Reinheima Holdings Limited, re [2003] NZLLA 128 (13 March 2003)

Last Updated: 21 February 2010

Decision No. PH 128/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by REINHEIMA HOLDINGS LIMITED pursuant to s.16 of the Act for variation of the conditions of an on-licence in respect of premises situated at 25 Tay Street, Invercargill, known as “Players”.

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at INVERCARGILL on 18 February 2003

APPEARANCES

Mr R T Chapman – for applicant

Ms D M McDonald – Invercargill District Licensing Agency Inspector – in opposition
Sergeant P R Stratford – New Zealand Police – in opposition
Mrs A M Fowler – Public Health South – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application by Reinheima Holdings Limited for variation of the conditions of its on-licence pursuant to s.16 of the Act for the premises known as “Players“ situated at 25 Tay Street, Invercargill.

[2] In a letter accompanying its application, the applicant said that it wished to modify its existing on-licence to comply with the Department of Internal Affairs requirement regarding gaming machine sites. The bar area on the mezzanine floor is designated a “supervised” area, and the ground floor is presently undesignated. The applicant said that the enclosed gaming machine area, known as the “Goldmine”, was on the ground floor, and needed to be designated in order to comply with the Department’s requirements.

[3] When it was discovered that the gaming machines were sited in an undesignated area they were moved to an area on the mezzanine floor. The applicant now wishes to move the gaming machines back down to the ground floor, hence the need for the imposition of a designation. The ground floor consists of pool tables, a skiing machine game, a small counter area with a chiller containing a variety of alcoholic and non-alcoholic drinks, and the enclosed area called the “Goldmine”, now empty, that held the gaming machines. The mezzanine floor contains a bar, pool tables, as well as the gaming machines.

[4] The applicant subsequently amended its application by requesting that the whole of the premises now be designated as “supervised”.

[5] The Police opposed the application on the basis of previous decisions of this Authority regarding the designation of gaming machine areas. The Inspector has also opposed the application on similar grounds.

Background

[6] Mr R T Chapman as counsel for the company had only received his instructions the afternoon prior to the hearing. He called Tracey Leanne Kruse who is employed by Reinheima Holdings Limited to manage the various companies owned by Mr Louis Crimp. Ms Kruse prepared the application for variation on behalf of Reinheima Holdings Limited.

[7] Ms Kruse described the layout of the premises. She said that if the application was approved, they would be able to have gaming machines in the poolroom downstairs. She said that the original concept when the premises opened in 1998, was for a pool hall for young people including those under the age of 18 years. That was how it operated until truant officers found young persons of school age on the premises. Young persons were then not allowed on the premises. She said that many of those young people were “undesirables”, and it suited the applicant to have a restricted or supervised designation to keep them out. In the last month, the company has voluntarily placed a “restricted” designation on the premises to prevent persons under the age of 18 years gaining access to the premises. She said that since the restriction was imposed, more adults are now visiting the premises, and it is a nicer place because of that.

[8] Ms Dawn Merrin McDonald is the Invercargill District Licensing Agency Inspector. She said that the application for variation for the premises known as “Players” was received on 16 October 2002. She referred to a letter from the applicant dated 14 October 2002 and signed by T Kruse which said:

“We wish to modify our existing On Licence under section 14(5)(g) of the Sale of Liquor Act, to comply with Internal Affairs requirement Gaming Machine Sites. The bar area (Mezzanine floor) is a supervised area and the ground floor is presently undesignated. The Goldmine (marked on the attached plan) needs to be a restricted area to comply.

Your urgent attention in this matter would be appreciated as this requirement came into effect on 1 October 2002.”

[9] Ms McDonald referred to the Police letter of 24 October 2002 written to the applicant advising it that: “We consider that as you already have a supervised area, the gaming machines should rightly be transferred to a location within that supervised area.”

[10] In a facsimile message received by the District Licensing Agency on 15 November 2002 from Reinheima Holdings Limited, Ms Kruse wrote:

“We would like to amend our application ... currently before the LLA. We would now like to designate the entire ground floor of “Players” to be a supervised area; this would comply with Internal Affairs regarding our casino area. As previously mentioned it is not viable for us to move the gaming machines to the mezzanine floor as suggested by Sergeant Harris.”

[11] Ms McDonald produced a time line prepared by the Invercargill Council’s Principal Building Code Officer in which is was noted that as at 10 February 2003: “A full Code Compliance Certificate has not been issued, as all the building work has not been completed.” Ms McDonald said that despite the Council making three requests for further information of the applicant by facsimile prior to that date, not all the information had been received. The building consent concerns a walkway to the bar area from the mezzanine floor. We were to hear from Mr Chapman as to what progress had been made with the engineering report. As at the time of writing this decision we have received no further information.

[12] Ms McDonald said that some of the gaming machines were now on the mezzanine floor which is a supervised area, and which meets the requirements of the Department of Internal Affairs.

[13] Ms McDonald said that she had not had a reply to her letter of 10 July 2000 to the applicant’s solicitor in which she requested confirmation as to who were the directors and shareholders of Reinheima Holdings Limited.

[14] Ms McDonald said that the issue to be determined was whether the ground floor of the premises, which is currently accessible to persons aged under 18 years, where facilities are provided for the playing of pool, snooker, billiards, and video games, should become a supervised area in order to accommodate gaming machines.

[15] Constable Timothy Francis Harwood is a member of the Liquor Licensing Squad at Invercargill. He received a copy of the application for variation to the premises trading as “Players”, together with a letter dated 14 October 2002 from the licensee. He noted that the letter stated that the purpose of the variation was to designate the gaming machine area of the premises to comply with the requirements of the Department of Internal Affairs.

[16] Later the Police received from the licensee a facsimile letter dated 10 November 2002. The licensee sought to amend the application to “designate the entire ground floor of “Players” to be a supervised area ...” The Police wrote to the licensee requesting the reason why the change in designation was sought. The reply on 27 November 2002 stated that the gaming machine area (called the “Goldmine”) had been built at great cost and had been positioned “close to the street, reception, safe, computer & staff.” The letter went on to say that, although the bar is supervised, it would be impractical to move the gaming machines to the bar. There was not enough room for all the machines, and they would interfere with the entertainment in the bar.

[17] Following receipt of that letter, Constable Harwood opposed the application on the grounds of the Authority’s previous decisions Thomas Edmund Leon Downes PH 485/2002 and Sporting Investments Limited PH 486/2002. In those decisions the Authority gave a clear ruling incorporating three principles at paragraph 49, but the one of relevance to this case is:

“• Gaming rooms per se will not be designated. Where the room or place in which the gaming machines are situated is not a bar within the confines of a hotel or tavern, a designation is inappropriate on the basis that the sale, supply or consumption of liquor is not the principal or exclusive activity.”

[18] On 12 December 2002 the Police received a letter from the solicitor acting for the licensee. He asked for the Police to reconsider its opposition to the application, and extended the following grounds:

“1. With the recent opening of the nightclub above the premises it is in the interest of the Management to have the total premises R18 to restrict the younger people from congregating around the nightclub area.

2. 2. That Management wish to extend the bar operations to the ground floor premises where pool tables are situated. As you will be aware the licence was originally granted on the basis that patrons would be on the premises for the purposes of watching and/or playing pool.
3. 3. That the general management of the premises will be more easily supervised if the total area is restricted to 18 years and over.”
   

[19] Constable Harwood then referred to correspondence for the period 14 October and 31 December 2002 between the licensee’s representatives and the Police, and to comments in the “Southland Times” of 6 and 7 January 2003 regarding the changing of designation for the whole of the premises. In some of the correspondence the Police were accused by Ms Kruse of frivolous and trivial objections. In the newspaper articles, Mr Louis Crimp, the owner of Reinheima Holdings Limited, claimed that the Police opposition was a “personal vendetta”, and that the Police were opposing the application “for such pathetic reasons.” Such gratuitous insults attempting to impose pressure on public officials for doing their duty does not reflect well on the company.

[20] Constable Harwood said that during the course of reviewing the application he became aware “of discrepancies as to who the Directors and Shareholders of Reinheima Holdings Limited are.” He said the Companies Office register listed Wanden Holdings Limited a 50% shareholder. In September and October 2000 the Police received two letters. One was from a Mr McKenzie (director and major shareholder in Reinheima Holdings Limited), and the other was from his solicitor stating that Mr McKenzie had sold all his shares in Reinheima Holdings Limited to Mr Crimp thus removing all interest he had in the company. Constable Harwood then referred to correspondence in which the District Licensing Agency and the Police sought to establish whether Mr Louis Crimp had any involvement in the company. They also asked why the Companies Office had not been advised of the change in shareholding, and why the Liquor Licensing Authority had not been advised pursuant to s.225 of the Sale of Liquor Act 1989. He said that although he put those questions in 2000, they still remained unanswered.

[21] Mr Chapman advised us that in a letter dated 3 September 2000 which should have been dated 3 October 2000, Mr Tom Pryde acting for Mr McKenzie wrote to Senior Sergeant P Brown of the Invercargill Police. In that letter Mr Pryde summarised the position. Regrettably the letter was never received. Part of the letter read:

“1. Mr McKenzie no longer has any interest whatever in Players, or Reinhema Holdings Limited.

2. He has resigned as a director Reinheima Holdings Limited effective 26 September. The Companies Office notice of his resignation was handed to Mr Crimp’s lawyer Roger Eagles on that day and it is understood that Mr Eagles should have filed the same in the Companies Office by now.

3. As far as Mr McKenzie is concerned, Mr Crimp is now the only shareholder in Reinheima.”

[22] On 12 September 2001 Mr Pryde wrote to Mr Watt, Secretary of the Invercargill District Licensing Agency. In that letter he referred to the letter inadvertently dated 3 September and said that it should have been 3 October 2000. He told Mr Watt that that letter was accurate except in one minor respect. He went to say that Mr McKenzie had indeed resigned as a director and Mr Crimp will be able to confirm that. He then said:

“However I am aware that Mr Crimp’s view is that while the shareholder Wanden Holdings Limited was to transfer its shareholding to Mr Crimp as part of the settlement the effective date of that Share Transfer was not to be 26 September but rather would be a date nominated by Mr Crimp. This is a matter which was of no concern to Mr McKenzie. As far as he was concerned the matter had been settled. Wanden Holdings remained a shareholder in Reinheima Holdings only until such time as Mr Crimp gave effect to the Share Transfer he was holding. There was nothing more for McKenzie to do or sign to transfer Wanden’s shares and sever his relationship with the company in every respect.”

Authority’s Conclusion and Reasons

[23] Section 16(7) of the Act states:

In considering the application, the Licensing Authority ... must have regard to such of the matters specified in section 13(1) of this Act are relevant to the application.

[24] Section 13(1) of the Act is as follows:

In considering any application for an on-licence the Licensing Authority... must 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 service other than those directly related to the sale and 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.

[25] Section 14(4) of the Act states that:

“On granting an application for an on-licence in respect of a hotel or a tavern the Liquor Licensing Authority ... must designate the whole or more parts of the premises as restricted or supervised areas.”

A “tavern” is defined in s.2 of the Act as follows:

“ ‘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 ... ”

[26] The applicant’s licence is an entertainment style licence to avoid contravening paragraph (a) of s.216 of the Act, that is, no on-licence for a hotel or tavern other than to a Licensing Trust shall be granted in the Trust district until a competition proposal has been carried. Condition (b) of the applicant’s licence states that:

“Liquor may be sold ... [on] such days and during such hours as facilities are provided for the playing of snooker, pool, billiards, and video games ... ”

[27] What must not be ignored in this case, is that that licence would not have been granted if there had been no facilities for the watching and playing of pool. Mr Chapman confirms this in his letter dated 12 December 2002 referred to in paragraph [18] above.

[28] The applicant, through Ms Kruse, has made no secret of the fact that it seeks a designation of its gaming machine area, known as the “Goldmine”, simply to comply with the requirements of the Department of Internal Affairs. Hence, the only matter of relevance to this application is paragraph (c) of s.13(1).

[29] The gaming machine area on the ground floor is surrounded by pool tables. The Inspector’s report states that Mr Crimp, in a letter dated 7 March 1997 to the Invercargill District Licensing Agency, stated:

“We acknowledge potential concerns raised by the Invercargill Licensing Trust about our application for an on-licence at 25 Tay Street, Invercargill. We have agreed to provide certain assurances on the basis of which ILT will not object to our application.

We undertake to the Licensing Authority as follows:

1. To keep the licensed premises open for the sale of liquor only at times when the downstairs pool and snooker hall is open for business.
2. To maintain not less than 2 pool tables in the bar.
3. Not to locate gaming machines on the mezzanine floor (which includes the bar area).
4. To maintain and operate the premises as a whole as a pool and snooker hall and to ensure that persons present in the bar area on the premises for the purposes of playing or being entertained by pool, snooker, or electronic games.
5. To not permit organised dancing in the licensed area unless for a special function or event with a special licence .... ”
   

[30] The applicant has been caught between two competing requirements. First, its undertaking to the District Licensing Agency that it will not place the gaming machines on the mezzanine floor. Second, if it is to comply with the requirement of the Department of Internal Affairs it needs to place the machines on the mezzanine floor which is designated as “supervised”.

[31] In Premier Restaurant &Tavern Limited LLA PH 474/2001 we said:

“[62] If gaming machines are not the concern of this Authority, then why should this Authority impose a designation to enable the site operator to run a gaming parlour? ... In the final analysis we have a duty to exercise our discretion ‘in the manner that is most likely to promote the object of the Act’. (s.4(2)). If gaming machines are beyond our purview, then why would we exercise a discretion which will not only encourage the spread of such machines, but bring the sale and supply into disrepute?”

[32] In the present application we take the same view. The licence for the premises was obtained on the basis that the premises was going to provide facilities for pool, snooker, billiards and video games. By designating the ground floor, there is a serious risk that the area will no longer attract young people, and the emphasis will change to a bar. In our view, the gaming machines should be in a bar area where persons aged over 18 years are more likely to congregate.

[33] The purpose of designation was discussed in Sporting Investments Limited LLA PH 486/2002. There we said:

“[45] In Kim Ashton Williams LLA 2291/96 an application was made for an on licence for a massage parlour. A request was made not to designate the premises as restricted. The Authority stated:

‘The purpose in designating the premises “restricted” is to assist the intention of the legislature that liquor not be sold to persons under the age of 20.’

[46] We have come to the view that in assessing which parts of any premises should be designated, our duty is to impose a designation on any bar or other area used principally or exclusively for the sale or consumption of liquor. See Kim Ashton Williams above. In s.2 of the Act a bar is defined as:

“Bar” in relation to any hotel or tavern, includes any part of the hotel or tavern that is used principally or exclusively for the sale, supply, or consumption of liquor.

[34] The ground floor is not used principally or exclusively for the sale and supply or consumption of liquor. If it were, then it would be in breach of s.216 of the Act. Hence, there is no need to impose a designation to ensure that liquor is not sold to persons under the age of eighteen years. In summary, any designation imposed on the ground floor would be for a reason not envisaged by the Act.

[35] In our view the suitability of the applicant company has also been brought into question. This is partly because of the public comments made by Mr Crimp, and partly because it has carried out work on the premises without a building permit. Furthermore, we believe that the imposition of a designation would lead to a change of emphasis downstairs. Finally, although the request is to designate the ground floor, the real reason is to designate a separate gaming room, and this we are not prepared to do.

[36] The application is, therefore, refused.

DATED at WELLINGTON this 13th day of March 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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