Carter, re [2003] NZLLA 398 (9 June 2003)

New Zealand Liquor Licensing Authority

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Carter, re [2003] NZLLA 398 (9 June 2003)

Last Updated: 5 April 2010

Decision No. PH 398/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by SUZANNE WENDY CARTER pursuant to s.9 of the Act for an on-licence in respect of premises situated at 574 Manukau Road, Epsom, Auckland known as “Club 574”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at AUCKLAND on 26 May 2002

APPEARANCES

Mr P D Swain – agent for applicant
Mr G S Whittle – Auckland District Licensing Agency Inspector – to assist

Objectors
Mr M A Connor – in opposition

Mrs S Nyo – in opposition

Mrs H Wenley – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an application by Suzanne Wendy Carter pursuant to s.9 of the Act for an on-licence for a massage parlour in respect of premises situated at 574 Manukau Road, Epsom, Auckland, known as “Club 574”.

[2] The applicant holds a current licence under the Massage Parlours Act 1978. The principal purpose of the business is not the sale of liquor but a massage parlour. The applicant requests the right to sell liquor at any time on any day whilst the premises is operated as a massage parlour. The previous owners of the premises also operated a massage parlour, and held an on-licence under the Sale of Liquor Act 1989. The applicant is seeking to operate the business with the same liquor licence conditions.

[3] The premises is situated on a busy main road. The Resource Management Act 1991 certificate was issued for the premises on 10 March 2003. It confirms that the business is in an area “zoned Residential – 7a and the use of the site as an Entertainment Facility (Massage Parlour/escort agency with nine rooms)”, is a permitted activity. The certificate states that the premises is permitted to operate 24 hours a day from Monday to Sunday inclusive.

[4] The application was not opposed by the reporting agencies. Forty-six letters of objection were received from the public. Several objected to the hours as being inappropriate for the area, although such hours are the norm for this type of business. One objector stated that the applicant was unsuitable to hold a liquor licence without providing any evidence to support that statement. The principal concerns that arose from the letters were; properties will be devalued, disturbance and littering by patrons, and the morality of having a massage parlour in a residential area. Several objectors alleged that a brothel was operating from the premises. We were not presented with any evidence to support that contention, other than the opinions of the objectors, and the inferences, which could be drawn from their evidence.

Factual Background

[5] Suzanne Wendy Carter said that the premises had operated as a massage parlour for at least the last 10 years. Ms Carter said the objectors have overlooked the fact that not only has a massage parlour been on “their corner” for that period of time, but it also has had a liquor licence for the latter part of that time. Her family trust purchased the building last year when the previous operator ceased business. The previous business was known as “Casablanca”. She obtained resource consent to extend and upgrade the building, and spent a considerable sum of money refurbishing the premises.

[6] Ms Carter obtained a licence under s.12 of the Massage Parlours Act 1978 on 6 December 2002. She commenced operating the business on 3 April 2003 with six staff members. Ms Carter also obtained a General Manager’s Certificate under the Sale of Liquor Act 1989. An objector, Mr Greg Devine, raised the issue of Ms Carter’s suitability. Having obtained a licence under the Massage Parlours Act, and a General Manager’s Certificate, there could be very limited issues as to her suitability. The Police and the Inspector explored that matter when the relevant applications were made. Mr Devine, alleged that Ms Carter lacked experience to conduct licensed premises. The Inspector also canvassed that matter when Ms Carter’s application was processed.

[7] Several objectors alleged that Ms Carter has been undertaking illegal activities on the site. Some have alleged that she is running a brothel. None have provided proof of such activity. Ms Carter’s response is that she has invested too much money on the premises and the business, to jeopardise that situation.

[8] The objectors raised other matters that have been covered by the issuing of the resource consent certificate. Those matters relate to the proposed hours being too extensive in regard to neighbouring land use, the zoning of the property, and the siting of the entranceway in relation to a dangerous intersection. It was also alleged that Ms Carter’s host responsibility policy was inadequate without stating why. Ms Carter said that the policy was prepared by Mr Swain. He is known to the Authority as a very experienced liquor licensing consultant, and consequently, we have no qualms about accepting it.

[9] During the short time that Ms Carter has been operating the business she has had no complaints about noise, or the manner of its operation. She said that during night hours any noise is masked by the normal traffic noise on Manukau Road. Ms Carter employs a full-time security person on the premises five nights a week until 7.00 am. He patrols both inside the building and in the grounds throughout the property, to prevent trouble on the premises, and to provide a degree of protection to the surrounding neighbours.

[10] Ms Carter intends to operate the premises according to demand. At present those hours are Monday, Tuesday and Wednesday from 10.00 am to 3.00 am the following day, Thursday 10.00 am to 4.00 am, Friday and Saturday 10.00 am to 7.00 am, and Sunday 10.00 am to 1.00 am.

[11] Mrs Helen Wenley lives at 2 Ngaroma Road which is behind the applicant’s premises. She and her family has lived there since August 1990. Mrs Wenley was therefore able to recount the history of the premises, and the various applications for resource consents in respect of the property from that time to the present. Mrs Wenley believed that the property was placed on the market in April 2002 “as a result of the expression of opposition by the neighbourhood, and the inability of the owner to develop the premises as he had intended.”

[12] Mrs Wenley formed the view that the premises was operating as a brothel. She outlined the reasons for her opinion that a brothel existed. Among her reasons were that the premises was advertised as a massage parlour which she said was a polite way of describing a brothel. To support that contention she said she was aware that there were ten bedrooms on the premises (although the plan of the premises that she produced showed nine). The plan depicted those rooms with double beds, and some had a spa bath. Mrs Wenley said that she also knew that the rooms had full-length mirrors and open showers. She also produced an advertisement from the “Truth” newspaper where “Club 574” was advertising for ladies of all nationalities.

[13] Mrs Wenley opposed the granting of a liquor licence because Epsom has no pubs. She believed therefore that people would frequent the massage parlour in order to be able to drink. Epsom only has restaurants and clubs with licences. She said that the when the premises was operating as the “Casablanca”, it was run down and sleazy. The neighbours assumed that only people who went there for sex would consume alcohol. Now that the premises was upmarket, a 24 hours licence would attract customers who were seeking a late night drink. It was her view that a liquor licence would be an essential part of promoting the business. She said that it was unfair to grant a liquor licence to an illegal activity. We have to say that Ms Carter is operating the premises under a licence issued pursuant to the Massage Parlours Act. It is therefore not an illegal activity. If there is illegal activity taking place on the premises then it is for the Police to investigate, and subsequently to make an application for cancellation of the licence. We appreciate Mrs Wenley’s point that the Police may be too busy to bother with any complaint. Nevertheless, the point has to be made that if the conditions of either licence are breached then the business is placed at risk.

[14] Sonya Nyo appeared on behalf of herself and her husband. She referred to a number of incidents that took place when the premises was being operated by the previous owner. Men came to her home looking for prostitutes. She has had cars driven by stranger’s in her driveway, and an attempt was made to break into her house through a window. She agreed that no such incidents have happened while the premises have been operated by Ms Carter.

[15] Michael Anthony Connor lives with his parents at 2A Ngaroma Road, Epsom, which is situated behind 574 Manukau Road. His parents bought the property and moved in on 11 February 2003. He said that they were under the impression that the property was being developed for backpacker’s accommodation.

[16] He said that they have no objection to the suitability of Ms Carter but they do have an objection to the suitability of the premises. He cited two occasions where the premises had been the subject of armed robberies. The offenders had used guns. On both occasions the offenders had used 2A Ngaroma Road to gain entry to 574 Manukau Road. He said that there was a lot of money on the premises. It therefore represented a high degree of risk which was the core of their objection. He said he would not expect a security guard to have a gun, inferring that the security guard would not be able to protect to Mr Connor’s family or prevent similar incidents happening again. Mr Connor said he had unsuccessfully tried to get a copy of the relevant Police reports. One of the robberies took place in 1996, and he was unable to get a date for the other.

[17] Mr Connor said that he was aware that if the licence was granted it would only be for 12 months, and that the crucial time will be when it is due for renewal. Considering that the premises already has a massage parlour licence, Mr Connor’s objection raises the question whether the existence of a liquor licence would aggravate the risk. It is our view that the sale of liquor is not likely to be a significant part of the business.

[18] Mr Swain submitted that none of the objections, apart from Mrs Wenley’s, raised issues that the Authority is required to consider under s.13(1) of the Act. There is no opposition from the reporting agencies, and the hours are permitted under the resource consent certificate. Ms Carter has detailed her proposals for complying with the Act, and there is no suggestion that the grant of a licence will increase liquor abuse.

[19] The Inspector submitted that the premises should be designated as a “restricted” area rather than a “supervised” area. Mr Swain advised the Authority that his client accepted that view.

[20] Mr Swain said that in the two months that Ms Carter has been operating the premises there have been no issues of noise, alcohol abuse or fighting.

[21] Mr Swain referred us to Pegasus Entertainment Company Limited LLA PH 666/2002 paragraph 31 which states:

“We have said before that the current wisdom is that if the applicant is suitable, and has a Resource Management Act certificate, (as in this application), then a liquor licence is almost inevitable given the criteria to which we must have regard.”

[22] Mr Swain then referred us to Cayman Holdings Limited LLA PH 145/2001 where it was stated:

“Apprehension of problems alone is not sufficient to prevent a suitable applicant, particularly one supported by a District Licensing Agency Inspector and the Police, from exercising rights granted by the Kawerau District Council. Such rights may be formally reviewed and varied by the council.

[23] In support of his argument that s.(9)(1)(e) contemplates that planning decisions are to be the local authority and not by the Liquor Licensing Authority he then cited Kyriak v Opua General Store [1993] NZAR 176 at 183 where Gallen J said:

“Decisions of a planning nature are to be made by the appropriately qualified authority and subject to the procedures within which those authorities act. Those procedure themselves give rights to persons affected by the decisions and provide for certain protection, procedures and approaches which are designed to ensure that decisions are made as contemplated by the appropriate authority.” [emphasis added]

[24] Mr Swain submitted that the Authority could apply s.106(2) of the Act whereby objections that were either vexatious or outside the scope of the Act could be ignored. We took the view that the objectors were genuine in their beliefs, and entitled to object. In particular, the provision of s.14(7) of the Act requires us to consider their views. He also asked that the Authority dispense with the 20 working days appeal period as provided for in s.140. The Authority’s response was that it would not do that because to do so would disenfranchise an objector’s rights.

Authority’s Conclusion and Reasons

[25] In considering an application for an on-licence the Authority is directed by s.13(1) to 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 –

(i) The sale and supply of non-alcoholic refreshments and food; and

(ii) The sale and supply of low-alcohol beverages; and

(iii) The provision of assistance with or information about

alternative forms of transport from the licensed premises:

(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.

[26] The objectors have raised an issue of suitability by submitting that the premises are being operated as a brothel. In terms of the judgment of Fisher J in Waitakere Licencing Trust v 3MI Choices Limited (High Court, Auckland, AP109-PL01, 10 July 2002) the onus of proving suitability is on the applicant. Ms Carter stated on oath that she was aware of her responsibilities to both the Massage Parlours Act 1978 and the Sale of Liquor Act 1989. She was not prepared to jeopardise her investment by trading illegally. Although an inference of illegality could be drawn from the evidence which was presented, we are not prepared to do so. Looking at the evidence overall, including the lack of adverse reports from the Police and District Licensing Agency Inspector, and the fact that Ms Carter is the holder of a General Manager’s Certificate, we are satisfied that Ms Carter is a suitable person to hold an on-licence under the Act.

[27] We are satisfied as to all the matters we are required to have regard to under s.13 of the Act. We believe that the sale of liquor will be ancillary to the main business of a massage parlour. It is not the experience of the Authority that a massage parlour is a place where people resort to for the consumption of liquor, or where liquor is abused.

[28] We are required by s.14(7) to consider:

“In determining whether to impose conditions under subsection (5)(a) [days and hours liquor may be sold] and, if so, what conditions, the Licensing Authority or District Licensing Agency, as the case may be, may have regard to the site of the premises in relation to neighbouring land use.”

[29] The objectors live in a residential area adjoining a busy main road. The applicant has a Resource Management Act certificate authorising the proposed activity. The Authority is entitled to rely upon the presumption that the formalities have been complied with as explained by Gallen J in Kyriak v Opua General Store (supra). The Authority has reiterated on a number of occasions that it does not have the jurisdiction to look behind the Resource Management Act certificate. However, we point out that pursuant to s.17(2) an on-licence is granted in the first instance for only 12 months. That is a probationary period. If the premises are not operated according to the Act or the licence then the objectors may raise such issues when the licence falls due for renewal.

[30] We are satisfied that the applicant is suitable, and we grant the applicant an on-licence for the sale and supply of liquor for consumption on the premises, to any person present on the premises.
[31] The hours will be as follows:

Monday to Sunday At any time on any day.

[32] A copy of the licence setting out the conditions to which the licence is subject is attached to the decision.
[33] The licence will not issue until:

(a) The expiry of 20 working days from the date of this decision. That period is the time provided by s.140 of the Act for the lodging of a notice of appeal.

(b) All relevant clearances have been obtained. The applicant is not entitled to sell liquor until the licence issues.

[34] The applicant’s attention is drawn to s.25 of the Act obliging the holder of an on-licence to display:

(a) A sign attached to the exterior of the premises so as to be easily read by persons outside each principal entrance, stating the ordinary hours of business during which the premises will be open for the sale of liquor, and

(b) A copy of the licence, and the conditions of the licence, attached to the interior of the premises so as to be easily read by persons entering through the principal entrance.

DATED at WELLINGTON this 9th day of June 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

club574.doc(aw)