Chanlon Holdings Limited, re [2003] NZLLA 389 (30 May 2003)

New Zealand Liquor Licensing Authority

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Chanlon Holdings Limited, re [2003] NZLLA 389 (30 May 2003)

Last Updated: 4 April 2010

Decision No. PH 389/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by CHANLON HOLDINGS LIMITED pursuant to s.18 of the Act for renewal of an on-licence in respect of premises situated at Level 2, Chancery Arcade, 98 Gloucester Street, Christchurch, known as “Caesars”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at Christchurch on 15 May 2003

APPEARANCES

Mr P J Egden – for applicant
Mr M Ferguson – Christchurch District Licensing Agency Inspector – in opposition
Sergeant J F Armstrong – NZ Police – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an application by Chanlon Holdings Limited for renewal of its on-licence in respect of premises known as “Caesars”. The business currently trades with an “entertainment” style licence. The premises are sited in Chancery Arcade, in Christchurch. “Caesars” has been part of the Christchurch licensed premises scene for many years.

[2] There are three quite distinct public areas in the complex. There is a restaurant known as the “Chancery Restaurant” with an associated snug bar. Next door is “Caesars”. It is described as either a nightclub, or a nightspot. The third area is a tavern which used to be known as the “Club Bar”, but is currently known as the “Chancery”. The three premises are often colloquially described as the “Chancery”. There are two on-licences issued in respect of the complex. One covers “Caesars”, and the other covers the restaurant and tavern. Both are owned by Chanlon Holdings Limited. It is the on-licence issued in respect of “Caesars” which is under consideration.

[3] Public notification of the renewal application did not attract any objections. The suitability of the applicant has not been challenged. Nor has the way the premises have been operated over the past three years. However, both the Police and the District Licensing Agency Inspector supplied reports under s.20 of the Act, stating that they opposed the application. They believed that the premises were being operated as a tavern. In other words they took the view that the sale of liquor was the principal business being conducted on the premises. Sergeant J F Armstrong of the New Zealand Police had written letters to the applicant company outlining his reservations, but had not received any reply.

[4] The applicant company was anxious to retain its “entertainment” style licence, and vigorously opposed any suggestion that the premises were a tavern. Accordingly, the matter was set down for a public hearing.

The Factual Background

[5] Mr Ian Alexander Mackenzie is a director of Chanlon Holdings Limited. He has been involved in the hospitality industry in Christchurch for the last 42 years. He is an executive member of the New Zealand Hospitality Association. It was his evidence that “Caesars” was specifically designed for entertainment purposes. It has held an “entertainment” style licence for sixteen years. The focal point of the premises is its central podium which occupies a significant part of the total area. Mr Mackenzie gave evidence that the focus of “Caesars” had always been entertainment.

[6] In the early 1990s he decided to develop “Caesars” as a karaoke venue. The setting up costs were very high, and the equipment has had to be constantly updated to cope with technology. Currently, “Caesars” has two 60 inch screens and five television monitors all dedicated to karaoke. The music library has 6,500 titles. Mr Mackenzie modestly claims that “Caesars” is the best equipped karaoke venue in New Zealand.

[7] Mr Mackenzie gave evidence that the company employs two full time karaoke operators for seven days a week. He stated that the premises open at about 8.00 pm each night seven days a week, and continue to the early hours of each morning. The karaoke stage or podium is used at all times when the premises are open. Either the patrons, or the karaoke operators, are singing. There is often considerable interaction between the operator and the patrons. The current on-licence allows for trading to commence at 9.00 am. These are similar hours to those enjoyed by taverns. Mr Mackenzie stated that there would be no issues taken if the opening hours were restricted to 6.00 pm. In this way the premises could be distinguished from a tavern.

[8] In the light of the reporting agency’s concerns, Mr Mackenzie arranged a customer survey to be completed over a period of eight weeks prior to Christmas 2002. 126 patrons completed the survey. Well over half of those polled came to “Caesars” at least once a week. 65% of them came for the “entertainment”. The vast majority of the patrons enjoyed karaoke, but would not be prepared to pay a cover charge.

[9] Mr Mackenzie did not accept that the premises were trading as a tavern. He pointed to the lack of pool tables, poker machines, television screens with Sky sport and even DJs which are now part of the normal tavern scene. He acknowledged that there was no cover charge, but pointed out that many of the nightclubs in Christchurch had no such charges either. He thought that cover charges and live bands were things of the past.

[10] The applicant company had been required to supply figures of gross turnover. On reflection the figures which were presented were inevitably distorted, because the karaoke operation does not bring in any income. That part of the business is subsidised by the bar. Consequently, the turnover is almost solely from liquor, including non-alcoholic drinks and chips etc. Next door in the “Chancery” tavern, the drinks are cheaper, but the wages are less. Mr Mackenzie submitted that the figures should be combined with the figures from the two other venues, as often people would eat at the restaurant before moving through to “Caesars”.

[11] Sergeant John Francis Armstrong has the responsibility for liquor licensing in the Hagley/Ferrymead Ward of the City of Christchurch. He wrote to the applicant company on 12 November 2001 referring to the decision in Leftfield Sports Café Limited LLA PH 181/2001. He invited the company to discuss the issue with him. He wrote again on 12 December 2001. As he received no reply, he felt bound to bring the matter before the Authority. It was his evidence that he could identify no significant variation in the operation of “Caesars” to any other tavern. He noted that there was unrestricted movement between the “Chancery” tavern and “Caesars”. One had dancing with a DJ, and the other had karaoke.

[12] Mr Martin Ferguson is a District Licensing Agency Inspector in Christchurch. He noted that “Caesars” was originally granted a food and entertainment licence in 1987. At that time the entertainment consisted of floor shows and live performances. He also wrote to the applicant company on 24 May 2002, requesting information which might assist in establishing the nature of the business. It was his belief that the premises operated as a tavern. He could see little reason for the three premises not trading under the one licence. He suggested that the real reason for the two licences was the ability to trade over Easter, Christmas Day and the half day on Anzac day, to the disadvantage of other taverns.

[13] The Authority took the opportunity to observe “Caesars” being operated. We were very impressed with the atmosphere, and the willingness of the patrons to enter into the spirit of the karaoke sessions. It was a very professional operation. We could not help but notice the number of young people who were turned away from “Caesars” as they did not have identification.

Authority’s Conclusion and Reasons

[14] The current on-licence authorises the applicant company to sell and supply liquor for consumption on the premises to any person who is present on the premises for the purposes of attending any function or entertainment (whether live or not). The emphasis is ours.

[15] According to the Collins Concise Dictionary, entertainment means:

1. The act or art of entertaining or state of being entertained.
2. An act, production etc., that entertains; diversion; amusement.

[16] According to the Concise Oxford Dictionary, entertainment means:

1. The act or an instance of entertaining, the process of being entertained.

2. A public performance or show.

3. Diversion or amusement for guests etc.

4. Amusement.

[17] There is no definition of entertainment in the Act, but in the light of the above definitions, we have no doubt that what is currently being offered by the applicant company is entertainment. It may well be that not every karaoke set up could be described as entertainment, but this is “state of the art” karaoke. It is continuous, and it is the principal attraction for most of the patrons attending the premises. That is what helps to distinguish it from taverns. In terms of the on-licence, it is noted that the entertainment does not have to be live. In summary we cannot accept that these premises are trading contrary to the terms of the licence.

[18] The issue however, is whether the business could be classified as a tavern. A tavern is described in the Act as:

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.

[19] There is no doubt that the business could be classified as a tavern based on the amount of liquor which is sold. As Mr P J Egden observed, it was this reasoning which led the Authority to conclude that the Leftfield Sports Café Limited (supra), was a tavern. In that case, the percentage of liquor to total turnover was 80 to 85%. In this case it is as high as 100%. It should be noted that the Leftfield decision was mainly concerned with the issue of whether a designation needed to be imposed. In this case, the issue is broader. In coming to a decision about whether these premises are a tavern, there are other factors which need to be considered. These include the intentions of the applicant, the public perception, the hours and days of trading, the imposition of a cover charge, the nature of the entertainment, and the reasons why the public come to the venue.

[20] Another useful indicator is to ask whether the Authority would grant an on-licence for the business, if an application had been made in a trust district. Pursuant to s.216(a) of the Act, no on-licence can be granted in respect of any hotel or tavern in any trust district. We think that such a grant would be unlikely.

[21] The issue is therefore very evenly balanced. Both arguments have merit. The offer to restrict the opening hour to 6.00 pm was not without significance. In circumstances such as these, the only way in which the matter can be resolved is to refer to the law affecting our discretion.

[22] In any decision concerning the renewal of an on-licence, the Authority is required to consider ss.22 and 23 of the Act. These are:

22. Criteria for renewal--- In considering any application for the renewal of an on-licence, the Licensing Authority shall have regard to the following matters:

(a) The suitability of the licensee:

(b) The conditions attaching to the licence:

(c) The manner in which the licensee has conducted the sale and supply of liquor pursuant to the licence:

(d) Any matters dealt with in any report made under section 20 of this Act.

23. Decision on application for renewal---(1) After considering an application for the renewal of an on-licence, the Licensing Authority shall—

(a) Renew the licence on the conditions presently attaching to it; or

(b) Renew the licence on such different conditions (relating to any matters specified in section 14(5) of this Act) as the Licensing Authority thinks fit; or

(c) Refuse to renew the licence.

(2) The Licensing Authority shall not exercise its powers under paragraph (b) or paragraph (c) of subsection (1) of this section except in response to—

(a) An objection duly made under section 19 of this Act; or

(b) A report duly submitted under section 20 of this Act; or

(c) A request by the applicant.

[23] As stated above, there are no concerns about the suitability of the applicant, or the manner in which the licensee has conducted the sale and supply of liquor. What the Authority must consider are the reports submitted by the reporting agencies, and the conditions of the licence.

[24] It will be noted that the Authority’s discretion in this case, is very circumscribed. It may only change those conditions which are listed in s.14(5) of the Act. These are the standard conditions about days and hours of opening, provision of food and low alcohol beverages, and other matters aimed at the responsible consumption of liquor. The condition concerning the closure of any hotel or tavern on Good Friday, Easter Sunday, Christmas Day or before 1.00 pm on Anzac Day is not one of the conditions which can be either inserted or deleted on a renewal. In summary, it is our view that we are unable to alter the style of this licence at any event.

[25] This provision is in keeping with the need for certainty in the continued operation of licensed premises. Mr Egden pointed to the judgment of Temm J in Wall Enterprises Limited v Police [1997] NZAR 279 in which it was stated:

“It is not surprising that Parliament should have imposed such strict limitations on the Authority’s powers when dealing with an Application for Renewal of an on-licence. The right to trade in the sale of liquor is a valuable asset and a licensee will often invest considerable capital in its business, as in this case.”

[26] It would seem that the appropriate response may have been an application under s.132 of the Act, on the ground that the premises had been conducted in breach of the conditions of the licence. If the ground was established, the Authority would have the power to made an order varying any of the conditions of the licence. Nevertheless, we feel bound to point out that it is unlikely that such an application would have been successful. As illogical as it may seem, although it could be argued that the premises are trading as a tavern, the business is not being operated in breach of the conditions of its licence.

[27] We are satisfied as to the matters to which we must have regard as set out in s.22 of the Act. The application for renewal is granted for three years. The hours of trading will be Monday to Sunday 6.00 pm to 6.00 am the following day.

DATED at WELLINGTON this 30th day of May 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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