GDL are irrelevant to the evaluation of the SAA against the criterion;
  
• (e) the issue is whether exposure has been limited so far as is reasonably practicable and it follows that if exposure is only limited to some extent, exposure is not limited so far as is reasonably practicable;
  
• (f) the alternative SAA suggested by the Medical Officer of Health fully accounts for the supermarket’s small size; and
  
• (g) it is difficult for shoppers to avoid the end-of-aisle displays during an ordinary shop as they are near commonly purchased items in the high- traffic, rear perimeter of the premises.
  

[30] In deciding that the costs and burdens would be disproportionate to the benefits of removing the end-of-aisle displays, Mr Browne submits that the DLC accepted the evidence for GDL that if the end-of-aisle displays were removed there would be a reduction in the amount of alcohol displayed; there would be a need to alter, or relay, displays throughout the entire store; GDL would have to hire more staff to restock the in-aisles areas of the SAA more frequently; and there would be a reduction in the range of total products the premises could carry. It is submitted by the Medical Officer of Health that these assertions are not sustainable because:

• (a) the Law Commission, in its review that led to the Act, considered that supermarkets share some responsibility for addressing alcohol-related harm (ARH) and that a one-off cost is likely necessary for supermarkets to comply with the Act;

• (b) the burden imposed is the lowest conceivable burden which would limit exposure;
  
• (c) GDL could retain the same shelving area by consenting to extend the SAA along the internal aisle to replace the area lost by the removal of the end- of-aisle displays;
  
• (d) the suggestion that the option proposed by the Medical Officer of Health would cost $16,000 for the SAA (or $40,000 for the relay of the entire store) is difficult to take seriously as the necessary changes could be effected during a routine fortnightly display change;
  
• (e) there is no presumption that an application for a licence will be granted or that it will be renewed such that little weight should be given to the complaint by GDL that the change involves a departure from what was previously approved prior to the Vaudrey decisions;
  
• (f) increased sales would offset any costs;
  
• (g) if even a relay of the store is required, the costs would be minor, one-off and proportionate to the benefits of reduced exposure; and
  
• (h) the burden to be borne by GDL is simply the basic cost of compliance.
  

[31] The Medical Officer of Health submits that the Authority should conclude that the SAA does not limit, so far as is reasonably practicable, shoppers’ exposure to alcohol displays, promotions and advertisements and should only describe that part of the SAA which omits the end-of-aisle displays. To prevent GDL from then adding the end-of- aisle displays within the reduced SAA, a s 117 condition should also be added to the licence to the effect that end-of-aisle displays cannot be used for the display and promotion of alcohol. Such a condition, it is submitted, is justified because:

• (a) it would not change the SAA;
  
• (b) it would prevent an undermining of the intended effect of the SAA;
  
• (c) its intended effect is to limit exposure to alcohol displays so far as is reasonably practicable;
  
• (d) the s 112 purpose is consistent with the general purpose of the Act to reduce the unsafe and irresponsible sale and supply of alcohol and to decrease alcohol-related harm (ARH);
  
• (e) the weighing of the benefits of preventing such displays and the burdens or reducing exposure has been done in the course of setting the SAA and the condition will simply ensure that the benefits of removing the end-of-aisle displays are not defeated through internal reconfiguration.
  

[32] Mr Browne submits that the evaluation of the SAA is an inherently comparative exercise and that alternative proposals need to be examined if they are raised in opposition to the area proposed. Mr Browne submits this is required as part of testing whether the proposed SAA meets the test in s 112(1).

[33] Before the Authority Mr Browne submitted that the Medical Officer of Health has been concerned for some time about the inclusion of end-of-aisle displays in SAAs and

it considers that the purpose of the Law Commission’s recommendation around single area restrictions was to prevent supermarkets placing alcohol at the end of aisles, in doorway entrances and among other goods. This was because, it is submitted, end- of-aisle displays solicit unplanned alcohol purchases.23 It is submitted that it was for this reason that the Medical Officer of Health sought expert evidence from Dr Bodo Lang, the Head of Department, for the Department of Marketing at the University of Auckland Business School, to see whether there was a good case for opposing end-of-aisle displays because they increase exposure.

[34] Further, should the Authority find that the DLC was wrong to consider that exposure was limited so far as reasonably practicable by the SAA, it follows that the DLC was likely wrong in not imposing a s 117 condition.

[35] Mr Browne submits that it is not proposed by the Medical Officer of Health that the SAA is altered but rather that the display of alcohol is altered. That is, by moving the SAA back a metre (effectively to the line excluding the end-of-aisle displays), the proposal is to restrict the kind of shelving that can be used in the SAA by the use of a s 117 condition. The primary focus is not on the size of the SAA, but on the end-of- aisle displays within it.

[36] Moreover, the imposition of s 117 conditions of the kind in issue, Mr Browne submits, is intertwined with the assessment of the SAA. In this case, it is submitted that consideration of the SAA and of the end-of-aisle displays are inextricably linked by virtue of the proposal to have end-of aisle displays. It is because of the end-of-aisle displays that the SAA does not meet the test in s 112 of limiting (so far as is reasonably practicable) the exposure of shoppers in supermarkets to displays and promotions of alcohol, and advertisements for alcohol. As such, a s 117 condition only needs to be considered because the SAA does not meet the test in s 112(1).

[37] Mr Browne submits that in Vaudrey, the High Court and Court of Appeal supported the use of a s 117 condition to prevent the use of an aisle end for alcohol which condition would not be altering the SAA. It is submitted that in Vaudrey, the Court of Appeal observed that the power to impose conditions under s 117 is broad. While any s 117 condition must be reasonable and not inconsistent with Act, its generality is not limited or affected by any other provision in the Act. Further, the Court observed that s 115 (which provides for the delays in the application of SAA conditions), enables a s 117 condition to be imposed pending those other conditions taking effect.24
[38] Subsequently, in Medical Officer of Health (Manawatu) v G & B Hasler,25 Clark J expressly said that a DLC may consider it necessary to impose conditions including a condition restricting end-of-aisle displays in a SAA.

[39] While the SAA in Hasler is in a different location in the premises to the proposed SAA in Countdown Hauraki, it is submitted that it is potentially available for a DLC to impose a s 117 condition to restrict end-of-aisle displays. Here, a s 117 condition is relevant for the purposes of keeping the SAA (without end of aisle displays) intact over time.

23 Law Commission report: Alcohol in our Lives: An Issues Paper on the Reform of New Zealand’s Liquor Laws, NZLC R114, 2010, at [45] recommendations 20 and [8.83.- 8.84]

24 above n 1, at [68]

25 above n 3

[40] Mr Browne submits that the evidence of Dr Lang for the Medical Officer of Health is different in nature from the evidence of Mr Radich for GDL. Mr Brown submits that the evidence of Dr Lang applies to the location of SAAs including end-of-aisle displays. It is submitted that this evidence establishes that shifting a SAA to exclude end-of-aisle displays, or the removal of end-of-aisle displays from a SAA will reduce exposure to alcohol. Further, in reliance on a range of studies, Dr Lang’s evidence is that end-of- aisle displays not only increase exposure to brands of alcohol but increases sales and exposure to categories of alcohol products. Dr Lang’s evidence, it is submitted, is that greater exposure to alcohol is associated with increased sales. Increased sales, the Medical Officer submits is an indicator of increased exposure.

[41] On the other hand, it is submitted that Mr Radich’s evidence does not support the conclusion that there will not be a material reduction in exposure if end-of-aisle displays are removed.

• [42] Mr Browne also submits that the DLC considered irrelevant matters including that:
  
  • (a) exposure is limited when compared to the supermarket as a whole;
    
  • (b) shoppers can avoid end-of-aisle displays;
    
  • (c) the SAA is small;
    
  • (d) customers will see alcohol whether or not there are end aisles;
    
  • (e) non-alcoholic shelving screens alcohol displays and limits exposure; and
    
  • (f) alcohol is only visible when customers are standing directly in front of the aisle.
    

[43] These matters are irrelevant, it is submitted because it is not relevant to the test of limiting so far as is reasonably practical, that only some steps have been taken to limit exposure.

• [44] Further it is submitted that:
  
  • (a) the fact that the premises are small and that there are limited options for the SAA is irrelevant because GDL can accept the Medical Officer of Health’s proposal and retain the size of the SAA of simply remove the end-of aisle displays;
    
  • (b) that removing end of aisle displays might result in only limited further reduction in exposure is irrelevant because the issue is not whether exposure is limited to some extent, but whether it is limited so far as is reasonably practicable; and
    
  • (c) the fact that the full burden for regulating the sale and supply of alcohol does not sit with ss 112-14 is irrelevant because these sections do require SAAs to limit exposure so far as is reasonably practical and it would be an error not to consider SAAs as important.
    

Submissions for GDL

[45] Ms Arthur-Young, Counsel for GDL submits that the location of the SAA proposed by GDL limits so far as reasonably practicable exposure to alcohol and that it is

unreasonable to impose a condition on the licence prohibiting end-of-aisle displays to restrict exposure further.

[46] Before the Authority, and in response to a question from the Authority, Ms Arthur- Young indicated that GDL had no intention to remove the dense ends on the end-of aisles displays. At the invitation of the Authority, GDL confirmed that it also has no intention of changing the arrangement of the screening shelving or the dense end displays at the rear of the aisles in the SAA. In general, Ms Arthur-Young said, GDL does not reconfigure the racking in its SAAs without consulting reporting agencies. An undertaking was given as follows:

GDL will not display alcohol on the outward facing wings highlighted yellow on the plan attached as [Annexure 1] at Countdown Hauraki Corner for the duration of the current licence without going through a formal variation process.

[47] Notwithstanding this, Ms Arthur-Young submits that for the purposes of the inquiry in s 112(1), the expression ‘to ‘limit’ means to circumscribe, restrict or reduce. It does not require prohibition on exposure to alcohol.26 Further, the expression ‘so far as is reasonably practicable’ imports a notion of proportionality in that it requires a balancing between the benefits ought to be secured and the resulting sacrifices (for example, cost, time, difficulty and inconvenience.27
[48] Moreover, Ms Arthur-Young submits that the High Court has confirmed that the focus of the inquiry under ss 112-114 is the size and location of the proposed alcohol area, and that the assessment under s 113(1) is principally concerned with the location of the alcohol area within the premises and not the configuration of the displays within that alcohol area.28
[49] A s 117 condition, Ms Arthur-Young submits, may only be imposed if it is reasonable and not inconsistent with the Act. Whether a s 117 condition is reasonable requires an objective assessment of whether the condition is a proportionate response to a perceived risk or issue, and an absolute prohibition would not ordinarily be reasonable.29
[50] Ms Arthur-Young agrees that the High Court in Hasler said that it is open to a licensing authority to restrict end-of-aisle displays through a s 117 condition. Ms Arthur-Young submitted, however, that Clark J also said that it would be impermissible to impose a condition prohibiting the use of end-of-aisle displays as a matter of course. The licensing authority should be satisfied that the condition is reasonable in the circumstances and that it would not be reasonable to take the view that end-of-aisle displays, of themselves, offend the purpose of the Act.30

• [51] Further, it is submitted that the High Court in Hasler said that:31

providing a licensee’s display and promotion of alcohol is consistent with the purpose of the single-area provisions – to limit so far as is reasonably practicable, the exposure of shoppers to alcohol – there is unlikely to be any reasonable basis for the imposition of conditions to further restrict the exposure.

26 Christchurch Medical Officer of Health v J & C Vaudrey Ltd, above n 2, at [81] 27 Christchurch Medical Officer of Health v J & C Vaudrey Ltd, above n 2, at [83] 28 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [44(e)]

29 Christchurch Medical Officer of Health v J & G Vaudrey Ltd, above n 2, at [104]

30 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [71]

31 Medical Officer of Health (Manawatu) v G & B Hasler, above n3 at [76]

[52] It is also submitted that the power to impose conditions is discretionary and whether a SAA limits exposure so far as is reasonably practicable is a matter for the opinion of the licensing body.32
[53] Ms Arthur-Young submits that the evidence of Dr Lang, which relates to the configuration and arrangement of the SAA, is not helpful to the Authority’s assessment of exposure for the purposes of s 113(1) because that assessment is concerned with the exposure to alcohol from the location of the alcohol area within the premises and is not about the internal configuration of the alcohol area.

[54] Mr Radich’s evidence, on the other hand is that the store’s SAA is small, occupying less than one full aisle of the store; not visible from the entrance or point of sales; is located to allow shoppers to complete a grocery shop without entering the area; and has limited visibility when considered in the context of the supermarket as a whole. That is, the evidence shows that the SAA in terms of its location within the premises limits exposure to alcohol so far as is reasonably practicable. This, it is submitted, is not disputed by the Medical Officer of Health who considered that the size of the area could be increased. It is also submitted that the Medical Officer of Health accepted at the hearing before the DLC that the SAA is not in a prohibited area.

[55] In terms of the imposition of a s 117 condition, Ms Arthur-Young submits that the display of alcohol already limits exposure so far as is reasonably practicable such that it would be unreasonable to impose a condition to restrict end-of-aisle displays. Rather it is submitted that the Medical Officer’s of Health case is that end-of-aisle displays offend the purpose of the Act and should be prohibited, which is precisely what the High Court warned would be unreasonable.

[56] Ms Arthur-Young submits that given the different nature of the evidence from Dr Lang, it is not an error that the DLC relied on Mr Radich’s evidence and did not consider that Dr Lang’s evidence justified prohibiting end-of-aisle displays. That the DLC preferred Mr Radich’s evidence, it is submitted, is justified.

[57] Dr Lang’s evidence, it is submitted, was based on an assessment of promotional marketing techniques used in conjunction with end of aisle displays; did not consider the particular circumstances of Countdown Hauraki; and was reliant on the effect that end-of-aisles have on sales which is not the relevant test under the Act.

[58] It is submitted that the evidence of Dr Rainger in turn, fails to demonstrate any issue with ARH in the Hauraki Community and is instead that alcohol related attendances at North Shore hospital are significantly higher than for the rest of Auckland and for New Zealand, on a single night in December 2013, being a date on which Countdown Hauraki was not trading. Dr Rainger, it is submitted, confirmed under cross-examination that he had not visited Countdown Hauraki. Against that too, it is submitted that the evidence shows that Countdown Hauraki has an excellent record of responsible trading and there have been no compliance issues at the store.

[59] The evidence also shows, it is submitted, that removing the end-of-aisle displays would require a relay of the entire store and the cost of doing so would not be minor or proportionate to the benefits of further limiting exposure. Ms Arthur-Young submits that the Medical Officer of Health has not provided any evidence to the contrary.

32 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [76] citing J & C Vaudrey Ltd v Canterbury Medical Officer of Health, above n 1, at [44]

[60] Ms Arthur-Young also submits that the Medical Officer of Health has adopted a policy position that end-of-aisle displays in supermarkets should be prohibited, and that this position is inappropriate and unreasonable. This, Ms Arthur-Young says, is confirmed both in evidence and in the submissions of the Medical Officer of Health. This policy position, it is submitted, fails to have regard to the particular circumstances of the licence and is contrary to High Court authority that conditions on end-of-aisle displays must be assessed on a case by case basis.33

• [61] In terms of the matters which are said to be irrelevant, Ms Arthur Young submits:
  
  • (a) consideration of the size of the supermarket is necessarily relevant as that goes to the position of the SAA relative to the premises;34
  • (b) the fact that the alcohol area can be avoided is a relevant matter as the SAA does not contain the prohibited pedestrian routes;
    
  • (c) the size of the SAA is relevant as the assessment under ss 112-114 is concerned with the perimeter and location of the area within the premises;
    
  • (d) the dense end racking is relevant as it limits exposure such that it is unreasonable to impose a condition under s 117;
    
  • (e) the fact that customers will see alcohol regardless of whether the end-of- aisle displays are removed is relevant when considering whether it is reasonable to impose a s 117 condition to limit the exposure of customers to alcohol; and
    
  • (f) the extent to which removing the end-of-aisles displays will result in further reduction in exposure is relevant as the DLC considered that the SAA already achieved the purpose in s 112(1) and there would be no further benefit to be achieved by removing the end-of-aisle displays;
    
  • (g) that the Act does not require alcohol to be excluded from viewing by shoppers is relevant as the DLC considered the SAA achieved that purpose; and
    
  • (h) that SAAs do not carry the full burden for regulating the sale and supply of alcohol in order to achieve the purpose of the Act is relevant as the DLC was relying directly on High Court authority.35

Authority’s Decision and Reasons

Issues

[62] The issue in this appeal is whether the DLC in describing the SAA, properly exercised its judgment about whether the SAA limits (so far as is reasonably practicable), the exposure of shoppers to alcohol given the end-of-aisle displays. If not, then the Medical Officer suggest that the area should be described to exclude the area in which the end-of aisle displays are located, and impose a condition preventing end of aisle displays.

33 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [71]

34 McMaster v G & B Hasler [2017] NZARLA 169 at [49]

35 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [75]

[63] It is clear from the submissions of Medical Officer of Health that his primary concern is to remove the end-of-aisle displays. It is the fact of these displays that the Medical Officer of Health objects to, and it is because of them that the Medical Officer of Health considers that the SAA has not been described consistent with the purpose in s 112(1) of the Act.

[64] In applying the test in s 112(1) of the Act, two considerations arise in this appeal. The first relates to the relationship between the configuration of shelving within a proposed SAA and the description of a SAA. The other is the extent to which limiting exposure so far as reasonably practicable requires a comparison of alternative proposals for a SAA.

Describing a single alcohol-area

[65] Put simply, Mr Browne submits that the proposed SAA is inconsistent with the prescription in s 112(1) because the end-of-aisle displays increase exposure relative to a SAA without end-of-aisle displays.

[66] Ms Arthur-Young submits, in turn, that the focus of the inquiry under ss 112-114 is on the size and location of the SAA within the premises and not the configuration of the displays within that area.

• [67] In Medical Officer of Health v G & B Hasler, Clark J said:36
  • [41] Thus, the intention, enacted in ss 112—114, is to restrict the location of the alcohol area. By restricting displays, promotions and advertisements to one dedicated area, away from the prominent areas of the store, the exposure of shoppers to alcohol has been restricted as intended by the legislature.
    
  • [42] Turning to the relevant provisions, the starting point is the obligation in s 112(2) on the licensing body when issuing or renewing a licence. The licensing body must:
    

... [impose] on the licence a condition describing one area within the premises as a permitted area for the display and promotion of alcohol.

[43] By operation of s 113(2):

an alcohol area must be described by means of a plan of the footprint of the premises showing—

(a) the proposed configuration and arrangement (or, in the case of the renewal of a licence, the existing or any proposed new configuration and arrangement) of the premises or level; and

(b) the perimeter of the area.

[44] Subsection (2) draws a clear distinction between the requirement for a plan of the footprint of premises showing the configuration and arrangement of the premises, and the bare requirement to show the perimeter of the alcohol area. The reason for the distinction is obvious:

• (a) An alcohol area must be delineated so that it avoids:
  

36 Medical Officer of Health (Manawatu) v G & B Hasler, above n 3, at [41]-[48], footnotes omitted

• any part of the premises through which the most direct pedestrian route between any entrance to the premises and the main body of the premises passes; and
  
• any part of the most direct pedestrian route between the main body of the premises and any general point of sale.
  

(b) The configuration and arrangement of the premises must be provided with an application for a licence because those details are relevant to the licensing authority's determination of the application.

(c) If ignorant of the configuration and arrangement of the premises

— the entrance, the main body of the premises, the pedestrian route through the main body of the store — a licensing body cannot form the necessary opinion about whether the alcohol area contains any proscribed area of the premises. While “main body” is not defined, it seems to me that if a shopper is able to enter the store, select items for purchase, and take them to the point of sale without passing through a delineated alcohol area, the shopper has taken “the most direct pedestrian route between any entrance and the main body of the premises” and “between the main body of the premises and any general point of sale passes”.

(d) Plans submitted with applications will highlight the checkout counters, the entrance to the store, and delineate the alcohol area. They may also describe the nature of the goods available from main areas of the store (such as aisles of “frozen food”), and the nature of goods displayed adjacent or near to the alcohol area. The licensing authority will be able to assess from the configuration and physical arrangement of the premises detailed on the plan, whether the alcohol area is in a proscribed part of the premises.

(e) Manifestly, the layout of shelving and alcohol within the alcohol area, has no bearing on the decision to position the alcohol area. Sections 112—114 are concerned not with the arrangement of shelving or displays within the area but limiting the exposure of shoppers to displays of alcohol and that is achieved (principally) by ensuring its perimeter is not in an impermissible section of the store. It is for this reason that the bare perimeter of the alcohol area is to be shown on the plan accompanying the licence application. Details of configuration and arrangement such as those required for the premises are inapplicable to the space within an alcohol area.

[45] The point is illustrated by the actual plan of the Dannevirke New World premises which the respondent submitted with its application for renewal. A copy of that plan is Attachment 2 to this judgment. The perimeter of the alcohol area is described as required by s 113(2)(b). As can be seen, some shelving is indicated but, in my view, the plan would have been acceptable without the indicative layout. There is no requirement in the Act or the Regulations for that detail.

[46] The appellant relies on the definition of “premises” to support his contention that a plan showing the configuration and arrangement of

the alcohol area is required. Premises is defined to include “part of any premises”. While that may be so it does not detract from the fact that throughout the Act, and more particularly in s 113(2) “premises” is used in contra-distinction to “area”. That distinction continues to operate in the context of the legislative requirement for a plan to show the proposed configuration and arrangement of the premises. Had the intention been to require the configuration and arrangement of the alcohol area then subs 113(2)(a) would have been drafted to include the area. For example:

An alcohol area must be described by means of a plan of the footprint of the premises concerned ... showing—

(a) the proposed configuration and arrangement ... of the premises ... and the area.

[47] Further, where the intention is to regulate the environment within the alcohol area, that is made plain with the use of different language. Section 114 for example makes the distinction between displays of alcohol “outside” and “inside” the alcohol area.

[48] It follows from the foregoing reasoning that the obligation to describe an alcohol area, which is imposed by s 113(2), is satisfied by delineating the perimeter of the proposed area on a plan of the premises. It is not necessary that the plan show the proposed configuration and arrangement of alcohol within the alcohol area.

(emphasis added)

[68] It is clear from this that a proposed SAA will not be inconsistent with the prescription in s 112(1) simply because of the existence of end-of-aisle displays within that SAA.

[69] The fact that this is a renewal application and the configuration of the shelving is apparent in a way it might not have been had this been a new application, should not see the SAA, as the delineation of the perimeter of the proposed area on a plan of the premises, conflated with the configuration of shelves within the area.

A comparative evaluation?

[70] In Christchurch Medical Officer of Health v J & G Vaudrey Ltd Gendall J summarised the role of the DLC, and now the Authority on appeal, as follows:37

I would therefore summarise the role of the relevant body in relation to the single area condition in these terms:

(a) In the case of an application for an off-licence which is also a supermarket or grocery store, the relevant body must impose a single area condition if it grants a licence. This entails an evaluative exercise requiring the relevant body to:

• (i) be satisfied that the proposed area is a single area;
• (ii) be satisfied that the proposed area complies with s 113(5)(b);
  

37 Christchurch Medical Officer of Health v J & G Vaudrey Ltd, above n 2, at [61]

(iii) consider whether the proposed area plan limits, so far as is reasonably practicable, the exposure of shoppers to displays, promotions and advertisements of alcohol;

In undertaking this evaluative exercise, it is the role of the District Licensing Committee and the Authority (not of the applicant) to describe the single alcohol area. Thus, the relevant body is not limited to simply accepting or rejecting the plan put forward by the applicant. Rather, the relevant body must describe an area which it considers complies with the above criteria, after hearing evidence and submissions from all relevant parties.

(b) There is no ability under ss 112-114 of the Act to impose general conditions (but that power is to be found in s 117).

[71] The Medical Officer of Health submits that the DLC failed to ensure that the SAA condition limited exposure so far as is reasonably practicable. There is, however, no dispute about the size or the location of the SAA. The only concern is the end-of aisle displays which we have already addressed.

[72] To the extent, however, that it is considered that the SAA does not limit exposure independent of the end-of-aisle displays, the Authority notes that importantly, the process of describing a SAA is an evaluative process.38 Moreover, any restriction mandated by s 112(1), requires ‘reasonability’. In fact, the entire Act endorses the proposition that any restriction must be proportionate. The role of the decision-maker, in describing the SAA is not limited to a ‘rubber stamping’ one, nor can it be absolute.39 Further, the requirement in s 113(1)(a) “to have regard” to the purpose in s 112(1), when describing a SAA supports the notion that the role of the relevant decision maker is an evaluative one requiring an assessment. As Gendall J put it, “it is not a black and white matter”.40

[73] The requirement “to limit” bears its ordinary meaning which is to restrict or restrain. The requirement is not aimed at total proscription and does not amount to, or mandate, a total prohibition on exposure.41
[74] The requirement in s 112(1), however, is not just to ‘limit exposure’. It is ‘to limit exposure so far as is reasonably practicable’. This standard is not an absolute but rather, requires reasonable steps to be taken, or as Gendall J put it “to do that which would not be unreasonable in the circumstances.”42 This is primarily a factual orientation.43

• [75] Summarising the relevant authorities, Gendall J said:44
  • [87] For convenience I distil the principles gleaned from the authorities to a summary of the prescription that is “so far as reasonably practicable”:
    
    • (a) the requirement is not absolute;
      

38 above n 2, at [59]

39 above n 2 at [59(h)]

40 above n 2 at [79]

41 above n 2, at [80] – [81]

42 above n 2, at [82]

43 above n 2 at [82]

44 above n 2, at [87] –[88]

(b) the physical possibility or feasibility of a task or course of action is not synonymous with reasonable practicability;

(c) ascertaining what is reasonably practicable entails a balancing exercise between the benefit sought to be secured and the sacrifices that would be occasioned by securing the benefit (such as cost, time, difficulty, inconvenience);

(d) the assessment is to proceed on the basis of information known at the time the decision is made; and

(e) the meaning of “reasonably practicable” is not static; it will respond to the context in which it is used.

[88] It follows that the obligation incumbent on the relevant body in relation to the single area condition is to ensure that the condition limits the exposure of shoppers to alcohol. That requirement is neither absolute nor de minimis. The relevant body is called upon to exercise its judgment as to whether, in each case, the limitation is condign. It is within the framework I have described that its judgement is to be brought to bear. This requires a factual assessment of all relevant circumstances, including the size and layout of the supermarket. It must then ensure that the objective sought to be secured is proportionate and reasonable when weighed against the sacrifices to be made in securing it.

[76] In the present appeal, the position of the Medical Officer of Health is that the determination of whether a SAA limits exposure so far as is reasonably practicable, requires a comparison of the benefits of reduced exposure of the proposed SAA against the sacrifices to be occasioned, relative to the benefits and sacrifices associated with other alternative proposals.

[77] This is not what the principles associated with the prescription ‘so far as is reasonably practicable’ require. Comparing the proposed SAA with the alternative SAA suggested by the Medical Officer of Health amounts to asking whether the ratio of benefits and sacrifices for the Medical Officer of Health proposal is greater than the ratio of benefits and sacrifices of the GDL proposal. In situations where other objectors might also put forward alternative proposals, this exercise would be multiplied accordingly.

[78] Such an approach rapidly becomes absolute in nature as regards the degree of exposure, as it suggests the optimal SAA is the proposal which provides the most reduced exposure relative to other options. Such a position not only approaches the ‘physically possible’ standard which is contrary to the principles summarised by Gendall J, but it is not supported by the plain reading of s 112(1). Nowhere in s 112-114 is there a requirement to describe the ‘best’ SAA relative to other possible configurations of the premises.

[79] Moreover, contrary to the submission of the Medical Officer of Health, it is implicit in the nature of the prescription to limit exposure so far as is reasonably practicable, that exposure will only be limited to ‘some extent’ as against an absolute standard. However, there is no such absolute standard. As Gendall J put it, the requirement is neither absolute nor de minimis. What the evaluative task requires is judgement about whether the ‘extent’ of the limitation is insufficient, too severe, or appropriate in the

circumstances. Ultimately, where the limitation is not acceptable to the decision-maker, the decision-maker must decline the application.45

[80] It is for this reason, in J & C Vaudrey Ltd and Bond Markets Limited v Christchurch District Licensing Inspector and ors46 this Authority said:

• [54] The issue is not whether another area might limit the exposure of shoppers to displays of alcohol to a significantly greater extent than the area proposed by Bond. Rather, the consideration for the Authority is whether the area plan proposed by Bond limits, so far as is reasonably practicable, the exposure of shoppers to displays, promotions and advertisements of alcohol. The primary focus is on the proposal put forward by Bond. In the first instance, the Authority is not engaged in a comparative exercise between the applicant’s proposal, the Inspector’s proposal, the DLC’s proposal or some other possible area.
  
• [55] Accordingly, the Authority cannot propose an alternative area before it first forms a view on Bond’s proposed area. Other options may come to the fore if the Authority is not satisfied with Bond’s proposal. But that is a second step after having first considered the proposal in the application by Bond. Then, if after having undertaken the evaluative exercise described by Gendall J, other options are not acceptable, the Authority must decline the application.
  
• [56] Accordingly, contrary to what has been suggested by the Medical Officer of Health, the DLC was not correct in reaching the conclusion that using the area in another aisle, even after considering the cost of relocation, and choosing an area of lower visibility, limited so far as is reasonably practicable, the exposure of shoppers to displays, promotions and advertisements of alcohol. By considering the cost of changing coolers from one side of a row to the other was minimal, as per the DLC’s proposed area, the DLC was implicitly comparing the Bond area with its own, as yet undisclosed proposed area.
  

[81] Given that ascertaining what is reasonably practicable entails a balancing exercise between the benefits and the sacrifices in the circumstances, and given the assessment is to proceed on the basis of information known at the time the decision is made, matters such as the size of the supermarket; the fact that the alcohol area can be avoided; the size of the SAA; and the extent to which the removal of end-of-aisle displays might further reduce alcohol relative to the sacrifices in doing so, are all relevant matters for consideration.

The Evidence

[82] Turning to the evidence before the DLC, the evidence was produced for the Medical Officer of Health by Dr Bodo Lang, the Head of Department, for the Department of Marketing at the University of Auckland Business School; Mr Ling Li, Auckland Regional Public Health Service Compliance Officer; and Dr William Rainger himself as Medical Officer of Health for Auckland.

[83] Mr Paul Radich, the Alcohol Responsibility Manager for Woolworths New Zealand Limited, gave evidence for GDL.

45 above n 2, at [58(d)]

46 J & C Vaudrey and Bond Markets Limited v Christchurch District Licensing Inspector and ors [2017] NZARLA PH 294-295

Dr Lang

[84] Dr Lang gave evidence about supermarket design and shopper behaviour in supermarkets. Dr Lang’s evidence is that one of the most important ways to maximise sales is to increase shopper’s exposure to products within a supermarket and placement of products at the back of a supermarket is designed to encourage shoppers to travel through as much of the supermarket as possible.47
[85] Dr Lang’s evidence is that a common shopping path for consumers is to dip in and out of aisles and to use the perimeter or race course to get from aisle to aisle. As a result, the ends of aisles are one of the most coveted positions in supermarkets in terms of being a malleable determinant of sales.48
[86] In terms of the impact of end-of-aisle displays on sales, Dr Lang’s evidence is that typically around 2% of all items in a supermarket are being promoted through end of aisle displays yet such items make up around 30% of sales.49
[87] Having regard to the drivers of exposure of end-of-aisle displays, various factors contribute to the effect of end-of-aisle displays including the fact that they are highly visible from a variety of angles and distances; they are positioned in areas of highest foot traffic; they make it easy to grab a product; and they offer more promotional space to a brand than is otherwise available.50 Dr Lang said studies have reported the impact of end-of-aisles displays on sales varying from 24% to 1,197%.51
[88] Dr Lang also gave evidence that if alcohol is sold close to bread, confectionery or other commonly bought items such as milk or meat, then alcohol sales are likely to be higher because it is positioned close to top selling categories in supermarkets.52 Further, as stated, end-of-aisle displays that face the rear of a supermarket have been shown to result in greater sales compared to front (cashier) facing end-of-aisle displays.53 Conversely, selling alcohol close to infrequently bought products is likely to reduce the amount of alcohol purchased.54
[89] In terms of the Hauraki Countdown SAA, Dr Lang’s evidence is that as the SAA is currently configured there are a range of factors that increase exposure to alcohol products being the end-of-aisle displays which are rear facing; there are three dimensional displays protruding into the aisle, there are A3 ‘special’ price signs on the end of aisle displays and within the SAA aisle, and smaller special price signs on the end of aisles, as well as A3 protruding shelf-mounted special signs.55
[90] Dr Lang also considered that one element of the SAA limited exposure to alcohol, namely the dense end nature of the end-of-aisle displays.56

Mr Li

47 Lang BoE at 2.1.2- 2.1.3

48 Lang, BoE, at 2.1.4

49 Lang BoE, at 2.2.1

50 Lang BoE at 2.3.1

51 Lang BoE at 4.1

52 Lang BoE at 2.4.1 and 4.5

53 Lang BoE at 2.4.2

54 Lang BoE at 4.5

55 Lang BoE at 2.7.1 and 5.1

56 Lang BoE at 2.7.2 and 5.2

[91] Mr Li gave evidence that as part of the preparation of the hearing before the DLC, he visited the premises and met with the store manager. Mr Li said that while in the supermarket he said that witnessed shoppers who were at the rear of the store who had likely walked along most of the back wall where hot chicken, deli, seafood and refrigerated cold meats were placed, and were thus exposed to the two end-of-aisle displays of alcohol. Mr Li said that he was concerned that the exposure of shoppers to alcohol had not been limited so far as reasonably practicable.57
[92] As a result, Mr Li said he proposed two solutions. The first was to move the alcohol into the aisle and use the end-of-aisle displays to display non-alcohol product, which solution was rejected due to the size of the store and the fact that product cannot be split up, although Mr Li said that he observed some products on other end-of -aisle displays not being associated with the product in the aisles.58
[93] The other solution was to remove the end-of-aisle display and to use one end-of aisle display to display low-alcohol drinks. This solution Mr Li said was rejected by Mr Radich after a period of consideration and that Countdown Hauraki intended to proceed based on the current plan.59
[94] Subsequent to this, Mr Li said that he reconsidered the applicant’s plan and considered that the end-of-aisles which at that time were open on three sides, would create a high level of exposure as shoppers who proceeded from the entry to the rear of the store and those who move in and out of aisles would most likely be exposed to end-of aisle displays from a variety of angles and distance.60

Dr Rainger

[95] Dr Rainger’s evidence is that he is concerned about the use of end-of-aisle displays when an alternative and less exposed area is available to display alcohol. Dr Rainger considers that a less exposed area exists within the inner aisles beside the rest of the alcohol.61
[96] Dr Rainger said the relevant issues from a public health perspective are that supermarkets overall supply a significant proportion of beer and wine to the market and as a result are likely to be contributing to alcohol-related harm generally. Where there is a basis that the object of the Act might be advanced, Dr Rainger considers that it is appropriate to apply the precautionary principle and takes steps to reduce the potential for harm. Dr Rainger considers that the evidence shows that end-of-aisle displays increases the exposure of shoppers to alcohol and alcohol promotion and marketing is a public health concern.

[97] Dr Rainger said in evidence that given the well-established link between alcohol availability and harm, it cannot be assumed that Hauraki is immune from ARH although he accepts that there is nothing extraordinary about the levels of ARH in the locality.62
[98] Dr Rainger gave evidence that on 14 December 2013 the North Shore Hospital had alcohol attributed admission attendances that were significantly higher than the

57 Li BoE at [12]

58 Li BoE at [14] – [15]

59 Li BoE at [16]- [22]

60 Li BoE at [23]

61 Rainger BoE at [2]

62 Rainger BoE at [9]-[10]

overall New Zealand and Auckland rates with 29% ED admissions attributed to alcohol in comparison to 18% overall in New Zealand and 19.2% overall in Auckland.63

[99] Dr Rainger also repeated the evidence of Dr Lang, agreeing with it.64
[100] As Dr Rainger recognises there is a need for the supermarket to utilise all shelf space, he recognises that the end-of-aisle displays would need to be replaced with another product, which he says should be a non-alcoholic product. Given other potential public health issues, he did not suggest what product might be suitable for these end-of-aisle displays.

Mr Radich

[101] Mr Paul Radich gave evidence that in his view the SAA meets the requirements of the Act because GDL complies with the requirements of s 113(5) and the end-of- aisle shelving has been modified to dense ends to screen the end-of aisle displays. The effect of these, Mr Radich says is that the end-of-aisle displays are not visible until customers around the corner and are in the front of them, at which point alcohol products displayed within the alcohol aisle are also visible.65
[102] Further, Mr Radich says the SAA is small occupying less than one full aisle of the store and alcohol is not visible from the entrance of the store or the point of sale area.

[103] Mr Radich gave evidence that requiring GDL to remove the end-of-aisle displays will have no benefit as it will not assist in ensuring the safe and responsible sale of alcohol or minimise harm from excessive or inappropriate consumption.66
[104] Mr Radich says it is constrained by the space it has and removing the end-of- aisle displays would result in GDL having either to restock products in aisles more frequently, requiring GDL to increase the number of staff at the store (at significant cost to the business), or to reduce the range of products that can be carried in store with a resultant impact for its customers. Removing the end-of aisle displays would result in cost and inconvenience in rearranging the single alcohol area.67
[105] In respect of the data referred to by Dr Rainger about ED admissions, Mr Radich considers that there are a number of factors that could mean the data may be an outlier when compared to earlier snapshot data, including for example that that was the night of the Woodstock ‘Fight for Life’ held at the Trusts Arena as well as ‘Christmas in the Park’ in the Auckland Domain. In any event, Mr Radich said in evidence that Hauraki Countdown was not yet trading as GDL’s lease did not commence until 1 April 2014.68

Analysis

[106] The Authority does not find the evidence of Dr Lang to be of direct assistance in determining whether the SAA limits so far as is reasonably practicable the exposure of shoppers to alcohol. This is because the evidence is primarily focused on the supermarket design as a way to maximise sales rather than exposure. There is no

63 Rainger BoE at [11]

64 Rainger BoE at [18] – [19]

65 Radich BoE at [2.8]

66 Radich BoE at [3.1]

67 Radich BoE at [3.1]

68 Radich BoE at [4]

requirement in ss 112 – 114 to limit sales. That said, to the extent that increased sales can be correlated to increased exposure, Dr Lang’s evidence is that end-of aisle displays clearly increases exposure, but also that the dense ends limits that exposure.

[107] Having regard to the drivers of exposure, from its site visit the Authority is of the view that the end-of-aisle displays are not highly visible from a variety of angles and distances. They are not visible outside of the SAA itself, nor from the race course until one is virtually upon them. Even with the removal of the end-of aisle ends, the width of the aisles is such that alcohol product will remain visible from the race course without having to enter into the SAA. This means that in the circumstances any additional benefit from removing the end-of-aisle displays is likely to be overstated from the perspective of exposure. Aside from the issue of end-of aisles, there is no objection to displays of alcohol within the aisle including those which protrude into the aisle.

[108] In terms of the concerns of Mr Li that having the ends-of-aisles open on three sides would create a high level of exposure, this has since been mitigated by the use of dense ends. Consequently, it is no longer the case that shoppers will be exposed to end-of aisle displays from a variety of angles and distance.

[109] Dr Rainger’s evidence that the alcohol attributed admission attendances for the North Shore hospital are significantly higher than New Zealand and Auckland rates overall is of concern but as this data is limited to one day only, the Authority does not consider it possible to draw a link between a real risk of alcohol-related harm and the renewal of the licence. Dr Rainger himself acknowledged that there is nothing extraordinary about the levels of ARH in the locality.

[110] In Medical Officer of Health (Wellington Region) v Lion Liquor Retail Limited69 Clark J confirmed that it the risk profile of a premises is relevant and while there is no requirement to link specific ARH to specific off-licences,70 there still needs to be an evidential foundation enabling a link to be drawn between a real risk of ARH and the grant or renewal of a licence. Where that foundation is established there is a requirement to minimise that risk, which may entail the imposition of conditions on the licence. The Authority is not satisfied that the evidence of harm meets this threshold beyond the general propositions that Hauraki is not immune to alcohol-related harm and there is a link between alcohol availability and ARH.

[111] Moreover, while ‘limiting exposure’ may provide a public health benefit in itself, that is not the purpose of ss 113-114. Again, the purpose of those sections is to limit exposure so far as is reasonably practicable.

[112] Against that, Mr Radich’s evidence is of the steps taken to limit exposure, through the SAA occupying less than one full aisle of the store, not being visible from the entrance or point of sales and allow shoppers to complete a grocery shop without entering the area. This evidence accords with the Authority’s observations of the premises. The evidence also is that there will be a cost in relaying the store should the SAA effectively be reduced in size by the area of end-of-aisle displays.

• [113] The majority of DLC said of the evidence:71
  

69 Medical Officer of Health (Wellington Region) v Lion Liquor Retail Limited [2018] NZHC 1123 [18 May 2018]

70 at [64]

71 at [37] – [38]

The evidence presented by Dr Lang was interesting and relatively compelling. In our view, it is clear that from the research addressed by Dr Lang that end of aisle displays are a retailing marketing tool form promoting and increasing sales. Such spaces are sought after by manufacturers.

We also understand that removing the end of aisle will come at a cost to the applicant by either reducing the amount of alcohol displayed or undertaking a relay of the entire store. Mr Radich only provided some general information on the cost involved in undertaking such an exercise. It would have been useful to have been provided more definite information. In any event, the lack of definitions does not inhibit the Committee from making a decision.

[114] Nevertheless, the majority formed the view that it was not necessary to exclude the end-of-aisle displays from the SAA as the sacrifices GDL must make outweigh the benefits to be gained from doing so.72 The Authority is satisfied that this view is one which was open to the DLC on the evidence.

Conclusion

[115] The Authority is satisfied that the DLC recognised the test it was required to apply, and that in describing the SAA to limit (so far as is reasonably practicable), the exposure of shoppers to displays and promotions of alcohol, the DLC appropriately balanced the benefit sought to be secured and the sacrifices that would be occasioned by securing that benefit. The Authority is satisfied that in doing so it was not required to exclude the end-of-aisle displays from the SAA.

[116] The Authority is of the view that with the undertaking offered by GDL not to remove the dense ends during the duration of the current period of the licence, the need for a s 117 condition prohibiting end-of-aisle displays also evaporates. In reliance on GDL’s undertaking, and for the reasons stated, the modification (including the s 117 condition) sought by the Medical Officer of Health is declined.

[117] The appeal is dismissed. Pursuant to s 158 of the Act, the decision of the DLC is confirmed.

[118] For the avoidance of doubt, the Authority confirms the SAA is that described in the floor plan appended to this decision.

DATED at WELLINGTON this 18th day of April 2019

District Court Judge K D Kelly Chairperson

Alcohol Regulatory and Licensing Authority

MoH v General Distributors (Countdown Hauraki) appeal

72 at [39] and [40(b)]