Panchal, re [2004] NZLLA 425 (9 July 2004)

Last Updated: 7 April 2010

Decision No. PH 425/2004

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by PUSPA PANCHAL and THAKOR PANCHAL (trading in partnership) for an off-licence pursuant to s.31 of the Act in respect of premises situated at 687 Ferguson Drive, Upper Hutt, known as “Tiki Foodmarket”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WELLINGTON on 17 December 2003

APPEARANCES

Mr D A Richards – agent for applicant
Sergeant S A Hughes – NZ Police – in opposition
Mr D J C Leyland – Upper Hutt District Licensing Agency Inspector – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application for an off-licence. The issue is whether the applicant has established that the premises can accurately be described as a grocery store, with its principal business being the sale of main order household foodstuff requirements pursuant to s.36(1)(d)(ii) of the Act. It therefore must also shown that the business is not a shop of the kind commonly known as a “dairy”.
[2] The Inspector reports that until the last 2002/2003 registration period, the Food Premises Licence Application forms completed by the applicant described the premises as the “Tiki Dairy”, and the premises was licensed by the Upper Hutt City Council as the “Tiki Dairy”. Approximately 18 months ago the applicant renamed the premises as the “Tiki Foodmarket”. The application to sell wine and beer was brought about by a desire to complement the grocery services to a large group of businesses, local residents and commuters.
[3] Both the District Licensing Agency Inspector and the Police opposed the application for an off-licence on the grounds that the applicant failed to meet the criteria in s.36 of the Act. The Police also opposed the application on the ground that Mr Panchal was convicted in the Upper Hutt District Court on 25 July 2001 for assault on a child. The application was duly set down for a public hearing.

The Application

[4] The applicant supplied a document with the application that stated the total percentage of gross turnover for “food” (as defined in the Food Act 1981) for the period of 1 February 2003 to 30 March 2003 was 70% of goods stocked on the premises. The food items were reduced to the following categories and percentages:

Prepared meals 2%
Confectionery 15%
Baked goods 10%
Tinned food 5%
Meat 1%
Dry goods 5%
Milk products 10%
Condiments 5%
Tea, coffee and cocoa 2%
Vegetables 5%
Fruit 3%
Nuts 1%
Syrup and cordials 5%
Eggs 1%

[5] Another list showing the total percentage of excluded items such as tobacco, personal hygiene items, cleaning products, hardware, newspapers and magazines etc, amounted to 30%. At the hearing the applicant produced another list showing the shelving space accorded to each category of goods stocked in the shop. That list included confectionery items. Mr Richards submitted that 64.06% of the total shelving in the shop was dedicated to main household foodstuffs compared to 70% of turnover. The applicant also produced a further list showing the product range and shelving space excluding the following items:

Bathroom and laundry 1.596

Stationery and hardware 1.452

Coke etc. 5.12

Chippies 2.088

Confectionary 2.925

Magazines 2.112

Pet Supplies 0.243

and the shelving space per square metre was reduced from 64.06% to 55.64% compared with 55% of turnover. The applicant therefore submitted that the percentage turnover for main order household foodstuffs was 55.6% of the total turnover figures. The applicant submitted that it does sell a small amount of cone ice cream, but only to the extent of one or two a day, and three or four a day over a weekend.

[6] From the information supplied to the Authority it was doubtful that the principal business of the store could be described as the sale of main order household foodstuff requirements.
[7] At the hearing Mr Richards offered to provide the Authority with certified accounts of the percentage of turnover derived from the sale of main order household foodstuffs. Pursuant to reg. 8(2)(j) of the Sale of Liquor Regulations that evidence is required to accompany every application for a grocery store. On 25 May 2004 Mr Richards wrote to the Authority enclosing percentages of turnover of various categories of products sold in the shop for the period 1 February to 30 March 2004. The figures had been certified by the applicants’ accountant.
[8] Those figures were:

Prepared meals 2.39%
Confectionery 11.09%
Baked goods 6.18%
Tinned food 1.35%
Meat 0.24%
Dry goods 1.62%
Milk products 15.25%
Condiments 0.81%
Tea, coffee and cocoa 0.75%
Vegetables 2.90%
Fruit 2.05%
Nuts 0.23%
Syrup and cordials 7.79%
Eggs 0.25%

[9] Excluded from those items were tobacco, personal hygiene items, cleaning products, hardware, newspapers and magazines, flowers, bathroom products, drinks such as Coke etc, spices, and pet food. The excluded items totalled 47.10 per cent. The largest item was tobacco at 36.92 %. Mr Richards asked the Authority to note that the sale of cigarettes had increased by approximately ten per cent since the adjacent “Challenge” petrol station and another dairy close by had closed.
[10] The applicant had requested trading hours of Monday to Sunday 7.00 am to 11.00 pm.
[11] The size of the premises was said to be about 500 square metres.
[12] Both the Police and the District Licensing Agency Inspector referred to the fact that the range of products that were sold on the premises under the name of the “Tiki Dairy” appear to be the same range as is now being sold under the name of “Tiki Foodmarket”. To all outward appearances the only change is the name of the premises.

Authority’s Conclusion and Reasons

[13] The applicants are governed by the provisions of s.36(1) and (3) of the Act. Those provisions are :

36 Types of premises in respect of which off-licences may be granted

(1) Except as provided in subsections (2) to (5) of this section, an off-licence shall be granted only—

(a) To the holder of an on-licence in respect of a hotel or tavern, in respect of the premises conducted pursuant to that licence; or

(b) To the holder of a club licence, being a club that is entitled under paragraph (i) or paragraph (j) of section 30(1) of this Act to hold an off-licence, in respect of the premises conducted pursuant to that licence; or

(c) In respect of premises in which the principal business is the manufacture or sale of liquor; or

(d) In respect of—

(i) Any supermarket having a floor area of at least 1000 square metres (including any separate departments set aside for such foodstuffs as fresh meat, fresh fruit and vegetables, and delicatessen items); or

(ii) Any grocery store, where the Licensing Authority is satisfied that the principal business of the store is the sale of main order household foodstuff requirements.
...

(3) Nothing in subsection (1) or subsection (2) of this section shall authorise the grant of an off-licence in respect of—

(a) Any service station or other premises in which the principal business is the sale of petrol or other automotive fuels; or

(b) Any shop of a kind commonly known as a dairy.

[14] This means that the applicants have to satisfy two tests. First, it must satisfy the Authority that the shop is a grocery store, having as its principal business “the sale of main order household foodstuff requirements.” In other words, the applicant must show that the majority of the goods which are sold in the store have been purchased for consumption in the household as part of that household’s main sustenance. Items such as confectionery, soft drinks, chips, milk shakes, and ice creams cannot be included in any assessment, and neither can any items be included which are not foodstuffs.
[15] Secondly, the applicant must satisfy the Authority that the premises cannot be described as a shop of the kind commonly known as a “dairy”.
[16] The size of any shop will automatically dictate the range of goods which can be displayed and sold. That is why the Authority stated that larger premises are less likely to be categorised as a dairy. In Caltex New Zealand Limited (supra), the Authority said:

“In particular the physical size (some 300 square metres) and the range of foodstuffs including convenience items has narrowly persuaded the Authority that the premises are not of a kind commonly known as a dairy.”

[17] In the present case the size of the premises makes it less likely to be categorised as a dairy. It is one of a number of factors to be considered.
[18] In Jay & H Company Limited LLA PH 155/2001 the Authority stated:

“In determining the ‘principal business’ of any store we endeavour to apply a broad common sense approach. Consideration includes:

(1) The turnover percentages produced in accordance with Regulation 8(2)(j).
(2) The number and range of the items available. The greater the number and depth of foodstuff items available, the more likely the premise is to be a grocery store in terms of s.36(1)(d)(ii).
(3) The size of the premises. Larger premises are less likely to be categorised as a dairy.
(4) The layout of the premises. The presence of trolleys and multiple rows of goods assist categorisation as a grocery store.
(5) A view of the premises. The evidential weight given by the Authority to a view is usually considerable.”

[19] In this case the Authority has taken a view of the premises twice. The first time was before the hearing on 10 December 2003 and again on 2 June 2004 after receipt of Mr Richards’ letter. Despite its size and its new name the premises still gives the impression of being a dairy. That view is further reinforced when the figure of 11.09 per cent for confectionery is added to the list of items excluded from the turnover percentages. The total figure for excluded items then increases to 58.19 per cent. We are therefore not persuaded that the premises is a grocery store of the type described in s.36(1)(d)(ii) of the Act.
[20] We are not satisfied as to the matters to which we must have regard as set out in s.35(1) of the Act. Parliament has given the Authority the power to grant an off-licence only to grocery stores where the principal business is the sale of main order household foodstuff requirements.
[21] We are not satisfied that the applicant’s premises meet that test. The application must therefore be refused.
[22] In the future the nature of the business may change. In those circumstances this decision should not prevent the partnership making a fresh application. We also wish to record that having heard the evidence regarding Mr Panchal’s conviction for assault, and having taken into account the circumstances in which it occurred, as well as his previously unblemished record, his suitability to operate an off-licensed grocery store was not an issue. Any future application should not be affected by that conviction.

DATED at WELLINGTON this 9th day of July 2004

B M Holmes
Deputy Secretary

TikiFoodmarket.doc(aw)