The Old Ward Garage Limited [2006] NZLLA 1142 (21 December 2006)

Last Updated: 28 January 2012

Decision No. PH 1142/2006

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by THE OLD WARD GARAGE LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at State Highway 1, Ward, known as “The Old Ward Garage”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Member: Ms P A Ballard

HEARING at BLENHEIM on 4 December 2006

APPEARANCES

Mr B Moore – on behalf of applicant
Mr G R Congdon – Marlborough District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] The Old Ward Garage Limited (hereafter called the company) represents a joint enterprise by three families who live and work in the area known as Ward which is half way between Blenheim and Kaikoura. Ward has a population of about 900 of whom 27% are under the age of 15. There is no supermarket or grocery store in the town and most of the inhabitants make the half-hour drive to Blenheim to purchase their household requirements.

[2] The three groups of shareholders are Dennis and Barbara Burkhart who are the proprietors of a lobster fishery, Bill and Pam Francis who have established a vineyard in Needles Road, and Brian and Roberta Moore who own and operate an olive grove. Together the three families decided to remodel the old and disused Ward Garage, and convert it into a Café and Tourist Centre from where they could feature their respective products.

[3] The intention was operate as a café with the emphasis on lobster from the fishery, olive oil from the local grove, and wine from the winery. The signature dish is a crayfish salad with olive oil and a glass of sauvignon blanc made from local grapes. The business is known as “The Old Ward Garage”. The great majority of the customers are from out of town.

[4] The shareholders also decided to establish a tourist centre in the same building. The centre depicts the local history of the district and offers a crayfish aquarium, an Artemia tank (a small crustacean from Lake Grassmere which is used for fish food), a display of old sheep shearing equipment, along with a video featuring local activities and tours. One of the Authority members made a visit to the premises and was able to confirm that there are a number of other features to the business which not only makes the business quite unique, but difficult to categorise.

[5] On 6 October 2005, on and off-licences were granted to the company. The off-licence was granted pursuant to s.36(2)(b) of the Act. In other words it was accepted by the Agency that the sale of liquor would be an appropriate complement to the kind of goods to be sold in the premises. This licence is used to provide complimentary wine tastings, and the customers are given the opportunity to purchase the local wine. The business also sells locally produced saffron and dukka products.

[6] The on-licence was granted to enable customers to consume liquor when dining at the premises. The hours authorised for the sale of liquor in respect of both licences are between 10.00 am and 8.00 pm Monday to Sunday.

[7] The advantage of combining the three businesses is that, run separately, they would be unlikely to be economic. In addition the proprietors would face resource management difficulties in trying to establish commercial enterprises adjacent to the main road.

[8] After 12 months trading, the company applied to renew its licence. It requested a variation to the conditions of the licence to extend the trading hours to 12.00 midnight. Over the previous 12 months the company has found that the café has become a popular facility for night-time functions and it became necessary to apply for special licences. The evidence was that over the past 12 months, seven special licences have been issued.

[9] The Inspector viewed the request for an extension to the trading hours with some concern. It seemed to him that the business may have changed its emphasis from what had originally been intended. It appeared that the tourist aspects of the business had taken longer to develop than had been anticipated, and that the supply of food to the public had become a primary focus.

[10] The Inspector took into consideration the impact of the High Court decision in Michael John Lopdell v Deli Holdings Ltd and Restaurant Brands Limited AP 97 to 99/01 Auckland Registry. The background to that case was as follows.

[11] In August 2001 we had issued two decisions granting off-licences to Deli Holdings Limited and Restaurant Brands Limited respectively. One of the businesses was a sophisticated delicatessen and the other a take-away pizza business. Both off-licences were issued on the basis that the sale of liquor would be an appropriate complement to the kind of goods sold on the premises. The principal business of both premises was the sale of food. The Police and District Licensing Agency Inspector had opposed the grant of the applications. They appealed both decisions to the Auckland High Court.

[12] In December 2001, Mr Justice Randerson issued his reserved decision. He concluded that s.36(4) of the Sale of Liquor Act 1989 precluded the grant of a ‘complementary’ off-licence to premises in which the principal business was the sale of food or groceries, whether or not the business on the premises was similar in nature to a supermarket or grocery store. The actual wording of the section is:

Section 36(4). “Nothing in subsection (2)(b) of this section shall authorise the grant of an off-licence in respect of any supermarket or grocery store, or any other premises on which the principal business is the sale of food or groceries.”

[13] Therefore the law is that if the principal business of “The Old Ward Garage” is the sale of food, then it cannot hold a ‘complementary’ off-licence. One of the concerns is that this type of licence not only authorises the sale of wine and beer, but all types of liquor including spirits. The reason why s.36(4) was enacted was ostensibly to prevent supermarkets and groceries from selling liquor other than wine and beer. Having made his own assessment of the situation, the Inspector took the view that while he supported the application and the variation to the licensing hours, it was up to the Authority to determine the application.

The Authority’s Decision and Reasons

[14] 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.

[15] The Court of Appeal discussed the issues of reasonableness in the decision of Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others [2003] NZCA 96; [2003] NZAR 752:

“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.”

[16] The difficulty in this matter is that section 36 of the Act is not uncomplicated. Pursuant to s.36(1)(a) of the Act, the combined grant of an on and off-licence is confined to hotels and taverns. If the primary purpose of this business became the sale of wine, then there would be no need to hold an on-licence. In summary, we think the Inspector is right. The nature of the present business prevents the grant a complementary off-licence. On the other hand the company has made a substantial investment on the basis that licences were issued in good faith. In our view it would be an unreasonable exercise of our jurisdiction to refuse the renewal without warning.

[17] In Wall Enterprises Limited v Police [1997] NZAR 279 Temm J stated:

“It is not surprising that Parliament should have imposed such strict limitations on the Authority’s powers when dealing with an Application for Renewal of an On-Licence. The right to trade in the sale of liquor is a valuable asset and a licensee will often invest considerable capital in its business, as in this case.”

[18] We believe that there is another way that the off-licence can be retained. Pursuant to s.36(2)(a) of the Act an Agency or the Authority may grant an off-licence if it is satisfied that in the area of Ward, the sale of liquor from a stand alone bottle store, or in either a supermarket or a grocery store would not be economic. The presence of an on-licence does not prevent this type of off-licence being granted.

[19] From the evidence we received at the hearing, it is difficult to resist the inference that any attempt to set up a stand-alone off-licensed business would be unlikely to succeed. Similarly, the inclusion of liquor in a grocery or supermarket would not be economic even assuming the presence of such a business. The reason that “The Old Ward Garage” survives is not only because of the hard work of the proprietors but also because of the range of unique locally produced speciality items that are stocked and sold. Although no actual figures were produced, the anecdotal evidence would suggest that the turnover from the sale of wine is showing a steady increase. There is no attempt to display or sell wines that are not sourced from the area, and no attempt to sell liquor without promoting the district at the same time.

[20] Given the lack of opposition to the application, we propose to renew the licence to give the company the opportunity to review its legal position before the licence next falls due for renewal. By that time it is not an unreasonable expectation to assume that the law may have been amended. If not the licensee will have sufficient time to provide evidence to support the continuing existence of its licence.

[21] The criteria to which we must have regard in considering the renewal application are set out in s.45 of the Act. These criteria are:

• (a) The suitability of the licensee:

(b) The conditions of the licence:
(c) The manner in which the licensee has conducted the sale and delivery of liquor pursuant to the licence:
(d) Any matters dealt with in any report made under section 43 of this Act.

[22] There are no adverse reports about the way this licence has been operated. The only issue raised by the Inspector has now been resolved. We propose to keep the hours within the normal range in which most off-licences must operate. Accordingly, and for the reasons given, the off-licence issued to the Old Ward Garage Limited is renewed for three years to 6 October 2009. The trading hours will be Monday to Sunday 10.00 am to 11.00 pm.

DATED at WELLINGTON this 21st day of December 2006

Judge E W Unwin Ms P A Ballard
Chairman Member

The Old Ward Garage.doc