Nelson v AAPC Properties Pty Limited [2003] NZLLA 419 (16 June 2003)

Last Updated: 7 April 2010

Decision No. PH 419/2003 –

PH 420/2003

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 the suspension of on-licence number 007/ON/238/2000, issued to AAPC PROPERTIES PTY LIMITED in respect of premises situated at 85 Ascot Avenue, Greenland, Auckland known as “Novotel Ellerslie”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number GM 0791/2000 issued to RHYS TREVOR CHALLENGER

BETWEEN NIGEL STUART ROBERT NELSON

(Police Officer of Auckland)

Applicant

AND AAPC PROPERTIES PTY LIMITED

First Respondent

AND RHYS TREVOR CHALLENGER

Second Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at AUCKLAND on 19 September 2002

APPEARANCES

Senior Sergeant M J Lopdell – NZ Police – for applicant
Mr L L Stevens, QC and Miss S L Hachache – for first and second respondents
Mr D W Sara – Auckland District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority are two applications. The first application is to suspend the on-licence issued to AAPC Properties Pty Limited (“the Company”), which operates an hotel known as "Novotel Ellerslie" (“Novotel”). The second application is to suspend the General Manager’s Certificate of Rhys Trevor Challenger.

[2] The grounds for the first application are that the licensed premises have been conducted in breach of the following provisions of the Sale of Liquor Act 1989: s.166, (supplies liquor to intoxicated person), s.167 (allows person to become intoxicated), s.168(1)(a) (allows intoxicated person to be or remain on licensed premises) s.168(1)(b) (allows any violent, quarrelsome, insulting, or disorderly conduct on licensed premises).

[3] The application to suspend the General Manager’s Certificate is based on the ground that the manager failed to conduct the licensed premises in a proper manner.

[4] Both applications arose out of a function that was held at “Novotel” on the evening of Wednesday 23 January 2002. The function was held for the staff of the Blockbuster Video Company Limited (“Blockbuster”). It was a prepaid package which had been organised through “Novotel” by “Blockbuster”. “Blockbuster“ paid for the food and refreshments. Its staff did not have to pay for anything. The package included the meal, wine on the tables, and drinks on a trolley, at a set cost. A large function room was set up for dining, and bottles of wine were placed on each table.

[5] It was alleged that a staff member named Dion Dalzell arrived at the function about 6.15 pm. He was sober. During the evening he drank extensively and by about 8.00 pm he was intoxicated. He became argumentative, and was involved in a number of altercations throughout the evening. It was alleged that, despite his condition, Dion was supplied with more wine. After an altercation with his store manager he left the function. He climbed over a fence, and went onto a motorway. He staggered to the median strip. When he attempted to return, a vehicle struck him. He received major head injuries from which he later died. A post mortem examination revealed that his blood alcohol level was 226 milligrams of alcohol per 100 millilitres of blood. His urine contained 296 milligrams of alcohol per 100 millilitres of urine.

Preliminary Matters

[6] Before the hearing got under way counsel and the Authority visited the areas of the hotel relevant to the events that took place, including the fence that Mr Dalzell climbed over to get access to the motorway.

[7] Mr Stevens invited the Authority to dismiss both applications in limine. He submitted that the applications raised questions as to the appropriate procedures to be followed, and that important constitutional and natural justice issues had arisen from those applications.

[8] He summarised the respondents’ preliminary submissions as follows:

“(a) The approach adopted by the Police in the filing of the applications against AAPC Properties Pty Limited (‘the company’) and Mr Rhys Trevor Challenger (‘Mr Challenger’) under sections 132 and 135 of the sale of Liquor Act 1989 (‘the Act’) respectively, is misconceived and amounts to an abuse of process (‘threshold issue’).

(b) Alternatively, both applications have serious defects to the point where the rules of fairness and natural justice have not been complied with. Additionally, neither application complies with the mandatory requirements to provide proper particulars either under the provisions of the Act (sections 132(2)(b) and 135(2)(b) respectively) and as required by law.

(c) Accordingly, both applications should be dismissed either on the basis of the threshold issue or on the basis of other defects including the failure to provide proper particulars.”

[9] Mr Stevens referred to the wording of each of the applications, noting that that the same narrative describing the alleged events at “Novotel” on 23 January 2002 had been used in each case. He noted that while the application under s.132 of the Act had listed four alleged offences under the Act, neither the company nor Mr Challenger had been charged in the District Court. He compared the application under s.132 to that under s.135 of the Act, wherein the alleged offences under the Act had not been referred to at all. Hence, he submitted that the threshold issue was whether it was permissible for the Police, in the circumstances of this case, to rely on the sections listed above in paragraph 2, as grounds for the applications.

[10] Mr Stevens sought to support that threshold issue by presenting extensive submissions. They included a detailed examination of the scheme of the Act, and were very much in line with the reasoning of Panckhurst J in Karara Holdings Limited and Others v The District Licensing Agency Inspector and Others [2002] NZAR 997. That decision was the subject of an appeal in the Court of Appeal for which a decision was issued on 13 June 2003. The Authority’s decision in the present case was in part delayed pending the decision from the Court of Appeal.

[11] Mr Stevens submitted that the grounds in the applications were insufficient as they did not contain the prescribed particulars as required by s.132(2)(b) and s.135(2)(b). We were surprised at that submission as the Police application had followed exactly Forms 22 and 24 of the Sale of Liquor Regulations 1990.

[12] Mr Stevens raised a number of legal arguments relating to the respective liability of the first and second respondents. He said that the respondents’ fundamental objection related to the procedure that was followed in this case. The Authority ruled that it would hear the evidence first then listen to legal argument.

[13] Senior Sergeant Lopdell sought to have the affidavit of Samuel James Alistair Haslam admitted in evidence. We were told that Mr Haslam was in Korea, and was not available to give evidence. The Senior Sergeant argued firstly that the Authority could, pursuant to s.109 of the Act, receive in evidence any statement, document or information that may assist it to deal effectively with any matter before it. Secondly, he submitted that the document could be admitted pursuant to s.2(2) of the Evidence Amendment Act (No.2) 1980 which provides:

• (2) For the purposes of sections 3 to 8 of this Act, a person is unavailable to give evidence in any proceeding if, but only if, he-
  • (a) Is dead; or
  • (b) Is outside New Zealand and it is not reasonably practicable to obtain his evidence; or
  • (c) ...
• (d) ... .”

[14] Thirdly, Senior Sergeant Lopdell submitted that the Authority is deemed to be a Commission of Inquiry pursuant to s.110 of the Act. Therefore the document could be admitted pursuant to s.4(1) of the Commissions of Inquiry Act 1908 which provides that every Commission shall have the powers of a District Court in its civil jurisdiction when, amongst other things, it is conducting and maintaining order at the inquiry.

[15] Following an objection by Mr Stevens that Mr Haslam was not available for cross-examination, the Authority ruled that Mr Haslam’s affidavit would not be admitted pursuant to s.27 of the New Zealand Bill of Rights which provides:

27. Right to justice – (1) Every person has the right to the observance of the principles of natural justice by any tribunal or other public authority which has the power to make a determination in respect of that person’s rights, obligations or interests protected or recognised by law.

[16] In that respect ss.132(5) and 135(5) of the Act also identically provide:

• (5) The applicant and the licensee shall be entitled to appear and be heard at the hearing, whether personally or by counsel, and to call, examine, and cross-examine witnesses.
  

Applicant’s Evidence

[17] Rachel Marie Dutch is the store manager for Blockbuster Video Birkenhead. She was a good witness who was clear and decisive. At about 7.30 pm on 23 January 2002 she arrived at a work function at “Novotel” at Ellerslie. Dion Dalzell, who was a friend and one of her staff members, was already there. She has known him for about one year. Mr Dalzell immediately came over and spoke to Ms Dutch. She could see that he had been drinking. He had a glass of wine in his hand and “he was very happy and bubbly and much more vocal than he normally would be.”

[18] Ms Dutch and Mr Dalzell spent most of the evening in each other’s company. She did not remember seeing him eat anything at dinner. Throughout the evening she noticed that he gulped his wine rather than sipping it. He always seemed to have a glass of wine but she did not know from where he was getting it.

[19] During the evening Ms Dutch noticed that Mr Dalzell was showing signs of drunkenness. Although he was not having trouble walking, he was “slightly wonky”.

[20] At about 10.30 pm Ms Dutch unsuccessfully attempted to get Mr Dalzell to go home with a couple of people but he would not go with them. Ms Dutch estimated that about 80 per cent of the Blockbuster staff were intoxicated. Only a small number of the staff were non-drinkers.

[21] Ms Dutch described Mr Dalzell as extremely annoying due to his extreme intoxication. They argued throughout the night and later fought outside on the grass. After another fight, in which Ms Dutch threw Mr Dalzell to the ground, he got up and walked towards the motorway.

[22] Ms Dutch opined that during the entire evening there did not seem to be any supervision by “Novotel” staff. She acknowledged that she had not made this statement previously. It was her view that any supervision was carried out by “Blockbuster“ staff. She said that it is the accepted thing that each manager looks after his or her own staff members. George Baultisa, the Northern Operations Manager, had approached her on two occasions during the night to do something about Mr Dalzell and another staff member who had become intoxicated. Ms Dutch thought that during the evening she also became intoxicated.

[23] Paul James Harrington is the store manager at Wairau Park Blockbuster Video store. He arrived at the function at 6.30 pm. He recalled Mr Dalzell drinking a lot of wine, and he did not see him eating anything. He noticed Mr Dalzell becoming more intoxicated. At about 8.00 pm he saw Mr Dalzell brush a glass off a table which smashed. The incident appeared to be caused by Mr Dalzell’s intoxication.

[24] Mr Harrington suggested to Mr Dalzell that he drink water. His response was that he could not stop at one drink, and that he drank alcohol when he woke up in the morning. At about 8.30 pm Mr Harrington pointed Mr Dalzell out to the bar staff, and instructed them to stop serving him. On one occasion he saw Mr Dalzell refused a drink at the bar but he later saw Mr Dalzell with a drink in his hand. Mr Harington assumed he had picked it up from a table. Mr Harrington informed “Blockbuster’s” Operations Manager that Mr Dalzell had “been banned from the bar”. At no stage did Mr Harrington see any of the “Novotel” staff ask Mr Dalzell to leave or to stop drinking or taken to a place of safety. Mr Harrington noticed that throughout the evening Mr Dalzell became louder, more argumentative, clumsy and his eyes were glassy. It was for those reasons that he drew Mr Dalzell to the attention of the bar staff.

[25] Gareth James Towler was an employee at the Birkenhead branch of “Blockbuster”. He arrived at the function at “Novotel” at about 7.00 pm on 23 January 2002. Mr Dalzell was sober. They spent some time in each other’s company. During the evening Mr Towler noticed that Mr Dalzell was not sipping his wine but was drinking it very heavily. He was regularly topping up his glass at a bar that was set up outside the doors of the function room. Although he was becoming “tiddly” himself he noticed that Mr Dalzell was becoming louder and ruder to him and others. Mr Dalzell began to “lean a bit”, and his movements became heavy and lethargic. He thought that Mr Dalzell’s state of intoxication was quite noticeable.

[26] Mr Towler saw Mr Dalzell break two glasses during the evening. Mr Towler said that by about 9.00 pm Mr Dalzell was heavily intoxicated. He still continued to get more wine which he “skulled”. Mr Towler described Mr Dalzell’s increasing aggressive behaviour and intoxication. He thought that if Mr Dalzell had much more to drink he would have become comatose. He saw Mr Dalzell have two fights with Ms Dutch. These were more of a face to face confrontation with some pushing and shoving. Mr Towler intervened both times. He later saw Mr Dalzell kicking a security guard’s car. After that incident Mr Towler and another staff member blocked Mr Dalzell’s re-entry to the function. They told him he was not welcome, and told him to leave. Mr Dalzell walked away followed by a security guard.

[27] Hayley Joan Elizabeth Mercer is the holder of a General Manager’s Certificate. At about 4.00 pm on 23 January 2002 she started work as a waitress at “Novotel”. People started arriving for the “Blockbuster” function at about 6.30 pm. A trolley bar was set up outside the Rimu Room in the pre-function area. The bar was also open, and a food trolley was set up in the same area.

[28] Ms Mercer noticed that one of the first people to arrive at the function stood out more than most. He was different, and had a flamboyant character. Ms Mercer served him a couple of drinks early in the evening, and he introduced himself as Dion. At about 9.00 pm she served him another drink. He appeared intoxicated, his movements were slow, and he had a stunned look on his face. He appeared upset, and he told Ms Mercer that he was angry. He said that he wanted to cut his best friend’s throat. She thought his behaviour was strange, and that she should not have served him a drink. She decided that she was not going to serve him again. As well, she told a barman, and the function manager, not to serve him. A patron also advised her that Dion had a problem with alcohol, and not to serve him anymore.

[29] Ms Mercer later saw Mr Dalzell stumbling through some chairs and tables. Although others were intoxicated at the function, he was drawing more attention to himself than anyone else. On another occasion she saw him having some sort of altercation, making angry gestures, then throwing a chair.

[30] Cameron John Battley is a security officer and doorman for Eden Security Services. He has been a security officer for six years. He wrote his own brief as he felt that the brief prepared by the Police was inaccurate. On the evening of 23 January 2002 at about 10.30 pm he was patrolling the grounds of “Novotel” when he saw a female having “an emotionally charged argument with a person whom she called Dion.” Mr Battley gained the impression that Dion was drunk.

[31] Mr Battley continued his rounds and later saw the same couple arguing again. It became physical, and Dion was put on the ground. Dion got up sobbing and swearing. He went to the carpark and kicked Mr Battley’s car. Mr Battley stopped Dion from returning to the hotel. There were discussions with other attendees of the function as to how they could get Dion home. Dion left the group, and climbed over a fence separating the carpark from the motorway. He fell onto a concrete ledge. Mr Battley tried to coax him back but he staggered across the motorway to the median strip where he lay down for a short period. Mr Dalzell then ran back across the motorway when he was hit by a vehicle.

[32] Constable Nigel Stuart Robert Nelson is a member of the Liquor Licensing Section stationed at Auckland Central Police station. On 15 May 2002 he went to “Novotel” and interviewed Rhys Trevor Challenger, the duty manager, for the evening of 23 January 2002.

[33] Mr Challenger told Constable Nelson that about 120 to 140 people attended the function. Pre-dinner drinks were served from 6.30 to 7.00 pm. Dinner was at 7.15 pm. A buffet was outside the room where the people were seated. Two bottles of wine were placed on each table. Waiters brought drinks to the tables. As part of the package beer, wine, and soft drinks were available to the patrons. Ten people were seated at each table.

[34] Mr Challenger was responsible for covering the entire premises during the evening. There were no other functions on that night. The bar was not busy. It was only being used by house guests. He said that he made security checks every half-hour to an hour. There were two waiters per table, and two barmen for the trolley outside the Rimu Room. They reported to the restaurant supervisor who reported to Mr Challenger.

[35] Mr Challenger said that about 10.00 to 10.30 pm a supervisor told him that a person had been refused service, but was not causing any trouble, and the function was under control. The person who had been refused service was not identified to Mr Challenger. Mr Challenger walked through the function to make sure that it was under control.

[36] He said at 11.00 pm he was due to hand-over to the next duty manager. Shortly after he received two telephone calls from Mr Battley about five to ten minutes apart saying that somebody was on the motorway. He did not know who it was or if that person was connected with the function. The first call was for help, and the second call was for a hotel representative. He was not able to leave the reception desk because there was no one immediately available to relieve him. When he received the second call he was able to leave with Mr Eccles the night manager, and go to the assistance of Mr Battley.

[37] He said that he had made four or five checks on the function that night. He was not aware of any people who were intoxicated. He thought that the function was running smoothly. He was not aware if Mr Dalzell was ever asked to leave the premises.

[38] Mr Challenger said that the restaurant supervisor and a “Blockbuster” supervisor were monitoring the wine on the tables and drinks to make sure that there was enough. The organiser of the “Blockbuster” function had extended the package when the drinks were running out. The extension only applied to the drinks trolley. He thought that there were sufficient staff on duty who could report through their supervisor to Mr Challenger.

[39] Constable Nelson produced a Coroner’s report, and a report from the Institute of Environmental Science and Research Limited regarding the results of the examination of Mr Dalzell's blood and urine. His blood contained 226 milligrams of alcohol per 100 millilitres of blood and his urine contained 296 milligrams of alcohol per 100 millilitres of urine.

Respondent’s Evidence

[40] Neil Andrew Scanlan has been the Regional General Manager, New Zealand of Accor Asia Pacific since January 2001. Accor Asia Pacific is the trading name for AAPC Properties Pty Limited. That company is ultimately owned by Accor SA the world’s largest group operating in the hotel, tourism, and corporate sector. The “Novotel” is part of the Accor Group which operates 3,700 hotels in 90 countries. Mr Scanlan has been in the hospitality industry for 20 years.

[41] The “Novotel” holds three licences. It has an on-licence for its bar, conference facilities, restaurant, and mini-bars in the guests’ rooms. It also has an off-licence and caterer’s off-licence. He said that to the best of his knowledge, and from inquiries he has made, that apart from the incident on 23 January 2002, the company has not been the subject of any actions or disputes before the liquor licensing authorities in either New Zealand or Australia. He believed that state of affairs was due to the training that the company provided for its staff, and the company’s host responsibility policy.

[42] He outlined what the host responsibility training entailed. All staff members have the policy explained to them, and each person signs a copy of it in acknowledgement. The job descriptions of the Food and Beverage Manager, and the Food and Beverage Supervisors for the bar, and the restaurant, specifically state that they must provide on the job training covering host responsibility to all staff including briefing their staff before any events.

[43] Mr Scanlan detailed the steps that the company had taken to minimise the possibility of such an event occurring again. He said he was at a loss to know what else the company could reasonably do to prevent it. He asked that the Authority consider the practical effects that a suspension could have for the company, staff, room guests, and pre-booked function patrons. The hotel holds advance bookings for conferences up to 12 months. Staff numbers would have to be reduced. Being an international hotel, guests who have pre-booked would have to be advised that the mini-bar service was not available.

[44] Lisa Marie Chater is the hotel manager for “Novotel”. Her inquiries confirmed that Rhys Challenger had complied with company policy on the night. He could be contacted through the pager system, and he had made regular checks of the function. All duty managers are required to be available to all staff via the pager system.

[45] Ms Chater said there were 139 guests at the function which meant that the ratio of guests to staff on duty was approximately 1:20. In her experience that was considered a normal and sufficient ratio for a buffet style meal as opposed to a “plated service”. Ms Chater produced a copy of the buffet menu which she described as substantial. Beer and house wines and non-alcoholic drinks only were available. The bar tab had been set at two beers and 0.4 bottles of wine per person.

[46] The function room was set up with 16 tables. Two bottles of wine were placed on each table. No additional wine was placed on the tables during the evening. After the pre-dinner drinks of beer, wine and soft drink were finished, guests were served drinks by bar staff from a moveable trolley bar.

[47] Ms Chater said that because of the company’s policy, and staff training she was at a loss as to how they could prevent a similar incident occurring again.

[48] Trevor Rhys Challenger is the Assistant Front Office Manager for the company. He is based at “Novotel”. On 23 January 2002 he was on duty from 3.30 pm to 11.30 pm. He has been employed by the Accor Group for six years. Prior to 1998 he had worked In Australia where he had undertaken training in liquor licensing matters and host responsibility. When he came to New Zealand in 1998 the company gave him another day’s training in host responsibility, including a bar person’s obligations in respect of liquor licensing.

[49] In February 2000 he undertook training with the Hospitality Standards Institute for his General Manager’s Certificate. In approximately September 2001, as part of his ongoing training he was instructed in the company’s host responsibility policy. He has since had further training in host responsibility by Academie Accor.

[50] On the night of 23 January 2002 he was the duty manager. He said, as was his usual practice, he would have regularly checked the function area where the tables were set up, the areas where the mobile bar and buffet were set up, and the smokers’ area outside the hotel.

[51] At about 10.15 pm or 10.30 pm he was advised that a guest had been refused alcohol. He had accepted the advice without further inquiry. Mr Challenger then made a further inspection of the function area. He was told that the guest had left the premises. Nothing of concern was drawn to his attention by the staff, including the function manager, Zaid Akeel.

[52] At 11.05 pm to 11.15 pm he received a telephone call from Cameron Battley that there was an argument taking place next to the carpark. Mr Challenger could not leave the reception desk until someone relieved him. He was the only staff member at reception because the receptionist was delivering towels to a room. The two night auditors were doing a floor check of the premises, including the function room, because one of them was taking over as the night manager at 11.00 pm. It might well be asked how any duty manager could adequately carry out his functions when he is not able to leave a reception desk.

[53] At 11.10 pm to 11.20 pm Mr Challenger responded to another call from Mr Battley. He went to the fence between the hotel and the motorway. He saw Mr Dalzell cross the motorway to the median barrier where he sat briefly, then lay down for 30 seconds. Mr Challenger instructed Mr Battley to call the Police. Shortly after Mr Dalzell was hit by a car when he was attempting to return across the motorway.

Respondents’ Submissions

[54] Mr Stevens argued that there was no breach of the Act by either respondent. Further, that if the Authority finds that there was a breach, then any breach was of such a minor nature that the applicant has not proved in the circumstances of the case that it was desirable to suspend the licence or the manager’s certificate. If the Authority found that it was desirable to make an order against either respondent then an appropriate order would be to adjourn the applications for one month pursuant to ss.132(7) and 135(7) of the Act.

[55] Mr Stevens submitted that the standard of proof must be very close to that of a criminal prosecution. The allegation under s.166 of the Act of ‘supply to an intoxicated person’ can only relate to Ms Mercer. He referred to her evidence, and suggested that there was no supply of alcohol by any of the respondents to Mr Dalzell while he was intoxicated. In support, he referred to the evidence of Mr Harrington who saw Mr Dalzell refused service.

[56] Mr Stevens submitted that “allowing a person to become intoxicated” pursuant s.167 of the Act necessarily involves an element of mens rea. He submitted that there was no evidence that indicated that the respondents were aware, or could reasonably have been aware that Mr Dalzell was intoxicated. He referred to the evidence of Ms Chater to demonstrate that the company had attempted to control what liquor was available to the guests.

[57] Mr Stevens submitted that it could not be said that Mr Challenger had “allowed” Mr Dalzell to remain on the premises while intoxicated because when Mr Challenger went to check on him, Mr Dalzell had already left the premises. Mr Stevens suggested that most, if not all the events, involving Mr Dalzell, occurred outside the premises after the period of 10.15 pm to 10.30 pm, and well away from the hotel building. In that respect, he referred to the alleged violent, quarrelsome, and disorderly behaviour pursuant to s.168(1)(b) of Mr Dalzell. He noted that the only person who witnessed these events, apart from “Blockbuster” staff was Mr Battley who is employed by a company unrelated to the respondent company. Mr Stevens also referred to the evidence of Ms Dutch and Messrs Harrington and Towler, to show that even Mr Dalzell’s own friends and colleagues did not consider it necessary to remove him from the premises. However, we do note that it was Mr Harrington who went to the bar staff, and instructed them not to serve any more drinks to Mr Dalzell.

[58] Mr Stevens said that as no breaches of the Act had been proved it could not be said that Mr Challenger had “failed to conduct the premises in a proper manner”. Mr Stevens referred to the evidence whereby it was said that Mr Challenger made periodic checks on the function (including a specific check when he was told that Mr Dalzell was to be refused service), that he was always available on a pager, and he acknowledged he was responsible for the conduct of the premises.

[59] Mr Stevens referred to the company’s “clean record” in respect of liquor licensing matters, and the Authority’s decision in Ceasefire Enterprises Limited v H A Park LLA PH 449-452/2002 where we said at paragraph [42]: “The company is entitled to bring its otherwise good record into account.” He also suggested that it was crucial that the Police had not formally raised any management issues with either respondent. In that respect, we suggest that there is no requirement for the Police to do so. It is the manager’s responsibility to ensure that the premises are conducted according to its licence and the requirements of the Act.

[60] Mr Stevens submitted that even if the Authority found that there had been breaches of the Act, it was not desirable to impose a suspension on either respondent because to do so would be disproportionate to the behaviour of the respondents. Rather, it would be more appropriate for the Authority to exercise its discretion under ss.132(7) and 135(7) of the Act, and to adjourn the applications for one month to enable the respondents to remedy any matters that may require remedying.

Police Submissions

[61] Senior Sergeant Lopdell submitted that members of the respondent’s staff supplied liquor to Mr Dalzell when he was intoxicated in breach of s.166(2). In particular, he referred to the evidence of Ms Mercer. He submitted that when a licensee supplies bottles of liquor on tables for self-service which was accessed by an intoxicated person, the licensee must be in breach of s.166(1) of the Act because it is a strict liability offence. Therefore, both the manager and the licensee were directly liable for supply of liquor to Mr Dalzell when he was intoxicated. “Supply” in those circumstances includes the supply by the staff as well as the self-service by Mr Dalzell.

[62] Because there was unchallenged evidence that Mr Dalzell arrived at the function sober, Senior Sergeant Lopdell said it follows, on the balance of probabilities, Mr Dalzell became intoxicated on the premises in breach of s.167. He submitted that the knowledge of the staff is deemed to be the knowledge of the manager.

[63] Senior Sergeant Lopdell said the evidence disclosed, that between 7.45 pm and 8.30 pm Mr Dalzell exhibited obvious signs of intoxication. Yet he was allowed to remain on the premises in breach of s.168(1)(a) of the Act, while his level of intoxication increased to that of drunkenness. He said that although Mr Challenger had been advised that staff members had stopped serving Mr Dalzell, he did not take the matter any further. Neither Mr Challenger or any of the respondent’s staff took Mr Dalzell to a place of safety, or removed him from the premises which would have provided a defence under s.168(2) of the Act.

[64] Senior Sergeant Lopdell referred to the loud verbal altercations that Mr Dalzell had with Ms Dutch, that at one stage involved him throwing a chair to the floor. He accepted that most of the disorder took place outside the premises, although there was also evidence that some of it took place inside the premises, hence there was a breach of s.168(1)(b) of the Act. He submitted that the respondents did not avail themselves of the defence under s.168(2) of the Act in respect of those matters either.

[65] It was submitted that the ground under s.132(3)(a) that the licensed premises had been conducted in breach of the Act, or conditions of the licence, or in an improper manner do not require mens rea on the part of the licensee. The applicant is only required to show, on the balance of probabilities, that the premises had been conducted accordingly.

[66] Senior Sergeant Lopdell referred to the decision of Panckhurst J in Karara Holdings Limited and Others [2002] NZAR 997 where His Honour had said that a s.132 application was inappropriate for what might be deemed a one-off situation but went on to say at paragraph [60]:

“By these observations I do not mean to suggest that immediate resort to s.132 will never be appropriate following a single breach of the Act. There may well be cases where a breach is so serious or of such a nature that variation, suspension or cancellation of a holder’s licence is necessary, either absent a prosecution or with a prosecution in tandem. Obviously, what is appropriate will depend upon the circumstances of any individual case. “

He submitted that the circumstances of the present case warranted an application pursuant to s.132 of the Act. His submission has to some extent been supported by the Court of Appeal’s decision.

[67] Senior Sergeant Lopdell said that the ground under s.135(3)(a) of the Act was a wide-ranging ground and involved the identical facts as the application under s.132 of the Act. He submitted that Mr Challenger was directly responsible for the supply of liquor to Mr Dalzell. In support of that contention he referred to Patrick Leonard Hunter v Police (High Court, Auckland, AP 36/93, 19 April 1993) where Thomas J said:

“It is clear that the offence of selling liquor is quite different from that of allowing liquor to be sold. The first is an offence which gives rise to both absolute and vicarious liability. The licensee or manager is responsible for the acts and omissions of his or her employees.”

[68] It was submitted that the knowledge of the respondent’s staff of Mr Dalzell’s intoxicated condition was deemed to be the knowledge of Mr Challenger because he had relied upon his staff in that regard. Therefore, by failing to follow up on the information given to him he had deprived himself of the defence in s.168(2) of the Act.

[69] In support of that submission Senior Sergeant Lopdell referred to Police v Russell James Harford (District Court, Auckland 5 November 1992, CRN 2004016800-5) where Judge McElrea held that a licensee or manager could be vicariously liable for the acts of a staff member. Judge McElrea found support for that contention in Murphy v Weir [1968] NZHC 25; [1968] NZLR 657 where Henry J had considered a long line of English and New Zealand authorities. The sole question was whether or not mens rea could be imputed to a licensee (or manager) who had personally “allowed” a drunken person to remain on licensed premises. Judge McElrea went on to say at page 5:

“It was held that if there was effective delegation from a licensee to a barman of the general control of a bar, and the persons who frequent it, it is accompanied by a delegation of the licensee’s duty not to allow drunken persons to be or remain on the premises. In these circumstances the licensee is vicariously responsible for the failure of the barman to carry out that duty.”

[70] Reference was made by Henry J to the decision of the Court of Appeal decision in Gifford v Police [1964] NZCA 28; [1965] NZLR 484, at 492. At page 492 of that decision, North P said:

“As presently advised, though it is unnecessary for me to reach a firm conclusion, I am disposed to think that there can be a delegation to a barman even although the licensee remains in general control of the premises, particularly in cases where the barman is entrusted with the responsibility of exercising a discretion.”

[71] Support for that view is then said to derive from certain named authorities.

[72] Chapman J in Miller v Jansen (1915) 17 GLR 304, 305 pointed out that evidence of delegation never is given, and would seldom be procurable.

“The delegation is to be inferred from the outstanding facts. It is enough to show that the barman was there, and presumably was placed there as barman by the licensee.”

[73] Senior Sergeant Lopdell submitted that when Mr Challenger was absent from the function, his responsibilities were delegated to the hotel staff at the function, and their knowledge was his knowledge. Consequently, he was directly responsible for all four breaches of the Act as set out in the s.132 application, and therefore he failed to conduct the premises in a proper manner.

Authority’s Conclusion and Reasons

[74] The principal thrust of the respondent’s submissions was that the Police had alleged breaches of four provisions of the Act, but the respondents had not been charged with those offences in the District Court. Mr Stevens’ carefully constructed arguments were in accord with Panckhurst J in Karara Holdings Limited and Others v The District Licensing Agency Inspector and Others (supra). It is noted that in its decision the Court of Appeal expressly stated that it was in the Authority’s powers to reach the decision it did. We therefore reject Mr Stevens’ argument. It should be noted that the High Court decision under appeal did not affect the position of managers at any event.

[75] The Authority has always regarded the sale or supply of liquor to an intoxicated person, or allowing a person to become intoxicated or to remain on licensed premises as extremely serious. To do so is contrary to the object of the Act as expressed in s.4 as well as being expressly prohibited by the Act. It is our view that the allegations that a man has become intoxicated on licensed premises, has been allowed to remain on the premises other than in a place of safety, and has subsequently died as a result of his intoxication, are so serious that the applications are justified.

[76] We cannot agree with Mr Stevens that “both applications have serious defects to the point where the rules of fairness and natural justice have not been complied with.” Both applications followed exactly Forms 23 and 24 of the Sale of Liquor Regulations 1990. The grounds for the applications were specified with particularity, and the alleged facts, which were identical in both cases, were sufficiently detailed to fairly inform the respondents of the allegations they had to face. So much so, that Mr Stevens was able to present an extensive and detailed response to them. On that basis we reject any suggestion that the rules of fairness and natural justice have not been complied with.

[77] Mr Stevens has argued that there was no breach of the Act by either respondent. As we have pointed out above, an application under s.132(3)(a) of the Act is only directed at the manner in which the licensed premises have been conducted.

[78] There is the unchallenged evidence that Mr Dalzell arrived at the hotel sober. It is equally clear that he remained on the premises until approximately 11.00 pm. It is also equally clear that he became heavily intoxicated while he was on the premises, to the extent that Mr Harrington asked the respondent’s staff not to serve Mr Dalzell any more liquor. Ms Mercer also had doubts about Mr Dalzell’s condition after she had served him. It is also clear that for approximately three hours or so Mr Dalzell’s intoxicated condition was apparent to all of those around him. That included him smashing two glasses and throwing a chair to the floor. Mr Stevens pointed out that even Mr Dalzell’s colleagues did not consider it necessary to remove him. We do not think that is relevant. It is the respondents who have a clear duty placed on them by the statute not to allow a person to become intoxicated on their premises. If a person does become intoxicated, they have a duty to either remove him from the premises, or put him in a place of safety. Mr Dalzell’s colleagues had no such duty. It is difficult to envisage why the respondent’s staff did not become aware of Mr Dalzell’s condition. There was no suggestion by any of the witnesses that there was any attempt by Mr Dalzell, or the persons attending the function, to hide his condition from the respondent’s staff or anyone else. He was apparently moving around the function room during the evening.

[79] For the reasons expressed above we are satisfied that the breaches in respect of ss.166, 167, 168(1)(a) the Act have been proved. Accordingly, we find that the grounds in respect of those matters for the application under s.132(3)(a) Act have been established, and that the licensed premises have been conducted in breach of the Act. We are not satisfied that the actions of Mr Dalzell on the premises were sufficient to warrant a finding that there was a breach of s.168(1)(b).

[80] In respect of the manager, Mr Challenger, we point out that s.115(1) of the Act provides:

“At all times when a liquor is being sold or supplied to the public on any licensed premises a manager must be on duty and responsible for compliance with this Act and the conditions of the licence.”

[81] It was submitted that Murphy v Weir (supra) and Gifford v Police (supra) are authorities for the proposition that a licensee or manager can supply liquor to an intoxicated person where a staff member is entrusted with a discretion. Therefore, in addition to s.115 of the Act it would seem that the manager is liable pursuant to the above authorities for the actions of the staff. We were advised that all staff employed serving liquor, undergo thorough in-house training in their responsibilities under the Act. They also receive host responsibility training. The only reason that they receive such training is to enable them to exercise their discretion better. In that context we note also that Ms Mercer is the holder of a General Manager’s Certificate.

[82] Mr Stevens’ submission regarding the standard of proof required was answered by Fisher J, in Super Star Bar (NZ) Limited v Peter Alan Kaveney, HC 100/96 Auckland Registry, 17 December 1996, where he said that:

“The standard of proof in a prosecution is of course proof beyond reasonable doubt whereas a lesser standard applies on an application for cancellation. In strict law, therefore, there would be nothing inconsistent with dismissal of the charges in the prosecution context and an adverse finding in of fact in the licensing context on the same factual issues.”

[83] For the reasons expressed in Murphy v Weir (supra) and Gifford v Police (supra) the respondent manager had allowed Mr Dalzell to become intoxicated. It was submitted that the company had attempted to control the amount of liquor available. In fact the only control was to advise the “Blockbuster” representative when the amount of liquor consumed was about to exceed the amount that had been prepaid. Mr Challenger told Constable Nelson that the “ ‘Blockbuster’ organiser extended the package because it was running out. The extension only related to the drinks trolley.”

[84] We are satisfied on the evidence that Mr Challenger had failed to conduct the premises in a proper manner. We accept that Mr Challenger made periodic checks of the function, and that he was always available via his pager. Yet, for example, when he was advised about Mr Dalzell he accepted the assurance that “everything was under control”, and made no further inquiries.

[85] Having found that the grounds under both ss.132(3)(a) and 135(3)(a) have been proved we must determine whether it is desirable under subsection (6) of both ss.132 and 135 to make an order.

[86] We accept what has been said by counsel, on behalf of the respondents. Apart from this unfortunate incident there has been no suggestion that the hotel or the manager has previously breached the Act or the conditions of the licence. For the company, we note that until this matter occurred it has had an unblemished record. We have noted the training systems, and the policies, and procedures that it has in place. We note also the size of the operation, and the number of people, both staff and customers, that will be effected if any of the company’s licences were to be suspended. We considered the question of an adjournment, pursuant to subsection (7) of s.136 but have decided against it. This is partly because we believe that the lesson has already been learned. There has also been considerable delay since this matter arose, and since the case was heard. In all of that time the respondent company has not come under notice. The first respondent is an international hotel. We are satisfied that the application itself has had serious implications for the company. It has responded in a very responsible way. For all of those reasons we do not think it is desirable to make an order under s.132(6) of the Act. In terms of s.4(2) of the Act, a message needs to be sent. We are of the view that the actions we are to take with respect to the manager will address the issue adequately.

[87] Mr Stevens suggested that an order for suspension of Mr Challenger’s certificate would be disproportionate to the respondent’s behaviour. The bald facts are that Mr Dalzell arrived at the hotel sober. He left the hotel drunk, and was subsequently killed by a motor vehicle because of his condition. The amount of alcohol in his blood was more than three times the legal limit for a driver of a motor vehicle. As we have indicated above the respondent had a legal duty not to allow him to become intoxicated. He failed in that duty.

[88] In exercising our discretion under s.135(6) of the Act, we believe that it is desirable to make an order. If no sanction was imposed, we would not be exercising our discretion in a way envisaged by 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.

[89] At issue then is the length of any suspension. Until now we have not had to face a situation where a person has been killed directly following an episode of drinking on licensed premises. In Alan Doyle LLA PH 482/2002 we suspended the manager’s certificate for three months following a Police visit to an inner city bar when five minors were found on the premises. While we have repeatedly said that sales to minors are very serious as evidenced by the changes that Parliament made to the Act in 1999, it does not compare with the present situation on the scale of seriousness.

[90] We also have to take into account the fact that this matter arose in January 2002, and through no fault of the respondents, has taken until now to be determined. It is significant that throughout that time neither respondent has come to notice. We also have to take into account that managerial responsibility has to be viewed in light of the provisions of s.115 of the Act.

[91] Balancing all the competing factors, General Manager’s Certificate number GM/0791/200 issued to Rhys Trevor Challenger will be suspended for three months from 6.00 am on Monday 7 July 2003.

[92] For the reasons expressed above the application in respect of s.132 of the Act is refused.

DATED at WELLINGTON this 16th day of June 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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