Reynolds v Mikano Limited and Diment [2003] NZLLA 738 (2 October 2003)

Last Updated: 22 January 2012

Decision No. PH 738/2003 -
PH 739/2003

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 suspension of on-licence number 007/ON/26/94 issued to MIKANO LIMITED in respect of premises situated at Sea Bee Air Building, Solent Street, Mechanics Bay, Auckland, known as “Mikano Bar and Grill”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number 005/GM/284/2001 issued to JOANNA DIMENT

BETWEEN SARAH JANE REYNOLDS
(Police Officer of Auckland)

Applicant

AND MIKANO LIMITED

First Respondent

AND JOANNA DIMENT

Second Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at AUCKLAND on 24 September 2003

APPEARANCES

Sergeant J Downey – NZ Police – for applicant
Mr A M B Green – for first and second respondents
Mr G S Whittle – Auckland District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is a cautionary tale for all restauranteurs. “Mikano Bar and Grill” has been operating in Auckland for ten years. It employs up to 45 staff. Its weekly turnover is well in excess of $50,000.00. According to the Chief Executive Officer of the Restaurant Association of New Zealand, the restaurant is an extremely professionally operated restaurant which fulfils the requirements of the Association’s code of conduct. “Mikano” is one of the restaurants which is recommended by the Association as a place to have an enjoyable dining experience. In ten years, the restaurant has had no brushes with the law.
[2] On Tuesday 28 January 2003, three young female students spent the day together. They had been school friends. One was Hayley who was born on 6 May 1987, and was 15 years and 8 months old at the time. One was Lisa who was born on 3 September 1987. She was aged 15 years and 4 months. The third was Amber. Amber’s age is not known, although according to the application, she was 14. She did not give evidence. It was Amber who suggested that the three of them go out for dinner. She told them she had her father’s credit card and would pay.

The three girls got changed at Amber’s house. They changed their clothing and borrowed some of Amber’s clothes. By their descriptions of what they wore, the girls dressed up for the occasion. Both Hayley and Lisa applied make-up. Both accepted that they would have looked older than their age, although not necessarily over 18. The three young women then took a taxi to the “Mikano Bar and Grill”. When they arrived at about 8.00 pm, they went upstairs and waited to be seated. The restaurant is undesignated, and therefore the girls were entitled to be present. A waiter seated them and gave them a menu and a drinks list. The restaurant was quite busy. The “America’s Cup” racing regatta was being run at the time.

When they were considering what to order, the girls decided to try and buy some alcohol. They ordered some bread, and two bourbons and coke, and an apple martini. These were supplied without question. A further three bourbons and coke were subsequently ordered, and later consumed. When the three main dishes arrived, an order was placed for a bottle of champagne. A bottle of “Tattinger” priced at $110.00 was selected. It was duly delivered, uncorked, and poured. The bottle was then placed in a wine bucket.

Ms Joanna Diment was the duty manager. She had been employed at “Mikano Bar and Grill” for nine months, but had previous experience at other licensed premises. She helped to take the main meals to the table and noticed the bottle of “Tattinger” in the wine bucket. From her casual observations of the three girls she thought they looked over 18 although she did not check with them. It may be that the expensive if not sophisticated bottle of champagne influenced her. At about this time Amber ordered three packets of cigarettes from the waiter. These were also supplied and entered on the account. After the meal and two deserts, the girls moved to the bar taking their drinks with them. They were seated at a table.

[6] Amber went up to the bar and asked the barman what was the finest wine that he had. The barman told her that he had a bottle of “Sir Winston” at $265.00. It was accordingly ordered, and brought to the table in its presentation case, opened, and poured. Amber then suggested that they order a limousine. With the assistance of the female cashier, she was able to do so.
[7] At this time one or more of the girls attempted to buy more cigarettes. This finally raised the suspicion of the duty manager who checked their account. When she saw what was on it, she immediately asked the barman to obtain some ID. He tried to do so, but was unsuccessful as none of the girls had any. According to Ms Diment, the girls had not been showing signs of intoxication. They were not giggling or making a scene. Nevertheless, the barman was instructed not to provide any further service. At some stage, Lisa went up to the bar. The barman asked her how old she really was. She told him she was 17. He told her not to worry as he would not tell the management. That barman is no longer employed at the restaurant.

At about this time Amber said that she would pay the account. Hayley and Lisa went downstairs to have a look at the limousine which had arrived. Amber tried to leave but was stopped by the duty manager who told her the account had to be paid. Amber then called her friends back inside. She told them that she had lost her father’s credit card. She suggested that they run out of the restaurant. There was an argument among the girls. Amber then told the duty manager they could not pay the account. Ms Diment asked them how old they were. She was told that two of them were 15 and one was 14. The restaurant manager was rung at home.

By this time, the account had reached $562.00. This comprised $110.00 for food, $422.00 for liquor, and $30.00 for cigarettes.

Ms Kelly Amanda Young is the general manager of the restaurant. She came to the restaurant and spoke with the girls. She thought they were exhibiting signs of intoxication. They were chain smoking, and unable to concentrate. They were certainly unresponsive and would not give their full names. The Police were then rung.

At about 11.30 pm, the Police rang Lisa’s parents. When Lisa’s father arrived at the restaurant he thought that Lisa looked 18 although the others looked younger. He considered that the incident had not been well handled by the restaurant. He thought that the restaurant should have been forced to absorb the cost of the liquor because it should not have been sold in the first place.

Hayley’s parents were contacted about an hour later, as the restaurant was not prepared to accept Lisa’s father’s cheque. Hayley’s father thought his daughter looked older than normal but not 18. He expressed surprise that the staff at the restaurant did not react sooner to the sale of such an expensive bottle of wine.

When the Police checked the licence and other documents, it was discovered that Ms Diment’s appointment had not been notified to the Police or the District Licensing Agency as required by s.130 of the Act.

The Applications

[14] As a consequence of the events on the night of 28 January 2003, the Police filed the two suspension applications. The applications were received by the Authority on 10 June 2003. The first application was to suspend the on-licence issued to Mikano Limited the licence holding company. The grounds for the application were firstly, that the licensed premises have been conducted in breach of ss.115, 130, 155, 165 and 172A of the Act.

Section 155 prohibits the sale or supply of liquor to minors.

The remaining sections refer to the requirements of the Act to have a manager on duty at all times when liquor is being sold to the public. The manager must be the holder of a General Manager’s Certificate. The licensee must give notice of the appointment of the manager within 48 hours of the manager’s appointment. Because of the failure to notify the appointment, no manager was properly appointed. Consequently, all sales made by the restaurant were by definition illegal. It is the licensee who carries the responsibility of ensuring that the manager’s appointment is properly notified. The Police rely on the case of AAA New Zealand Limited LLA 1150/2000. In that decision, the Authority held that where no notice of the appointment of a manager had been made to the Police or the Authority or the District Licensing Agency, then all sales from the premises are unauthorised sales of liquor in terms of s.165. In other words the absence of notice of appointment automatically ensures that the sales are unauthorised until the requisite notice is given.

In the past the Authority has differentiated between premises which were acknowledged as being non-problem premises, and those where the breaches are symptoms of inadequate management and control. In terms of the object of the Act, the issue is whether there are collateral instances of liquor abuse. In this case, such instances did exist on the night in question.

The second ground alleged in the suspension application was that the premises had been conducted in breach of the condition of the licence requiring the licensee to ensure that the provisions of the Act relating to the sale and supply of liquor to prohibited persons were observed.

The second application was for the suspension of a General Manager’s Certificate issued to Joanna Diment. The ground for this application was that the manager has failed to conduct the licensed premises in a proper manner.

The Respective Submissions

[20] On behalf of both respondents, Mr A M B Green accepted the briefs as read. He did not wish to cross-examine any of the witnesses. No evidence was called on behalf of the respondents, although the company director, general manager and duty manager were all present at the hearing.

Mr Green submitted that the conduct of the three girls was relevant to the applications. He argued that they had dressed to appear older. When they arrived they were not seen by the duty manager. They were seated behind an internal wall and were therefore less visible to the duty manager. On the other hand, she did see

them when she helped to serve the meal. On behalf of the respondents, Mr Green acknowledged that the waiting staff and barman should have sought age identification when liquor was ordered. He accepted that the grounds for the application had been established.

[22] Mr Green referred to the unusual situation. The cost of dining normally prohibits young girls from dining at such a restaurant. The girls’ choice of venue added to the initial deception. He asked the Authority to infer that the staff at the restaurant were under a false sense of security, which has now been removed following the filing of the suspension applications. According to Mr Green, attitudes at the restaurant have changed, and additional host responsibility training has been undertaken. The front desk is now permanently manned.

Mr Green submitted that the Authority has a duty to apply an even-handed (rather than a heavy handed) approach as suggested by the Court of Appeal in its recent decision Christchurch District Licensing Agency Inspector and Another v Karara Holdings Limited and Others CA 178/02 13 June 2003. In that case, the Court commented on the scheme of the Act at paragraph [26] 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. The licensing bodies which administer the licensing system, and courts on appeal, are required by section 4 (2) of the Act to exercise their respective functions in a manner that is most likely to promote this underlying statutory policy and object. ”

[24] In summary, Mr Green stressed the licensee’s blameless record. Coupled with the unique circumstances, and the duty manager’s inability to identify the young girls at an earlier time, he submitted that it was desirable to suspend the General Manager’s Certificate rather than the on-licence.

Mr G S Whittle is a District Licensing Agency Inspector based in Auckland. He referred the Authority to the principle that “a licence will be easy to get and easy to lose.” This principle was first coined by the authors of the textbook “Sale of Liquor”. It was subsequently quoted by the Authority as far back as 1990 in Douglas-Oliver Corp. Ltd [1990] NZAR 411. It has been cited in a number cases since.

Both the Inspector and the Sergeant submitted that a suspension period of two weeks for the on-licence, and one month for the manager was appropriate.

Decision

[27] On the night in question, the premises were operated in breach of ss.115, 130, 155, 165, and 172A of the Act. It will be noted that some of these offences are licensee offences. The premises were also conducted in breach of a condition of the licence. This condition requires the licensee to ensure that the provision of the Act relating to the sale and supply of liquor to minors, is observed. The manager failed to conduct the premises in a proper manner. The sole issue therefore, is whether it is desirable that suspension orders should be made. In our view, that decision should reflect the seriousness of supplying liquor to minors.

Reputable restaurants are not the places where we expect to find such breaches of the Act. The circumstances reflect little credit on the policies and systems in place at the time. The conduct of the staff and management appeared to range from naïve to careless. In other decisions we have set out the reasons why we regard the sale of liquor to minors as an incident of liquor abuse. The reasoning received approval from the High Court in The Mill Liquorsave Limited v Grant David Verner Wellington High Court CIV-2003-485-874 dated 18 August 2003.

In that case His Honour Mr Justice Gendall made the following comments:

“[23] I have no doubt at all that deterrence (i.e. to ‘discourage’ others) from selling to minors, as well as special deterrence to the licensee before the Authority, is a relevant consideration and squarely within the objects of the Act. A reasonable system of control of the supply of liquor includes the need to be able to secure compliance with licence conditions and the law through the exercise of discretionary disciplinary powers specifically given to the Authority by Parliament. If it could not suspend a licence given to a corporate body where a ‘fault’ or breach of the Act was that of a manager, its powers of control over licensed persons or bodies could be rendered nugatory or severely curtailed.”

[30] We give full credit to the respondents for the very co-operative attitude displayed at the hearing. We appreciate that the young girls were saved the potential distress of appearing at the hearing and being questioned. Mr Green did his best for his clients but there were few other mitigating factors. We accept that the respondents are very concerned about what happened and have taken steps to ensure that there will be no repetition. On the other hand, we have previously stressed that sales made in on-licensed (as opposed to off-licensed) premises aggravate the potential for liquor abuse. This case proves the point.

We accept the submission that 14 days is an appropriate period given the circumstances. The management displayed by staff is a reflection on the licensee’s systems. As Mr Green submitted, it is clear that the restaurant was lulled into a false sense of security. We have discounted the period by 4 days (30%) to reflect the co-operative if not remorseful attitude displayed by the respondents through their counsel. We believe that a further day is warranted for the technical breaches resulting from the failure to notify the manager’s appointment. The lack of notification of the appointment of managers is becoming widespread. Although the offences are technical in nature, when combined with incidents of liquor abuse, they assume greater importance in the management of licensed premises. We have therefore decided that a suspension period of 11 days is an appropriate sanction for what happened.

The suggested suspension period for the manager is reasonable and reflects the onerous responsibility shouldered by the holder of a General Manager’s Certificate. Managers are trained to uphold the law and the conditions of the licence. They lead staff by example. They carry the responsibility pursuant to s.115 of the Act, for ensuring compliance with the conditions of the licence, and the provisions of the Act.

For the reasons we have given we make the following orders.

(1) On-licence 007/ON/26/94 issued to Mikano Limited is suspended for eleven days from 6.00 am on Monday 13 October 2003 to 6.00 am on Friday 24 October 2003.

(2) General Manager’s Certificate 005/GM/284/2001 issued to Joanna Diment will be suspended for a month from Monday 13 October 2003.

DATED at WELLINGTON this 2nd day of October 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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