Flaxmere Licensing Trust [1999] NZLLA 2103 (15 October 1999)

Last Updated: 1 December 2013

Decision No. 2103/99

IN THE MATTER of the Sale of Liquor Act 1989

_AND

IN THE MATTER of an application by FLAXMERE LICENSING TRUST for an on- licence pursuant to s.7 of the Act in respect of premises situation at the corner of Portsmouth and Chatham Roads, Hastings, known as "Western Suburbs Rugby and Sports Club"

_{BEFORE THE LIQUOR LICENSING AUTHORITY}

Quorum:

Mr R J S Munro

Mr J W Thompson

HEARING at NAPIER on 27 July 1999

APPEARANCES

Mr G D J Wellwood – for applicant, Trust House Limited and Western Hastings

Suburbs Rugby and Sports Club Inc

Mr D J Longhurst )

Mr T G Williams ) – objectors

Miss G N Scarfe )

Ms N Valler – Hastings District Licensing Agency Inspector )

Mr A J Stothart – Hastings District Licensing Agency Inspector ) – to assist

Mr M N Lange – Hastings District Licensing Agency Inspector )

_DECISION

This is an application by the Flaxmere Licensing Trust for an on-licence in respect of premises leased to a club incorporated as the "Western Hastings Suburbs Rugby and Sports Club Inc". That club was incorporated, after the hearing, on 27 August 1999.

Following public notification of the application, objections were received and the matter set down for public hearing. On 27 July 1999, in the course of the hearing, it became clear that the application was far from complete and we granted Mr G Wellwood, solicitor acting for the applicant and others including the club which was yet to be incorporated, leave to submit further documentation to our Secretary.

Mr Wellwood recorded an appearance for the Flaxmere Licensing Trust, for Trust House Limited (the Contractual Manager of Trust "Operations") and for the yet to be constituted rugby and sports club. Mr Wellwood is the patron of the Club and has been involved in winding up the former Flaxmere Rugby Football Club Inc (In liquidation).

He told the Authority that problems had arisen in operating the previous club licence. He said that basically the old club management was "not up to scratch" and this had produced some "outrageous behaviour" and objections to the application were the result. However, the element of members that caused the problems is now "out of the club" and a different approach is being pursued. Mr Wellwood described the relationship between

the club and the proposed licensee as a management contract, but not a partnership. The club holds a lease from the Hastings District Council which now owns the premises following liquidation of the previous club.

Both the club now in liquidation, and the new club cater for a large number of junior rugby players.

Mr Wellwood then called Mr L M Wilson, the General Manager (Operations) of Trust

House Limited based at Masterton. Mr Wilson said that under an agreement dated

30 March 1989, the Flaxmere Licensing Trust appointed his company as manager of its operations from 1 April 1989. If this on-licence is granted, Trust House Limited staff would be responsible to the licensee (the Flaxmere Licensing Trust) for the sale and supply of liquor on the club premises.

Mr Wilson explained that the present application is not made for commercial gain as the Trust distributed profits to the local community. In the last year over $70,000 had been so returned. He emphasised that the operation would be solely in relation to the bar and not the operation of the club premises. In answer to a question from Miss Scarfe, Mr Wilson said the Trust did not seek to "run" the club in any way, although there would be ongoing dialogue. He believe the Trust had a good reputation which had not been tarnished. Problems were now largely historic.

The club premises are largely unpartitioned and contain a kitchen, toilets, bar, and office facilities which extend along the sides of the building. The majority of the usable space is open and not divided.

In answer to questions from the Authority Mr Wilson agreed that there could be problems with designation because of a lack of physical separation of any bar on the premises and the large number of junior rugby players. The trustees of the Flaxmere Licensing Trust had formally resolved to make this application, he told the Authority. The hours sought and advertised for trading under the on-licence are as follows:

Monday to Thursday 3.00 pm to 10.00 pm Friday 3.00 pm to 11.00 pm Saturday and Public Holidays 12.00 pm to 11.00 pm

Sunday 12.00 pm to 10.00 pm (to persons present for dining)

Objector's Evidence

Mr T Williams, an objector, whose boundary fence is 40 metres from the clubrooms said that since moving to his property three years ago with his wife he found problems directly relating to the consumption of alcohol. Mr Williams told us that:

"One of our main concerns is that a licence ..... effectively opens the bar up to the general public and we don't want to live across from a pub. We have three young children ....".

Mr Williams said that since the clubrooms have closed down (as a result of the former club's liquidation) his family's quality of life has improved.

Miss G N Scarfe, who lives directly opposite the clubrooms, told us that she was a Community Mental Health Nurse and an avid follower of rugby who socialises regularly. She told us that she was not adverse to sporting associations or access to the licensed

liquor services and accordingly her objection does not arise from prejudice against sport or alcohol. She complained of "demolition derbies" outside the premises, urination, use of illegal substances and verbal abuse. She said that the former sports club and Hastings District Council personnel have proved "ineffective" in dealing with her complaints. In answer to further questions from Mr Wellwood, Miss Scarfe indicated that she had approached management of the club with her dissatisfaction but nothing had changed.

Mr D J Longhurst told us that he has lived for 21 years close to the clubrooms situated on Ron Giorgi Park. He told us that trouble from drunken patrons and very noisy bands has had a horrific effect on quality of life. "Complaints to Council Noise Control and the Flaxmere Police have not made any difference to the conduct and control of patrons using the club." He told us that the club premises were only 42 metres away from his home and that he had been an original foundation member of the rugby club when it was formed.

In response to an invitation from Mr Wellwood, Mr Longhurst declined to withdraw his objection, stating that many of the same people were still controlling the club. He told us that although he had received letters from the previous club apologising and saying that problems would not arise again, repeatedly they had. For these reasons he lacked confidence in the arrangements now proposed.

Inspector's Comment

Ms N Valler had nothing further to add to her report dated 12 April 1999 in which she raised no opposition to the application providing the Authority put conditions on the on- licence restricting trading to members and guests only.

Mr A J Stothart, an Inspector, produced a schedule of noise complaints received by the Hastings District Council against the former club premises in 1997 and 1998. This showed that six complaints were received in 1997 and a further four noise complaints received in 1998. The most recent was on 11 October 1998. The club had gone into liquidation in September 1998.

Mr Stothart then outlined the process used by a Council contractor responsible for actioning noise complaints during the silent hours.

_{Requirement for Further Submissions and Evidence}

We reserved our decision indicating a requirement for documentation from the applicant, detailing its relationship with the club and full details of the proposed chain of responsibility from the elected trustees to the individuals operating as their agents in the club premises day by day.

Further documentation received

Our Secretary received on 13 September 1999 further documentation from Mr Wellwood which he described as:

"1. Constitution and Certificate of Incorporation of Western Hastings Suburbs

Rugby & Sports Club.

This is the Sports Club that leases land premises from the Hastings District Council. As the Authority will be aware the Council has no objection to use of the premises as licensed premises for sale of liquor.

2. Details of the lease between the Council and the Sports Club. This is in the form of a letter from Council and a draft lease. We understand lease payments have already been made.

3. The actual agreement between the Club and Flaxmere Licensing Trust, the applicant for the Liquor Licence.

4. A Management Agreement between the applicant Trust and Trust House Limited which would be the managers of the Club premises when it becomes a licensed liquor outlet.

5. A company search of Trust House Limited just to reinforce the close relationship between the applicant and its manager. Highlighted in the search are:

(i) K H Kibblewhite a director and Chairman of Flaxmere Licensing Trust. (ii) The applicant Trust is a shareholder in Trust House Limited."

Mr Wellwood wrote that the new rugby club "acknowledges that its clubrooms would become a 'public tavern' if the licence is granted" and acknowledged that what he termed "historic concerns" would be remedied by "placing all management and control of the premises into the hands of experienced experts". He reminded the Authority that the Flaxmere Licensing Trust is a publicly elected statutory authority and submitted it is an appropriate body to hold the on-licence.

Authority's Conclusion and Reasons

This application is unusual. After a period of plainly unsatisfactory operation of a club licence by another legal entity on these premises, the club holding that licence was placed into liquidation. From the ashes a new incorporation has recently emerged which Mr Wellwood submits is able to overcome the previous problems. The element which had caused those problems is in his words "out of the club".

The club's viewpoint was challenged before us by objectors in person. Doubts are also expressed in written objections which are part of the complete file before the Authority. We remind ourselves that we are considering a new application by the Flaxmere Licensing Trust. We must also consider other evidence before us, in particular the Trust's relationship with a new legal entity, the Western Hastings Suburbs Rugby and Sports Club Incorporated (WN/977609) which was incorporated as recently as

27 August 1999.

In considering any application for an on-licence, the Licensing Authority is directed by s.13(1) to have regard to the following matters:

"(a) The suitability of the applicant:

(b) The days on which and the hours during which the applicant proposes to sell liquor:

(c) The areas of the premises or conveyance, if any, that the applicant proposes should be designated as restricted areas or supervised areas:

(d) The steps proposed to be taken by the applicant to ensure that the requirements of this Act in relation to the sale of liquor to prohibited persons are observed:

(e) The applicant's proposals relating to the sale and supply of non-alcoholic refreshments and food:

(f) Whether the applicant is engaged, or proposes to engage, in--

(i) The sale or supply of any other goods besides liquor and food; or

(ii) The provision of any services other than those directly related to the sale or supply of liquor and food,--

and, if so, the nature of those goods or services:

(g) Any matters dealt with in any report made under section 11 of this Act."

As we indicated during the course of the hearing, the suitability of the Flaxmere Licensing Trust as applicant has not been brought into question in these proceedings. Similarly, the days and hours during which the Trust proposes to sell liquor have not been effectively challenged.

If an on-licence is granted in respect of a tavern, the Authority is directed by s.14(4) of the Act to designate each bar on the premises as a "restricted area" or a "supervised area". Consumption of liquor would take place throughout the licensed premises.

It follows that from 1 December 1999 if the licensed premises are designated as "supervised", persons under the age of 18 (pursuant to s.2 of the Sale of Liquor Amendment Act 1999 amending s.2 of the principal Act) may be admitted to the premises only if accompanied by that person’s parent or guardian.

We understand from the evidence and submissions that this is the result intended and accepted by the club. That unusual request is a matter for the club rather than this Authority to address. We assume such a restriction is acceptable to the wider membership of the club.

Of significance to the Authority is Mr Wellwood’s frank admission that the club acknowledges “that its clubrooms would become a ‘public tavern’ if the licence is granted”.

That intention runs contrary to the Inspector's report recommending that patronage be limited to members and guests only.

We have before us a letter from the Hastings District Council dated 18 March 1999 signed by J Kydd-Smith, Development Manager, certifying that the proposed use of the Western Suburbs Club’s premises for the purposes of an on-licence meet the requirements of the Resource Management Act 1991. A letter dated 26 March 1999 certifies that the building meets the requirements of the New Zealand Building Code. Those certificates on their face meet the requirements of s.9(1)(e) of the Act.

A planning consent dated 9 March 1990 which by operation of s.383 of the Resource Management Act 1991 is a land use consent "grants consent to the Flaxmere Rugby Club to sell liquor for consumption by members and guests of the club from their premises .....". That consent does not coincide with the certificate before us dated

18 March 1999 as another legal entity would be selling the liquor to a wider group of patrons.

The Inspector (Ms Valler) perhaps anticipated this difficulty and commented in her report:

"Under the Hastings District Council's District Plan a new resource consent is not required for the on-licence application providing the premises is run as a club (as before) and subject to the following conditions ...." (The emphasis is our own.)

The conditions she proposes would restrict patronage to members and guests only. This is broadly the authorisation of a club licence. An on-licence would not restrict sales to members and their guests; an on-licence with tavern conditions would authorise the sale and supply of liquor to a considerably wider group. The effect of s.8(2) which prevents an on-licence being held by a club also needs to be considered.

The owner’s statement pursuant to the Sale of Liquor Regulations 1990 (Reg. 5(3)(i)) indicates that the owner (the Hastings District Council) has no objection to the grant of an on-licence. That document refers to a lease to the club granted by the Council.

The Lease to the Club

We do not have an executed copy of that lease although we note Mr Wellwood’s comment that lease payments have already been made. The draft expresses a commencement date of 1 March 1999. Relevant provisions include:

"6. NO ASSIGNMENT ETC.

(a) The Club shall not assign or part with possession of the premises during the lease ....

7. SUBLETTING

(a) The Club will not sublet the premises without the prior written consent of the Council ....

8. USE

(a) The Club shall use the premises only as clubrooms and headquarters for itself and any approved affiliated club ...

(f) The Club shall at all times operate within the terms of any liquor licence issued to it ....

...

12. CLUB RULES

... The clubrooms shall at all times when it is open be under the charge of a responsible member of the club."

The Agreement Between the Trust and Club

The agreement to operate bar premises between the Flaxmere Licensing Trust and the Western Hastings Suburbs Rugby and Sports Club Inc dated 6 September 1999 includes the following:

"1. With effect from 1 January 1999 and continuing for three (3 years) Flaxmere Licensing Trust shall have the sole and exclusive right to operate the bar facility on the premises leased by the club ...

...

6. The bar must be manned by an employee or authorised agent of Flaxmere Licensing Trust at all times when the premises of the club are in use with the following being the minimum hours 2.30 pm – 7.00 pm on scheduled competition days (or early (sic) if normal times are changed due to test matches and the like) ... subject to it being in full compliance with the hours permitted of the Club for the opening and closing the premises under its Liquor Licence ...

...

10. The Club shall receive payments from the contractor which will be determined as follows:

(a) 15% of the gross turnover of the bar of all products sold (excluding cigarette sales), plus GST, to be paid in consecutive monthly instalments with the first due on the 20th of the month following the granting of the licence.

(b) Should annual gross turnover exceed $150,000, the contractor will pay the club a pro-rata bonus payment.

...

18. The Club acknowledges that this agreement is independent (of) any sponsorship agreement or grants which may from time to time be in place between the club and the Flaxmere Licensing (Charitable) Trust."

The Conflict Between Tavern and Club Use

The frank admission that the clubrooms would become a "public tavern", contrary to the apparent intent of Clause 8(a) and perhaps other clauses of the lease raise questions for this Authority.

The precise ambit of land use on this site is a matter for the Hastings District Council as a consent authority pursuant to the Resource Management Act 1991 and on appeal to the Environment Court. This Authority will not usually go behind such decisions. Nevertheless, we cannot fail to note divergence in the planning documentation now before us.

We find the applicant to be suitable. Where this application fails, is with the steps proposed by the applicant in relation to the sale of liquor to prohibited persons. There is little or no evidence of such steps before us. The club has a large number of juniors. There have been problems in the past. The District Council's own lease (albeit only in draft form) contains a number of provisions which are inconsistent with the manner of

operation now proposed. Details in the lease are matters for negotiation between the

Hastings District Council and the club.

We find the inconsistencies such that they must be addressed before the Authority issues any kind of licence. Further, an essential question, colloquially "who is in charge" has not been properly addressed in the documentation. The lease states at paragraph

12 that overall control is vested in a responsible member of the club. Yet other documentation suggests that, for liquor licensing purposes, responsibility would rest with the Flaxmere Licensing Trust operating through a company, Trust House Limited, and then appointed holders of General Managers' Certificates on a day to day basis. As a practical matter there must be no conflict in responsibilities.

There is also the proposed 2.30 pm daily opening time (“or early” (sic)) expressed at para 6 of the agreement (contrary to Mr Wellwood's 3.00 pm application). There can be no legal obligation on a licensee to serve liquor at any time or to any person – see s.15 of the Act. There are identical provisions applying to holders of an off-licence (s.38) a club licence (s.61) and a special licence (s.81). Although the "manning" of a bar and the "service" of liquor may be conceptually separate, in practical terms the two aspects become intermingled.

Contractual provisions cannot override the statute.

Finally, we note Ms Valler's report which recommends the restriction of patronage to members and guests rather than the general public. An on-licence for a tavern (in terms of s.7(1)(d)) authorises consumption on those premises by any person who is present. By way of contrast, a club licence restricts consumption of liquor to members and to a limited category of other persons described in s.53. A club licence does not authorise the operation of a tavern. Section 8(2) of the Act specifically precludes an on-licence being held by a club. Ms Valler also very properly highlights planning issues (is it a "club" or a "tavern") which remain unresolved.

The Result

These points may seem unduly technical to members of the newly formed club. We do not doubt members good intentions. The Act carefully balances rights and responsibilities and at the present time that balance lies against the applicant.

We are not satisfied that an on-licence should be granted in respect of these premises. We do so after considering all the evidence before us and after having regard particularly to the provisions of s.13(1)(c) and (d) of the Act, and noting the apparent intent of s.8(2) of the Act.

An alternative may be a club licence, but such an application is not before the Authority at the present time. The holder of a club licence might well employ by contract an entity such as the Flaxmere Licensing Trust to manage the operation of the licensed facilities. Such an arrangement could be considered as a condition pursuant to s.60(2)(d) of the Act. There are difficulties in changing an application starting out under one section of the Act which were noted by Gallen J in Kyriak v Opua General Store Ltd [1993] NZAR

176 at 186. Section 54 of the Act precludes a club licence being held by a licensing trust, although as the High Court noted in Porirua Licensing Trust v Porirua District Licensing Agency [1997] 2 NZLR 78 at 86 (Eichelbaum CJ) an incorporation must necessarily act through employees or agents. That approach was followed in Portage Licensing Trust v NZ Police and others [1998] NZAR 160 (Laurenson J) and may provide the basis of an application by the club for a club licence.

The application is refused.

DATED at WELLINGTON this 15th day of October 1999

R J S Munro J W Thompson

Member Member

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