[1] On 1 December 1999 amendments to the Sale of Liquor Act 1989 reducing the drinking age in New Zealand came into effect. The age of persons to whom liquor could be sold or supplied at licensed premises became 18 years. At the same time as it enacted this liberalising measure Parliament doubled the maximum penalties for all offences under the Act. The maximum penalty that could be imposed on a licensee for the supply of liquor to underaged persons became a fine of $10,000.
[2] At the same time mandatory reporting by the police to the Liquor Licensing Authority of the conviction of a licensee whose business had sold liquor to an underaged person was introduced. The Liquor Licensing Authority became required to consider whether to hold a public hearing to look into whether the convicted person’s licence should be suspended or cancelled. Other provisions aimed at facilitating and securing compliance by licensees, managers and staff with the reduced drinking age were also introduced in the 1999 legislation.
[3] This appeal is concerned with enforcement action taken by the Liquor Licensing Authority on application by the police and a licensing inspector at Christchurch to suspend for a short period the licences of five licensees in Christchurch whose businesses were shown during a test purchase operation to have sold liquor to an under-aged person on a single occasion. The High Court allowed appeals by the licensees against the suspension orders holding that they had been imposed by the Liquor Licensing Authority for the purpose of punishment, which was not authorised by the Sale of Liquor Act. The present appeal has been brought by the police and the inspector, with the leave of the High Court, against that decision.

Background facts

[4] During 2001 the Police, inspectors of the District Licensing Agency at Christchurch and Christchurch Crown Public Health, a public body which undertakes health promotion and protection activities, became concerned at the apparent ease with which local young persons were able to acquire liquor. They decided to take a combined approach to the problem and arranged for a series of test purchases of liquor from licensed premises in the city to be undertaken by under-aged persons. On 13 December 2001 three volunteers aged 17, 16½ and 15½ years, each of whom had parental consent, sought to purchase liquor to take away at a total of 30 off-licensed premises in Christchurch. In seven instances they were successful. The 16½ year old, a male, was served at four of the eight premises he visited and the 15½ year old, a female at three of the ten outlets she approached. The third volunteer, a 17 year old male, was refused service at each of the twelve premises where he sought to make a purchase.
[5] The test purchases operation was the second of its kind undertaken in Christchurch by the authorities concerned. On 5 October 2001 some 34 off-licensed premises had been approached in the course of a similar operation which received extensive local publicity. On that occasion sales had been made to underaged volunteers at seven licensed premises. Shortly afterwards a letter was sent by the authorities to the licensees of each of the 150 off-licensed premises in Christchurch explaining why the test purchases operation had been undertaken. The letter referred to a recent release of national statistical information which pointed to an increase in the number of young people coming to the attention of health services as a result of their liquor related problems. The letter also said that the October operation was considered necessary by the authorities responsible in order to identify those premises which were acting in breach of requirements of the Sale of Liquor Act 1989, and it would be repeated in the future, with the subsequent prosecution of those who offended. The operation of 5 October was to be treated as a warning.
[6] The letter to licensees was followed up by a District Licensing Agency newsletter sent out in November 2001 which repeated the message that the October test purchase operation was a warning and repeated the indication that there would be further test purchases in the future. The test purchases on 13 December 2001 followed, in the course of which all seven off-licensed premises which had made sales to underaged volunteers the previous October were revisited. One of the seven licensed premises from which purchases were made by underaged volunteers on that occasion had also sold liquor to a volunteer the previous October.
[7] The Police then applied to the Liquor Licensing Authority (the Authority) under s132 of the Sale of Liquor Act 1989 (the Act) for suspension of the off premises licences held in respect of five of the businesses concerned, and a District Licensing Agency inspector applied for suspension of the other two off-premises licences. As well, applications for suspension of the seven managers’ certificates held by those on duty at the licensed premises at the time were made under s135 of the Act. Charges were also laid by the Police against five of those staff at the premises who made the sales concerned under offence provisions of the Act. These prosecutions did not however proceed as those charged were dealt with either by diversion or through the Youth Aid section of the police. No prosecutions were brought by the Licensing Agency in relation to the underage sales at the premises for which it had assumed responsibility for enforcement action.

Liquor Licensing Authority decision

[8] The applications for suspension of the off-premises licences and managers’ certificates were heard by the Licensing Authority on 22, 23 and 24 April 2002. A separate hearing was held in respect of the off premises licence of each premises together with the manager’s certificate of the duty manager. The ground of the applications for suspension of the licences was that the premises had been conducted in breach of the provisions of the Act. At the hearing each licensee pointed to its past conviction free record, the remedial steps it had taken since the test purchase operation, and the one off nature of the incident of sale giving rise to the suspension application. These circumstances were said to make suspension an excessive response. There was also some criticism on behalf of Karara Holdings Ltd, the owner of a supermarket, that the applicants had proceeded by way of application under s132 rather than by prosecution for breach of offence provisions of the Act. The Licensing Authority rejected that submission saying in effect that there were two separate parallel processes under the Act with different standards of proof. The Licensing Authority also rejected, on the facts, a further submission in the case of Karara Holdings that the employee making the sale had believed, on reasonable grounds, that the purchaser was 18 years of age (a defence available under s155(4)). Submissions by this and other licensees that there had been inappropriate entrapment of the serving employees were also rejected.
[9] On 7 May 2002 the Licensing Authority, comprising Judge Unwin and Mr Crookston, gave a composite decision in respect of all applications in which it separately addressed the circumstances of each opposing licensee. By way of background the Licensing Authority referred to a survey commissioned by the Alcohol and Public Health Research Unit which indicated that the number of successful purchases of liquor from supermarkets by 16 and 17 year olds had increased from 8% in 1995 to 15% in 2000. It also referred to a Ministry of Justice report which indicated that, whilst the proportion of those under 18 years who drank liquor had not increased since the law was changed, there were indications of an increased frequency of drinking in the group and of increased consumption on typical drinking occasions. The Licensing Authority also referred to difficulties faced by the Police and inspectorates of District Licensing Agencies in enforcing the drinking age restriction under the Act. It observed:

As has been amply shown in ... cases currently before the Authority, the absence of detection does not equate to an absence of offending.

[10] The Licensing Authority was satisfied that a ground for suspension of each off-premises licence had been made out by the applicant authorities. The Authority rejected a suggestion that each licensee should have been given an individual warning, rather than have to face a suspension application. There had been large media coverage of the issue of access to liquor by minors, and the Licensing Authority, in its previous decisions, had made plain to the industry that breaches of the law could result in suspension without prior warnings. The message which the Licensing Authority had constantly stressed was: “No identification – no sale.” By implication the Authority here was referring to an amendment to the Act in 1999 under which, if the person selling or supplying liquor had sighted an “evidence of age” document (which by definition includes a driver’s licence and a document issued by a specified organisation) reasonable grounds would exist for a belief by the person selling the liquor that the purchaser had attained 18 years of age, providing a defence to the unlawful supply (s155(4), and (4A); s2A).
[11] The Licensing Authority also observed that the fact that there had been only 75% compliance during the controlled purchase operation showed that the message had not got through to most licensees that they and their employees needed to be alert to prevent underaged sales. The long-term objective should be that all test purchases were unsuccessful. Training, experience and enforcement were necessary to attain the objective of the Act.
[12] The suspension, for a moderate period, of each of the licences concerned was seen by the Licensing Authority as serving the object of the Act. The financial impact was recognised, as was the past exemplary record of the respondents, and that they were to some extent being made examples for the wider industry, to influence the speed with which licensees generally would improve their compliance with the Act.
[13] The Licensing Authority made orders suspending the off-premises licences held by The Brougham Tavern Limited, Robeade Holdings Limited, Ferrymead Tavern Limited, R C and L F McLean Limited, Karara Holdings Limited. They are the respondents in the appeals presently before us. In each case the suspension ordered was for a period of five working days (from 6am Monday to 6am Saturday) later the same month. The off-licences in respect of the two other premises were also suspended by the Licensing Authority. In the case of Woolworths (New Zealand) Limited the suspension was for a lesser period of three working days. This was despite the fact that its Big Fresh Supermarket had also made the sale to an underaged person during the test purchase operation on 5 October 2001. The Authority, however, took the view that it was appropriate to recognise that special systems for preventing under-aged sales of liquor had been introduced by Woolworths. These included the licensee’s own arrangements for test purchases to test checkout operator compliance, the compilation of a staff learning guide and internal disciplinary procedures. Neither the Woolworths suspension nor that of the seventh licensee are before this Court. All told, the licences of three supermarkets, a night and day foodstore, and three taverns were suspended.

High Court judgment

[14] The five licensees who are respondents in this Court appealed to the High Court against the Licensing Authority’s decision. Their right of appeal was confined to a question of law under s139 of the Act. The appeal was heard by Panckhurst J who delivered a reserved judgment on 8 July 2002: Karara Holdings Limited and Others v District Licensing Agency [2002] NZAR 997. In his judgment Panckhurst J referred to arguments advanced by the licensees concerning disparity of treatment, the failure of the Licensing Authority to take into account relevant considerations, and the like, as being more appropriately raised in a general appeal against conviction and sentence. This in the Judge’s view was not a criticism of counsel but rather pointed to the problem of the Licensing Authority punishing single instances of offending under the management enforcement provisions of Part VI of the Act, rather than the bringing of a prosecution under Part VIII, which created offences punishable on summary conviction in the District Court. There were broader rights of appeal against such convictions than were given against decisions of the Licensing Authority generally under Part VII of the Act.
[15] This concern was reflected in the Judge’s analysis of the scheme of the Act. He said that Parts I to VI were concerned with the establishment and proper maintenance of an effective licensing system in which the fundamental principle was one of management responsibility. In this context he saw part VI as empowering suspension of licences for such purposes as developing a system of responsible management. It allowed, for example, the Licensing Authority to order suspension in order that training of staff be undertaken or some change in systems or the premises of the licensee be made, before trading could resume. The provisions of Part VI were therefore not punitive in their purpose although that might be their nature and effect when applied for authorised purposes. A single breach might justify the use of the Licensing Authority’s suspension power but only if it were so serious or of such a nature that suspension was necessary without, or in tandem with, a prosecution. By contrast, the offence provisions in Part VIII of the Act were tailored to deal with all conduct in breach of the Act as and when it occurred. These provisions provided a wide range of sentencing options as well as greater scope for appeal rights. The Judge saw this fundamental distinction which was reinforced by the introduction to the Act, in 1999, of s132A, which required the reporting of convictions for certain offences under Part VIII of the Act to the Licensing Authority. The implicit purpose of that provision was to encourage, in appropriate cases, the use of s132 in order to undertake a broader consideration of the requirements of the licensing scheme following the conviction of a licensee for certain offences under the Act.
[16] Panckhurst J accordingly decided that the single incident breaches of the respondents had not properly been dealt with under s132. This was because the licensees had an exemplary record and the proper administration of the licensing scheme of the Act did not require licence suspension to allow the development of proper procedures or to secure genuine licensing ends. The use of the section was contrary to law as it had been applied for an improper punitive purpose. The case was analogous to Poananga v State Services Commission [1985] 2 NZLR 385, in which an administrative power of transfer was impermissibly used to punish a public servant as an alternative to application of the statutory disciplinary code. The punitive focus of the Licensing Authority’s decision likewise was not authorised by the Act.
[17] For these reasons Panckhurst J allowed the respondent licensees’ appeals and quashed the orders of suspension. He described the outcome as an unfortunate result but one which was dictated by the terms of the legislation. The proper course for the authorities in this instance, on the basis of the High Court’s judgment, would have been to prosecute each of the licensees for a breach of the Act. That course was no longer open because of a statutory time-bar.

Issues on appeal

[18] The question of law for which Panckhurst J gave leave to appeal to this Court under s150(2) of the Act was whether his conclusion that the power of suspension under s132 had been used by the Licensing Authority for a purpose other than that for which it was conferred was wrong in law.
[19] Counsel for R C and L F McLean Ltd, Mr Barton, in both his written and oral submissions sought to rely on an additional ground to support the High Court decision. He argued that the Licensing Authority had used against his client evidential material that had apparently emerged at hearings in respect of the applications concerning other licensees heard during the Licensing Authority’s sitting in Christchurch that week. Mr Barton submitted that there had been a breach of natural justice and a failure to give individual justice as a result of what he called procedural improprieties. It emerged that other counsel also wished to advance for their clients this argument.
[20] Application for leave to advance a separate question of law in those terms was made by the respondents accordingly and we heard the parties on it. Despite opposition from Mr Smith for the Inspector we have decided to grant leave to the respondents to argue this additional point of law in order to facilitate bringing these matters to a conclusion.

Statutory provisions

[21] We start with the section itself. At the time of the Licensing Authority’s decision s132 relevantly provided:

132 Variation, suspension, or cancellation of licences other than special licenses

(1) Any member of the Police or any inspector may at any time apply to the Licensing Authority in accordance with this section for an order-

(a) Varying or revoking any condition of a licence, other than a special licence, imposed by the Licensing Authority, or imposing any new condition (relating to any matters specified in section 14(5) or section 37(4) or section 60(2) of this Act; or

(b) Suspending the licence; or

(2) Every application for an order under this section shall-

(a) Be made in the prescribed form and manner; and

(b) Contain the prescribed particulars; and

(3) The grounds on which an application for an order under this section may be made are as follows:

(a) That the licensed premises have been conducted in breach of any of the provisions of this Act or of any conditions of the licence or otherwise in an improper manner:

(b) That the conduct of the licensee is such as to show that he or she is not a suitable person to hold the licence:

(c) The licensed premises are being used in a disorderly manner so as to be obnoxious to neighbouring residents or to the public.

(4) The Secretary shall-

(a) Send a copy of the application to the licensee; and

(b) Fix the earliest practicable date for a public hearing of the application; and

(5) The applicant and the licensee shall be entitled to appear and be heard at the hearing, whether personally or by counsel, and to call, examine, and cross-examine witnesses.

(6) If the Licensing Authority is satisfied that any of the grounds specified in subsection (3) of this section is established and that it is desirable to make an order under this section, it may, by order,-

(a) Vary or revoke any condition of the licence imposed by the Licensing Authority; or

(b) Impose any new condition (relating to any matter specified in section 14(5) or section 37(4) or section 60(2) of this Act); or

(d) Cancel the licence.

(7) Instead of making an order under subsection (6) of this section, the Licensing Authority may adjourn the application for such period as it thinks fit to give the licensee an opportunity to remedy any matters that the Licensing Authority may require to be remedied within that period.

[22] The section confers on the Licensing Authority a power to vary, suspend or cancel any licence other than a special licence. There are equivalent provisions in respect of special licences and managers’ certificates in ss133 and 135. There are three alternative grounds on which the police or licensing inspectorate can apply to the Licensing Authority under s132 for orders under that section. Each is concerned with how the licensed premises have been conducted. The sole ground relied on in the present case was that the licensed premises had been conducted in breach of the Act (s132(3)(a)). This ground is concerned with specific conduct in breach of the law or a licence condition. The other two grounds are more concerned with conduct generally which reflects on a licensee’s suitability (s132(3)(b)) or amounts to use of the licensed premises in a disorderly manner (s132(3)(c)).
[23] An application under s132 must be the subject of a public hearing at the earliest practicable date, at which the applicant and the licensee are entitled to participate. If following the hearing the Licensing Authority is satisfied that a specified ground has been established, and that it is desirable to make an order, it may vary or revoke conditions of the licence, suspend the licence for up to six months, or cancel the licence. The Licensing Authority may instead adjourn the application for a period to give the licensee an opportunity to remedy any matters the Licensing Authority requires be remedied.
[24] Subject to an argument advanced for Karara Holdings Ltd by Mr Hampton QC concerning whether a single incident of conduct in breach of the Act can satisfy the first ground under s132(3)(a), to which we shall shortly return, s132 is a broadly expressed provision empowering the Licensing Authority to make orders including licence suspension. As Mr Smith, counsel for the licensing inspector, pointed out s132(6) requires that the Licensing Authority be satisfied that one or more grounds for an order are made out and thereafter simply that it is desirable to make an order. Instead of making an order the Licensing Authority is able to adjourn an application to remedy matters of concern. The principal question of law before us, however, is the extent to which the section’s operation is confined by the purposes for which these powers were given. Consideration of that question, and of the meaning of s132(3)(a), requires further consideration of the scheme and purpose of the Act.
[25] The Act, like its predecessors, established a regime for the sale and supply of liquor in New Zealand in the form of a licensing system. Its underlying principle is that the sale of liquor to the public or any member of the public requires a licence (s6(1)). The Act also creates offences in relation to various practices in sale and supply of liquor. The nature of the licensing system under the Act, and the manner in which the agencies created by the Act are to administer it, are stipulated in a statement of its object:

4. Object of Act – (1) The object of this Act is to establish a reasonable system of control over the sale and supply of liquor to the public with the aim of contributing to the reduction of liquor abuse, so far as that can be achieved by legislative means.

(2) The Licensing Authority, every District Licensing Agency, and any Court hearing any appeal against any decision of the Licensing Authority, shall exercise its jurisdiction, powers, and discretions under this Act in the manner that is most likely to promote the object of this Act.

[26] Section 4 expresses a philosophy concerning the social utility of controls over the sale and supply of liquor which reflects the underlying policy of the Act. Parliament has declared that the Act’s system of controls over the sale and supply of liquor should be administered so as to contribute to the reduction of liquor abuse in the community within the limits of their capacity to do so. The stipulation that the object of the Act is to establish a reasonable system of control reflects that legislative perception. It also implicitly recognises that if the administration of the Act’s licensing system becomes too heavy-handed, so that it unreasonably inconveniences those wishing to purchase and consume liquor in a manner not giving rise to abuse, that result would be inconsistent with the statutory object. The licensing bodies which administer the licensing system, and the Courts on appeal, are required by s4(2) of the Act to exercise their respective functions in a manner that is most likely to promote this underlying statutory policy and object.
[27] The licensing system which the Act establishes is simplified and functional. There are four types of licence: on licences, off licences, club licences and special licences. Those applying for licences must meet qualitative requirements so that, for example, before a District Licensing Agency grants an off-licence it must be satisfied of the suitability of the applicant, the adequacy of steps proposed to ensure compliance with the Act, and the suitability of the premises to be licensed (ss33 to 35). The Act also requires public notice of the application, and inquiry and report from the police and the licensing inspectorate. There is an opportunity for the public to object to the grant of the application on ground of unsuitability of the applicant. Importantly, however, under the Act there are no restrictions of an economic kind on the grant of licences such as by reference to tests of “need or desirability” for new licensed premises. These were a feature of previous legislation. It follows that licences are more readily available under the Act than they were under previous licensing regimes to those who establish their personal suitability, and that of their premises, for the purposes for which they apply to be licensed. As well the Act expressly provided for the first time that the types of premises that could be licensed were to include supermarkets (s136). In essence the 1989 Act provides a more liberal licensing system.
[28] The Act establishes the Licensing Authority as the specialist tribunal with national responsibilities in the administration of the Act’s licensing system. It is chaired by a District Court Judge. It also confers on New Zealand’s local authorities the responsibilities of District Licensing Agencies. They have subsidiary licensing functions and regulatory responsibilities in their areas of jurisdiction. The latter include the provision by the District Agencies of a licensing inspectorate (s103). These respective functions reflect the need for the continuing administration of the licensing system, at a national and local level. It is in this wider statutory context that s132 is to be interpreted and the purpose of the power of suspension it gives the Licensing Authority ascertained.
[29] Section 132 appears in Part VI of the Act, which is headed Management of Licensed Premises, where it is one of a group of sections under the sub-heading Enforcement Provisions. As the Judge recognised, this indicates that the function of s132 is to enable the Licensing Authority to enforce sound management of licensed premises. Its particular role is to enable the Licensing Authority to secure management compliance by licensees, through enforcement steps, in those cases brought before it by the Police or District Licensing Agencies where it appears there have been breaches in licensing standards which are reflected in the grounds for applying for and making orders under s132.
[30] Section 132 accordingly provides a mechanism which the Licensing Authority, in appropriate cases, can use to ensure continuing management compliance by licensees in furtherance of the public interest in reducing liquor abuse. The place of s132 in the Act is to achieve the purpose of maintaining the integrity and effectiveness of the licensing system. The powers of the Licensing Authority to make orders under s132 in respect of licences, following particular proved breaches of standards of conduct of licensed premises, reflects a legislative perception of the appropriate scope of the powers required by the statutory body with principal responsibility for administration of the Act to achieve the statutory object.
[31] We now turn to the offence provisions of Part VIII of the Act which are more broadly directed. Offences in relation to supply of liquor to under-aged persons and outside of licensed hours are committed by those supplied with liquor and by those actually making the unlawful supply as well as by licensees. There is also provision for the vicarious liability of a manager on duty or a licensee. As the High Court Judge said the offence provisions are of a different character to licensing system controls under the Act although they are closely aligned with them. By enabling breaches of the law to be punished the offence provisions provide incentives for licensees to conduct their licensed businesses in accordance with the requirements of the Act.
[32] As indicated, the 1999 amendment to the Act introduced mandatory reporting by the Police to the Licensing Authority of convictions of licensees and managers for certain offences, namely those of sale of liquor to under-aged persons (s155), sale of liquor at unauthorised times (s165), sale of liquor to intoxicated persons (s166(1)), and allowing a person to become intoxicated on licensed premises (s167). Convictions of employees for equivalent offences under ss155(2) and 166(2) must likewise be reported. Section 132A requires that in all such cases the report must include a summary of the evidence founding the conviction, a statement by the Police concerning any past conduct of the premises in breach of the Act, and a further statement of the Police view of whether the conduct concerned shows that the licensee is not a suitable person to hold a licence. The Police must also recommend whether the licence of the convicted person should be suspended or cancelled, and give reasons for that recommendation. The Licensing Authority must consider the report and has the power to hold a public hearing into whether the licence should be suspended or cancelled (s132A(5)). The grounds for making such an order are closely similar to those under s132 of the Act. The licence can be suspended for up to 6 months or cancelled (s132A(8)).
[33] Prior to the 1999 amendment there was no provision in the Act enabling suspension or cancellation of a licence as part of the penalty imposed by the District Court on a licensee who had committed an offence. The Act during that time had maintained a strict separation between powers of suspension and cancellation of licences, which were seen as the exclusive responsibility of the Licensing Authority, and imposition of penalties for breach of the law which was that of the District Court. The 1999 amendment also conferred on the District Court a new sentencing option, following conviction of a licensee for any one of certain offences, including under-aged sale of liquor. In addition to any other penalty the District Court was empowered to suspend the convicted person’s licence for up to seven days as part of the sentence for the offence(s155). The Act also generally increased maximum fines and that for a licensee who sells or supplies liquor or allows it to be supplied on or from licensed premises, under s155, was doubled to $10,000.

Were the premises conducted in breach?

[34] One argument advanced by Mr Hampton QC, and adopted by counsel for other respondents, was that it could not be said that licensed premises had been conducted in breach of any provision of the Act under s132(3)(a), on the basis of a single instance of breach of the law, here by sale of liquor to an underaged person. The contention was that in the context of a provision stating a ground for enforcement action for inappropriate conduct of licensed premises conducted only denotes continuing conduct.
[35] The Report of the Working Party on Liquor (1986), chaired by Sir George Laking, on which the scheme of the Act is largely based, made specific reference to the role of powers of cancellation and suspension of licences as part of licensing enforcement:

CANCELLATION OR SUSPENSION

4.33 Under the present system there is an evident reluctance on the part of the licensing authorities to cancel any licence. We can appreciate that this is a severe penalty which can have adverse consequences on the viability of the business. But in our view too little use has been made of the power to suspend licences particularly where there is a history of recurring breaches of the law. If a licensee, whether a sports club or of a tavern, who regularly sells liquor to minors were to have the licence suspended for even a short period it would act as a strong incentive to comply with the law on underage drinking...

4.34 We also propose that licensees be made more responsible for the actions of managers appointed by them and the draft Bill reflects that concern. We draw attention also to the proposal that a licence be subject to cancellation or suspension through a failure of the manager, as distinct from the licensee, to conduct the premises in a proper manner.

This passage however does suggest that the authors of the Report believed that it would not often be thought appropriate for a one-off breach of the Act to give rise to suspension of a licence.

[36] There was a similar expression of expectation by Dr Wayne Mapp MP who was responsible for proposing to the House, in the course of the passage of the Sale of Liquor Bill, the provision that became s132A of the Act. During the Committee stage of the Bill Dr Mapp described the provision as a “wake-up call to establishments that are regularly breaking the law” (27 July 1999) 579 NZPD 18,562. When considering legislative history or passages in Hansard as a guide to the meaning of a statute, however, it is important to have a clear focus on the statutory language that is to be interpreted. The Working Party’s view, like that of the proposing Member of the House of Representatives in 1999, is no more than an indication of how they each contemplated a power of suspension itself might be applied by the Licensing Authority. They do not control the scope of the power of suspension which ultimately is to be ascertained from the statutory language in its context: R v Secretary of State for the Environment ex parte Spath Holme Ltd [2001] AC 349, 392 B to D per Lord Bingham.
[37] The particular ground for the application under s132(3)(a) that the appellants made was that the licensed premises of the respondents have been conducted in breach of the provisions of the Act. The statutory object of establishing a reasonable system of control over sale and supply of liquor to the public, contributing to reduced liquor abuse, supports a broad meaning of conducted. It indicates a meaning of s132(3)(a) which allows a single instance of conduct amounting to an offence under the Act to be the basis for an application. This is also consistent with the specific nature of conduct giving rise to the s132(3)(a) ground compared with the more general conduct qualifying as a basis for application under sub-paragraph (b). Furthermore, it is most unlikely that Parliament would have stated a ground for application by the Police and inspectors for an order under s132 in imprecise terms. If continuing conduct in breach were required before those authorities could apply under s132 they would have to reach difficult judgmental conclusions as to how many occasions of breach had to be shown, and over what period of time, before they could even make application to the Licensing Authority. The Licensing Authority itself would encounter the same complexities in deciding whether the ground under s132(6) was made out. It is highly unlikely that the legislature would have intended to subject the respective authorities to such an uncertain standard.
[38] For these reasons we conclude that a single instance of underaged sale of liquor on licensed premises is sufficient under s132(3) and (6) to show they have been conducted in breach of the provisions of the Act and reject the submissions of counsel for the respondents to the contrary.

The scope of the suspension power under s132

[39] Counsel for each of the respondents advanced argument in support of the High Court judge’s conclusion that the power of suspension under s132 had been wrongly applied for a punitive purpose. Mr Munro appeared for holders of off-licences in respect of the three taverns, and also for the Hospitality Association of New Zealand which had been given leave to intervene in the appeal. He argued that it was not the role of the Licensing Authority to operate as a first instance disciplinary body for licensees and managers. He also suggested that the manner in which the appellants had proceeded, under s132 rather than by prosecution in the District Court, had the potential for allowing systemic avoidance of that Court’s role in determination of criminal offending. He cited this Court’s decision on availability of exemplary damages in tort claims, where the conduct alleged was criminal offending, in Daniels v Thompson [1998] 3 NZLR 22, for the proposition that “the infliction of punishment for criminal offending lies as it should, primarily with the criminal law” (at p53).
[40] The last proposition, however, assumes that the s132 process is criminal in nature. That is not the case. The purpose of the power of suspension and cancellation under the Act, as it indicated, is to enforce proper standards of conduct by licensees of their licensed premises in the public interest. The powers may be applied as a consequence of conduct that is in breach of the law, as s132(3)(a) specifically allows, but that does not mean that the powers are criminal in nature. This can be demonstrated by reference to the analogous licensing systems regulating many occupations in New Zealand. It is long established, for example, that powers of suspension or removal of the right to practice under the disciplinary provisions currently appearing in the Medical Practitioners Act 1995 Part VIII and the Law Practitioners Act 1982 Part VII are not criminal in nature but rather exist to ensure that the appropriate standards of conduct in those professions are maintained: In re a Medical Practitioner [1959] NZLR 784, 800 per Gresson P; 814 per North and Cleary JJ; see also Dental Council of New Zealand v Bell [1992] 1 NZLR 438, 445 and Dentice v Valuers Registration Board [1992] 1 NZLR 720, 724. In Dentice a range of occupations so regulated is listed.
[41] Once it is appreciated that licensing enforcement, involving suspension on account of failure to meet standards of conduct, is not a criminal process a major element of the High Court Judge’s reasoning is undermined. There is then no sound basis for reading down the scope of Part VI powers to ensure that full scope is given to the summary criminal process of the District Court. Whether or not the licensing enforcement procedure was used by the Licensing Authority for disciplinary purposes, as Mr Munro also argued, is beside the point. The purpose of Part VI in general and s132 in particular in the scheme of the Act is to maintain the integrity and effectiveness of the licensing system through management compliance with standards. Provided the use of the power is within the scope of that purpose it is authorised by the Act. Whether the effect, from a licensee’s perception, is disciplinary or even punitive is then irrelevant as long as it is merely an incidental effect to the genuine use of the power for the authorised purpose. The offence provisions of Part VIII are of course an important part of the statutory framework. They are separate from licensing enforcement and are administered by a court in its criminal jurisdiction rather than a statutory tribunal. The two sets of provisions in the respective parts of the Act operate in tandem and it is open to enforcement agencies such as the police and licensing inspectorate to choose between them or even, where they consider the situation warrants, to invoke both: Super Star Bar (NZ) Ltd v Kaveney: HC100/96, Auckland, 17 December 1996.
[42] There was some criticism of the Licensing Authority by the High Court for expressing a general view that it was the more appropriate forum for enforcement proceedings because of the advantages of speed and consistency. There is no reason why such a view should not be expressed by the Licensing Authority to District Licensing Agencies and the Police. The Licensing Authority may take policy positions for the purpose of better discharging its functions and may advise those having an interest of its views. It should be borne in mind that Parliament in 1989 took the view that a national licensing body should continue to be the principal licensing system regulator. Clearly it is able to rely on its expertise and background knowledge in discharging its functions.
[43] It is necessary for us to consider arguments advanced to us by counsel for the respondents to the effect that even if originally s132 was a power of broad scope the position changed in 1999 when s132A was introduced to the Act and a short period of suspension became one of the penalties available to the District Court following conviction of a licensee for offences against the Act. Mr Hampton argued that the scheme of s132A contemplated that its procedures which are initiated by reporting of convictions should thereafter be followed before a licence was suspended for conduct in breach of the law rather than the application based procedure under s132. He emphasised that the 1999 procedures were intended to inform the Authority, not only of the conviction, but also of the general background as to the recent conduct of the licensed premises by the licensee. Ultimately, the matters on which the Authority had to be satisfied reflected the same requirements as those in s132(6) of the Act which, Mr Hampton said, also indicated that s132A was intended to be in substitution for the earlier provision rather than additional to and duplicating it.
[44] This argument was elaborated by Mr Hampton and supported by other counsel in a number of ways. We are however satisfied that there is no sound basis for it. We can state our reasons shortly. The event which resulted in the introduction of s132A to the Act was of course the reduction of the drinking age to 18 years. This was a further liberalisation of the liquor laws and the enactment of s132A clearly reflected a particular concern felt by members of the House of Representatives over the possible adverse social consequences of that change. That context, coupled with the absence of any words in s132A indicating it was intended to supplant s132 or make it a subordinate provision, lead us to the conclusion that s132A is intended to provide an additional procedure for suspension rather than a substitute for the existing one. It is highly improbable that in 1999 there was any legislative intention to curtail existing licensing enforcement powers of the Licensing Authority as the national licensing body. The Member of Parliament whose initiative led to the introduction of the provision to the House of Representatives described it as “a further layer of enforcement and control”: (27 July 1999) 579 NZPD 18,563. The addition of the District Court’s short power of suspension, as part of the punishment for offending, was accordingly not intended to be in substitution for the Licensing Authority’s powers under s132. Rather those wide powers to vary, suspend and cancel licences were intended to have full continuing effect. We accordingly reject the argument that the 1999 legislation had a confining effect on the scope of the power under s132.
[45] Finally on the question of the scope of the power of suspension we refer again to the views of the 1986 Working Party on Liquor, whose proposals led to the more liberal licensing system of the 1989 Act. The Working Party’s firm views on the role of suspension and cancellation of licences in licensing enforcement has already been set out in para [35] of this judgment. They reflect a perception that while licences giving the right to sell and supply liquor would be more easily obtained under their proposed system than under previous statutory regimes, it would be necessary to enforce the standards expected of licensees more rigorously than had been done in the past. The conclusion expressed in this judgment that the powers of the Licensing Authority, under s132, in respect of suspension and cancellation are to be given the broad meaning that is indicated by their language in its context accords with what the Working Party saw as necessary and desirable to maintain the effectiveness of licensing controls. The Act, in this respect, puts responsibility for the enforcement decisions largely in the hands of the Licensing Authority reflecting Parliament’s view of its central importance to the licensing system. There is limited scope for appeal from its decisions other than where questions of a licensee’s suitability or character are involved or on questions of law (ss138 and 139). Provided the grounds are properly made out by an applicant under s132, and the Authority is acting for the purposes of the Act, its role as the decision maker is to be respected by the Courts.

Natural justice

[46] As indicated, we decided to give leave to the respondents to add an additional question of law to be determined in the appeal. The additional question concerned whether there had been a breach of natural justice by the Licensing Authority in the manner it conducted its hearing. We are satisfied there is nothing in this point which was fully argued before us. The complaint concerns the taking into account of material such as patterns of liquor consumption by young persons and test purchase operations including that in October 2001. As Mr Oliver, for the Police, pointed out the matters which the Authority is said to have unfairly relied on were of a background nature only which could have been taken into account by the Authority as part of its general knowledge of and expertise in the industry without formal evidence. There was no unfairness or lack of individual justice in the way the Licensing Authority proceeded. The circumstances bear no relation to those in Meads Brothers Limited v Rotorua Licensing Agency [2001] NZCA 386; [2002] NZAR 308 a decision of this Court relied on by Mr Barton. In Meads Brothers Limited the Licensing Authority, after concluding its hearing into a contested licence renewal application, received and took into account in reaching its decision fresh material adverse to the licensee without providing it with an opportunity to comment. This Court set aside the resulting decision to renew the licence subject to restrictive conditions.

The Licensing Authority’s purpose in this case

[47] The Licensing Authority’s conclusion that the off-licences of the respondents should be suspended for a short period was reached on the basis that the grounds for suspension were made out and because of general concerns over the increasing degree of access by under-aged persons to liquor often through direct purchases from licensees. Although there are references equating the suspension to a punishment in its decision we are satisfied they are no more than indications of recognition of the incidental effect of the decisions. The principal reasons reflected the Licensing Authority’s judgment of what was required to uphold the integrity and effectiveness of the licensing system. It was within the scope of its power to reach the decision it did. For this reason the appeal against the judgment of the High Court must be allowed and the Licensing Authority’s decision reinstated.

Outcome

[48] For these reasons the appeals are allowed and the questions of law referred to in paragraphs [18] and [19] above answered in favour of the appellants. Unless counsel for any of the respondents advises us within seven days that in respect of a particular respondent there are matters requiring further argument in the High Court we shall make an order dismissing the appeals to that Court by the respondents and remitting the matter to the Licensing Authority to set fresh starting dates for the periods of suspension.
[49] The two appellants are each entitled to costs in both Courts which we fix at $6000 together with disbursements, including reasonable travel and accommodation costs of counsel, to be agreed on or failing agreement fixed by the Registrar. The five respondents are each liable to meet an equal share of those costs and disbursements.

Solicitors:
Buddle Findlay, Christchurch, for Appellant in CA178/02
Mackintosh Bradley Price, Christchurch, for First Respondent in CA178/02
Anderson Lloyd Caudwell, Dunedin, for Second Respondent in CA178/02
Crown Law Office, Wellington for Appellant in CA179/02
Munro Law, Wellington, for Respondents in CA179/02

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