Linwood Food Bar Limited v Davison [2014] NZHC 2980 (27 November 2014)

Last Updated: 4 December 2014

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000562 [2014] NZHC 2980

BETWEEN	LINWOOD FOOD BAR LIMITED Appellant
AND	JENNIFER DAVISON Respondent
AND	STUART JOY Second Respondent
AND	PETER SHAW Third Respondent

Hearing:	11 November 2014
Appearances:	T J MacKenzie and N M McSparron for Plaintiff H F McKenzie for Defendant
Judgment:	27 November 2014

_{RESERVED JUDGMENT OF DUNNINGHAM J}

[1] Linwood Food Bar Limited (Linwood) operates a bar in Riccarton Road, Christchurch, known as Richey Bar. In December last year it applied to renew its on-licence and to extend its closing hours. All three of the respondents¹ opposed the application, citing wide ranging concerns about the bar’s operation and the role played by Linwood’s director, Mr Zhang, in the running of the bar.

[2] In a decision delivered on 1 August 2014, both applications were refused. Linwood appeals that decision, arguing that the Alcohol Regulatory and Licensing Authority’s (the Authority) finding that Mr Zhang had “overruled” the general

_{manager of the bar and thereby “allowed unsuitable persons to enter ...”,}² _was

¹ Being the District Licensing Inspector, a Police representative and a representative of the

_{Medical Officer of Health.}

² _{Linwood Food Bar Ltd [2014] NZARLA PH 511.}

LINWOOD FOOD BAR LIMITED v DAVISON AND ORS [2014] NZHC 2980 [27 November 2014]

unsupportable on the evidence, and this finding was critical to its conclusion that

Linwood was not a suitable applicant.³

[3] The issue for me to determine is whether, in rehearing the matter:

(a) I agree that this finding was unsupportable on the evidence; and

(b) if I do, whether the appeal should be allowed and the application to renew the on-licence granted.⁴

Background

[4] Concerns with the operation of Richey Bar had already been aired in

October 2013, when the Authority heard five applications relating to the premises.

[5] Two applications were brought by the police and the Christchurch District Licensing Inspector (the Inspector) seeking the suspension of the on-licence and a variation of its conditions. The applications alleged that the premises had been conducted in breach of ss 167(1) and 168(1) of the Sale of Liquor Act 1989 (the

1989 Act) and condition (d) of the licence.⁵ By consent, the on-licence was

suspended for two days.

[6] Linwood’s application for a tavern style licence, rather than an entertainment licence, was granted, but its application seeking an extension of hours was adjourned to the 14 July 2014 hearing. The application by the police and the Inspector to suspend the general manager’s certificate was granted and the certificate was suspended for five weeks. The general manager’s application to renew his certificate was granted, although the renewal term was truncated.

[7] The respondents placed some importance on these earlier events because they consider that the Authority’s decision at that time identified concerns about the

3. The second ground, which is that the Authority relied on a “suspicion” of an alleged incident of intoxication to determine that Linwood was not a suitable applicant, was not pursued at hearing.
4. Linwood did not appeal the decision declining an application to vary the hours during which it could sell alcohol.

⁵ Repealed on 18 December 2013 by s 418(3) of the Sale and Supply of Alcohol Act 2012.

licensee’s suitability and signalled that suitability would also be an issue when the application for renewal of the licence was determined by the Authority.

[8] When the matter came before the Authority again in July this year, the police, the Inspector and the Medical Officer of Health all recommended that the application for renewal be declined.

[9] In summary, the grounds for opposing the renewal were:

(a) the occurrence of various breaches and shortcomings prior to October 2013, including four incidents of intoxicated patrons being found on the premises, which led to the hearing before the Authority in October 2013;

(b) the fact there had been a further incident where an intoxicated person was found on the premises on 4 January 2014;

(c) there were concerns regarding Mr Zhang’s active involvement in the management of Richey Bar, when he had no Manager’s Certificate or Liquor Licence Controller Qualification and little apparent awareness of how to comply with the 1989 Act’s requirements;

(d) Richey Bar had a record of enforcement dealings with agencies over the entire period of its licence;

(e) Richey Bar was identified as being “high risk” premises, but those involved in the management of the bar had little appreciation of the requirements to implement appropriate systems and to train staff to minimise that risk;

(f) the design and layout of the premises was not conducive to management of the risk; and

(g) Richey Bar was impacting negatively on the good order and amenity of the area.

[10] Through further updating evidence admitted at the hearing of the appeal,⁶ the respondents alleged that there had been further incidents at the Richey Bar between

1 August 2014 and 30 August 2014 when the decision to close the bar took effect.

The respondents said these included the “tail end of a fight involving approximately

30 people on 24 August 2014”, a visit by Constable Joy on 25 August 2014 where it was allegedly observed that “patron intoxication was becoming high”, a visit by the Inspector on 20 August 2014 where she observed what she describes as an “unacceptable” food offering, and also on 30 August 2014, where she alleged there was a breach of a condition of the bar’s resource consent in that both doors to the outside were open, when one door of the sound lobby needed to be closed at all times.

[11] The respondents submitted that these further incidents reinforced the correctness of the Authority’s decision, as did the 27 August 2014 decision of Gendall J who declined to stay the effect of the decision, saying “from the decision of the Authority public safety concerns and issues over the continued suitability of the appellant are real and there is nothing before me to displace these concerns or to suggest that they do not remain live”.⁷

[12] In summary the respondents consider that the Authority’s finding that Mr Zhang had “overruled” the duty manager was supported on the evidence and, in any event, was not what led the Authority to the conclusion that Linwood was not a suitable applicant. Rather, it was one factor amongst several and, looked at in totality, the Authority’s decision was correct.

The legal principles applying on appeal

[13] An appeal under the 1989 Act is by way of rehearing,⁸ though the Court

_{“shall have full discretionary power to hear and receive further evidence on}

⁶ A range of further evidence was sought to be admitted by the respondents. Only that evidence

_{which could properly be categorised as “updating evidence” was admitted.}

⁷ _{Linwood Food Bar Ltd v Davison, Joy and Shaw [2014] NZHC 2062 at [20].}

⁸ Section 138(7).

questions of fact, either by oral evidence or by affidavit”.⁹ The Authority’s decision

can be confirmed, reversed, or modified.¹⁰

[14] The level of deference to be given to the Authority by appellate Courts was clearly articulated by Kós J in Triveni Puri Ltd v Commissioner of Police:¹¹

[19] It has been observed by the Courts that there is a limited scope for appeal from the Authority. The Act puts responsibility for enforcement decisions largely in the hands of the Authority, reflecting Parliament’s view of its central importance to the licensing system. The Court is nevertheless bound to reach its own independent conclusion. It may give such weight as it thinks fit to the opinion of the Authority, but must not regard itself as bound by the Authority’s opinions, simply because it is a specialist tribunal. However, the Authority is an experienced body, well able to assess evidence and has the advantage of actually seeing and hearing the witnesses in question and listening to the cross-examination.

[15] A further relevant consideration is that, because of the date in which Richey Bar applied to renew its on-licence, it is to be dealt with under the 1989 Act, but regard must also be had to certain provisions of the Sale and Supply of Alcohol Act 2012 (the 2012 Act).

[16] Under the 2012 Act the criteria for the issue of licences are set out in s 105 as follows:

105 Criteria for issue of licences

(1) In deciding whether to issue a licence, the licensing authority or the licensing committee concerned must have regard to the following matters:

(a) the object of this Act:

(b) the suitability of the applicant:

(c) any relevant local alcohol policy:

(d) the days on which and the hours during which the applicant proposes to sell alcohol:

_{(e) the design and layout of any proposed premises:}

⁹ _{Section 138(8).}

¹⁰ _{Section 138(11).}

¹¹ Triveni Puri Ltd v Commissioner of Police [2012] NZHC 2913, [2013] NZAR 88.

(f) whether the applicant is engaged in, or proposes on the premises to engage in, the sale of goods other than alcohol, low-alcohol refreshments, non-alcoholic refreshments, and food, and if so, which goods:

(g) whether the applicant is engaged in, or proposes on the premises to engage in, the provision of services other than those directly related to the sale of alcohol, low-alcohol refreshments, non-alcoholic refreshments, and food, and if so, which services:

(h) whether (in its opinion) the amenity and good order of the locality would be likely to be reduced, to more than a minor extent, by the effects of the issue of the licence:

(i) whether (in its opinion) the amenity and good order of the locality are already so badly affected by the effects of the issue of existing licences that—

(i) they would be unlikely to be reduced further (or would be likely to be reduced further to only a minor extent) by the effects of the issue of the licence; but

(ii) it is nevertheless desirable not to issue any further licences:

(j) whether the applicant has appropriate systems, staff, and training to comply with the law:

(k) any matters dealt with in any report from the Police, an inspector, or a Medical Officer of Health made under section

103.

(2) The authority or committee must not take into account any prejudicial effect that the issue of the licence may have on the business conducted pursuant to any other licence.

[17] Section 131 is also relevant. It makes it clear that renewal of a licence is not automatic and it is to be approached in much the same manner as the grant of an initial licence.

[18] My attention was also drawn to the purpose and object of the 2012 Act which applied to this application even though the appeal is to be determined under the

1989 Act. Importantly, as was emphasised in Venus NZ Ltd, the object in s 4 of the

2012 Act differs from that contained in the 1989 Act in that the aim is now minimisation of alcohol related harm, not merely its reduction. ¹² That means both

_{the Authority, and this Court, must have regard to reducing alcohol-related harm to}

¹² Venus NZ Ltd [2014] NZARLA PH 762.

the smallest amount, extent or degree, when making decisions on the grant of renewal of a licence.

[19] Finally, I observe that in determining whether a licensee is suitable, a positive finding is required as to his or her suitability. As was said in Page v Police:¹³

That implies an onus upon the applicant to demonstrate suitability. Such suitability is not established in a vacuum but in the context of the particular case: for example, the place, the intended business (here in a difficult central city location), the nature of the business itself, the hours of operation and the intended activities, provide the basis of the assessment of the individual. Where that person is inexperienced in business generally, or in relation to the licensing industry, then it is likely that a very favourable view of their abilities will be in a central prerequisite.

[20] Bearing those principles in mind, I now turn to the issues raised by the

appellant regarding the Authority’s findings.

Discussion of grounds of appeal

[21] The primary issue raised on appeal was the Authority’s finding that, on

24 May 2014, Mr Zhang had “overruled” his bar manager’s decision to exclude a group of persons under a voluntary one way door policy which Mr Wilkins, the bar manager, had instituted when, as a licensee, Mr Zhang was required under s 214(4)¹⁴ to take all reasonable steps to enable the manager to carry out his duties in terms of the section.

[22] The appellant’s submissions traversed a number of extracts from the transcript, the totality of which was said by the appellant to amount to the bar manager, Mr Wilkins, simply being persuaded to exercise his discretion in respect of a policy he had voluntarily adopted, to let a group of “pre-booked people” into the bar, even though they had arrived after 1.30 am. The evidence did not amount to an

_{“overruling” which is how the Authority had characterised it.}

¹³ _{Page v Police HC Christchurch AP84/98, 24 July 1998 at 9.}

14. The appellant says in fact it was the provisions at s 115 of the Sale of Liquor Act 1989 which applied but, as they are analogous, nothing turns on this.

[23] Secondly, and perhaps more importantly, the Authority expressly found that the people let in were “unsuitable”.¹⁵ The appellant says the only basis on which the people could have been said to be unsuitable was if they were intoxicated to a degree where they should not have been allowed onto licensed premises. There was no evidence of this, particularly as evidence from Constable Siddell about the sobriety of the group when they were admitted was deleted from the evidence, because those

allegations were not put to Mr Zhang or Mr Wilkins. The only evidence which remained on the record was Constable Siddell’s evidence that a large number of those bar patrons at around 2.30 am that night were “heavily intoxicated”. However, that did not demonstrate that when the decision was made to admit them, contrary to the voluntary one way door policy, they were necessarily “unsuitable” patrons.

[24] Mr MacKenzie supplemented the submissions on that key issue with four other observations:

(a) In respect of the Authority’s finding that Mr Zhang remained “inexperienced” in the licensing industry, he submitted this must be a neutral factor, as Mr Zhang’s experience had been considered sufficient to support Linwood’s application in the past.

(b) While the Authority recognised that the applicant had “reformed the way in which the premises operate” by appointing a new and experienced manager and an experienced security guard, he said the Authority had not given that suitable weight in the decision.

(c) He pointed out that, despite the close scrutiny that the Richey Bar had from the police and the Inspector, there had been very little evidence of incidents over the past eight months, and submitted that too much weight had been placed on the one incident on 4 January 2014 where a young woman was so intoxicated she vomited in front of the duty manager and Constable Higgs, having smuggled in and consumed a

_{bottle of Tequila.}

¹⁵ At [26] of the decision.

(d) On the issue of neighbours and rubbish, he pointed out that Richey Bar was not the only licensed premises in the area, and it was not clear why problems in the neighbouring area should necessarily be sheeted home to Richey Bar.

Discussion

[25] Having reviewed the written briefs of evidence presented to the Authority, along with the transcript of evidence, I am satisfied that the finding of the Authority that Mr Zhang “overruled” Mr Wilkins in his role as duty manager, put the matter too strongly. Looked at in totality, the evidence was that Mr Zhang discussed the issue with Mr Wilkins and persuaded him to change his mind. Mr Wilkins confirmed he was “persuaded”, or “convinced” to let them in, rather than that he was overruled, and the evidence of the security guard, Mr Absolum, was that he initially denied the group entry but the decision was “overturned” by “Nathan and Zhang”, suggesting Mr Wilkins and Mr Zhang had come to a mutual view the group should be allowed in.

[26] In terms of the group’s “suitability”, I accept that there was no direct evidence before the Authority that they were intoxicated to the point where it would have been inappropriate to serve them any more alcohol at the time they were admitted. The available evidence suggests the group was “affected” by alcohol (as the Authority described the group at [7] of the decision), as Mr Absolum denied them entry initially, Mr Wilkins the duty manager only allowed them entry after Mr Zhang said they had a booking and he wanted to keep them as customers, and by 2.30 am they were observed by an experienced constable to be “heavily” intoxicated. However, I proceed on the basis that the group’s level of intoxication was not such that they should not have been admitted.

[27] I am satisfied, though, that the Authority’s main concern was that Mr Zhang, with his obvious inexperience at managing the premises, would seek to influence his staff in making these operational decisions.

[28] Mr Zhang, in cross-examination before the Authority, demonstrated he had

limited knowledge about the Act’s requirements and the need to have adequate

procedures and training in place to minimise the risk of alcohol induced harm. He repeatedly deferred to Mr Wilkins as knowing about such matters when questions on them were put to him. It was therefore reasonably a matter of concern to the Authority that when both the security guard and the duty manager were refusing entry to a large group after 1.30 am when the voluntary one way door policy applied, that Mr Zhang intervened to “persuade” them otherwise.

[29] The dubious nature of that decision was supported by Constable Siddell’s observation, not long afterwards, that the level of intoxication of the patrons he observed was “unacceptable”.

[30] Overall then, I am satisfied that this incident was not as serious as described in the Authority’s decision but, nevertheless, contributed to the picture of shortcomings in the management of the bar. That was well supported by other evidence referred to by the Authority, including the intoxication allegations, the Inspector’s concerns with the management of the bar and its approach to compliance with regulatory requirements, and the concerns of neighbouring businesses who observed that before the bar began operating, and when it ceased trading during refurbishment in March 2014, the problems they observed disappeared.

[31] In relation to the supplementary evidence I heard at the outset of the appeal, I accept that Ms Davison’s evidence that the food offering on 20 August 2014 was unacceptable was not sustainable in light of the conditions of the licence, which only required three types of food to be available. Similarly, I accept Constable Joy’s evidence as to the levels of intoxication observed on 25 August 2014, did not demonstrate that inappropriate levels of intoxication had been reached. However, I do accept the further evidence that a crowd outside Richey’s Bar had been fighting at closing time on 24 August 2014 and there had been a minor breach of the conditions of resource consent on 30 August, because both sound doors were open. Obviously these incidents in themselves could not be fatal to the application. However, they echo themes which are found throughout the evidence presented to the Authority, and which satisfy me that the applicant did not discharge the onus to demonstrate that it was a suitable candidate for renewal. They were indicative of the casual

approach the applicant took to meeting its licensing and other regulatory requirements.

[32] In conclusion, I accept the respondents’ evidence that the bar is properly categorised as “high risk” premises, given the youth of its clientele, its late hours of trading, its location, and its focus on night club style of entertainment. Such premises require sophisticated and stringent management systems to minimise the risk of alcohol related harm. The applicant, through its director Mr Zhang, did not demonstrate those skills and I am satisfied the Authority’s decision to decline renewal of the on-licence was clearly open to it on the evidence it heard.

[33] The appeal is therefore declined.

[34] Costs are reserved. If costs cannot be agreed, the respondents may file memoranda as to costs, no later than 15 working days from the date of this decision, and the appellant within 10 working days thereafter.

Solicitors:

Wynn Williams, Christchurch

Raymond Donnelly & Co., Christchurch