Murphy - Murphy's Bar & Grill [2000] NZLLA 92 (7 February 2000)

Last Updated: 20 February 2010

Decision No. PH 92/2000

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by DEAN JAMES MURPHY for an on-licence pursuant to s.7 of the Act in respect of premises situated at 18G Clark Street, New Lynn, Waitakere City, known as “Murphy’s Bar & Grill”

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 December 1999

APPEARANCES

A D Bambrook for applicant
P H Mulligan for Waitakere District Licensing Agency and Inspector D R Bryant – to assist
Constable L Boyle – NZ Police – to assist
M J Spearman – Portage Licensing Trust – in opposition

DECISION

By application dated 4 February 1998 Mr Dean James Murphy (the applicant) made application to the Waitakere District Licensing Agency (the Agency) for an on-licence in respect of premises situated at 18G Clark Street, New Lynn, Waitakere City, known as “Murphy’s Bar & Grill”.

Photographs accompanying the application showed the premises entrance under two “Lion Red Beer” signs and a red canopy over the entrance with the following signage on it:-

“- LION RED – The measure of a man’s thirst – Murphy’s Bar & Grill.”

In the form of application under Business Details the general nature of the business to be conducted by the applicant if the licence was granted was given as “restaurant”. A question as to whether the sale of liquor was intended to be the principal purpose of the business was answered “no” and a further question as to what was intended to be the principal purpose of the business was answered “dining”. Trading hours sought were:-

Sunday to Thursday 11.00 am to 1.00 am (the following day)
Friday and Saturday 11.00 am to 3.00 am (the following day)

Delay in processing of application by Agency

Notwithstanding the application being dated 4/2/98 the subject premises have traded since 11 November 1997 pursuant to temporary authorities issued by the Agency. No less than nine temporary authorities have been issued by the Agency covering the period 11 November 1997 to 12 February 2000.

The application was filed with the Agency on 11 May 1998 but not forwarded by the Agency to our Secretary until 14 May 1999. At the hearing submissions were made by Mr P H Mulligan as counsel for the Agency concerning reasons for the delay in the file being forwarded. Counsel said that in the period when the application was received by the Agency unacceptable delays were occurring with the processing of applications “clearly below an appropriate standard and the Agency apologises to the Authority for this”.

Objection

Public notification of the application attracted an objection from the Portage Licensing Trust on the grounds that the subject premises were being conducted as a bar or tavern and not as a restaurant contrary to the provisions of s.216(a) of the Act which provides that no on-licence shall be granted to any person other than the (Portage) Licensing Trust in respect of any hotel or tavern in the trust district.

Reports

The application was not opposed in reports from the Police and an Agency Inspector but a report dated 22 June 1998 filed on behalf of the Medical Officer of Health included:-

“The large bar area, the general layout of the premises, the small kitchen area and the provision of a happy hour all lead me to conclude that this premises is trading as a tavern which falls outside the restrictions of the licensing trust. While the Medical Officer of Health would not offer an objection to the licence renewal (sic) in terms of host responsibility issues, we would support any action taken by the District Licensing Agency in respect of whether the premises is trading as a tavern or a restaurant.”

A report from Agency Inspector D R Bryant dated 3 May 1999 mentioned that Mr Murphy’s trading under temporary authorities had been pursuant to a licence issued to W L F Floyed. The report mentioned that Mr Murphy had delayed applying for a substantive on-licence until a carparking requirement in terms of a resource consent granted to Mr Floyed had been resolved.

Applicant’s Evidence

Evidence of Mr Murphy relevant to the issue of whether the premises have traded as a restaurant or a tavern follow in summary reform.

“Seating is provided as follows:

• 4 booths with bench style seating for 8 patrons in each booth;
• 2 tables with 8 chairs at each table;

• 24 stools which provide seating for patrons at a leaner opposite the bar.

There are 4 full time and 2 part times employees. A certified manager and a chef are present during all opening hours.

Food is stored in 4 fully stocked freezers. Cooking is in public view on a hot plate and deep fryer together with a stove/oven adjacent to the bar area. All meals and snacks are very competitively priced and popular with patrons.

There are two forms of menu. A main menu which is changed every 6 months and a blackboard menu changed every week. Copies of these menus are attached to this statement marked ‘1’ and ‘2’.”

Mr Murphy acknowledged awareness since May 1998 of Portage Licensing Trust’s contention that the premises were trading as a bar and not as a restaurant but he had not taken any steps to have a till system that would provide details of revenue from liquor sales as distinct from the sale of food and other refreshments. Income and Expenditure reports were provided by Mr Murphy. We quote from his evidence:-

“Although sales figures are recorded for beverages and food together the analyses do show the following figures:

• Period 1.4.98 – 31.3.99

food purchases: $35,026.59

food sales $17,244.81

• Period 1.4.99 – 30.9.99

Alcohol/drinks purchase $47,413.93

Food $16,541.13 ”

An “Income and Expenditure Analysis Report” for the period from 1/4/98 to 31/3/99 produced by Mr Murphy included the following details:-

“Income
Sales Bar / Food 479,179.19
Eftpos 16,836.63
Sales Function Food 17,244.81
Credit card income 6,049.78

Less : Direct Costs
...
Purchases Bar 199,652.11
...
Purchases Food 35,026.59

Period 1/3/99 to 30/9/99:-

“Income
Sales Bar and food 155,040.20
Other income 1,940.14

Less : Direct Costs
Purchases alcohol/drinks 47,413.93
...
Purchases Food 16,541.13 ”

Mr Murphy said that the meals and snacks provided at Murphy’s Bar & Grill are competitively priced and popular with patrons.

Evidence of Objector

Mr M J Spearman gave evidence as general manager of the Portage Licensing Trust (PLT). The witness said that as far back as May 1997 when the previous licensee sought renewal PLT had objected that the premises then trading as “Hook Line & Sinker New Lynn” were trading as a tavern contrary to s.216(a) of the Act. That objection had subsequently been withdrawn in reliance on assurances from Mr Floyed as to how the premises would be operated in the future. PLT’s present objection is based on the manner of Mr Murphy’s trading for two years under temporary authorities.

Mr Spearman described having attended “Murphy’s” with an associate at 3.25 pm on 2 December 1999 and ordered beers without being met with any enquiry as to whether they would be dining. Eight other patrons were present drinking with no-one consuming food. There were no visible signs that the other patrons had eaten or were about to eat food. Mr Spearman and his associate left Murphy’s at 3.45 pm. The witness said:-

“Mr Diack and myself left the premises at 3.46 pm. During the period we were there, five drinks were served, other patrons continued to consume liquor, one person was eating but no other food was ordered or in evidence.

The layout of the premises is that of a bar not a restaurant. The bar area dominates the public area of the premises, no attempt is made to provide a menu or offer food to customers arriving at the premises. Signage in the premises is consistent with a bar not a restaurant e.g. ‘start every day with a Guinness’ plus brewery advertising signs.

These premises have historically operated as a de facto tavern within a licensing trust district. They were definitely operating in this manner when I visited the premises on Thursday 2 December.”

Supplementary Inspector’s Report at the Hearing

Mrs Bryant said:-

“The premises are known as Murphy’s Bar & Grill. A good variety of low priced meals as well as burgers and toasted sandwiches are available at all times. A full range of non-alcoholic drinks, both hot and cold are available at all times.

...

The days and hours applied for are the same as those of the existing licence and available to Mr Murphy under the Temporary Authority. However these hours are rarely used to the maximum and the normal closing times are 11.00 pm Saturday to Wednesday and 1.00am Thursdays and Fridays.

The premises seldom appear on the Last Drink Survey and I am not aware that the premises are adversely affecting the neighbours now as they were under the previous licensee. I believe Mr Murphy has demonstrated that he is a responsible licensee by the manner in which the premises have operated under his management.

Mr Murphy currently employs 2 certificated managers while a third person has filed for a General Manager’s Certificate. Three chefs are also employed. Staff are rostered so that any time the premises are trading a minimum of two staff, one chef and one certificated manager, are on duty. Mr Murphy takes an active role in the business and is able to fill any role required of him due to unforeseen staffing problems.

The menu has recently been revised and ‘specials’ are clearly advertised on fixed blackboards while the original menu is displayed on every table. The specials are changed every week or two.

...

The issue of whether this operation is in breach of Section 216 (a) of the Act, by operating as a tavern is question of degree. I consider on balance that the applicant’s operation does not offend that provision and therefore support the grant of this application.”

Cross-examination of Mr Murphy in relation to income and expenditure figures

The Authority assumes that the figures described as 1/3/99 to 30/9/99 should be for the six months ending 30/9/99.

In relation to the figures for the 12 months ending 31/3/99 Mr Murphy said that the “sales, function, food” income of $17,244.81 could be altered by deleting the word “function”. On that basis in response to questions from Mr Spearman and the Authority Mr Murphy accepted that the following conclusions could be drawn:-

12 months ending 31/3/99

Bar purchases of approximately $199,000 and food purchases of approximately $35,000 give food purchases as 17.5% of bar purchases. When asked by Mr Spearman whether that would be normal for a restaurant Mr Murphy replied “I don’t know. I haven’t been in the restaurant business before.”

Mr Murphy was asked by the Authority why he had not arranged for the till to differentiate between alcohol and food sales to assist on the issue of whether the premises traded as a restaurant or a tavern. Mr Murphy replied “I never thought it would be a problem”.

Mr Murphy was asked if he could provide the Authority with any other evidence confirming a breakdown of food sales as distinct from liquor sales. The applicant replied that he was not able to.

In relation to the income and expenditure figures Mr Bambrook, as the applicant’s counsel, conceded that:

“a problem arises because the food and beverage sales figures have not been separated in processing through the till.”

After quoting the purchase figures for the 12 month and six month periods mentioned above counsel submitted:-

“... these figures demonstrate that even though there is a deficiency in the manner in which the food/beverages sales data has been recorded, there is a significant demand for and supply of meals and snacks.”

Six months ending 30/9/99

Mr Bambrook as counsel for the applicant referred to the “alcohol/drinks” purchases of $47,500 (in round figures) and food purchases of $16,500 giving food purchases as 35% when compared with bar purchases. These figures highlighted an increase from 17.5% to 35% for the six month period compared with the previous 12 months.

Mr Murphy explained the difference as resulting from the “manageress” previously employed by Mr Floyed “doing the books” initially, then leaving and being replaced by Mr Murphy’s partner.

Relevant Statutory Provisions

“ ‘Restaurant’ means any premises in which meals are regularly supplied on sale to the public for consumption on the premises:

‘Tavern’ means any premises used or intended to be used in the course of business principally for the provision to the public of liquor and other refreshments; but does not include an airport bar:

Section 216. Provisions applying until competition proposal carried – Unless and until the competition proposal is carried in respect of any licensing trust to which this section applies, the following provisions shall apply, notwithstanding any of the other provisions of this Act:

(a) No on-licence shall be granted to any person other than the licensing trust in respect of any hotel or tavern in the trust district:”

Authority’s Conclusion and Reasons

In Nali Investments Limited v Invercargill Licensing Trust [1994] NZAR 127 Fraser J set out the approach that should be adopted in determining whether premises the subject of a restaurant licence have traded, or are likely to trade, as a tavern in a trust district.

His Honour said at page 130:-

“Clearly section 216(a) is a provision which the Authority would have to consider in every appropriate case arising in a trust district whether the trust is an objecting party or not. One of the purposes of the section is to protect a trust from competing taverns unless the electors of the district have decided that competition shall be permitted. The issue of whether the use or intended use of premises brings it within the definition of a tavern is not always clear cut. It is a question of fact and degree.”

And at page 137:-

“The matters to be considered will depend on the evidence adduced at the hearing but from the tenor of the case presented to the Authority at the original hearing it seems likely that consideration will have to be given to:

(1) The nature and extent of the entertainment, the times when it will be available, how such times relate to the opening hours, whether liquor and other refreshments will be available to non-dining patrons when entertainment is not offered, how the cost of the entertainment is to be financed and the basis on which patrons are to be charged.

(2) The restaurant and kitchen facilities for preparing and serving meals, the times when meals will be available, and generally how the restaurant will be operated.

(3) The staff to be employed in the different sections of the business.

(4) The expected revenue from the various sections of the business and the basis on which the forecast is made.

The list is not intended to be exhaustive or exclusive. In the end, the decision as to whether the premises are intended to be used principally for the provision to the public of liquor and other refreshments is one of judgment after evaluating and weighing all relevant matters established by the evidence.”

In Nali the issue was whether nightclub premises not yet trading were likely to operate as a tavern. Hence reference to “entertainment” which is not an issue in the present case. In relation to “Murphy’s” it must be recorded that there was no challenge to Mr Murphy’s suitability to hold a liquor licence and no host responsibility problems were raised.

Commenting on the restaurant Mr Bambrook said “evidence was given that there was restaurant style seating, both in booths with bench style seating and conventional tables and chairs, which together provided seating for up to 48 patrons”. Mr Bambrook omitted to mention that it was Mr Murphy’s own evidence that in addition to the seating for 48 patrons there was provision of “24 stools which provide seating for patrons at a leaner opposite the bar”. It was Mr Spearman’s evidence that the layout of the premises is that of a bar not a restaurant. He added that the bar area dominates the public area of the premises and signage in the premises is consistent with a bar, not a restaurant. Although Mr Spearman is an objector and not an independent observer, he is known to the Authority as a person with experience of licensed premises. It would be unusual for a true licensed restaurant to cater for 96 patrons of whom only 48 can be seated at tables or in booths with bench type seating with the remaining 50% of patrons at a leaner opposite the bar.

Facilities for preparing and serving meals at “Murphy’s” were described by Mr Murphy:-

“Cooking is in public view on a hot plate and deep fryer together with a stove/ oven adjacent to the bar area. All meals and snacks are very competitively priced and popular with patrons.”

Inspector Bryant confirmed that:-

“A good variety of low priced meals as well as burgers and toasted sandwiches are available at all times. A full range of non-alcoholic drinks, both hot and cold are available at all times.”

The fact that the meals might be less than might be expected in an expensive restaurant does not weigh against Mr Murphy in assessing whether or not the premises trade as a restaurant and from other evidence adduced at the hearing the provision of staff appears to be adequate for a restaurant.

Quoting from Nali “the times when meals will be available”. Although an isolated incident the evidence of Mr Spearman and an associate visiting the premises between 3.00 and 4.00 pm on Thursday 2 December last was that no enquiry was made as to whether they would be dining and apart from one, other patrons present were not dining. Mr Spearman did not allege that food was not available if asked for. Overall our impression is that dining would take place at Murphy’s at around normal meal hours with patrons not being in any way inhibited from having a drink without dining at other times. If the premises were not in a trust district they might accord with what is known as a “bar/brasserie” in other than trust districts where casual drinking is permitted without premises being classified as a tavern providing that the sale of liquor does not become the principal part of the business. The provisions of s.216(a) have restrained the Authority from granting “bar/brasserie” licences in trust districts because of the possibility of such premises trading as a tavern.

“Revenue from various sections of the business”. Here we are not considering “expected revenue” as was the case in Nali as Mr Murphy has been trading for two years leading up to the hearing on 6 December last. On the income and expenditure figures provided by Mr Murphy even his counsel did not go so far as to submit that the figures would support the proposition that the premises were trading as a restaurant. Mr Bambrook said in closing written submissions:-

“These figures demonstrate that even though there is a deficiency in the manner in which the food/beverages sales data have been recorded, there is a significant demand for and the supply of meals and snacks.”

The possibility of Mr Murphy persuading the Authority that the principal business of Murphy’s Bar & Grill is other than the provision to the public of liquor and other refreshments was not assisted by not having a till system recording a breakdown of sales of liquor as distinctive from food. Mr Murphy would in all probability have been aware that the question of restaurant or tavern had been an issue for the previous licensee from whom he purchased the business. Certainly from May 1998 when the PLT objection was lodged Mr Murphy must have been aware of the importance of the distinction in a trust district yet no steps were taken to record a breakdown of sales. We can only infer that Mr Murphy did not want the results of such a breakdown of sales revenue to be known to the Authority.

It was submitted by Mr Bambrook that the purchase figures provided by Mr Murphy indicated food/liquor purchase percentage increasing from 17.5% to around 35% for the six months ending 30 September 1999 when compared with the 12 month period ending 31 March 1999. To avoid any likelihood of being classified as a tavern business food purchases would need to be well in excess of 35% of liquor purchases.

The income and expenditure figures provided by Mr Murphy, combined with the nature and layout of the premises and signage and photos lodged with the application, have caused the Authority to conclude that the PLT objection is valid in that Mr D J Murphy has operated a tavern in a trust district. No evidence was adduced by Mr Murphy that the manner of operation of the premises would change in the future if the licence sought was granted. It follows that the application by Mr Murphy for an on-licence is refused.

DATED at WELLINGTON this 7th day of February 2000

_____________________________
R Barber
Deputy Secretary Murphys.doc(J9)