Sargent v First 5 Limited [2003] NZLLA 993 (18 December 2003)

Last Updated: 27 January 2012

Decision No. PH 993/2003 –
PH 994/2003

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 off-licence number 046/OFF/1182/03, issued to FIRST 5 LIMITED in respect of premises situated at 5 Parumoana Street, Porirua, known as “Grandslam Porirua”

AND

IN THE MATTER of an application pursuant to s.132 of the Act for the suspension of off-licence number 046/OFF/1183/03 issued to FIRST 5 LIMITED in respect of premises situated at 107 Mana Esplanade, Mana, Porirua, known as “Grandslam Mana”

BETWEEN STEPHEN DENNIS
SARGENT
(Police Officer of Porirua)

Applicant

AND FIRST 5 LIMITED

First and Second Respondents

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 16 December 2003

APPEARANCES

Senior Sergeant S D Sargent – New Zealand Police – applicant
Mr D A Richards – for respondents

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] In this case, the Authority has two suspension applications for determination. Senior Sergeant Sargent of the New Zealand Police is the applicant. He is stationed at Porirua, and holds the portfolio of Liquor Licensing Officer. The applications arise out of a controlled purchase operation run jointly by the New Zealand Police, Porirua District Licensing Agency, and the Regional Public Health Service. In bringing the applications, before the Authority, the Police seek to educate off-licence holders, managers, and licensees generally, about their responsibilities under the Act with regard to checking for appropriate forms of identification, and refusing service to those who are unable to produce it.

[2] A total of twenty one premises were tested in the operation. The two sixteen year old volunteers were able to obtain alcohol from seven of the licensed premises. Two of those premises were the stand-alone bottle stores operated by First 5 Limited, and known respectively as “Grandslam Porirua” and “Grandslam Mana”.

[3] Mr K A Rickys is a director of First 5 Limited. He gave evidence that the company accepted what had happened. There was no requirement for the Police to call evidence. In each case, the company had relied on its employee manager to comply with company policy, and in each case it believed it had been let down. The company had since terminated the employment of both managers.

[4] The grounds for the applications are that the premises were conducted in breach of s.155 of the Sale of Liquor Act 1989, (sale and supply of liquor to minors), and also in breach of the condition of the licence. That condition reads:

The licensee must ensure that the provisions of the Act relating to the sale and supply of liquor to prohibited persons are observed.

The Factual Background

[5] First 5 Limited purchased the two premises in question from Lion New Zealand in November 2002. Fourteen other premises were included in the purchase. As part of the sale contract, all existing staff were to be retained for a minimum of three months, and thereafter in accordance with normal employment law. A series of staff meetings were held at which the requirements of the new owners were set out. These included new employment contracts. Each of the 16 sites was visited, and a complete set of new signs as required under the Act, was delivered. On 4 December 2002, the Operations Manager wrote to all stores. He warned of another Police or District Licensing Agency check, and said:

“EXPECT, WANT and DEMAND a100% clearance rate on this.”

[6] An earlier controlled purchase operation had been conducted in Wellington in November 2002. First 5 Limited was caught up in the operation, but no sanctions were imposed. Nevertheless, the impact of the operation was keenly felt by the company. The company wrote to all “Grandslam” liquor stores on 30 November 2002 confirming that it was the responsibility of all managers and duty managers to enforce the provisions of the Act. All duty managers were required to sign acknowledgements to that effect. On 3 January 2003, a memo was sent to all “Grandslam” stores. This included the comment:

“It is absolutely imperative that you and your staff are constantly aware of the need to ask for ID.”

[7] As a consequence of the earlier operation, the employment contracts were re-negotiated. They provided that the employer could terminate the employment of any employee if he or she breached the conditions of the licence or the Act. Further warnings about selling to minors were sent out in July and August 2003.

[8] On Friday 5 September 2003, at about 7.41 pm, Emma entered the off-licensed premises known as “Grandslam Porirua.” By that time she had visited nine premises and been refused service at six of them. Emma was born on 24 December 1986. She was aged sixteen years and eight months at that time. In our view she looked her age. She uplifted a four pack of Kristov Blueberry Vodka Cruisers and took it to the checkout counter. There she was served by Mr Dodina Kisona. Mr Kisona has held his General Manager’s Certificate since 6 September 2002. There is some dispute as to whether Mr Kisona was on duty at the time. He said he was not. He gave evidence that the duty manager was having a meal break at the time. Nevertheless, he was the holder of a current General Manager’s Certificate, and therefore privy to all the material sent out by the company.

[9] Mr Kisona did not ask Emma how old she was, or whether she had identification. He told her the price of the liquor was $8.95. She paid cash, and left with her change and the alcohol. Mr Kisona later acknowledged that he had made the sale. He thought he might have served her before, as she looked familiar. This explanation was not advanced at the hearing concerning his certificate, and was not accepted by the directors of First 5 Limited.

[10] Mr Kisona’s conduct was considered to be a direct breach of company policy. After serious consideration, the directors formed the view that his actions constituted a serious enough breach of the law and company policy, to result in his immediate dismissal. Mr Kisona was written to on 18 September last. The company explained that it could no longer trust or have confidence in him. Mr Kisona has commenced an action in the Employment Tribunal against the company. This action is unresolved, but judging by the paper work that has been generated by the claim, resolution will not be easy.

[11] On the same day at about 6.50 pm, a young volunteer named Matthew entered “Grandslam Mana”. He had visited four premises by this time, and been refused service at three of them. Matthew was born on 29 July 1987, and was just over sixteen years of age at the time. Although he has a mature build, he certainly looked young. He walked to a big fridge and selected a six-pack of beer, and walked to the counter. He had earlier said hello to Mrs Kay Elizabeth Asquith, the duty manager. Mrs Asquith was a sole charge employee, and had been with the business for about three years. The beer was scanned at the counter, and Matthew was advised that the price was $8.00. He handed over a $20.00 note and left with the liquor and his change.

[12] Mrs Asquith was not feeling well that evening, and had no recollection of the transaction. She acknowledged that she had received clear instructions not to sell to minors. Mrs Asquith’s conduct was also seen as a direct breach of company policy resulting in her dismissal. She also has commenced a claim in the Employment Tribunal by way of personal grievance, and this action has yet to be dealt with. We are aware of how difficult and stressful such claims can be for both parties.

[13] In his closing submissions, Mr Richards argued that the company had done all it could to avoid breaking the law. It had complied with its obligation under s.115(3) of the Act. In other words it had taken all reasonable steps to enable the managers to comply with their obligations under subsection (1) of s.115 of the Act. Pursuant to that section, a manager must be on duty at all times when liquor is being sold or supplied to the public. He or she must also be responsible for compliance with the Act and the conditions of the licence. A licensee’s duty is to take all reasonable steps to enable a manager to comply with the above obligations.

Decision

[14] There are two tests which are contained in s.132 of the Act. First, the Authority has to be satisfied that that the grounds have been established. If they have, (and in this case there is no contest with the facts), then the Authority must then decide whether it is desirable that orders be made. There is also provision for an adjournment to give the licensee an opportunity to remedy any matters which the Authority may require to be remedied.

[15] In coming to a decision about the desirability of making an order, the Authority will be guided by the object of the Act as set out in s.4:

The object of the Act is to establish a reasonable system of control over the sale and supply of liquor to the public with the aim of contributing to the reduction of liquor abuse, so far as that can be achieved by legislative means.

[16] There is no question that selling to minors has the potential for serious liquor abuse. Furthermore, it is our view that the only way that standards will be raised in the industry, is if examples are made when the law is ignored in this way. On the other hand, the system of control over the sale and supply of liquor must be a “reasonable” one.

[17] Mr Richards argued the case from the position of vicarious liability, and the provisions of s.181 of the Act. He submitted that the sales had been made because of the employee’s lack of attention, lack of care, and failure to take responsibility. He asked why the licensee should be punished in such circumstances, where the licensee has done everything it reasonably could be expected to do. He questioned how a licensee could be punished for the improper management of its employees, about which it had no knowledge. However s. 132 (3) (a) of the Act makes specific provision for a licence to be suspended, or cancelled, or varied, if the licensed premises have been conducted in breach of any of the provisions of the Act or of the conditions of the licence or otherwise improperly. The section has been deliberately worded in this way. Furthermore, the process in which a licensee can be the subject of sanctions for the actions of a manager recently received approval from the High Court.

[18] In The Mill Liquorsave Limited v Grant David Verner Wellington High Court CIV-2003-485-874 18 August 2003, His Honour Mr Justice Gendall made a number of interesting comments about the role of the Authority including the following:

“I have no doubt at all that deterrence (i.e. “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 ....”

[19] As will be seen, the power to suspend the on or off-licence where the fault is that of the manager, is a deterrent tool which the Authority has at its disposal. However, in these two cases, we believe that the exercise of our discretion against the licensee would be heavy handed in the circumstances.

[20] On the evidence we heard we accept that the licensee has acted very responsibly. It took a number of steps to ensure that the message got through. It was clearly very concerned by the controlled purchase operation which took place in November 2002, and tried very hard to impress on its managers, the need for vigilance. Although most of its liquor outlets passed the test, there were two where the managers failed to heed the message. We did not think that the failures were the result of inadequate company management. By dismissing the two employees who were involved, the company has made itself vulnerable to orders which may be made by the Employment Tribunal. It has shown how seriously it takes its legal obligations, and sent a very powerful message to its staff.

[21] Earlier in our decision, (paragraph [1]), we made reference to the need to educate licensees and managers of the desirability of checking for identification, and where necessary, refusing service. We believe that this message will have got through regardless of the outcome. For the reasons we have expressed we do not consider it desirable to make any further orders.

[22] The applications for suspension are accordingly declined.

DATED at WELLINGTON this 18th day of December 2003

Judge E W Unwin Mr J C Crookston
Chairman Member

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