Cavanagh v Star Service Stations Limited [2003] NZLLA 936 (10 December 2003)

Last Updated: 26 January 2012

Decision No. PH 936/2003 –
PH 940/2003

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of two applications pursuant to s.132 of the Act for variation, suspension or cancellation of off-licence number 049/OFF/32/2002 issued to STAR SERVICE STATIONS LIMITED in respect of premises situated at Ground Floor, Aurora House, 45 The Terrace, Wellington, known as “Star Mart The Terrace” and off-licence number 049/OFF/19/2001 issued to KIRAN DAHYA LALA and SHASHIKALA KIRAN LALA, trading in partnership, in respect of premises situated at 75 Raukawa Street, Strathmore, Wellington, known as “Raukawa Street Foodmarket”

AND

IN THE MATTER of two applications pursuant to s.135 of the Act for suspension or cancellation of General Manager’s Certificate number 049/GM/49/201 issued to KAMALJIT SINGH, and General Manager’s Certificate number 049/GM/82/2001 issued to KIRAN DAHYA LALA

BETWEEN STEPHEN MICHAEL CAVANAGH
(Police Officer of Wellington)

Applicant

AND STAR SERVICE STATIONS LIMITED

First Respondent

AND KIRAN DAHYA LALA and SHASHIKALA KIRAN LALA

Second Respondents

AND KAMALJIT SINGH

Third Respondent

AND KIRAN DAHYA LALA

Fourth Respondent

AND

IN THE MATTER of an application by STAR SERVICE STATIONS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at Ground Floor, 45 The Terrace, Wellington known as “Star Mart The Terrace”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 26 November 2003

APPEARANCES

Sergeant G D Verner – NZ Police - for applicant
Mr D A Richards – agent for respondents and applicant for renewal of off-licence
Mr M J Kemp – Wellington District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority are five matters for determination. Four of the applications relate to a controlled purchase operation conducted in Wellington by the New Zealand Police, together with Regional Public Health, and the Wellington District Licensing Agency. Of the seven premises which were visited, two made sales to the minor. The sales were made in a convenience store known as “Star Mart The Terrace”, and a grocery store known as “Raukawa Street Foodmarket”. In both cases the duty manager made the sales to a sixteen-year-old volunteer. Accordingly, the Police have applied for enforcement orders against the two managers, and the two off-licences.

[2] The fifth matter relates to an application by one of the holders of the off-licence to renew its licence. Because the premises were involved in the sale to a minor, formal opposition was filed against the application. There are no other compliance issues relating to the application, and the renewal of the off-licence was not seriously opposed.

[3] Although the applications were for the variation, suspension or cancellation of the off-licences, it was accepted that if the grounds were established, an order for suspension was appropriate. The grounds for the applications in respect of the off-licences are:

• (a) That the licensed premises have been conducted in breach of s.155 of the Act. Section 155 prohibits the sale or supply of liquor to minors.
  

(b) That the licensed premises have been conducted in breach of the condition of the off-licence which requires the licensee to ensure that the provisions of the Act relating to the sale and supply of liquor to prohibited persons are observed.

[4] Although the applications in respect of the two General Manager’s Certificates were for suspension or cancellation, it was also conceded that if the grounds were established, then orders for suspension would be appropriate. The grounds for the applications are that the managers failed to conduct the licensed premises in a proper manner. Mr Kamaljit Singh was granted his General Manager’s Certificate on 23 November 2001, and Mr Kiran Dahya Lala became certificated on 9 March 2001.

[5] On behalf of all respondents, Mr D A Richards urged the Authority to exercise its discretion and not to make any orders. He referred to the systems in place particularly with regard to “Star Mart The Terrace”. He suggested that the volunteer appeared to be over 18 years of age. If a sanction was considered desirable, the Authority was requested to take into account a number of mitigating circumstances, in assessing the appropriate period of suspension.

The Background Facts

[6] The applications should be viewed against the following background. It is now four years since the drinking age was lowered from 20 to 18. After a settling in period, concerns about teenage access to liquor became quite widespread. There were a number of reported instances of unruly behaviour by intoxicated minors. On 28 August 2001, the Authority issued its decision cancelling the off-licence of Onehunga Wines & Spirits Co Limited LLA PH 311–312/2001 for indiscriminate selling to minors. The Wellington District Licensing Agency sent a copy of the decision to every off-licence in Wellington.

[7] Throughout the country, District Licensing Agencies, and the Police and officers from Regional Public Health have taken a number of initiatives designed at bringing the matter to the attention of those who sell liquor to the public. In Wellington, the District Licensing Agency has been particularly proactive in seeking to educate off-licence holders and managers about their responsibilities with regard to checking for identification, and refusing service when identification was unavailable. This has been done by newsletters, an electronic bulletin board, a website, and a number of presentation forums. Copies of all material used by the Agency were presented to the Authority.

[8] Between July and September 2003, a new campaign known as “Think Before You Buy Under 18s Drink” was conducted. This was a combined initiative involving the Police and the Hutt Valley Health Service as well as the Agency. A variety of strategies were used. In summary, it is our view that combined with the “No Card No Service” message, there is no way that the holder of any off-licence could not know the serious consequences of selling to minors.

[9] In November 2002, the Wellington District Licensing Agency in conjunction with Regional Public Health, and the New Zealand Police, conducted their first controlled purchase operation in the city. On the evening in question, a total of 21 premises were tested. Of the 21 premises that were visited, eight sold to the volunteers without asking for identification. We have expressed reservations about two of the incidents, because of the maturity of one of the volunteers. The eight premises were duly brought before the Authority during the early part of 2003.

[10] On Friday 8 August 2003, a further operation was conducted. Just one volunteer was used. A total of seven premises were visited and the volunteer was able to purchase liquor at only two of them. As stated above, these were “Star Mart The Terrace”, and “Raukawa Street Foodmarket”.

[11] “Star Mart The Terrace” is one of a number of standalone convenience stores which operate as a chain throughout New Zealand, and which hold an off-licence. These stores are owned by Caltex New Zealand Limited, and are operated by the first respondent, Star Service Stations Limited. “Star Mart The Terrace” opened four years ago. It operates a “Subway” franchise within the premises and is therefore described as a busy operation.

[12] “Raukawa Street Foodmart” is situated in Strathmore, a suburb of Wellington. Mr K D and Mrs S K Lala, the second respondents, have operated the grocery store for seventeen years, and have held an off-licence since May 2001.

The Incident Involving “Star Mart The Terrace”

[13] “Samantha” was born on 28 May 1987 and was 16 years and two months at the time of the operation. In our opinion she looked her age. On Friday 8 August 2003, at about 6.30 pm she entered “Star Mart The Terrace”. She went straight to the display of liquor and selected a bottle of “Bernadino Spumante” sparkling wine valued at $9.95. She took the bottle to the counter where Mr Kamaljit Singh who was the duty manager served her. Apart from saying “Hi”, and asking Samantha whether she wanted a bag, he made no other comment. The volunteer paid cash and left the premises within about five minutes, with the bottle of wine, a receipt and her change. She had never attempted to purchase liquor before, but did not believe that she was nervous as she saw the attempted purchase purely as a job to be done.

[14] Michael John Kemp has been employed as a District Licensing Agency Inspector for three and a half years. He interviewed Mr Singh who acknowledged that he had made the sale. Mr Singh said that he looked at Samantha closely and thought she looked quite old. He suggested that she was 24 to 25. He said he was usually very cautious when selling liquor or cigarettes. He told the Inspector that his verbal instructions were to ask for identification if the person looked young.

[15] Kamaljit Singh has worked at “Starmart The Terrace” for over two years as a part-time evening manager. He is well thought of by his employers. When he gave evidence, he stated that on the evening in question, he was unusually busy because a staff member had gone home sick. He suggested that there was a queue at the time although this was not put to the volunteer, and Mr Kemp stated that there were no such problems when conducting the interview. After seeing “Samantha” again at the hearing, Mr Singh still maintained that she appeared to be old, and when pressed, suggested she looked 20 years of age. He apologised for his error of judgement, and said he had received retraining and a warning. In the letter, the warning was said to last for six months.

[16] Bryce Hargrave Taylor is the National Merchandise Manager for Caltex NZ Limited. He produced the internal training programme which is used by all store staff. This is made up of 20 modules, but the section on selling to minors and complying with the law, consists of two pages. As was pointed out at the hearing, training on recognising the age of customers may be more useful than two pages which do little more than set out the law on the subject. In the written material, there was no reference to requesting identification from persons who may look 25 or under, although this was apparently the company standard operating procedure at the time.

The Incident Involving “Raukawa Street Foodmarket”

[17] At about 7.30 pm on Friday 8 August 2003, “Samantha” entered “Raukawa Street Foodmarket”. Once again she went to the area where liquor was displayed and selected a bottle of “Bernadino Spumante” valued at $9.95. She walked to the counter which was manned by Mr Kiran Dahya Lala the duty manager. Apart from telling her what the price was, Mr Lala made no other comments. “Samantha” received the bottle which was placed in a paper bag, and she walked out of the store with her change, and a receipt.

[18] Mr Kemp returned to the store and spoke with Mr Lala. Mr Lala said he had not asked for identification because it did not cross his mind. In his opinion the volunteer looked 18. Mr Lala later stated that the shop’s policy was to ask for identification if the purchaser looked under 25. He admitted that he had made an error of judgement.

[19] When he gave evidence, Mr Lala said that the shop was quiet and he was alone. He said he had plenty of time to observe the volunteer. He thought she was very confident and seemed to know exactly what she wanted. It was his view that young people often will purchase in a group rather than by themselves, although there seemed to be no evidence to support this opinion. He also thought (incorrectly) that he had served her before.

[20] Mr Lala said that since the incident he and his wife have taken a much firmer approach in asking for identification. He said that they now write all the details of any identification in a logbook. He said that the apparent age under which a customer is asked to produce identification has now been increased to 30. Mr Lala also said that he knew most if not all his customers. As a consequence he said that there was little need to challenge many people. He acknowledged that he had made a poor judgement call.

The Respondents’ Submissions

[21] Mr Richards submitted that there was an element of entrapment in terms of the dicta set out in The Queen v Climo T85/77 Auckland High Court. In our view, the issue is whether “Samantha” was detecting whether an offence could have been committed, or whether she seduced the normally vigilant duty managers into a course of criminal activity. We believe that she made no comment and did not exhibit behaviour which could be seen in any way to have initiated the offence. In this case the sale of liquor is a normal activity in each premises. The volunteer carried out the actions of any normal customer. Indeed it could be argued that the actions of a young person in purchasing a single bottle of inexpensive sparkling wine would normally raise at least a suspicion in the mind of any salesperson. A manager could be expected to be even more inquisitive.

[22] If “Samantha” had been made up to look over 18, or if she had lied about her age (if asked), or in some way encouraged the managers to believe that she was over 18, then Mr Richards might have a point. The managers are entitled to try to establish that they believed on reasonable grounds that the volunteer had attained the age of 18 years. In both cases however, the managers acknowledged that they had made an error of judgement. As Sergeant Verner pointed out, all they had to do was ask the volunteer her age or ask for identification, and no sale would have been made. We do not accept the argument that the fact that she was on her own, was evidence that she was of age.

[23] The use of young volunteers to monitor compliance with the Smoke Free Environments Act 1990, (selling cigarettes to persons under the age of eighteen), was approved by Her Honour Judge Rushton in Auckland Healthcare Services Ltd v Hikerry Foods Ltd Auckland District Court 8 February 1999.

[24] Mr Richards asked that the Authority temper justice with compassion. He submitted that neither manager had deliberately flaunted system, but made an honest mistake. He argued that the lessons had been well and truly learned.

Decision

[25] There was no real contest with the facts, and it will be apparent from our comments that in our view, the grounds in the applications had been established. On the night of 8 August 2003, both premises were operated in breach of s.155 of the Act. Both premises were also operated in breach of condition (d) of the off-licence. The licensee had failed to ensure that s.155 had been observed. The next issue then is whether it is desirable that suspension orders should be made. That issue as always, should reflect the seriousness of supplying liquor to minors, and the potential for liquor abuse.

[26] 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 tacit approval from the High Court in the Mill Liquorsave Limited v Grant David Verner Wellington High Court CIV-2003-485-874 18 August 2003.

[27] In that case His Honour Mr Justice Gendall made a number of interesting comments about the role of the Authority and these are set out below:

“[22] The suspension and other provisions of Part VI are designed to enforce sound management of licensed premises. They can be disciplinary as well as regulatory in nature. Consequences of sanctions imposed upon a licensee may well be punitive. The question is whether a need to deter other licensees is an appropriate consideration for the Authority to take into account in the exercise of its discretion. Counsel argued that in this case it was not an appropriate consideration because it did not promote the objects of the Act, which included establishing a reasonable system of control over the supply of liquor and reducing its abuse. But that object is a nationwide system aimed at general control through the Authority and Licensing Agencies and other mechanisms so as to further the objects of the Act ...

[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 ...

[28] In my view the phrase “licensing end” is no more than shorthand for “advancing the purposes of the legislation” which places liquor licensing and enforcement largely in the hand of the Liquor Licensing Authority. General deterrence of other licensees from breaches of the law, where there are general concerns of an increasing degree of access by underage persons to liquor often through direct purchases from licensees, is a factor or consideration which squarely falls within a legitimate licensing end or aim to be considered by the Authority when exercising its discretion to suspend a licence or not ... “.

[28] The Court of Appeal in Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others (CA 178/02, 13 June 2003) has reminded us that in exercising our discretion we must avoid being heavy handed. We accept such a duty, and we have been careful to distinguish between those licensed premises which sell liquor only, and those (such as supermarkets, convenience stores, grocery stores, and perhaps restaurants) where the sale of liquor is not the primary business being conducted. We assume that where the core business of any company is not the sale of liquor, the company will have weighed up the advantages and disadvantages of maintaining an off-licence. Having made that decision, the company must then accept the obligations which go with the licence. The company may gain a privilege, but in doing so, it will assume a relatively straightforward responsibility, coupled with a potential liability, if it takes that responsibility too lightly.

[29] In this case, we accept the respondents’ expressions of concern and acknowledgement of an error of judgement. Nevertheless, in terms of s.4(2) of the Act we believe that suspension orders are appropriate. In this way recognition will be given to those premises when offered the same opportunity to sell to the minor, resisted the temptation to do so. We have yet to be convinced that the message about selling to minors is getting through. In these two cases, it was our view that complacency was the underlying cause of the illegal sales. There was nothing which set these four applications apart from other cases we have dealt with. Indeed it could be argued that the systems of training, and the processing of sales were less stringent than others we have heard about. In other words, there seemed to us no good reason to depart from the norm.

[30] In fixing a reasonable period of suspension we have noted that the original periods of suspension in the Karara decision was five days. In that case suspension orders were made in respect of two supermarkets, one convenience store, and two bottle stores which were attached to taverns. The Court of Appeal in the Karara decision (supra) described the period of suspension as a “moderate period” in paragraph [12] and “a short period” in paragraph [47]. Since the original decision was made, the Authority has tended to order suspension to cover the day that the illegal sale was made.

[31] As in every case the issue is how seriously the object of the Act should be taken. Or in other words whether the principle that “a licence will be easy to get and easy to lose” has validity. This principle was first coined by the authors of “Sale of Liquor”, and subsequently quoted by the Authority as far back as 1990 in Douglas-Oliver Corp Ltd [1990] NZAR 411. We had understood that the concept had been embraced by the hospitality industry. In which case, it must be applied even handedly, not just to applications for licences, but to enforcement applications as well. As Mr Kemp pointed out, any cost to the licensee should be measured against the social costs that society absorbs in respect of alcohol related harm experienced by young people.

[32] As far as the managers are concerned, it is clear that they failed to conduct the premises in a proper manner. At the time of the operation, both managers had recently been trained to uphold the law and the conditions of the licence. Both are charged by the Act with leading by example. In our view, strong reasons would have to be advanced for us not to impose suspensions on managers who had not exercised the control expected of them. The normal period of suspension in such circumstances is one month.

[33] The manager carries the responsibility pursuant to s.115 of the Act, of ensuring compliance with the conditions of the licence, and the provisions of the Act. The managers failed that challenge.

[34] Dealing with the application for renewal, since there is to be a suspension order against the first respondent, there is no reason why the off-licence should not be renewed. As stated above, there are no outstanding compliance issues. In terms of the criteria contained in s.45 of the Act, we believe that a refusal to renew or a reduced period of renewal would be an unreasonable exercise of our discretion.

[35] For the reasons we have given we make the following orders:

(1) Off-licence number 049/OFF/32/2002 issued to Star Service Stations Limited is suspended for five days from 7.00 am on Monday 5 January 2004 to 7.00 am on Saturday 10 January 2004.

(2) Off-licence number 049/OFF/19/2001 issued to Kiran Dahya Lala and Shashikala Kiran Lala is suspended for five days from 7.00 am on Monday 5 January 2004 to 7.00 am on Saturday 10 January 2004.

(3) General Manager’s Certificate number 049/GM/419/2001 issued to Kamaljit Singh will be suspended for one month from Monday 5 January 2004.

(4) General Manager’s Certificate number 049/GM/82/2001 issued to Kiran Dahya Lala will be suspended for one month from Monday 5 January 2004.

(5) The off-licence issued to Star Service Stations Limited in respect of premises situated at Ground Floor, Aurora House, 45 The Terrace, Wellington, known as “Star Mart The Terrace” is renewed for three years.

DATED at WELLINGTON this 10th day of December 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

StarMart - Raukawa.doc(nl)