Panchal - Everest Food Store [2003] NZLLA 707 (25 September 2003)

Last Updated: 30 December 2011

Decision No. PH 707/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by HEMANT PANCHAL and BAXIKA PANCHAL trading in partnership for an off-licence pursuant to s.31 of the Act in respect of premises situated at 31 Everest Avenue, Lower Hutt, known as “Everest Food Store”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 17 September 2003

APPEARANCES

Mr D A Richards – agent for the applicant
Miss K Naylor – Hutt City District Licensing Agency Inspector – in opposition
Sergeant A F Cappleman – N Z Police – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority is an opposed application for an off-licence. The issue is whether the applicants have been able to establish that their premises can accurately be described as a grocery store and not a dairy. Having achieved that target, the applicants also carry the burden of showing that the principal business of their store is the sale of main order household foodstuff requirements.
[2] The application is made pursuant to s.36(1)(d)(ii) of the Act. An off-licence can be granted to any grocery store where the Licensing Authority is satisfied that the principal business of the store is the sale of main order household foodstuff requirements. However, pursuant to s.36(3)(b) of the Act, no such grant can be made in respect of any shop of a kind commonly known as a dairy.
[3] In this case, opinions as to the status of the shop varied. The case was described by the District Licensing Agency Inspector as ‘borderline’. The evidence produced by the Police showed that the shop was less than 100 square metres. The parties are placed in a dilemma as there is no definition of a dairy in the Act. To some extent, dairies have become a thing of the past. Dairies have been forced to become more like convenience stores where any item is sold provided there is a demand. In many cases, the final decision depends to a large extent on the view of the premises taken by the Authority, in conjunction with the evidence given at the hearing.

The Background to the Application

[4] For the past eight and a half years, Mr Hemant Panchal and his wife Mrs Baxika Panchal have operated the ‘Everest Food Store’. Prior to doing so, they operated a dairy next door for two years. From the day it opened, the shop was called a food store. The Panchals have a large and loyal client base. This base has expanded over the years mainly due to the upgrading of a swimming pool complex known as the ‘Naenae Swimming Pool’ located over the road. Apparently, the patrons of the swimming pool use the shop to purchase fast food and confectionery. The Panchals live in their home which is at the back of the premises.
[5] Mrs Panchal contended that many patrons purchased their entire weekly grocery needs from the shop despite the presence of a supermarket close by. She said that she had lowered the profit margin in order to compete, and she gives credit to her loyal customers, which they are unable to obtain at the supermarket. On the other hand, Mrs Panchal said that she was unable to supply fresh meat, or fresh fish, or fresh poultry together with a range of fresh fruit and vegetables. This is because she has been unable to obtain an exemption from the Council. Mrs Panchal said that during the day and depending on the season, the shop changed from being a convenience store to a food market. For example during the summer months, there was more concentration on the ‘convenience’ side of the business.
[6] Mrs Panchal acknowledged that lots of children used the shop. In fact she stated that the customers saw the premises as a safe place to send their children. The shop offers ice creams in a cone and milk shakes. In addition there is a range of sweets and other forms of confectionery. The suitability of Mr and Mrs Panchal is not an issue in this case. It was accepted that they would trade within the law if granted a licence.
[7] The proposed trading hours are:

Monday to Sunday 7.00 am to 10.00 pm.

[8] The premises are located in the centre of the retail business district of Naenae. The floor area was originally described as 160 square metres, but Mr Richards acknowledged that he must have made an error when calculating the available space. He was unable to argue with the Police evidence that the useable floor space was only 61.48 square metres. Mrs Panchal produced figures which appeared to show that the majority of the goods which were sold, fell into the category of main order household foodstuff requirements. The categories which were included were:

1. Prepared meals 2%

2. Confectionary 18%

3. Baked Goods 8%

4. 4. Tinned Food 3%

5. Tea Coffee Cocoa 1%

6 Vegetables 7.8%

7. Fruit 3%

8. 8. Nuts 1%
9. 9. Meat 2%
10. Dry Goods 2%
11. Milk Products 8%
12. Condiments 1.5%
13. Water/Syrup/Cordials 5%
14. Eggs 1%
    

[9] Although these figures show a percentage of 63.3% of total turnover, items 2, 11, and 13 are suspect. The evidence disclosed that there was quite an emphasis on the sale of many of the items to children. Mrs Panchal confirmed that the busiest time of the day was in the morning, when the children and adults came to buy items for the lunch box. Although an attempt was made to have the figures certified, the certificate from the Accountants and Tax Consultants simply stated that the information reflected an accurate fair and true record of the business. It was not explained what items the term ‘confectionary’ embraced.

The Opposition

[10] Sergeant A F Cappleman is the Licensing Sergeant for the Lower Hutt area. He visited the store to make his own assessment of the business. He made a careful measurement of the useable space in the store. In his opinion the space available amounted to 61.48 square metres. He noted that although the shop was orderly, there was only room for one person in the food aisles. There were no trolleys or baskets.
[11] He also noted that the dairy signs had either been removed or crudely covered over. At the front of the main serving counter was a selection of smaller chocolate bars and lollies. In his opinion the swimming complex is used by children under the age of 18 years, and the dairy was the major calling point for those going to or coming from the pool complex.
[12] He concluded:

“I can only conclude, that although this premise carries the name Food Store it is merely a dairy of the current age and by the introduction of alcohol, would merely reduce the range of products sold in the shop, or add to the clutter of its floor space as well as exposure of alcohol in a premise frequented by children.”

[13] Miss Karen Patricia Naylor is the District Licensing Inspector for the Hutt City Council. She visited the store in January 2003, and noted the display of advertising signs associated with a dairy. There was even a sign advertising that the shop was a dairy. When she made a second call she noted that the dairy sign had been removed, but her overall impression of the business had not changed. It was her view that the case was borderline.

Conclusion

[14] In Jay and H Company Limited LLA PH 155/2001 the Authority stated:

“In determining the ‘principal business’ of any store we endeavour to apply a broad common sense approach. Consideration includes –

(1) The turnover percentages produced in accordance with Regulation 8(2)(j).

(2) The number and range of the items available. The greater the number and depth of foodstuff items available, the more likely the premise is to be a grocery store in terms of s.36(1)(d)(ii).

(3) The size of the premises. Larger premises are less likely to be categorised as a dairy.

(4) The layout of the premises. The presence of trolleys in multiple rows of goods assist categorisation as a grocery store.

(5) A view of the premises. The evidential weight given by the Authority to a view is usually considerable.”

[15] We apply the Jay and H Company Limited criteria to the present case.

The turnover percentages

[16] As we stated above, the figures provided are marginal. As was pointed out, the applicants had shown turnover percentage figures which came to 102%. The issue is not critical but does tend to support the argument that a more detailed analysis would have been helpful in determining the issue. Ice creams, milk shakes, soft drinks and sweets, do not fall into the category of main order household foodstuffs. They form a critical part of any dairy’s turnover. Their presence not unnaturally, attracts children.

Number and range of items

[17] We accept that there was a wide range of household foodstuffs which one might expect to find in a grocery store, although some choices were limited. Miss Naylor noted the minimal range of frozen foods. Although there were a reasonable number of items, they did not feature highly in the turnover figures.

Size of the premises

[18] We have said before that in terms of the supervision of licensed premises, and compliance with the Act and the off-licence, it is important that there is plenty of space, not only for the appropriate display of the liquor, but for monitoring the public as well. In a small crowded shop without designation, we believe that an off-licence would be inappropriate.
[19] We have said in relation to other licence applications, that the way in which the sale of liquor is portrayed to the public is an important factor in preserving the integrity of the Act. While we accept that in every application for an off-licence, we are bound to consider the criteria set out in the Act, there are other matters which may be brought into the equation. We will be slow to exercise our discretion in respect of premises that are clearly inappropriate because of size or other factors. In any small shop an applicant will be more limited in attempting to detect prohibited persons.
[20] In this case the size of the premises is a very limiting factor.

The layout of the premises

[21] It is accepted that the layout is a direct result of the available space. This factor has also affected the ability to provide shopping baskets and/or trolleys. Some of the dairy signage is still visible.

The view of the premises

[22] A member of the Authority took a view of these premises. He formed the same view as the Sergeant. He considered that the shop was well laid out. Although, there was a display of grocery items, the presence of all the confectionery and chips at the front of the shop, and the availability of the ice-cream and milkshakes was a telling factor, as was the cigarette and magazine display. The layout and size of the premises were such that he was not satisfied that the premises were not a dairy. Even with the changes to the signage, the ‘Tip Top’ ice cream signs are still a significant feature on the shops frontage. The applicants have failed to establish on the probabilities, that they were not running a dairy.
[23] In this case, the Authority is governed by s.36 of the Act. This section describes the types of premises in respect of which off-licences may be granted. The relevant parts of the section read:

(1) Except as provided in subsections (2) and (5) of this section, an off-licence shall be granted only –

(a) To the holder of an on-licence in respect of a hotel or tavern, in respect of the premises conducted pursuant to that licence; or

(b) To the holder of a club licence, being a club that is entitled under paragraph (i) or paragraph (j) of section 30(1) of this Act to hold an off-licence, in respect of the premises conducted pursuant to that licence; or

(c) In respect of premises in which the principal business is the manufacture or sale of liquor; or

(d) In respect of –

(i) Any supermarket having a floor area of at least 1000 square metres (including any separate departments set aside for such foodstuffs as fresh meat, fresh fruit and vegetables, and delicatessen items); or

(ii) Any grocery store, where the Licensing Authority is satisfied that the principal business of the store is the sale of main order household foodstuff requirements.

(3) Nothing in subsection (1) or subsection (2) of this section shall authorise the grant of an off-licence in respect of –

(a) Any service station or other premises in which the principal business is the sale of petrol or other automotive fuels; or

(b) Any shop of a kind commonly known as a dairy.

[24] For the reasons expressed, the applicant has failed to satisfied us that the premises are not a dairy. The Authority has no jurisdiction to grant an off-licence in these circumstances. Accordingly, the application is refused.

DATED at WELLINGTON this 25th day of September 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

EverestFoodStore.doc(aw)