Hannah's Family Limited - Shamrock Superette [2005] NZLLA 707 (13 October 2005)

Last Updated: 30 December 2011

Decision No. PH 707/2005 –

PH 709/2005

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by HANNAH’S FAMILY LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 2/739 Chapel Road, Howick, Manukau City, known as “Shamrock Superette”

AND

IN THE MATTER of applications by JAI KYUNG HAN and MYEONG HEE LEE pursuant to s.118 of the Act for General Managers’ Certificates

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at MANUKAU CITY on 29 September 2005

APPEARANCES

Mr J K Han – representing the three applicants
Mr P A Radich – Manukau District Licensing Agency Inspector – in opposition
Constable P D Lally – NZ Police – in opposition
Mr G K Oh – interpreter

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] There are effectively three applications for the Authority to determine. The first matter is an opposed application for an off-licence. The applicant is a private company, and its two directors are Jai Kyung Han and his wife Myeong Hee Lee. There are two main issues to be resolved. The first is whether the applicant company has been able to establish that its premises can accurately be described as a grocery store, with its principal business being the sale of main order household foodstuff requirements. The second issue relates to the suitability of the company, given that its two directors are unable to communicate effectively in the English language.

[2] The remaining two applications are made by Mr Han and Ms Lee, who each seek the grant of a General Manager’s Certificate. The applications are opposed by the Manukau District Licensing Agency Inspector, Mr P A Radich, on the grounds that neither of the applicants is able to speak or understand the English language. It was argued that the applicants were unable to demonstrate knowledge of the law, or the practical ability to apply such knowledge under New Zealand conditions. Mr Han’s application for a General Manager’s Certificate was also opposed by the Police on the grounds that on 18 December 2003, he had been convicted in the District Court in Whangarei, for selling cigarettes to a person under the age of 18.

[3] Mr Han was not well prepared for the hearing. He only had the assistance of an interpreter. The case was originally scheduled to be heard on a Wednesday, but due to a misunderstanding, Mr Han did not appear. He was rung and asked to appear the following day. Ms Lee did not appear at the adjourned hearing as she was running the shop.

The Background to the Application

[4] The application for the off-licence was filed on 14 June 2005. It appears that Hannah’s Family Company Limited purchased the business known as “Shamrock Superette” as a going concern. The premises are located in a small group of shops in Chapel Road, Howick.

[5] We understand that the assets of the business included the projected revenue generated from an off-licence, which had previously been granted in respect of the premises. However, it appears that the previous owner was establishing another similar business further down Chapel Road. He had allowed the off-licence to lapse prior to Mr Han taking over. It is assumed that this was to avoid paying the renewal fees. Accordingly, Mr Han and his company were unable to trade with the benefit of any temporary authority. It was not possible to establish an accurate factual summary because of Mr Han’s difficulty in making himself understood.

[6] Mr Han indicated that he had received advice from the previous owner that the grant of an off-licence was a formality. He and his wife must have been mildly surprised when the Inspector advised them that they would each need to obtain a General Manager’s Certificate before the application for the off-licence could be considered. The previous owner apparently advised them that they could complete their training with a Korean instructor. Accordingly, they both completed a course in the Korean language, and on 5 July 2005, each of them received a Licence Controller Qualification from the Hospitality Standards Institute.

[7] We interpolate here, that if such a qualification can be obtained without any ability to speak English, then the training standards may have to be re-evaluated. To continue the narrative, once Mr Han and Ms Lee received their qualifications they filed their applications for a General Manager’s Certificate. They seemed to expect that the licence and certificates would follow.

The Application for the Off-licence

[8] The application for an off-licence complied with the relevant regulations. There was a certificate from the Manukau City Council confirming that the sale of liquor for consumption off the premises in association with a convenience store, met the requirements of the Resource Management Act 1991. Unfortunately, it appears that a final building inspection has not been undertaken since the premises were built in 1995. Accordingly, there was only an interim certificate that the building met the requirements of the Building Code. It is hoped that there will be no problem with the issue of a final certificate, which is a mandatory requirement before any off-licence can be issued.

[9] The hours of trading sought are:

Monday to Sunday 7.00 am to 9.00 pm

[10] We were able to take a view of the business. The size of the premises including storage capacity, is less than 100 square metres. Although the shop is advertised as a superette, the majority of the advertising at the front of the building is for ice cream products. Access to the shop is at the rear of the premises in the car park. The first impression from the rear of the premises, is the large number of magazine covers on display.

[11] There is shelving down two walls of the shop, and one shopping isle in the middle. Apart from a number of main order household foodstuffs, there is a large amount of sweets, soft drinks, chocolate bars and chips on display. Items such as dog food, cleaning products, and hygiene products are also displayed. No ice creams other than the standard packaged products are sold. There is no milkshake making facility.

[12] Pursuant to Regulation 8(2)(j) of the Sale of Liquor Regulations 1990, Mr Han’s accountant was asked to produce sales figures showing the percentage turnover of each product. The information was received on the morning of the hearing. The figures seem to relate to one week’s trading only. It seems that the sale of cigarettes accounts for 45% of the total turnover. When added to the other non-foodstuff items listed by the accountant, the percentage rises to 66% of turnover. There is an item called “others” which accounts for 17% of turnover. More clarification will be required.

[13] As Mr Radich pointed out, in order to obtain an off-licence the principal business must be the sale of main order household ‘foodstuff’ requirements. Accordingly, by definition many of the items referred to in the accountant’s figures, cannot be included. Mr Radich considered that the premises was a dairy, and we are inclined to agree. There was certainly no sign of fresh fruit, or vegetables or small goods.

[14] The second ground for the opposition to the off-licence relates to the suitability of the company. There are no managers who hold General Manager’s Certificates. Without a certificated duty manager, the business cannot trade. We now deal with the applications by the directors of the company.

The Applications for General Manager’s Certificates

[15] Mr Radich interviewed Mr Han on 11 August 2005. The interview was unsatisfactory. Mr Han was unable to satisfy the Inspector that he could communicate effectively with any representative from the Agency, or the Police, or his customers. The Inspector took the view that Mr Han’s understanding of the Act was substandard. Although he had the services of an interpreter, Mr Han asked no questions.

[16] Ms Lee was interviewed on 23 August 2005. She had great difficulty in understanding the questions. She was unable to satisfy the Inspector that she could communicate effectively with representatives from the reporting agencies or with her customers. He believed that her understanding of the Act was substandard.

[17] Constable C D Lally gave evidence that on 18 December 2003, Mr Han was convicted in the District Court in Whangarei, Mr Han was convicted of selling cigarettes to a person under the age of 18. The offending took place on 8 July 2003.

The Authority’s Conclusion and Reasons

[18] As stated above, the first issue in this case is to determine what is the principal or predominant, business being conducted at 2/739 Chapel Road? In our view the business is a dairy, but it could also be classified as a convenience store. It may be that a licence could be granted if the applicants were able to prove that the principal or main business was the sale of main order household foodstuff requirements.

[19] In Jay and 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 evidential weight given by the Authority to a view is usually considerable.”

[20] In Caltex New Zealand Limited LLA PH 167/2001, the Authority also confirmed that it was not essential for the percentage of main order household foodstuffs to exceed 50% of turnover. For example it could be 40%, with three other categories each contributing 20% of turnover. However it must still be the main line of business in the store.

[21] We then apply the Jay and H Company Limited criteria to the present case.

The turnover percentages

[22] On the figures provided, there is no way that the applicant can establish that main order household foodstuffs are the largest group of items sold. In our view the main business in this small store, is the sale of normal, non-foodstuff, household and personal requirements such as cigarettes, confectionery and magazines.

Number and range of items

[23] There is a reasonable range of items on display, but these items are limited in quantity by the available display space, and the buying demands of the public. This limitation is born out by the turnover percentages. It is clear that the greater the number and depth of non-food items available, the more likely a premise may be labelled as a convenience store and not a grocery.

[24] It has been said that main order household requirements would be easily recognised as the items the majority of New Zealand families purchase once a week from either a supermarket or a grocery. Traditionally grocers have stocked dried and preserved goods. The perception of a grocery is to see shelves of tinned food, flour, sugar, packaged foods, soups, breakfast cereals, sauces, pickles, cooking oils and so on. In a modern context, we would add such items as bread, bakery products, baking needs, dairy products, drinks, tea, fruit, vegetables, biscuits, pasta, rice, fish, poultry, meat and small goods. Such items may be fresh or frozen.

Size of the premises

[25] There was no accurate measurements showing the size of the premises. We were somewhat surprised to hear that an off-licence had previously been granted, but we were advised that a real effort had been made to ensure that the premises complied with the Act’s requirements. In terms of the supervision of licensed premises, and compliance with the Act, it is important that there is plenty of space, not only for the appropriate display of the liquor, but for monitoring the public as well.

[26] 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.”

The layout of the premises

[27] The Authority took a view of these premises, and our perception of the shop is set out in paragraph [10] above. We think it highly unlikely that the applicant company would be able to convert the business into a grocery.

[28] In this case, the Authority is governed by s.36 of the Act. This section describes the types of premises in respect of which off-licences may be granted. The relevant parts of the section read:

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

(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 –

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

[29] Although a dairy is not defined in the Act, in the past it has been described as a place where children regularly attend to purchase sweets, ice cream and the like. We have set out the legal position in some detail in the hope that the information will assist the applicant company.

[30] The second issue relates to the two applications for a General Manager’s Certificate. Quite clearly these cannot be granted at present. We note that the offending which led to the conviction, occurred over two years ago. In the circumstances it should not act as a bar to the grant of an application, although in a licensing context, the nature of the offence gives cause for concern.

[31] In applications for grants of General Manager’s Certificates, we are required to take into account the criteria set out in s.121 of the Act. The criteria are:

• (a) The character and reputation of the applicant:
• (b) Any convictions recorded against the applicant
• (c) Any experience, in particular recent experience, that the applicant has had in managing any premises or conveyance I respect of which a licence was in force:
• (d) Any relevant training, in particular recent training, that the applicant has undertaken and any relevant qualifications that the applicant holds:
• (e) Any matters dealt with in any reports under section 119.
  

[32] In Kwang Sick Kim LLA PH 1069/2000 the Authority laid down certain principles in dealing with persons whose first tongue was not English. These criteria were to include:

• (a) The applicant’s ability to communicate in English with patrons, the Police, and warranted Inspectors;
  

(b) Demonstrated knowledge of the law and practical ability to apply that knowledge under New Zealand conditions;

(c) Our assessment of the applicant’s willingness and likelihood of upholding the law; and

(d) The history of operation of the particular premises where the certificate in the first instance is to be used.

[33] Quite apart from the lack of managerial experience, there remains the issue of the applicants inability to communicate in English. We understand that Mr Han’s language skills have improved since he was first interviewed in August, but in our opinion he has some way to go before he would qualify for a certificate.

[34] In summary, our response to the three applications would normally be to decline them on the grounds set out above. However, in his case we have considerable sympathy for Mr Han and Ms Lee. It seems to us that they may have been the subject of some sharp commercial practices. It may be that the vendors of the business have taken advantage of their inability to speak and understand English.

[35] We therefore propose to adjourn the applications for six months during which time the applicants may wish to take legal advice, or the advice of a licensing consultant. We do not wish to hold out any hope that the applications have merit. It may be that there is little that the applicants can do. However, it seems to us that at the very least, they should have an opportunity to find out whether there is any merit in their pursuing their applications. They were quite unprepared for the hearing. Options may include attending an English language course, changing the nature of the business, employing a certificated manager, or re-applying for an off-licence at a later date. If in six month’s time we have not heard from the applicants’ lawyer or licensing consultant, then the applications will be refused.

[36] For the reasons given, the applications are adjourned for six months.

DATED at WELLINGTON this 13th day of October 2005

Judge E W Unwin Mr J C Crookston
Chairman Member

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