Burgess v Urbino Investments Limited and Colosimo [2005] NZLLA 243 (29 April 2005)

Last Updated: 5 March 2010

Decision No. PH 243-245/2005

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 021/ON/4762/2003, issued to URBINO INVESTMENTS LIMITED in respect of premises situated at 53 The Strand, Tauranga, known as “Usual Suspects”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for the suspension of General Manager’s Certificate number GM 3111/99 issued to MICHAEL SANTO COLOSIMO

BETWEEN RONALD FRANCIS BURGESS

(Tauranga District Licensing Agency Inspector)

Applicant

AND URBINO INVESTMENTS LIMITED

First Respondent

AND MICHAEL SANTO COLOSIMO

Second Respondent

AND

IN THE MATTER of an application by URBINO INVESTMENTS LIMITED pursuant to s.18 of the Act for the renewal of an on-licence in respect of premises situated at 53 The Strand, Tauranga known as “Usual Suspects”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at TAURANGA on 14 April 2005

APPEARANCES

Mr R F Burgess – Tauranga District Licensing Agency Inspector – applicant and to
assist with application for renewal
Mr A Dormer – for respondents and applicant for renewal

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Before the Authority are three substantive applications for determination. The first application is to suspend an on-licence issued to Urbino Investments Limited in respect of tavern-style premises situated at 53 The Strand in Tauranga, known as “Usual Suspects”.

[2] The grounds for the application are that the licensed premises have been conducted

(a) In breach of s.165 of the Act (unauthorised sale or supply), and

(b) In breach of a condition of its licence. The condition states:

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.

[3] The second application is for the suspension of a General Manager’s Certificate issued to Mr Michael Santo Colosimo. The grounds for this application are that Mr Colosimo has failed to conduct the licensed premises in a proper manner, or that his conduct is such as to show that he is not a suitable person to hold the certificate.

[4] Both applications arise from the same set of facts. It is alleged that on Easter Sunday 11 April 2004, “Usual Suspects” was trading in breach of the Act, and in breach of its licence. At the time Mr Colosimo was the holder of a General Manager’s Certificate and a director of the licensee company. It was alleged that he was present on the premises during some of the time that the illegal activity occurred.

[5] The third application is brought by Urbino Investments Limited and is for the renewal of its on-licence. The on-licence fell due for renewal on 24 September 2004. This application was not opposed by the reporting agencies, but the file was forwarded to the Authority to be dealt with contemporaneously with the suspension applications. The District Licensing Agency Inspector flagged the possibility that we reduce the renewal period.

[6] The issues which we are required to determine are:

• (a) Whether the grounds listed above have been established to our satisfaction, and
  
• (b) If so, whether it is desirable that suspension orders be made, and
  
• (c) If so, the length of the suspensions.
  

[7] On behalf of the respondents, Mr A Dormer contended that if there were breaches of the Act or licence, they resulted from genuine breakdown in communication between Mr Colosimo and the duty manager of “Usual Suspects”. He submitted that any breach of the Act was unintentional, and that given the good record of the licensee and its director and manager, no orders were called for, or desirable.

The Application

[8] We are grateful to the parties for the way in which the hearing was conducted. The evidence on behalf of the applicant and the respondents was accepted without any need to question its veracity. This evidence showed that the on-licence for “Usual Suspects” was issued on 24 September 2003. It contained the usual condition preventing the sale of liquor on Good Friday, Easter Sunday, Christmas Day and before 1.00 pm on Anzac Day other than to persons who were present to dine.

[9] Mr Ronald Francis Burgess is a Liquor Licensing Inspector appointed under the Act for the Tauranga District Licensing Agency. He is employed by the Tauranga District Council. In the early afternoon of Good Friday, 9 April 2004, he visited “Usual Suspects” as part of routine monitoring of licensed premises in Tauranga and Mount Maunganui. He noted that tables and chairs were being put onto the footpath as if the premises were being prepared for opening. He was advised by a senior staff member that she was aware of the requirements of the on-licence, and that only those patrons present to dine would be permitted to purchase liquor. She stated that pizzas would be available.

[10] Each Easter, Tauranga hosts the Montana Jazz Festival. This is a major event and part of The Strand roadway is closed off for the occasion. About 20,000 people attended the Festival over the weekend. In 2004, some 24 licensed premises were involved with the festival by providing facilities for the festival performers. A jazz band was allocated to each premises. Each of the premises was able to obtain a special licence to sell liquor while the festival was in progress. On the Easter Sunday, the special licence allowed for trading between 12.00 midday and 6.30 pm. “Usual Suspects” did not have a special licence, as the premises had declined to be involved with the Festival the previous year, and had not therefore been approached in 2004.

[11] On Easter Sunday 11 April 2004, Mr Burgess was carrying out routine monitoring of licensed premises in the Tauranga Central Business District. At about 3.00 pm he was passing “Usual Suspects” with his wife, when friends called out to them. They stayed at the premises for about an hour. At any one time he calculated that there would have been 60 – 80 persons present. He said that all were drinking liquor, and none were eating.

[12] Mr Burgess stated that he saw patrons coming in off the street and heading straight to the bar to purchase a drink. He heard no comments from bar staff that it was necessary to be present for dining purposes. He said that during the hour, he and his friends purchased drinks and no one was asked why they were present. Furthermore, he noticed that a temporary tap stand bar had been set up at the entrance to the premises to enable liquor to be sold directly to passing patrons who would not have to enter the premises. At some stage he saw Mr Colosimo on the premises, but although Mr Colosimo acknowledged his presence, they were unable to speak to each other.

[13] As a result of his observations, Mr Burgess wrote to Mr Colosimo on 14 April 2004. Two days later he received a phone call from Mr Colosimo who said that they had served 156 pizzas on the Easter Sunday. He said he thought that all licensed premises were part of the Jazz Festival. When disabused of this notion, Mr Colosimo stated that he did not agree with the way the Festival was run, and that it should have continued until 10.00 pm rather than stop at 6.30 pm. Later in the day Mr Colosimo rang to say that more than 156 pizzas had been sold. He subsequently wrote to Mr Burgess. In his letter, the number of pizzas sold rose to 164. However, the majority of these were sold between 6.00 pm and 7.00 pm. He also stated that the business had provided its own entertainment.

[14] At the time of the incident, the duty manager for “Usual Suspects” was Brendan Thomas Bass. Mr Bass was also a one third shareholder in the licensee company, although since then, he has sold his shareholding. Mr Colosimo was also a one third shareholder, but he has a number of other interests in licensed premises. Consequently, he spent most of his time with his other premises. Mr Bass had the major responsibility for the day-to-day running of “Usual Suspects”.

[15] Mr Bass stated that he understood that the premises were covered by a special licence which had been granted by the District Licensing Agency in conjunction with the Festival. His understanding was that the special licence expired at 6.00 pm, and covered all licensed premises on the Strand. He said that the staff were firmly instructed that from 6.00 pm on, they were to make sure that all persons purchasing or consuming liquor were present for the purpose of dining. His evidence was that Mr Colosimo had been present during the afternoon for a very short time to replenish the till float.

[16] Mr Colosimo has a long and distinguished career in the hospitality industry. Sergeant Thomson, the Tauranga Liquor Licensing Sergeant for the last 10 years, confirmed that none of the premises operated by Mr Colosimo had ever been a cause for concern. Mr Colosimo stated that he knew that “Usual Suspects” was unable to sell liquor to patrons not present for the purpose of dining, and he also knew that the premises were not part of the special licence which the Council had granted. He said he was amazed to discover that Mr Bass thought that “Usual Suspects” was part of the Jazz Festival special licence.

[17] Mr Colosimo’s recollection was that he and Mr Bass had decided not to participate in the event with its special licences, but rather have their own jazz band. He said that the decision was made to close on the Good Friday, and open on Easter Sunday only for patrons who were present for the purpose of dining. He confirmed that they had sold 164 pizzas which represented a normal month’s sales. He stated that between himself and Mr Bass, there appeared to have been a “kind of monumental communication failure”. He confirmed that he was at “Usual Suspects” for a few minutes to take over a new till float as they were running short of coins.

[18] As a result of the incident the Police instigated a prosecution. However, it seems that the prosecution was laid against “Usual Suspects” rather than the licensee company, and eventually the information was dismissed on a technicality. The suspension applications followed.

[19] Mr Dormer stressed that a large number of the patrons were eating, and there was no evidence of any liquor abuse. He submitted that in the light of the miscommunication any suspension could be seen as unreasonable, particularly given the company’s good record. It should be noted however, that the incident occurred six months after the on-licence was issued and during the first “probationary” year of operation. Mr Dormer contended that the incident had been an expensive warning for the licensee, and the message had been well and truly reinforced.

The Authority’s Decision and Reasons

[20] There is no question in our minds that on Easter Sunday 11 April 2004, these licensed premises were being conducted in breach of the condition of the licence and in breach of s.165 of the Act. Selling pizzas to some of the customers, and providing entertainment was clearly insufficient to avoid responsibility. The evidence from Mr Burgess showed that the sale of most of the food happened later in the day. It seems to us that this Easter Sunday was no different than any other Sunday except that there was an unusually large number of pedestrians on The Strand, and business was brisk.

[21] As to the desirability to make suspension orders, it is our view that the law preventing the sale of liquor by hotels and taverns on the three and a half sacrosanct days, is well known and established. That law is obeyed by the vast majority of licensees. There can be no excuse based on ignorance of the law. There has been constant pressure by the industry to have the law amended. Indeed the Authority has referred to the problem from time to time in its Annual Reports. Whether the law is right or wrong is not the issue. The law states that liquor may not be sold or supplied on Easter Sunday unless the patron is present on the premises for the purpose of dining. The application of the law is not difficult. The issue in this and similar cases, is about treating the law with respect.

[22] We have a number of reservations about the explanation given by Messrs Colosimo and Bass. It will be noted that Mr Colosimo initially stated that he thought that “Usual Suspects” was part of the Festival. Later he said that he was amazed that Mr Bass had thought that the premises were the subject of the special licence. We did not hear what he thought when he visited the premises on the Sunday afternoon, and saw that they were trading either illegally, or contrary to the way he and Mr Bass has earlier agreed. The suggestion by Mr Bass that he thought he was part of the Festival special licence, is an unrealistic assumption by a person who has held a General Manager’s Certificate for two years. In summary, we do not accept the communication breakdown theory. On the other hand, there is no evidence apart from by inference, that the illegal trading was deliberate.

[23] Any suspension order does not just affect the respondents. It can also affect the way other licensed premises conduct their businesses. In our view, allowing the law to fall into disrespect in this way, and allowing the premises to trade on Easter Sunday, can lead to liquor abuse issues. The only way that standards will be raised in the industry, is if examples are made when the law is ignored or breached in this way.

[24] The issue then turns of the length of suspension. In Scott Lyall Taylor v High City Group Limited and another LLA PH 308-310/2001, we suspended the on-licence for two weeks for trading on Good Friday. That is not a particularly good comparison as we saw that incident as a deliberate attempt to evade the law.

[25] In Scott Lyall Taylor v Edens (2000) Limited and another LLA PH 489/2003 where the tavern was open 50 minutes after it should have been closed on Anzac Day, we suggested that a five day suspension was appropriate, but extended this to seven days because of other procedural irregularities. However, in that case, the respondents did not appear at the hearing.

[26] In Martin Ferguson v Nadia Mavana Pelenato LLA PH 522/2002, the on-licence was suspended for ten days for trading on Anzac Day. However, in that case there were many more aggravating features than in this case, including a lack of acceptance of culpability.

[27] In Geoffrey Ian Midland v Valerie Kelly Limited and another LLA PH 118/2003 the on-licence was suspended for a week for trading on Easter Sunday. However, the circumstances in that case showed a much greater disdain for the law. There was very little attempt at providing dining facilities at all, and no acceptance that what had happened was illegal.

[28] The case which is most relevant is Michael John Lopdell v Aussie Pub Company Limited and anor LLA PH 577-578/2003. In that case, the on-licence was was suspended for four days, and the General Manager’s Certificate was suspended for four weeks for trading on Easter Sunday. In that case, the premises had an excellent record, and placed a genuine emphasis on food. There were no liquor abuse issues.

[29] In the case of Mr Colosimo’s General Manager’s Certificate, the position is more complicated. Section 135(3) provides the grounds on which a certificate may be suspended or cancelled. These are:

• (a) That the manager has failed to conduct any licensed premises in a proper manner:
  

(b) That the conduct of the manager is such as to show that he or she is not a suitable person to hold the certificate.

[30] The evidence is clear that Mr Bass was the duty manager. Mr Colosimo was present as the licensee of the premises and not its manager. The on-licence states:

The authority conferred by this licence shall be exercised through a manager or managers appointed by the licensee in accordance with Part VI of the Act.

[31] Pursuant to s.115(1) of the Act, it is the manager who must be on duty and responsible for compliance with the Act and the conditions of the licence when liquor is being sold or supplied to the public. If there was improper conduct, then it was Mr Bass who should have been the subject of the application. The only requirement on the licensee is contained in s.115(3) of the Act and that is to take all reasonable steps to enable the manager to comply with subsection (1) above. Pursuant to s.172A of the Act, a licensee commits an offence who fails without reasonable excuse to ensure that the provisions of s.115 are complied with. It seems to us that the law requires that the licensee must give the manager sufficient resources and opportunity to comply with the Act. There is no evidence that Mr Colosimo failed this test.

[32] On the other hand, the position is different with s.135(3) (b) of the Act. Here, we are able to consider a manager’s conduct, and not the way he or she has managed the premises. In considering a manager’s conduct, there are few boundaries. As was said in Anthony William Strange LLA 1632/96:

"In many occupations off duty conduct is commonly ignored. An exception may arise where the conduct impacts upon work performance. Few trades or professions have a direct legislative link which requires that conduct – including out of hours activities – be considered under the quasi disciplinary procedures of s.135 of the Act. Nevertheless that burden is imposed by Parliament upon licensees (under s.132) and managers under the Sale of Liquor Act 1989. Their conduct and suitability may be examined at any time if an application is brought before the Authority."

[33] In this case, Mr Colosimo’s conduct when he arrived at the premises was surprising to say the least. According to the evidence at the hearing, he knew that the premises were not allowed to trade unless the patrons were present for dining, and he knew that the premises had not received a special licence. The unanswered question is why he did nothing about what he must have observed. After all, business was so brisk that he was apparently required to replenish the float. In our view, notwithstanding his record, some sanction is warranted.

[34] We accept a duty to apply an even-handed (rather than a heavy handed) approach as suggested by the Court of Appeal in its decision Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others NZAR [2003] 752. In that case, the Court commented on the scheme of the Act as follows:

“Section 4 expresses a philosophy concerning the social utility of controls over the sale and supply of liquor which 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 stipulation that the object of the Act is to establish a reasonable system of control reflects that legislative perception. It also implicitly recognises that if the administration of the Act’s licensing system becomes too heavy-handed, so that it unreasonably inconveniences those wishing to purchase and consume liquor in a manner not giving rise to abuse, that result would be inconsistent with the statutory object.”

[35] Balancing all the competing factors, and taking into account the respondents’ co-operation through counsel, and bearing in mind the criteria for the renewal of an on-licence under s.22 of the Act, we make the following orders:

(a) On-licence 021/ON/4762/2003 issued to Urbino Investments Limited will be suspended for three days from 7.00 am on Sunday 22 May 2005 to 7.00 am on Wednesday 25 May 2005.

(b) General Manager’s Certificate number GM 3111/99 issued to Michael Santo Colosimo will be suspended for 10 days from 7.00 am on Sunday 22 May 2005.

(c) The on-licence issued to Urbino Investments Limited in respect of premises situated at 53 The Strand, Tauranga known as “Usual Suspects” will be renewed for three years.

DATED at WELLINGTON this 29th day of April 2005

Judge E W Unwin Mr J C Crookston
Chairman Member

Usual Suspects.doc(nl)