Patel, re [2003] NZLLA 12 (22 January 2003)

Last Updated: 15 February 2010

Decision No. PH 012/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by TARAL PATEL and TARUNA PATEL trading in partnership pursuant to s.31 of the Act for an off-licence in respect of premises situated at 486-490 Parnell Road, Parnell, Auckland, known as “Parnell Superette”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Member: Mr J C Crookston

HEARING at AUCKLAND on 2 October 2002.

APPEARANCES

Mr P D Swain – as agent for the applicants
Mr D W Sara – Auckland District Licensing Agency Inspector – to assist
Mr R G Poole – for New Zealand Police – in opposition

FINAL DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application for an off-licence. The issue is whether the applicants have established that their premises can accurately be described as a grocery store, with its principal business being the sale of main order household foodstuff requirements. Alternatively, they must show that the business is not a shop of a kind commonly known as a dairy.

[2] After hearing the evidence, the Authority issued an interim decision (PH 544/2002) on 7 October 2002. In its decision, it decided to adjourn the application for three months. The purpose of the adjournment was to enable the applicants to come to a decision whether or not they wished to proceed with the application.

[3] If they decided to do so, the Authority indicated that it would require certified figures showing the specific categories of items sold from the premises. The Authority also stated that following any alterations to the premises, a further inspection would then be made. Following the inspection, a final decision would be issued.

[4] The concerns of the Authority were twofold. On the one hand, having taken an initial view of the business, the Authority was not satisfied that the premises were not a dairy. Alternatively, the Authority was of the view that the applicants had failed to establish that the business was a grocery store, with its principal business being the sale of main order household foodstuffs. Accordingly, the applicants had failed to qualify for an off-licence in terms of ss.36(1)(d)(ii) and 36(3)(b) of the Act. Secondly, the Authority was of the view that the turnover percentages were insufficiently detailed to be of any assistance.

Events Subsequent to Interim Decision

[5] On 14 November 2002, a letter was received from Mr P D Swain as agent for the applicants. He advised that the applicants had made a number of changes to their shop. He stated that unfortunately the exterior sign writing could not be changed in the short term. The advertising on the outside of the building was subject to contract. However, Mr Swain advised that his clients were of the view that the changes to the internal layout should satisfy the Authority that the premises were not a dairy. The Authority was invited to make a further inspection.

[6] In addition the applicants wrote to the Authority on 15 November 2002. In their letter, the applicants argued that some of the confectionery items such as ice cream and biscuits could be classified as main order household items.

[7] On 4 December 2002, the final submissions were received from Mr Swain. He also enclosed figures certified by Patel Pike & Associates Limited, Accountants and Business Advisors of Auckland. Mr Kanu Patel, the manager of Patel Pike & Associates Limited, noted that the figures were based on information supplied by the applicants, plus their buying patterns for October and November 2002.

[8] A reasonable attempt had been made to separate the figures into categories which one would expect to find in a dairy, or which could not be classified as ‘main order household foodstuff requirements’. These categories were:

1. Confectionery $ 160.00

2. Drinks and Beverages $ 380.00

3. Milk shakes $ 6.50

4. Newspaper $ 240.00

5. Toiletries $ 350.00

6. Ice-creams $ 168.00

8. Magazines $ 680.00

9. Stamps $ 30.00

10. Cigarettes, Tobacco, Cigars $2,330.00

11. Phone-cards $ 700.00

12. Biscuits and chips $ 100.00

[9] The total turnover for the period in question was $10,717.50. Accordingly, the figures showed that the non-grocery items shown above amounted to $5144.50 or 48% of total turnover.

[10] The ‘grocery’ items were shown as follows:

1. Confectionery, large chocolate $ 200.00

2. Grocery beverages & drinks $ 620.00

3. Milk $ 650.00

4. Ice cream – gourmet $ 210.00

5. Bread $ 530.00

6. Fruit & vegetables $ 160.00

7. Biscuits & chips $ 520.00

8. Delicatessen $ 510.00

9. All other groceries $2,173.00

[11] The total amount of ‘grocery’ items came to $5,573.00 or 52% of turnover. As a matter of courtesy, copies of these figures were sent to the Police and the District Licensing Agency. They were asked to comment, although the Authority had by then made its decision based on the second view of the premises, and the principles set out in the interim decision.

Decision of the Authority

[12] In our earlier decision we referred to Jay & H Company Limited LLA 155/2001. In that decision, the Authority set out a number of considerations which should be taken into account when determining the principal business of any store. In the light of the subsequent evidence referred to above, we revisit these suggested criteria.

The turnover percentages

[13] We are grateful for the figures which have been provided. By a very small margin, they show that the most of the items sold could be classified as grocery items. On the other hand because there is so little difference between the two lines of goods, it is our view that the view of the business would be likely to achieve even greater prominence in assessing whether the business was not a dairy.

Number and range of items

[14] As we stated in the interim decision, there is a large range of items on display. In those circumstances, it could be argued that the premises narrowly qualify as a grocery. However, as with the turnover, the difference is not conclusive.

Size of the premises

[15] In our earlier decision, we also stated that the premises were large enough to be categorised as a grocery, and small enough to be categorised as a dairy.

The layout of the premises

[16] In the interim decision we made the following comments:

“The Authority took a view of these premises. This was the most telling factor. The premises gave the impression of a dairy both inside and outside. On the outside, all the windows are covered with advertisements for dairy type items. ‘Kit Kat’ is predominant. The Patels have every right to advertise their shop in this way, but in doing so, they run the risk of being classified as a dairy. On the inside, one receives the same impression. The counter is small and is surrounded by dairy type items. There is provision for milk shakes and ice creams. We can imagine children going to the shop for sweets, and chips and ice creams. The layout of the shop is presently quite cluttered. The ability to browse while selecting ‘grocery’ items for the home is restricted.”

[17] When we made our second visit to the premises, we were disappointed to find that none of the major exterior advertising had been removed. A vertical ‘dairy’ sign had been removed but replaced by an even larger ‘Kit Kat’ sign. There is no signage or advertising to show that the premises is a grocery store. Anyone walking past the building, would in our view, not expect there to be a grocery inside.

[18] We were equally disappointed when we inspected the interior of the premises. The stock levels have been maintained, but re-allocated. While it is true that there is a better display of grocery items, the entranceway and counter are still dominated by dairy type items, including the freezer used to dispense cone ice creams.

[19] In our interim decision, we emphasised that the view we had taken was very important. We said:

“Having been to the premises we were left in a position of uncertainty as to whether the business was a dairy or not. It seems to us that the Patels must carry the onus of establishing that the premises not a shop ‘of a kind commonly known as a dairy’.”

[20] In summary, the subsequent view of the premises did not persuade us that the premises were not a dairy. The figures which have been produced were insufficiently conclusive to tip the scales in favour of the applicants.

[21] Accordingly, we have not been satisfied that the premises are not a shop of a kind commonly known as a dairy. Therefore, pursuant to s.36(3)(b) of the Act, the application must be refused.

DATED at WELLINGTON this 22nd day of January 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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