Verner v The Mill Liquorsave Limited and Godfrey [2003] NZLLA 296 (1 May 2003)

New Zealand Liquor Licensing Authority

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Verner v The Mill Liquorsave Limited and Godfrey [2003] NZLLA 296 (1 May 2003)

Last Updated: 14 March 2010

Decision No. PH 296/2003 –
PH 297/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application pursuant to s.132 of the Act for suspension of off-licence number 049/OFF/42/2000, issued to THE MILL LIQUORSAVE LIMITED in respect of premises situated at 233 Victoria Street, Wellington, and known as “The Mill Liquorsave"

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number GM 1336/97 issued to PAUL JAMES GODFREY

BETWEEN GRANT DAVID VERNER
(Police Officer of Wellington)

Applicant

AND THE MILL LIQUORSAVE LIMITED

First Respondent

AND PAUL JAMES GODFREY

Second Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 15 April 2003

APPEARANCES

Sergeant G D Verner – NZ Police - applicant
Mr S M Harrop – for the first respondent
Mr C M Gallagher – for the second respondent
Ms G Bareta – Wellington District Licensing Agency Inspector – in support of
applicant

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority, are two suspension applications. The first is an application to suspend an off-licence issued to The Mill Liquorsave Limited in respect of a stand alone bottle store situated at 233 Victoria Street, Wellington, and known as "The Mill Liquorsave".

[2] The grounds for the application are that the licensed premises have been conducted:

(a) In breach of s.155(1) of the Act. That section prohibits the sale or supply of liquor to minors.

(b) In breach of a condition of its licence. The condition requires the licensee to ensure that the provisions of the Act relating to the sale and supply of liquor to prohibited persons are observed.

[3] The second application is for the suspension of a General Manager’s Certificate issued to Paul James Godfrey. The ground for this application is that the manager has failed to conduct the licensed premises in a proper manner.

[4] Both applications arise from the same set of facts. It is alleged that a 16 year old female volunteer was sold liquor without being asked for her identification. The sale was made by Mr Godfrey who was the duty manager at the time.

[5] The respondents concede that the sale was made. The issues to be determined are, (a) whether it is desirable that suspension orders be made, and (b) if so, the length of the suspension.

The Factual Background

[6] The drinking age was lowered to 18 on 1 December 1999. Over the last three years, there have been rising concerns about minors gaining access to liquor directly from licensed premises. In the light of these concerns, the Wellington District Licensing Agency has carried out a number of initiatives, aimed at ensuring that licensees were fully aware of their responsibilities not to sell to young people without requesting identification. Some of the initiatives were conducted jointly with the Police.

[7] By way of example, in August 2001, the Authority issued its decision in the case of Onehunga Wines & Spirits Co Limited LLA PH 311-312/2001. That decision cancelled an off-licence and a manager’s certificate, following proof of ten unauthorised sales to minors. To ensure that the decision was widely disseminated, the District Licensing Agency sent a copy of the Authority’s decision to every off-licence in Wellington. In the letter, it asked all licensees to help keep Wellington safe. At that time the letter was sent out, the premises were under the present ownership.

[8] In June 2001, the Wellington Liquor and Environment Health teams combined to produce a "new look" quarterly newsletter. Ms G Bareta is the Team Co-ordinator for the Agency. She produced three newsletters issued between June 2001, and June 2002, in which age verification issues were highlighted. Since July 2002, the District Licensing Agency and the Police, have operated an electronic bulletin board designed to keep the hospitality industry in Wellington up to date with relevant issues. Such issues have included discussions about sales to minors.

[9] In addition, the Agency has its own website, and the Wellington City Council has a well established Liquor Licensing Policy. Finally, the District Licensing Agency holds presentation forums for licensees twice a year. Such forums routinely include a focus on the importance of checking identification before selling to young people.

[10] In summary, the Wellington District Licensing Agency has proactively sought to educate licence holders and managers about their responsibilities under the Act. Ms Bareta submitted that licensees and managers in Wellington had been given every opportunity to be aware of the current climate of controlled purchase operations, aimed at monitoring the compliance by licensed premises, of the law affecting supply to minors.

[11] In November 2002, the Wellington District Licensing Agency in conjunction with Regional Public Health, and the New Zealand Police, conducted their first controlled purchase operation in the city. The operation followed an evaluation of other controlled purchase operations, and resulted in a framework document. The Authority has previously remarked on the research which went into producing a document of such quality.

[12] On the evening in question, a total of 21 premises were tested. Of the 21 premises that were visited, eight sold to the volunteers without asking for identification. We have had serious reservations about two of the incidents, because of the maturity of one of the volunteers.

[13] One of the volunteers was a young woman named Chloe. Chloe was born on 11 April 1986, and was sixteen and a half years at the time of the operation. She entered "The Mill Liquorsave" at about 9.45 pm. She uplifted a four pack of "Tattoo Vodka and Cranberry" and took it to the counter. Chloe was served by Mr Paul James Godfrey, the duty manager at the time. Apart from advising her of the cost of the liquor, he had no other conversation with her. The incident took about five minutes. Chloe visited seven off-licensed premises that evening. In five other premises, sales were refused when she acknowledged, either than she was under age, or had no identification.

[14] "The Mill Liquorsave" Limited is a substantial company which is based in New Plymouth. It has 22 liquor stores, either under its control, or within its franchise. The company is responsible for well over 200 employees. According to Mr Stephen Leon Fromont, its General Manager, the company commands about 22% of the take home liquor market in New Zealand. The respondent company has never had a conviction recorded against it in its 20 year history. Nor has it been the subject of any suspension application.

[15] Mr Fromont gave evidence that the company had a very strong policy of doing its best to ensure that no minor was ever sold liquor. He produced documentation which confirmed that the company was serious about the issue. As the duty manager who made the sale, Mr Godfrey was given a final written warning, although he had never been the subject of any warning prior to the incident. As a consequence of what happened in this store and two others, substantial steps have been taken by the company, aimed at ensuring that such conduct will not be repeated.

[16] In February 2003, the company revised and strengthened its sale of liquor policy. In future, all customers under the age of 25 were to be asked for ID. The server is now asked electronically if he or she has made the check. Dismissal from employment was now likely, if persons under age were served. The record of duty managers would be noted, if staff under them served a minor. A "Mystery Shopper" programme was to be instituted along the lines of the "Controlled Purchase Operation". The budget for such activity is expected to be around $50,000. Each staff member is now asked to sign an acknowledgement of their responsibilities under the Act, at the commencement of each shift. Finally, the in-store video surveillance is to be enhanced to assist in reviewing employee performance. Mr Fromont accordingly asked that the sale be viewed as a "one-off" incident.

[17] Mr S M Harrop argued that in the light of all the circumstances, suspension of the off-licence was not justified or warranted. While he accepted that the ground had been established, he argued strongly that it was no longer "desirable" to make an order. He submitted that an adjournment of the application was a possible option for the Authority. In terms of whether an order was "desirable" or not, Mr Harrop referred the Authority to the provisions of s.4 of the Act. He asked whether a suspension would be most likely to establish a reasonable system of control over the sale and supply of liquor to the public, with the aim of contributing to the reduction of liquor abuse? He suggested that the respondent company already had such a system in place.

[18] He submitted that in the light of the decision of Panckhurst J, in Karara Holdings Limited and others v The District Licensing Agency Inspector and others, AP 14/02 Christchurch High Court 8 July 2002, the Authority’s focus should be on the level of management responsibility, and attitude to obligations under the Act.
[18] He argued that there was no need for "punishment and/or deterrence" for the company. In the light of the company’s history of compliance, and the efforts it had made subsequently, he contended that it would be inappropriate for the company to suffer the sanction of suspension. The incident he suggested was an "aberration" in the clear policy adopted by the company.

[19] Bearing in mind that the Court of Appeal is about to rule on the Karara decision, any discussion is potentially inconsequential. In previous cases, we have accepted that the four main principles of the decision were as follows:

• Part IV of the Act is intended for situations where the Authority seeks to enforce the management responsibility aspect of the licensing regime;
  
• Orders under s.132 of the Act can be made by the Authority where the Authority considers the orders appropriate to secure a genuine licensing end;
  
• An order for suspension under Part VI of the Act may or may not be punitive and deterrent in nature but these ends are not the essential purpose for which the power is conferred;
  
• Immediate resort to s.132 of the Act may be appropriate following a single breach of the Act either in the absence of a prosecution or with a prosecution in tandem. Resort to s.132 of the Act in these circumstances may be appropriate where a breach is so serious or of such a nature that variation, suspension or cancellation of the holder's licence is necessary.
  

[20] The Authority has had difficulty in the interpretation of the decision, including whether a breach of this nature results from a failure of managerial responsibility, or whether any order will secure genuine licensing ends, and whether a breach such as a sale to a minor is considered to be "serious". In this case, had there been a prosecution of the manager, the case would in all likelihood have come back to the Authority at any event, pursuant to the provisions of s.132A of the Act. As to genuine licensing ends, one only has to stand in line at a supermarket to notice the impact of the original decisions. Mr Harrop saw no problem with our dealing with the matter, but argued that the High Court decision should be taken into account when it came to the issue of whether it was desirable to make an order. Mr Harrop’s arguments and submissions were among the best we have ever heard.

[21] Mr C M Gallagher had a more difficult task. Mr Godfrey elected not to give evidence. He had no dispute with the basic facts. It was argued on his behalf that the sale had been made shortly before the shop was due to close. Consequently, the person at the door (the first line of defence), was no longer at his post. He was apparently helping to clean up. Mr Gallagher asked the Authority to note Mr Godfrey’s ten year exemplary record in the hospitality industry. Mr Godfrey was not only acutely aware of the embarrassment, inconvenience, and cost, he had caused his employer, but was now under permanent threat of dismissal. In the light of these matters, he asked for leniency.

Decision

[22] We take the view that the breach on this occasion was very much the result of a neglect of management responsibility by Mr Godfrey. It is difficult to see how such a "mistake" occurred. We accept that no system can be totally foolproof. Nevertheless, a manager is the person who has benefited from specific training in upholding the law, and the conditions of the licence. He is the person charged with leading staff by example. He carries the responsibility pursuant to s.115 of the Act, of ensuring compliance with the conditions of the licence, and the provisions of the Act. He failed that challenge. Had he asked either “Do you have identification?” or “Are you 18?” the volunteer was instructed to tell the truth. It is likely that had either question been asked, no sale would have taken place.

[23] This case is reasonably unique in that it involves not only a stand alone off-licence, but a sale made by a certificated manager. It is acknowledged that grounds exist to make an order. In this case, it is unlikely that the case against the licensee for failing to ensure observance of the condition of the licence relating to the sale of liquor to minors, was established. That is a specific licensee responsibility as opposed to the more neutral ground of establishing a breach of the Act.

[24] The issue in these two cases is whether orders should be made. That issue must reflect the seriousness of supplying liquor to minors, when viewed against a background of two factors:

(a) The potential increase of liquor abuse. Although there was no abuse reported in this case, some minors who have purchased liquor unlawfully, have ended up in a hospital, or have become involved in offending.

(b) The 1999 reduction of the legal drinking age from 20 to 18.

[25] This major change of policy was accompanied by a number of other statutory measures. These measures were designed to bolster the detection and enforcement of breaches of the new law. In our view, Parliament clearly took the view that the supply of liquor to minors was a very serious liquor abuse issue. It gave the Act the necessary teeth in an attempt to actively discourage those who might be tempted to supply liquor to persons under age. The measures which were enacted included:

(a) Section 2A. The provision of “evidence of age documents”.

(b) Section 132A. The mandatory reporting of certain proven offences (including sales to minors) to the Authority, and a requirement for the Authority to consider whether a public hearing to suspend or cancel the licence is appropriate.

(d) Section 155(2A). Not only were all penalties doubled for all offences, the penalty for supplying liquor to minors was increased to a maximum of $10,000 (for managers and licensees), and the District Court was given the power to suspend a licence for up to 7 days.

[26] Our views about the impact of these provisions were first expressed in Onehunga Wines & Spirits Co. Limited LLA PH 311-312/2001. As was said in that case:

"Since the age limit was reduced to eighteen, there have been regular concerns expressed throughout the country about the ability of young people to obtain alcohol ... When Parliament reduced the age limit to eighteen it doubled the penalties. It was sending a message to the public that people who breached this aspect of the law must expect rigorous enforcement and severe consequences."

[27] Over the last two years, the Authority has sent out clear signals that in the area of sales to minors, there will be cancellations and suspensions. The principle that "a licence will be easy to get and easy to lose" was first coined by the authors of "Sale of Liquor", and subsequently quoted by the Authority as far back as 1990 in Douglas-Oliver Corp Ltd [1990] NZAR 411. It has been cited in a number cases since. The fact that the sale was made by a certificated manager, in our view aggravates the situation.

[28] In exercising our discretion under ss.132(6) and 135(6) of the Act, we believe that it is desirable to make orders. Put in another way, if no sanction was imposed, we would not be rewarding those businesses which declined sales to the young volunteer, and we would not be fulfilling our function as set out in s.4(2) of the Act:

The Licensing Authority, every District Licensing Agency, and any Court hearing any appeal against any decision of the Licensing Authority, shall exercise its jurisdiction, powers, and discretions under this Act in the manner that is most likely to promote the object of this Act.

[29] In terms of the length of any suspension, recent cases in Rotorua have established the general guidelines that in cases involving "one-off" sales to volunteers, from stand alone off-licences, a period of twenty four hours will be the norm. In cases where the sales have been made by certificated managers, a period of one month’s suspension has been imposed by the Authority.

[30] In the case of the manager, we see no reason to depart from the general principle. He accepted that he made an error of judgement. As the manager, he pays a greater price. We think that a 30 day suspension is appropriate particularly taking into account the provisions of s.115 of the Act.

[31] In the case of the licensee, we were impressed by the steps which have since been taken by the company, and the way in which it has approached its responsibility to the law. Nevertheless, we believe that a suspension order is appropriate. In this case, we propose to suspend the licence for twelve hours. This is half the normal sanction for a stand-alone off-licence, and reflects the company’s efforts since the incident. We have taken into account the respondent’s exemplary record in the industry. We considered the question of an adjournment, but have decided against it. This is partly because we believe that the lesson has already been learned, and partly because we take the view that applications for suspension are one of the ways in which the object of the Act can be achieved. It is our view that a reduction in liquor abuse cannot be achieved, if the law relating to the sale of liquor to minors is regularly breached as the controlled purchase operation showed.

[32] Balancing all the competing factors, off-licence number 049/OFF/42/2000 issued to The Mill Liquorsave Limited will be suspended for twelve hours from 6.00 am on Wednesday 14 May 2003.

[33] General Manager’s Certificate number GM 1336/97 issued to Paul James Godfrey will be suspended for one month from 6.00 am on Wednesday 14 May 2003.

DATED at WELLINGTON this 1st day of May 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

The Mill Liquorsave.doc(nl)