Verner v Bullit Limited and Lockie [2004] NZLLA 20 (23 January 2004)

Last Updated: 16 February 2010

Decision No. PH 020/2004 -
PH 022/2004

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 049/ON/6/2002 issued to BULLIT LIMITED in respect of premises at 45 Tory Street, Wellington, known as “Chow & Motel”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number 015/GM/95/2000 issued to DUNCAN HENRY LOCKIE

BETWEEN GRANT DAVID VERNER

(Police Officer of Wellington)

Applicant

AND BULLIT LIMITED

First Respondent

AND DUNCAN HENRY LOCKIE

Second Respondent

AND

IN THE MATTER of an application by BULLIT LIMITED pursuant to s.18 of the Act for renewal of an on-licence in respect of premises situated at 45 Tory Street, Wellington known as “Chow & Motel”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 18 December 2003

APPEARANCES

Sergeant G D Verner - NZ Police - applicant and in opposition to application for renewal
Mr H P Kynaston - for first respondent and applicant for renewal of on-licence
No appearance by or on behalf of second respondent
Mr M J Kemp - Wellington District Licensing Agency Inspector - to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority are three matters for determination. The first application is for an order for suspension of the on-licence issued to Bullit Limited in respect of premises situated at 45 Tory Street, Wellington, known as “Chow & Motel”. The second application is pursuant to s.135 of the Act for suspension of a General Manager’s Certificate issued to Duncan Henry Lockie. The third application is by Bullit Limited for renewal of its on-licence for premises situated at 45 Tory Street, Wellington.

[2] The Police opposed the application for renewal of the on-licence on the same grounds which brought about the suspension applications.

[3] The applications for suspension arose out of a visit to the premises at 1.18 am on Friday 25 April 2003 (Anzac Day) by representatives of the District Licensing Agency and New Zealand Police. The premises were operating at a time when it was required to be closed. A condition of the respondent’s licence states that no liquor is to be sold after 12.00 midnight on the day before Anzac Day, other than to persons who were present on the premises for the purpose of dining.

[4] There were between 60 and 80 people present on the premises, none of whom were partaking of a meal, and the restaurant on the premises was closed. As a consequence of that matter, the Police and the District Licensing Inspector have both opposed the application for renewal of the first respondent’s on-licence. The grounds for suspension of the on-licence are:

• [a] That the licensed premises have been conducted in breach of s.165(1) (unauthorised sale or supply of liquor) and s.168(1)(a) (allows any intoxicated person to be or to remain on the premises) of the Sale of Liquor Act 1989;
  
• [b] That the licensed premises have been conducted in breach of the following conditions of the licence:
  

“(b) No liquor is to be sold or supplied on Good Friday, Easter Sunday, Christmas Day, or before 1.00 pm on Anzac Day to any person other than persons who are present on the premises for the purpose of dining.

...

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

[5] The ground for suspension of the General Manager’s Certificate was that the manager had failed to conduct the licensed premises in a proper manner. Mr Duncan Henry Lockie was granted his General Manager’s Certificate on 22 August 2000.

The Background Facts

[6] Michael John Kemp is an Inspector for the Wellington District Licensing Agency. On Friday morning 25 April 2003, he and another Inspector, Ms Joanne Burt, and Sergeant Grant Verner of the NZ Police were involved in the inspection of a number of licensed premises within the Wellington city and suburbs. The purpose of the inspections was to ensure that premises that were not authorised to be open on Anzac Day were, in fact, closed.

[7] Prior to leaving the office, Ms Burt compiled a list of those premises that had obtained a special licence to remain open beyond midnight and those premises that were required to be closed.

[8] At approximately 1.10 am they went to the premises known as “Chow & Motel” at 45 Tory Street. The main doors of the premises on Tory Street were closed so they went to the side door in Forrester Lane. The sound of music could clearly be heard. The door was closed, but there was a buzzer beside the door which Mr Kemp operated. There was the sound of the door being electronically unlocked, and they opened the door and entered the premises. On the first floor they found a large number of people in various stages of intoxication, none of whom were partaking of a meal, nor was there evidence of any of those people having partaken of a meal.

[9] While Sergeant Verner and Ms Burt went to locate the duty manager, Mr Kemp noted that three names were listed as duty managers. One of those names was “Duncan Lockie”. While Mr Kemp was recording these details, eight people entered the premises, and at the same time three people left the premises. Of the three, one male and one female were said to be heavily intoxicated. They were not spoken to.

[10] One of the male persons who had entered the premises was eating a hamburger. He told Mr Kemp he had left the premises to buy it because he was hungry.

[11] Mr Kemp noted that the restaurant area was empty, the kitchen was closed, and there were no lights on in the kitchen. The kitchen was very clean and it was apparent that it had not been used for some time. When Mr Kemp walked into the lounge area he noticed it was full of patrons. Again, there was no person partaking of a meal, and there was no food in sight on any of the tables in that area. Mr Kemp walked back through to the main bar, and he stood at the top of the stairway with Ms Burt. He observed a drunken Asian male being assisted by two other males, and all three were showing signs of extreme intoxication.

[12] Mr Kemp spoke to Mr Lockie and he completed a licensed premises inspection form in Mr Lockie’s presence. He handed the form to Mr Lockie, and asked him to read it and advise him of any concerns about what was written on the form. Mr Lockie read the form but made no comment. He declined to sign it. Mr Kemp had had no previous problems with the premises.

[13] Grant David Verner is a Police Sergeant stationed at Wellington. He is currently the Liquor Licensing Sergeant for Wellington. He said that when he went to the premises with Ms Burt and Mr Kemp on 25 April 2003, he noted there were about 40-50 people inside the premises in the foyer area at the bottom of the stairs. He then moved into another area of the bar where a further 20-30 people were drinking. There was subdued lighting in the premises and there was loud music playing. Sergeant Verner noted that people were still purchasing liquor from the bar. He said that most patrons were either holding, or had on the table in front of them, a glass containing what appeared to be liquor. He identified himself to the staff working in the premises and asked to speak to the duty manager.

[14] A short time later Sergeant Verner spoke to Duncan Henry Lockie and advised him that the premises should be closed. Mr Lockie said he thought it was okay to stay open as long “as food was available”. Sergeant Verner advised him that was not correct and people could only be present if they were there for the purpose of dining. Sergeant Verner pointed out there was no food available, and the separate dining room was not being used. He also pointed out that the kitchen had been closed for some time because all the equipment was cold. Mr Lockie did not respond to that comment.

[15] Sergeant Verner advised Mr Lockie to close the premises but he did not seem very interested in complying with the Sergeant’s request. The music was not turned off or the volume turned down nor were the lights turned up. Mr Lockie also did not make a general announcement advising patrons that the premises were closing. The bar kept operating with drinks being supplied and money going into the cash registers.

[16] While he was waiting for the premises to close, Sergeant Verner noted that the correct licence was displayed stating that the premises should be closed on Anzac Day until 1.00 pm. Sergeant Verner looked around the premises to see if he could see any signs regarding the sale or supply of liquor to prohibited persons as required by the licence but he did not find any such signs.

[17] At 1.41 am Sergeant Verner noticed that a group of people seated near the stairs were about to leave. One of them was a female aged 20-25 years who stood up and then lost her balance. Sergeant Verner approached her and inquired how much she had had to drink. Her response was that she had had “a couple of drinks”. The female was very unsteady on her feet, and had very slurred speech. Sergeant Verner assessed her as being extremely intoxicated. He pointed the woman out to Mr Lockie, and advised him that he believed she was extremely intoxicated and that Mr Lockie should make his own assessment. Mr Lockie looked at the woman but made no comment. He looked away and began talking to someone else. The woman was then assisted down the stairs by her friends.

[18] At 1.44 am Sergeant Verner advised one of the bar staff to turn the lights up to encourage people to leave and by 1.48 am all the patrons had left the premises.

[19] On 23 May 2003 Sergeant Verner, Ms Burt, and Mr Ray Matthews of Regional Public Health held a meeting with Paul Ryan and Duncan Lockie. Mr Ryan stated that he assumed staff were aware of the Anzac Day trading rules and consequently he had not contacted the staff before Anzac Day to confirm that they knew and understood the requirements regarding Anzac Day.

[20] Mr Ryan advised that he was working on new procedures and guidelines as a result of the incident, and when the documents were completed he would forward them to the Police and the District Licensing Agency. A draft document was subsequently forwarded to the District Licensing Agency, however it was considered that it was too large and difficult to understand, and it was sent back to be reduced to a “clear and concise” document. Sergeant Verner also confirmed that there had been no issue with the premises apart from the one incident.

[21] Mr Kynaston said that the respondent company did not challenge the application for suspension, and its evidence was about the way the premises was now being operated and the changes that had been made since the incident on Anzac Day.

[22] Paul Antoni Ryan is a sole director and shareholder of Bullit Limited. He said the premises operated by Bullit Limited consisted of “Chow Restaurant” with an entrance on Tory Street and “Motel Bar” with an entrance on Forresters Lane. He said that “Chow” is open seven days from noon until midnight and the “Motel bar” is open Tuesday to Saturday from 7.00 pm until 3.00 am. He said he was not working on the night that the Police and the Inspectors visited the premises. He said that by and large he accepted what Sergeant Verner and Mr Kemp had stated in their evidence.

[23] Mr Ryan was devastated when he found out what had occurred. He wrote a letter on 8 May 2003 to Ms Burt and sought a meeting with her. Since writing that letter, the company had done a lot of work on its systems to improve the way it operates. That work was motivated by the Anzac Day incident.

[24] Mr Ryan said that he employed Nicky Clark specifically to develop those systems. He chose her because of her previous experience in London at “Starbucks” and “Carluccios” both of which are large systems based businesses.

[25] Mr Ryan said he had employed Duncan Lockie as a general manager in October 2000 during the development phrase of “Chow” prior to opening the business. Mr Lockie’s role was to develop and implement the processes and systems that would allow the business to function. Mr Lockie had over ten years experience, and he had owned and managed a chain of three New Zealand restaurants. Mr Ryan worked the odd shift from time to time so he was able to monitor Mr Lockie’s performance as well as that of the other staff. He talked to Mr Lockie on a daily basis, and until the Anzac Day inspection he never had any problem with Mr Lockie’s management. Mr Ryan said he had not given Mr Lockie any specific instructions relating to Anzac Day. He assumed the premises would be shut. In hindsight he should have asked Mr Lockie what he planned to do, but Mr Lockie was responsible for that type of decision.

[26] Mr Ryan said that although the company had been recently developing its systems, it did have policies covering such things as intoxication, minors, asking for identification, and other matters relating to its host responsibilities. Mr Lockie had written those policies, and all staff were trained in those policies as part of their induction.

[27] Mr Ryan said although the kitchen was closed on the night of the inspection, and he accepted that people were not there for the purpose of dining, food was and is always, available.

[28] Mr Ryan said that he has now taken over the role of general manager following Mr Lockie’s resignation. He works only occasional shifts and leaves his other staff to manage the premises on a day to day basis. However, he now monitors when the premises are open. He said there are now always two certified managers working, and on busy nights there are normally three, including the floor manager, who is also a duty manager who oversees the running of the premises.

[29] He said that following the Anzac Day inspection, their staff have been put through a series of training sessions on various aspects of host responsibility including intoxication. More recently, those formal sessions have given way to regular, on the job coaching, where staff members were required to make an assessment of people in the bar as to whether those people were intoxicated.

[30] Mr Ryan then provided an extensive list of the steps they had taken to improve the systems and staff training to ensure that the company complied with its responsibilities and duties pursuant to the Sale of Liquor Act.

[31] Nicola Susan Clark has been working at “Chow” for one year. She has ten years experience in the hospitality industry, and she returned to New Zealand in August 2002 after working for four and a half years in London. In London she worked for the “Seattle Coffee Company” (which was bought out by “Starbucks”) and “Carluccio’s” (a chain of ten Italian delicatessen/restaurants).

[32] Ms Clark was the manager of the “Nottinghill Gate Starbucks” and she was also the assistant manager in two “Carluccio’s” restaurants managing up to 50 staff with a turnover of ₤60,000 per week.

[33] Ms Clark said that both companies used operation manuals, and were very much systems based businesses with strict checks and balances. She was involved in developing and modifying the systems and staff training.

[34] Ms Clark said her job description at “Chow” included management shifts in the restaurant but her main responsibility was the development of “Chow’s” operational systems. She has rewritten the job descriptions and duties and the “Chow” staff handbook. She said the handbook was a living document, and it had existed for two years. It explained the “Chow” policies and procedures. When new employees are inducted into the organisation the handbook and the employment contract are explained to them. The staff handbook also contains all their legal responsibilities including health and safety in the workplace, disciplinary procedures, holidays, sick pay, anti-discrimination and sexual harassment, as well as host responsibility and liquor licensing requirements. She said that developing and implementing systems, policies, and procedures demonstrated that the company was serious about its legal and social obligations.

[35] In his closing submissions Mr Kynaston said that he was happy to let the evidence speak for itself. He emphasised that although perfection was never achieved, the company had made significant efforts to ensure that systems and plans were in place for the proper running of the premises. He noted that this was the only issue that had arisen in four years of trading. He said that since 25 April 2003, the Police had been to the premises a number of times and there have been no further reported incidents. He submitted that showed that the systems were working.

[36] Sergeant Verner submitted that the evidence clearly showed that the liquor was sold and supplied by “Chow and Motel” when not authorised to do so, and that liquor was supplied to at least one intoxicated patron. He said there was no excuse for the premises remaining open on Anzac Day particularly when there are only four days in the year when “Chow and Motel” was required to close. By allowing the premises to remain open on Anzac Day, it raised serious questions about Mr Lockie’s knowledge of the Sale of Liquor Act, and also of the on-licence issued to “Chow and Motel”. Consequently, Mr Lockie had failed to conduct the premises in a proper manner.

[37] The failure to close “Chow and Motel” was compounded by the fact that intoxicated patrons were allowed to remain on the premises. The evidence in respect of most of the patrons was non-specific. However, one patron was identified and pointed out to the manager. Sergeant Verner submitted that a manager must actively manage the premises and ensure all staff are constantly assessing patrons to ensure intoxicated patrons are identified and dealt with as early as possible.

[38] However, the licensee was the person who was ultimately responsible for the premises. Although Duncan Lockie failed to manage “Chow and Motel” properly, the licensee had failed to ensure that the manager was fully equipped to carry out his functions. Sergeant Verner therefore submitted that the licensee should have made sure that Mr Lockie had a good understanding of the Sale of Liquor Act and the on-licence and the licensee should also have ensured that clear procedures were in place for dealing with intoxication.

[39] He submitted that as liquor abuse was involved in this case, periods of suspension for both applications were warranted. He suggested that if an order for suspension was made it should include the same day of the week that the offence took place.

Authority’s Conclusions and Reasons

[40] Section 4(1) and (2) of the Act read:

4. Object of Act
   

• (1) The object of this 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.
  

(2) The Licensing Authority, every District Licensing Agency, and any Court hearing any appeal against any decision of the Licensing Authority, shall exercise its jurisdiction, powers, and discretions under this Act in the manner that is most likely to promote the object of this Act.

[41] Intoxication is a form of liquor abuse, and allowing a person to be or to remain, or to be become intoxicated in, licensed premises are among the more serious examples of a failure to contribute to the reduction of liquor abuse. In the same way the duty of a licensee not to supply liquor to prohibited persons is one of the most important conditions of any licence.

[42] In Alan Robert Lyon LLA PH 57/2003 we commented that:

“New Zealand’s drinking culture has become defined by many factors and social changes. Its manifestation is often seen in binge drinking, or drinking harmfully. If the object of the Sale of Liquor Act is to be taken seriously, then eventually standards of good drinking behaviour will have to be set. Because people are inclined to be tolerant of alcohol abuse, then the focus must inevitably fall on the law. If the law becomes tolerant towards such behaviour, then the object of the Act will lose credibility. If managers of licensed premises are shown to lack discipline, then why should patrons take the issue seriously. The behaviour currently exhibited by younger drinkers is but a symptom of the malaise.”

[43] In the present case the evidence of the Police and the District Licensing Agency Inspector has not been challenged. The respondent company quite properly accepted that the premises were operated in breach of the Act and of the conditions of its licence. Mr Lockie did not appear to give evidence but advised the Authority by way of a letter dated 16 December 2003, that there was no explanation for his actions other than complacency. He said that he failed to read the conditions of the on-licence requiring that food be available at all times while serving alcohol, and that he had allowed the kitchen staff to sign out early. He reiterated that had any customers asked for food, this would have been prepared for them.

[44] It is apparent from his letter that Mr Lockie has no understanding of the requirement of s.14(2)(b) of the Act in that persons may only be present in a hotel or tavern on Anzac Day if they are there for the “purpose of dining”.

[45] From the evidence we are satisfied that persons were allowed to be on the premises in breach of s.14(2)(b) of the Act, and in addition that an intoxicated person was allowed to be or to remain on the premises.

[46] We are satisfied that the grounds for the applications pursuant to s.132 and s.135 of the Act have been established. We are therefore required to decide whether it is desirable to make any orders. The comments we made in Alan Robert Lyon LLA PH 57/2003 are directly relevant to the present applications as well as the following comments from the Court of Appeal’s decision at paragraphs [26], [40] and [41] of Christchurch District Licensing Agency Inspector v Karara Holdings Limited and Another (CA 178-179/02, 13 June 2003) where the Court said:

“[26] Section 4 expresses a philosophy ... that 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 licensing bodies which administer the licensing system, and the Courts on appeal, are required by s.4(2) of the Act to exercise their respective functions in a manner that is most likely to promote the underlying object.

[40] That last proposition however, assumes that the s.132 process is criminal in nature. That is not the case. The purpose of the power of suspension and cancellation under the Act, as indicated, is to enforce proper standards of conduct by licensees of the licensed premises in the public interest.

[41] The purpose of Part VI in general and s.132 in particular in the scheme of the Act, is to maintain the integrity and effectiveness of the licensing system through management compliance standards.”

[47] It is also pertinent to refer to The Mill Liquorsave Limited v Grant David Verner (Wellington High Court CIV-2003-485-874, 18 August 2003) where 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 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 nation wide system aimed at general control through the Authority and Licensing Agencies and other mechanisms so as to further the objects of the Act. ... ”

[48] It is our view that the grounds of the application for suspension of the on-licence and the manager’s certificate are established, and that it is desirable to make orders pursuant to s.132(6) and s.135(6) of the Act. We need to point out that we are governed by s.4(2) of the Act. Our duty is to exercise our discretion in a manner that is most likely to promote the object of the Act. There can be few more graphic forms of liquor abuse than intoxication as well as selling outside the hours when not authorised to do so.

[49] We were particularly impressed with the steps that the respondent company has taken to improve its systems of management and control over the premises, and to prevent a reoccurrence of the present situation arising again. For those reasons we are prepared to impose a shorter period of suspension than would otherwise have been warranted.

[50] We are also satisfied that the grounds of the application for suspension of the on-licence took place under the management of Mr Lockie. Pursuant to s.115(1) of the Act, he was the manager who was on duty and responsible for compliance with the Act and the conditions of the licence. We were most unimpressed with his attitude regarding his responsibilities as well as his lack of co-operation and deplorable behaviour towards Sergeant Verner when he sought to have the premises closed.
[51] In spite of being a manager of some ten years experience his letter demonstrated to the Authority that his knowledge of the Act was somewhat deficient.

[52] Following the Anzac Day incident Mr Ryan reacted immediately and co-operated fully with the Police and the Inspector. On the evidence we heard we accept that the licensee has acted very responsibly. It has put in place extensive procedures and training systems to prevent a repeat occurrence. It was clearly very concerned by what took place on Anzac Day. It has shown how seriously it takes its legal obligations. Section 4(2) of the Act requires us to exercise our discretion in a manner most likely to promote the object of the Act. A period of suspension is to be imposed and the offending manager is no longer employed at the premises. In the circumstances we think it is unlikely that that the incident will be repeated. For those reasons the application for renewal will be granted.

[53] We therefore make the following orders:

• [a] On-licence number 049/ON/6/2002 issued to Bullit Limited will be suspended for four days from 7.00 am on Tuesday 10 February 2004 to 7.00 am on Saturday 14 February 2004.
  
• [b] General Manager’s Certificate 015/GM/95/2000 issued to Duncan Henry Lockie will be suspended for six weeks from Monday 9 February 2004.
  
• [c] On-licence 049/ON/6/2002 issued to Bullit Limited will be renewed for three years.
  

DATED at WELLINGTON this 23rd day of January 2004

Judge E W Unwin Mr J C Crookston
Chairman Member

Bullit Ltd.doc(afw)