Thelstan Investments Limited [2000] NZLLA 1273 (28 November 2000)

Last Updated: 15 February 2012

Decision No. PH 1273/2000

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by THELSTAN INVESTMENTS LIMITED for an on-licence pursuant to s.7 of the Act in respect of premises situated at Shops 2 and 3, Kelston Shopping Centre, 2-18 West Coast Road, Kelston, Waitakere City, to be known as “The Korner Entertainment Centre”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge J P Gatley
Members: Mr R J S Munro
Mr J W Thompson

HEARING at AUCKLAND on 6 and 7 November 2000

APPEARANCES

Mr A Dormer for applicant
Mr J R Watson for Waitakere District Licensing Agency Inspector – in opposition
Mrs A J Brown for Portage Licensing Trust – in opposition
Mr E R Price for Waitakere District Licensing Trust – to assist
Constable J P Loye – NZ Police – to assist

DECISION

1. By application dated 19 June 2000 Thelstan Investments Limited (the applicant) seeks an on-licence in respect of premises situated at Shops 2 and 3, Kelston Shopping Centre, 2-18 West Coast Road, Kelston, Waitakere City, to be known as “The Korner Entertainment Centre” (The Korner).
   
2. Public notification of the application attracted an objection from Portage Licensing Trust (PLT) on the ground that the proposed business would operate as a tavern within the PLT district, contrary to s.216(a) of the Act. A report from Mr A Ahmu, Waitakere District Licensing Agency Inspector, opposed the grant of a licence for similar reasons. A Police report recommended that the matter be set down for public hearing.
   
3. The sole director and shareholder in the applicant company is Mr Charles Barry Waterton.
   
4. The complete file on the application included a certificate pursuant to s.9(1)(e) of the Act from Waitakere District Council planners certifying that the proposed use of “The Korner Entertainment Centre” premises “meets all resource management requirements under the Waitakere City District Plan”. Although the certificate does not follow the precise wording set out at s.9(1)(e) of the Act – i.e. that the proposed use meets the requirements of the Resource Management Act 1991 – we will accept it as a valid certificate given that it was described on its face as issuing pursuant to s.9(1)(e) of the Sale of Liquor Act 1989.
   

Background Circumstances

5. Opposition to this application was largely based on the fact that following a public hearing in Auckland on 8 and 9 February 2000, in Decision No. PH 529/2000 the Authority had granted an application by a Waitakere District Licensing Agency Inspector, pursuant to s.132 of the Act, seeking cancellation of an on-licence held by the present applicant in respect of the same premises on the grounds that the then named “On the Korner Restaurant” had been operated as a tavern in the PLT District contrary to s.216(a) of the Act. In addition the Authority had specifically found that Mr C B Waterton was not a suitable person to operate a licensed restaurant in a trust district. We also said that we would not be making any finding that Thelstan Investments Limited was not a suitable entity to hold a liquor licence.
   
6. At the previous hearing Messrs D L Brookes and P S Wheat were, together with Mr Waterton, equal one-third shareholders in Thelstan Investments Limited. Messrs Brookes and Wheat no longer have any interest in the applicant company.
   

Applicant’s Evidence

7. Mr Waterton produced a floor plan for “The Korner” showing a service area, office, toilets, kitchen, a gaming machine room for 18 gaming machines and a main area containing 8 pool tables. The witness explained how after the previous licence had been cancelled the lease of the premises had been advertised for sale as a restaurant and there had been “talks with the Portage Trust”, but nothing came of those attempts to have someone else take over the lease which runs through to 2005. With about $200,000 having been spent on refrigeration plant, air conditioning, extra toilets, kitchen equipment “and the like” for a restaurant, it was not feasible to sell the premises for some completely different purpose. Mr Waterton then decided to apply for a licence for an entertainment centre.
   
8. Mr Waterton said:-
   

“I appreciate that the Authority may perhaps be a little sceptical, but there is no way that I would wish to blot my copy book again. The hospitality industry has been my life now for over 30 years. I am financially committed to these premises: indeed if I can’t get some sort of licence for them I could well be facing bankruptcy.

I have every incentive to do things right, and every reason not to in any way abuse the privilege of a licence should you grant the application.

I have prepared some budgets and am confident that properly run I will be able to make a moderately good profit, even with only modest liquor sales.

From my previous experience with ‘The Korner’ I do not expect that the slot machine players will consume much alcohol. Nor from my observation of other licensed pool parlours do those players drink more than moderately.

Neither group of players are likely to eat full meals as such, but a limited food range will be available.

...

I have designed the layout of the premises as much as I can to avoid giving any impression of being a bar. The pool tables are the dominant visual feature both from outside, and from the entrance.”

9. Mr Waterton produced a facsimile from the Auckland Area TAB Manager expressing interest in installing a “self service Easybet Terminal” in “The Korner” as soon as one becomes available.
   
10. As an indication of Mr Waterton’s genuine intention to operate “The Korner” as other than a tavern he:-
    
    • Offered to accept any on-licence that may be granted for an initial term of six months, as distinct from the normal twelve month initial term provided in s.17(1)(a) of the Act, so as to give the objectors an early opportunity to oppose renewal if “The Korner” did in fact trade as a tavern.
    • To provide monthly audited financial accounts to the Waitakere District Licensing Agency (The Agency) and PLT to establish that the predominant business of “The Korner” was not the sale of liquor.
      

Evidence, Reports and Submissions in Opposition

11. Evidence in opposition by Mr M J Spearman, General Manager of PLT, and from Constable J P Loye, a report in opposition from Mr A R Ahmu, Agency Inspector, and submissions in opposition from Mrs A J Brown for PLT, and Mr J R Watson for the Agency Inspector, all followed a similar theme. In summary form the application was opposed because:-
    

11.1 Having already been found by the Authority to have operated a restaurant in a Trust district as a tavern Mr Waterton (or a company under his control) was not suitable to operate any on-licence in a Trust district.

11.2 The history of the applicant’s operation of the premises and its conduct at the time of the previous application for a restaurant on-licence, give no assurance or confidence that the current application, if granted, will be conducted in accordance with the application or within the law relating to on-licences in licensing trust districts.

11.3 Taverns both in the PLT District and elsewhere have gaming machines, pool tables, dart boards and slot machines, but still derive their predominant income from the sale of liquor.

11.4 The applicant is attempting to obtain a licence to operate a tavern under the guise of an “entertainment centre”.
11.5 The public perception of “On the Korner Restaurant” was that it was a tavern and there is no reason for that public perception to change. The public will go to “The Korner” principally to drink and to use the gaming machines at the premises.

11.6 The types of ‘entertainment’ specified in the application are not such as to distinguish the business from a tavern operation and will involve a significant amount of drinking by patrons who do not attend to play pool.
11.7 The use of ‘entertainment’ facilities in taverns is incidental to the use of the premises for the supply and consumption of alcohol.
11.8 Any reduction of exclusive retailing rights for trusts should only occur following a poll of electors.
11.9 Site rental paid to gaming machine operators should not be relied on as evidencing that the principal business of premises is other than the sale of liquor.

11.10 It is accepted that an on-licence may be lawfully granted for a genuine pool hall in a licensing trust district, but here there is a strong probability that the new business which Mr Waterton wishes to operate will be a tavern.

11.11 Trading hours originally sought by Mr Waterton of Monday to Sunday 9.00 am to 3.00 am the following day (subsequently reduced to 9.00 am to 11.00 pm seven days a week) were more akin to tavern hours than those of a genuine “pool hall”. Trading hours of 11.00 am to 11.00 pm would be more appropriate.

Submission of Mr E R Price

12. In a separate submission at the hearing, subsequently endorsed in written submissions received after the hearing from Mrs A R Brown, Mr E R Price for the Waitakere Licensing Trust invited the Authority to:-
    

“Effectively preserve the distinctions in the previous s.7 by utilising the provisions of s.14(5)(h), in the event of the present application for an on-licence being granted.”

13. Section 14(5)(h) of the Act, which came into force on 1 April 2000, gives the Authority a discretion to impose a condition on an on-licence relating to:-
    

“The persons or types of persons to whom liquor may be sold or supplied.”

14. Counsel invited us to consider imposing a condition on any new licence that may issue to Thelstan Investments Limited, restricting the persons or types of persons to whom liquor may be sold at “The Korner” to those present on the premises for the purpose of attending any entertainment.
    

Authority’s Conclusion and Reasons

15. The issue for our determination in this application is whether Thelstan Investments Limited, or in its alter ego Mr C B Waterton, can be trusted to operate on-licence premises in a trust district in such a way that “the provision to the public of liquor and other refreshments” will not be the principal business undertaken. The words in quotes are from the definition of a tavern in s.2 of the Act. “Other refreshments” is not defined but we accept that those words refer to non-alcoholic beverages and do not include food (see “Sale of Liquor” Dormer Sheriff and Crookston at paragraph 2.09.06).
    
16. We do not accept submissions along the lines that the Authority having found that Mr Waterton was not suitable to operate a licensed restaurant in a trust district, it follows that he is not a suitable person to hold any on-licence in a trust district. Mr Waterton has over 30 years’ experience in the liquor industry. He has obviously learned a salutary lesson from having the on-licence for “On the Korner Restaurant” cancelled. He is well aware that if an on-licence is granted in respect of “The Korner”, the manner of operation will be closely monitored by Inspectors, representatives of PLT and the Police, with any operation akin to a tavern being met promptly with an application pursuant to s.132 of the Act for cancellation.
    
17. Following the hearing the Authority was unanimously impressed with the sincerity of Mr Waterton in giving evidence and responding to questions. A genuine intention not to risk being accused for a second time of operating a tavern in a trust district was evidenced by his willingness to accept an on-licence for a term limited to six months, at the end of which he would be happy to come under scrutiny on an application for renewal. At the conclusion of the hearing we were minded to grant a licence limited to an initial six month term, but submissions in opposition made it clear that any grant of a licence for less than twelve months would be challenged as breaching the mandatory requirement of s.17(1)(a) of the Act.
    
18. Mr Waterton’s genuine intention not to operate a tavern was further evidenced by his willingness to provide Agency Inspectors and PLT with monthly audited financial accounts for their scrutiny as to whether the sale of liquor was the predominant part of the business, if the on-licence sought was granted.
    
19. Our conclusion is that Mr Waterton deserves a second chance rather than be precluded from any opportunity to use the leased building for a purpose similar to that for which it was substantially renovated at no small expense. It follows that an on-licence will be granted to Thelston Investments Limited in respect of “The Korner”.
    

Trading Hours

20. We accept the submission of Mrs Brown for PLT that appropriate trading hours for this entertainment venue will initially be Monday to Sunday 11.00 am to 11.00 pm. Mr Waterton concedes that he does not wish to trade on Good Friday, Easter Sunday, ANZAC Day before 1.00 pm or on Christmas Day.
    

Designation

21. Mr Waterton accepts that the premises should be designated “restricted”.
    

Types of Persons to Whom Liquor May be Sold

22. There is a history to this issue. The Sale of Liquor Act 1989 saw the number of licences reduced from 29 to 4, on, off, club and special, but s.7 of the Act effectively retained 4 different types of on-licence distinguishing the following different classes of persons to whom liquor may be sold:-
    
    1. Lodgers and employees of the licensee.
    2. Diners.

Persons attending any function or entertainment.
Any person present on the premises or conveyance – i.e. casual drinkers.

23. Section 7 of the Act was amended with effect from 1 April 2000 to provide that an on-licence authorises the holder of the licence -
    

“(a) To sell and supply liquor, to any person present on the premises or conveyance described in the licence, for consumption on the premises or conveyance; and

(b) To allow the consumption of liquor on the premises or conveyance described in the licence.”

24. A s.96 Statement to Agencies from the Authority dated 24 October 2000 included:-
    

“Given that the wording of the authority to sell, supply and consume liquor is standard in all on-licences issued after 1 April 2000, and bearing in mind that the trading name on any individual licence may give little or no indication of the business to be carried on under that licence, the Authority requires that for businesses other than hotels and taverns the condition of the licence covering days and hours of sale include a description of the nature of the business e.g.:-

‘Liquor may be sold only on the following days and during the following hours:

On such days and during such hours as the premises are being operated as a nightclub and entertainment venue but not other than on the following days and hours: ...’

or

‘On such days and during such hours as the premises are being operated as a restaurant but not other than on the following days and hours: ...’

This requirement is to ensure that licensees who portray their business as being other than that of a hotel or tavern do not operate a business in which the sale and consumption of liquor predominates, particularly at a time when hotel and tavern premises are prevented by statute from so trading.”

25 In the present matter Mr Price submitted:-

“That it is open to the Authority to effectively preserve the distinctions in the previous s.7 by utilising the provisions of s.14(5)(h).”

26. By reason of a resource consent, zoning or because premises are in a trust district, it may be necessary to identify a limitation on the business that can be carried out under a particular on-licence. The Authority’s preference is to achieve that by appropriate wording of the condition on trading hours, in accordance with our s.96 statement, rather than by “preserving the distinctions in the previous s.7 by utilising the provisions of s.14(5)(h).
    
27. Limiting the persons to whom liquor may be sold or supplied pursuant to the on-licence to issue to Thelstan Investments Limited to “persons present on the premises for the purpose of attending any entertainment” would, in our view, be turning a blind eye to reality. In any licensed premises with pool tables some will attend to play pool accompanied by another or others who may only have a drink and watch the game being played. There may also be some persons who will attend and have a drink while waiting for a table to come free, but not end up having a game before the premises close. Rather than be faced with evidence as to whether or not such persons are “present on the premises for the purpose of any entertainment” we think it preferable that the question as to whether premises are a tavern or an entertainment venue should be determined by evidence as to whether or not the predominant purpose of the business is the sale of liquor and other refreshments.
    
28. If in the future an Inspector should have occasion to seek suspension or cancellation of the on-licence to issue to Thelstan Investments Limited then application pursuant to s.132 (for suspension or cancellation) can be made on the ground that the premises have traded in breach of the condition regarding trading hours - i.e. as other than an entertainment venue – without going so far as to impose a condition that the only “types of persons” who can be sold or supplied liquor are those persons on the premises for the purposes of attending entertainment. Such a condition could arguably exclude persons accompanying players of pool or gaming machines from being on the premises.
    

Monthly Audited Financial Accounts

29. Rather than impose a condition on the licence regarding monthly audited financial accounts, we will merely record that at the hearing Mr Waterton expressed a willingness to provide Agency Inspectors and PLT with monthly audited financial accounts to assist them to assess whether or not “The Korner” is trading as a tavern. Any failure by Mr Waterton to comply with the willingness expressed at the hearing would raise a question as to his suitability to hold any licence in a trust district.
    
30. In all other respects we are satisfied as to the matters to which we must have regard as set out in s.13 of the Act, and we grant the applicant an on-licence. A copy of the licence setting out the conditions to which it is subject is attached to this decision.
    
31. The licence shall not issue until:
    

31.1 The expiry of 20 working days from the date of this decision; that period is the time provided by s.140 of the Act for the lodging of a notice of appeal.

31.2 All relevant clearances have been obtained.

32. The applicant’s attention is drawn to s.25 of the Act obliging the holder of an on-licence to display:-
    
    1. A sign attached to the exterior of the premises, so as to be easily read by persons outside each principal entrance, stating the ordinary hours of business during which the premises will be open for the sale of liquor, AND
    2. A copy of the licence, and of the conditions of the licence, attached to the interior of the premises so as to be easily read by persons entering through each principal entrance.
       

DATED at WELLINGTON this day of November 2000

_____________________________

Judge J P Gatley

Chairman

korner.doc(aw)