Singer and McCullough v Ashtree Holdings Limited and Scenic Cellars Partnership Limited [2004] NZLLA 281 (29 April 2004)

Last Updated: 12 March 2010

Decision No. PH 281/2004 –
PH 285/2004

IN THE MATTER of the Sale of Liquor Act 1989

IN THE MATTER of applications pursuant to s.132 of the Act for suspension of off-licence number 020/OFF/11/2000 issued to ASHTREE HOLDINGS LIMITED in respect of premises situated at 126 Ruapehu Street, Taupo, known as “Grantley’s Liquor Merchants”

AND

IN THE MATTER of applications pursuant to s.132 of the Act for suspension of off-licence number 020/OFF/49/2002 issued to SCENIC CELLARS PARTNERSHIP LIMITED in respect of premises situated at 32 Roberts Street, Taupo, known as “Scenic Cellars”

BETWEEN GRANT ALLAN SINGER

(Taupo District Licensing Agency Inspector)

AND ANDREW McCULLOUGH

(Police Officer of Taupo)

Applicants

AND ASHTREE HOLDINGS LIMITED

First Respondent

AND SCENIC CELLARS PARTNERSHIP

LIMITED

Second Respondent

AND

IN THE MATTER of an application by SCENIC CELLARS PARTNERSHIP LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at 30 Roberts Street, Taupo known as “Scenic Cellars”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin

Member: Mr J C Crookston

HEARING at TAUPO on 14 April 2004

APPEARANCES

Mr G A Singer – Taupo District Licensing Agency Inspector - applicant
Sergeant J McGrogan – NZ Police - applicant
Mr W I Davey – on behalf of first respondent
Mrs C A Langley – on behalf of second respondent and applicant for renewal of
off-licence

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] There are effectively five matters before the Authority for determination. They relate to a controlled purchase operation conducted in Taupo in November 2003, by the Taupo Police, together with the Taupo District Licensing Agency, Toi Te Ora Public Health, and the Taupo Safer Community Council. Of the eight off-licensed premises which were visited, two made sales to a minor.

[2] These two premises are known as “Grantley’s Liquor Merchants” and “Scenic Cellars”. The Taupo Police and the District Licensing Agency Inspector each brought separate applications for suspension of the two off-licences. Their combined reasoning for bringing the applications related to concerns for the safety of young people in the Taupo area, and the apparent ease with which minors were able to purchase liquor from off-licensed premises. The applications were identical.

[3] The grounds for the applications in respect of each off-licence 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] The fifth matter to be determined is an application by Scenic Cellars Partnership Limited, for the renewal of its off-licence. The licence fell due for renewal on 4 February 2004. Although there was no opposition from the Police, the Inspector noted that the premises were the subject of suspension applications. Accordingly, he recommended that the renewal application be considered at the same time as the enforcement proceedings.

[5] Because the facts were virtually the same, it was felt appropriate to deal with both applications in the one decision. During the hearing, both respondents accepted that an illegal sale had been made. Neither premises are regarded as “problem” premises by the reporting agencies. Both respondents made representations for leniency taking into account the steps taken by management following the incident, and their hitherto exemplary records.

The Background to the Applications

[6] The applications for suspension should be viewed against the following background. It is now over four years since the drinking age was lowered from 20 to 18. After a settling in period, public concerns about teenage access to liquor became quite widespread. There were many reported instances of drunken behaviour by intoxicated minors. Although the main source of supply was said to be in the homes, there was evidence of an increasing trend for young people to access liquor from licensed premises. Because of concerns about “problems of excessive drinking by some young people”, the Minister of Justice asked the Ministry of Justice to undertake an ongoing review of the impact of the lowering of the minimum drinking age.

[7] 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. As was said in that decision:

“Since the age limit was reduced to eighteen, there have been regular concerns expressed throughout the country about the ability of young people to obtain alcohol ... When Parliament reduced the age limit to eighteen it doubled the penalties. It was sending a message to the public that people who breached this aspect of the law must expect rigorous enforcement and severe consequences.”

[8] Then on 7 May 2002, came the well-known Karara decision LLA PH 216 – 229/2002. In that case, the Authority was confronted by seven applications for suspension following a controlled purchase operation. Three of the licensed premises were supermarkets. One was a convenience store. The other three premises were off-licences associated with a tavern. Six of the off-licences were suspended for five days. The seventh was suspended for three days. All had exemplary records. No specific warnings had been given.

[9] The case was followed by an appeal to the High Court, which effectively stated that the Authority had exceeded its jurisdiction. Subsequently, the Court of Appeal restored the original orders. See Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others (CA 178/02, 13 June 2003). The resultant publicity was significant, and most off-licensed premises felt the impact.

[10] On 17 December 2002, the Minister of Justice and the Associate Minister of Health announced that “The Government is very concerned about the widespread negative impacts of alcohol and illicit drugs on the health and social wellbeing of individuals, families and communities. Of special concern is the impact on our young people.” They announced the establishment of a Ministerial Action Group on Alcohol and Drugs. Part of the Action Plan was aimed at examining what further steps needed to be taken to prevent the sale of liquor to underage drinkers. The plan stated that ALAC and the Police would identify “best practice” operations in enforcing controls of the purchase and consumption of alcohol by those under age, with a view to developing and implementing more effective practices. The Minister of Justice subsequently spoke with industry leaders about the seriousness of the problem.

[11] As part of the Action Plan, a new tax was imposed in July 2003 on drinks containing 14 to 23 percent alcohol. The tax increase was intended to counter the growing popularity of “alcopops” favoured by younger drinkers. A special report compiled by ALAC in 2003 showed that up to 87% of young people aged between 14 and 18 defined themselves as current alcohol drinkers.

[12] Over the last four years, District Licensing Agencies, the Police, and officers from Regional Public Health have taken a number of initiatives designed at bringing the issue to the attention of those who sell liquor to the public. Among the education methods employed by the agencies has been the controlled purchase operation. By using this method, the agencies have for the first time, been able to check to see whether off-licences were playing their part in reducing liquor abuse. As a consequence of such operations, the number of enforcement applications brought before the Authority has increased significantly.

[13] Sergeant J McGrogan currently holds the Liquor Licensing portfolio for the Taupo Police. He produced a number of statistics to show that alcohol enforcement can have a direct impact on crime. He noted that the Bay of Plenty (in which Taupo is included) has one of the highest catch rates for any Police District for excess breath or blood alcohol apprehensions. Police figures showed that in the year ended January 2003, 143 underage drinkers were processed in Taupo for excess breath/blood alcohol. This compares with 33 for Rotorua, 47 for Eastern Bay of Plenty, and 255 for Western Bay of Plenty.

[14] Mr Grant Allan Singer is an Inspector employed by the Taupo District Licensing Agency. He referred to the high profile and media attention which alcohol and youth had received on the signing of the Alcohol Accord with the Taupo Central Business District in August 2003. This had been boosted by the alcohol campaign “Think before you buy under 18’s a drink” run by the Taupo Safer Community Council in October/November 2003.

[15] On Wednesday 22 October 2003, the Police conducted their first controlled purchase operation. This was to be by way of a preliminary warning to the licensed community. Four of the premises made sales to the volunteer. The first respondent, “Grantley’s Liquor Merchants” was visited during the operation, but the sale was declined because of lack of identification. The second respondent was not visited as it was considered that it was not an “at risk” outlet. Letters were sent to all the premises which were visited. Some were congratulated on passing the test. Those that had failed were reminded of their obligations. There was an article in the local newspaper. In all the publicity, it was stated that a further controlled purchase operation would follow.

The Controlled Purchase Operation

[16] On Friday 21 November 2003, a second operation was conducted by the Police, Toi Ora Public Health the Taupo Safer Community Council and the Taupo District Licensing Agency. Eight premises were visited and the two respondents made sales.

[17] “Julia” was born on 24 May 1988. She was aged 15 ½ on the day of the operation. Although she was wearing some makeup no one suggested that she looked over 18. Her youthful looks were confirmed by the fact that the great majority of the premises refused her service.

[18] At 8.34 pm, “Julia” went to the premises known as “Scenic Cellars”. She uplifted a 750 ml bottle of “Yellowglen” wine valued at $19.95 and took it to the counter. The 26 year old salesman named Matthew Hannah did not ask her what her age was, or for any identification. Conversation was limited to small talk. The store was not very busy at the time. Constable D H Wells observed the sale.

[19] Some twenty minutes later, “Julia” entered the premises known as “Grantley’s Liquor Merchants”. She selected a 1125 ml of Carthews 62 Gin valued at $18.95. She was served by Jeremy Davey, the proprietor’s son. As he made the sale he used the words “So long as you have ID with you”. However, he neither asked “Julia” her age or for her identification. “Julia” was able to leave with the bottle and her change. Constable D H Wells also observed this sale.

The Respondents’ Evidence and Submissions

[20] Ashtree Holdings Limited has been operating “Grantley’s Liquor Merchants” in Taupo for the past four years. An associated company has been operating a similar business in Auckland for seven years. Mr Warrick Ian Davey is a shareholder and director of the respondent company, and he appeared on the company’s behalf with assistance from Mr G S McKay, a HANZ area manager.

[21] The business is a “stand-alone” bottle store with hours of trade between 8.00 am and 11.00 pm daily. Up until the sale to “Julia”, there were no recorded breaches of the Act, or other adverse incidents reflecting on the suitability of the respondent company. Indeed, as recorded above, the company staff had successfully declined a sale during the first operation.

[22] On the night of the second operation, Mr Davey was overseas. At some stage, his son Jeremy was called in to assist because of staff shortages. He had previously worked at the store although his primary occupation was elsewhere. His brother and another staff member had left the store prior to 9.00 pm. Earlier, the manager had also left after being called away to take a sick child to the hospital. We did not hear from any member of the staff apart from Mr Davey senior. Mr Davey thought his son Jeremy would have been under pressure working on his own, and keeping an eye out for possible shoplifting. He acknowledged that on the night in question, there should have been at least two persons working. Since that time, his son Jeremy has obtained his General Manager’s Certificate, and now works full-time in the store.

[23] Mr Davey believed that the systems in place were as good as humanly possible. These systems included video surveillance. Mr Davey was unable to say what extra systems or training or auditing had been put in place since the incident, and he had not yet made the decision to require staff to question anyone appearing to be under the age of twenty-five years.

[24] Mrs Cate Ann Langley is one of the directors and shareholders of Scenic Cellars Partnership Limited. She appeared on behalf of the company, and was assisted by Mr G S McKay. The company took over the business of “Scenic Cellars” in late 2001. The business is a “stand-alone” bottle store specialising in fine wines. Young people are not part of the target market. The business has been operating in Taupo for over twenty years and has a database of about 20,000 interested purchasers throughout New Zealand. This list is added to after visits from the many tourists who visit Taupo. The hours of operation are 8.00 am to 10.00 pm daily.

[25] Mrs Langley stressed that the business’s philosophy was to develop patron’s wine knowledge and taste in wines and improve their palate. Most of the sales took place away from the counter after discussions about individual wines between the salesperson and the buyer. She said that when the business was taken over, each member of the staff was required to sign a form acknowledging that where a customer appeared to be under 25 years of age, proof of age documentation must be requested. The staff member was advised that any breach of this requirement could jeopardise his or her future employment.

[26] On 22 October 2003, a staff breakfast meeting had been held. The agenda showed a ten-minute discussion on such items as sales to minors, and controlled purchase operations. Regrettably the only person not present on that occasion was Mr Hannah who was working the breakfast shift at another licensed premises. After the illegal sale, an executive decision was made to give Mr Hannah a written warning rather than dismiss him because of his exemplary record with the company. At the December staff breakfast, a further fifteen minutes was spent on such matters as controlled purchase operations, identification, and role-plays.

[27] The company also instituted its own controlled purchase operation. When it found that a mistake was made in identifying the correct month of birth, separate signs were put up beside the points of sale computer screens to help the staff. These signs read:

I D Check

Person must have been born before
today’s date in
APRIL 1986

[28] All staff were now encouraged to check with the duty manager before making a sale if they had any doubt about the matter. The numbers of staff holding General Manager’s Certificates had been doubled since the take-over of the business. In summary therefore, the company believed that sufficient checks and balances were now in place to ensure that the mistake was not repeated. In our view, the evidence presented on behalf of “Scenic Cellars” was very impressive.

Decision on Application for Renewal

[29] The criteria to be considered on an application for renewal of an off-licence are set out in s.45 of the Act. There is no need to refer to these criteria in detail because the applicant company is a “standout” operator, and the application has been referred to us to ensure consistency.

[30] We did consider whether to reduce the period of renewal in the light of the sale to a minor, but for the reasons to be given later in this decision, a period of suspension is to be imposed against the company. In those circumstances, a renewal of the off-licence is appropriate.

Decision on Enforcement Applications

[31] Pursuant to s.4(2) of the Act, the Authority is required to exercise its jurisdiction, powers and discretions in the manner that is most likely to promote the object of the Act. That object is as follows:

“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.”

[32] There is no question that selling to minors has the potential for serious liquor abuse. This reasoning received support from Mr Justice Gendall in his decision in The Mill Liquorsave v Grant David Verner Wellington High Court CIV-2003-485-874. In that decision he made the following comments at paragraph [25]:

“The fact that there was general community concern over sale of liquor to persons under 18 was known to the Authority. It was aware of breaches by some persons in the industry from its own hearings. (For example the 14 breaches identified in two operations referred to in the Karara Holdings Ltd case). These concerns, and the prevalence of the problem, were vitally relevant considerations for the Authority. It said as much in paras [25], [26], [27 and [31] of its decision.”

[33] 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. Regrettably, cases such as these appear to show that the message is taking time to get through. For example, the number of intoxicated young people admitted to Auckland City Hospital’s emergency department continues to rise. Last year’s number was 40% higher than in 1999. On the other hand, it is accepted that the system of control over the sale and supply of liquor must be a “reasonable” one. To some extent any financial loss associated with the suspension of a licence should be measured against the social costs that society absorbs in respect of alcohol related harm experienced by our young people.

[34] There was no real contest with the facts, and in our view, the grounds in the applications have been established. Both premises were operated in breach of s.155 of the Act and in breach of a condition of the off-licence. It is accepted that in each case there were some unusual circumstances. Not having heard from the persons who made the sales, it was difficult to establish why such major mistakes were made.

[35] Having reached that point, the test 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.

[36] In other decisions we have set out the reasons why we regard the sale of liquor to minors as an incident of liquor abuse. As mentioned above that reasoning was approved by the High Court in the The Mill Liquorsave Limited decision (supra). In that case His Honour Mr Justice Gendall made a number of interesting comments about enforcement processes under the Act. We set these comments out below:

“[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.”

[37] The Court of Appeal in the Karara Holdings Limited decision (supra), 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. In the former case we have normally imposed a 24-hour suspension particularly if the breach has resulted from a controlled purchase operation. More recently, it has been the Authority’s practice to impose the suspension to include the day on which the sale was made.

[38] In this case, we accept that both respondents have received something of a “wake-up” call. We also accept that each company has an excellent record. 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 who, when offered the same opportunity to sell to the minor, resisted the temptation to do so.

[39] So far as “Grantley’s Liquor Merchants” is concerned, there was nothing in this incident which set it apart from other cases we have dealt with. Indeed it could be argued that because a bottle of gin was involved, the circumstances were worse. In our view, there is no good reason to depart from the norm. On the other hand, we thought that “Scenic Cellars” had shown a much more pro-active reaction to the incident. The management of that business seemed to us to take a very focused and professional approach. We believe that this business should be dealt with in a much more understanding if not lenient way.

[40] The problem is that both businesses have trading hours of 8.00 am to 11.00 pm in the case of “Grantley’s Liquor Merchants”, and 8.00 am to 10.00 pm in the case of “Scenic Cellars”. The loss of a licence for 24 hours means an actual loss of potential trading of 14 or 15 hours. In the case of “Scenic Cellars” we believe that the sanction to be imposed should represent approximately half of the sanction which is to be imposed on “Grantley’s Liquor Merchants”. Although the proposed period of suspension may be considered by some to be nominal, we point out that we were minded to adjourn the application pursuant to s.132(7) of the Act. The factor which persuaded us not to do so, was the very young age of the volunteer.

[41] As in every case the issue is how seriously the object of the Act should be taken. We have been concerned to uphold the integrity of 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. It seems to us that the concept has 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.

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

(1) Off-licence 020/OFF/11/2000 issued to Ashtree Holdings Limited is suspended for one day from 8.00 am on Friday 14 May 2004 to 8.00 am on Saturday 15 May 2004.

(2) Off-licence 020/OFF/49/2002 issued to Scenic Cellars Partnership Limited is suspended from 8.00 am on Friday 14 May 2004 to 4.00 pm on Friday 14 May 2004.

(3) The off-licence issued to Scenic Cellars Partnership Limited is renewed for three years from 4 February 2004.

DATED at WELLINGTON this 29th day of April 2004

Judge E W Unwin Mr J C Crookston
Chairman Member

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