Lopdell v Silver Bell Market [2003] NZLLA 585 (22 August 2003)

Last Updated: 24 November 2010

Decision No. PH 585/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of a rehearing of an application pursuant to s.132 of the Act for variation of off-licence number 007/OFF/041/2001 issued to FORTUNE ON INVESTMENT LIMITED in respect of premises situated at 79-85 Dominion Road, Auckland, known as "Silver Bell Market"

BETWEEN MICHAEL JOHN LOPDELL

(Police Officer of Auckland)

Applicant

AND FORTUNE ON INVESTMENT LIMITED

Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at AUCKLAND on 13 August 2003

APPEARANCES

Senior Sergeant MJ Lopdell – NZ Police – applicant
Mr P D Swain– agent for respondent

DECISION OF THE AUTHORITY

Introduction

[1] This is an application by the Police pursuant to s.132 of the Act for variation of condition (c) of the off-licence held by Fortune on Investment Limited in respect of premises situated at 79 – 85 Dominion Road, Auckland, known as “Silver Bell Market”. That condition provides “Only liquor of Asian origin may be sold or delivered.” The Police seek to vary condition (c) to conform with s.37(3) of the Act, so that only wine, beer and mead as described in that subsection, may be sold. The grounds for the current application are that the licensed premises have been conducted in breach of sections 36(4) (nothing in s.36(2)(b) shall authorise the grant of an off-licence in respect of any supermarket) and 37(3) of the Act (supermarkets and grocery stores are limited to selling wine, beer and mead).

[2] The respondent owns a supermarket that specialises in Asian foodstuffs. It had erroneously been granted an off-licence by the Auckland District Licensing Agency pursuant to s.36(2)(b) of the Act, to sell beers, wines, sparkling wines, spirits, and liqueurs of Asian origin as an appropriate complement to the kind of goods sold in the premises. There was no opposition to that application by the Police or the District Licensing Agency Inspector. Pursuant to s.36(4) of the Act a supermarket, in which the principal business is the sale of food or groceries, is excluded by s.37(3) of the Act to sell liquor other than wine, beer, and mead. Section 36(4) of the Act prohibits the granting of an off-licence under s.36(2)(b) in respect of any supermarket.

[3] The present application arose when Police went to the respondent’s premises on Easter Sunday, 31 March 2002, and purchased two bottles of “Soju”. “Soju” is an Asian spirit. The Police brought two applications for suspension of the respondent’s off-licence and the manager’s certificate which were dealt with on the papers by consent of the parties. Both the respondent’s off-licence and the manager’s certificate were suspended for seven days as recorded in our decision LLA PH 500-501/2002. The Police later brought the current application for variation of the off-licence which was heard by us on 18 September 2002. The Police said that the purpose of the application for variation was to bring the licence into line with current law as stated by Randerson J in his reserved decision in Michael John Lopdell v Deli Holdings Limited and Restaurant Brands Limited AP 97-99/01. Although, as Potter J later observed at paragraph [33] in Michael John Lopdell v Fortune on Investment (High Court, Auckland, AP108/02, 1 April 2003), the application was unnecessary because the licence was unaffected by the judgment in Deli Holdings Limited.

[4] We then issued our decision LLA PH 551/2002 whereby we refused the application by the Police pursuant to s.132 of the Act for variation of an off-licence issued to Fortune on Investment Limited in respect of premises known as “Silver Bell Market”. We considered that the use of the procedure in s.132 was an unreasonable use of the enforcement provisions of the Act for two reasons. First, pursuant to s.4(2) of the Act, we considered if we granted the application we would not be assisting in the establishment of a reasonable system of control over the sale and supply of liquor to the public. It was our view that a licensee is entitled to have the certainty of knowing that s/he or it can trade within the conditions of the licence for the duration of the term of the licence. Secondly, we considered that the appropriate procedure was to wait until the licence was due for renewal.

[5] The Police appealed the Authority’s decision in LLA PH 551/2002. Potter J delivered a judgment (AP 108/02) in the Auckland High Court on 1 April 2003. Her Honour allowed the appeal, and referred the matter back to the Authority for reconsideration. Her Honour held that the procedure under s.132 of the Act did not preclude the Police from making an application for variation at any time during the term of the licence. She effectively held that where an application for variation under s.132 of the Act is made during the term of the licence the Authority was not entitled to decline to exercise its discretion under subsection (6) of that section.

The Rehearing

[6] Senior Sergeant Lopdell submitted that in its decision, the Authority had found that the facts forming the grounds of the application had been proved. That is, the premises had been trading in breach of ss.36(4) and 37(3) the Act, and that “Soju” was a spirit from rice, thereby not qualifying as a wine under s.37(3). Senior Sergeant Lopdell noted that Potter J at paragraph [22] had found that the respondent had not been conducting the premises in conformity with the Act. He also noted that at paragraph [28] Her Honour had said that the Police had properly invoked the mechanism in the Act “to vary the licence to the extent to bring it within the law”.

[7] Senior Sergeant Lopdel submitted that as Potter J had found that the licence was issued “ultra vires the authority of the District Licensing Agency”, it was in effect a nullity, and therefore it must be desirable to grant the application to vary the licence. He submitted that if the Authority refused to exercise its discretion to make the appropriate order it would be endorsing a document that was a nullity. Although the applicant was not seeking an order for cancellation it was the only reasonable alternative to granting an application for variation. He submitted, that any course other than to vary the licence, or to cancel, it would be improper.

[8] Senior Sergeant Lopdell said that a subsidiary purpose of bringing the application was to seek some form of direction from the Authority to District Licensing Agencies indicating that when a licence has been granted ultra vires the Act that they have the power to rehear the original application pursuant to s.110(3) of the Act. He suggested that could possibly be done by way of a s.96 Notice. We indicated at the hearing that as far as we were aware the problem in the present case is confined to Auckland. On that ground alone, the problem did not warrant any direction from the Authority. In any event, it would not be a proper use of the power under s.96 of the Act. It is our view however, that the correct way to regularise the situation would have been a report to the Agency to rehear the matter. No attempt was made by the Police to do so.

[9] Mr Swain confined his submissions to the provisions of s.132 of the Act. He noted that subs.(3) of s.132 sets out three grounds upon which an application can be made. He said there was no dispute from his client as regards the facts of the case, and his client had already served a period of suspension pursuant to the Authority’s decision in LLA PH 500-501/2002 in respect of a different breach of the Act.

[10] Mr Swain submitted that as the Authority had found that the allegations had been proved, it was required pursuant to subs.(6) of s.132 of the Act to find whether it was desirable to make an order under that section. That includes an order to vary the licence. It was his submission that the High Court had not said that having found the allegations proved that the Authority had to make an order. In support of that contention Mr Swain referred to three decisions of the Authority where it had declined to make an order. In Scott Lyall Taylor v S.I.E. Holdings Limited LLA PH 383/2002 the Authority declined to make an order because of a genuine misunderstanding as to the conditions of the licence. In Donald William Sara v GAD Holdings Limited LLA PH 484/2003 the Authority declined to make an order because there had been an innocent mistake by the licensee in allowing another company to operate the business under the licence. In Trevor Vincent Walker v Standard 183 Limited LLA PH 541–542/2003 the Authority declined to make an order and adjourned the proceedings for six months. That was to give the licensee an opportunity to continue remedying its management of the business to prevent further repetition of illegal trading.

[11] Mr Swain referred us to the recent Court of Appeal decision of Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others (CA 178/02 13 June 2003), where the Court commented on the scheme of the Act as follows:

Section 4 expresses a philosophy concerning the social utility of controls over the sale and supply of liquor which reflects the underlying policy of the Act. Parliament has declared that the Act’s system of controls over the sale and supply of liquor should be administered so as to contribute to the reduction of liquor abuse in the community within the limits of their capacity to do so. The stipulation that the object of the Act is to establish a reasonable system of control reflects that legislative perception. It also implicitly recognises that if the administration of the Act’s licensing system becomes too heavy-handed, so that it unreasonably inconveniences those wishing to purchase and consume liquor in a manner not giving rise to abuse, that result would be inconsistent with the statutory object.”

[12] He said that if that statement was applied to the present application then the Authority could not come to the conclusion that it was desirable to make an order in terms of subs.(6) of s.132 of the Act for the following reasons. First, there was no evidence of liquor abuse, the incident was a one off event, and there was no evidence of continuing breaches of the licence or the Act. We have to disagree. It was a continuing breach. Secondly, his client had already suffered a suspension of seven days in respect of trading on Easter Sunday, and varying the conditions of the licence would in effect punish his client twice. Thirdly, at the time the licence was granted and renewed it was common throughout New Zealand for District Licensing Agency’s to grant liquor licences to premises that sold ethnic food as an appropriate complement to the type of goods being sold. It was because of the judgment by Randerson J in Michael John Lopdell v Deli Holdings Limited and Restaurant Brands Limited (High Court, Auckland, AP 97/01, 10 December 2001) that his client’s licence was no longer valid.

[13] However, Mr Swain argued that because a licence becomes invalid during its currency, as in the present circumstances, it does not automatically cease to operate. The only way it can cease to operate (apart from a rehearing by the District Licensing Agency) is by the licensee not renewing the licence, or surrendering the licence pursuant to s.227 of the Act, or pursuant to an order for cancellation under s.132 of the Act. Mr Swain suggested that a rehearing by the Agency pursuant to s.110(3) would be contrary to s.27 of the New Zealand Bill of Rights Act, which relates to a breach of natural justice. However, if the appropriate notice was given to all parties, we cannot see a problem if such a procedure were adopted.

[14] Mr Swain noted that the licence was due for renewal on 21 June 2004. He said that would be the appropriate time to deal with any issue of variation.

Authority’s Conclusion and Reasons

[15] Subsections (6) and (7) of s.132 provide:

(6) If the Licensing Authority is satisfied that any of the grounds specified in subsection (3) of this section is established and that it is desirable to make an order under this section, it may, by order,—

(a) Vary or revoke any condition of the licence imposed by the Licensing Authority; or

(b) Impose any new condition (relating to any matter specified in section 14(5) or section 37(4) or section 60(2) of this Act); or

(c) Suspend the licence for such period not exceeding 6 months as the Licensing Authority thinks fit; or

(d) Cancel the licence.

(7) Instead of making an order under subsection (6) of this section, the Licensing Authority may adjourn the application for such period as it thinks fit to give the licensee an opportunity to remedy any matters that the Licensing Authority may require to be remedied within that period.

[16] The special feature of this case is that the respondent has been operating under a licence that has been erroneously issued by the Auckland District Licensing Agency, and to which there was no opposition by the Police or the Inspector nor were there any objections from the public. The licence was renewed for a three year period without opposition or objection.

[17] In our view the licensee has been the victim of circumstances not of its own making.

[18] Senior Sergeant Lopdell argued that the Authority was left with only one of two options under s.132, and that was to vary the conditions of the licence or to cancel it. He added that he was not seeking cancellation of the licence although he submitted that to cancel a licence that was ultra vires the Act would not be an improper use of s.132 of the Act. In our view to cancel the licence would be out of all proportion for trading under the terms of its erroneously issued licence, and therefore would be undesirable to do so.

[19] Senior Sergeant Lopdell also argued that if we did not make an order under s.132(6) we would effectively be endorsing a document that was a nullity. We agree. Mr Swain intimated during his submissions that it would be possible for the respondent to make a further application that would allow it to comply with the requirements of the Act.

[20] In line with the philosophy in Christchurch District Licensing Agency Inspector v Karara Holdings Limited & Anor at paragraph [12] above, we are not convinced that in the circumstances of this case that it is desirable to make an order for variation of the licence at this time. It is our view that the justice of the case can be met by applying subs.(7) of s.132. Accordingly, we adjourn the proceedings for six months to allow the respondent an opportunity to make the necessary changes to its business to comply with the conditions of his licence. If on application a further extension to that period is justified, we will consider it. If the Inspector reports that the necessary changes have not been made within that period then the matter will have to set down for a further hearing. If the respondent is given a reasonable opportunity to make the licence “legal”, and does not accept that opportunity, then reluctantly we shall be forced to issue an order amending the licence.

[21] Clearly the respondent must put its house in order. Through no fault of its own, it has built up a business based upon a licence which was issued erroneously. It would be unreasonable to vary the licence without giving the respondent the opportunity of correcting the error or changing its situation. How it does so is a not a matter for us to comment on.

DATED at WELLINGTON this 22nd day of August 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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