Kims Trading Limited, re [2006] NZLLA 244 (6 April 2006)

Last Updated: 5 March 2010

Decision No. PH 244/2006

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by KIMS TRADING LIMITED pursuant to s. 31 of the Act for an off-licence in respect of premises situated at Shop 2, 200 James Street, Whakatane, to be known as “Kims Liquor”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at WHAKATANE on 3 March 2006

APPEARANCES

Mr P D Swain – agent for applicant
Mr I P Major – Whakatane District Licensing Agency Inspector – to assist
Sergeant A B Hilterman – NZ Police – to assist
Mrs R E Clunie - objector – in opposition
Mrs M P Dee – objector – in opposition
Mr M Valach – objector – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application by Kims Trading Limited (the company), for an off-licence pursuant to s.31 of the Act. The proposed premises are situated at 200 James Street, in Whakatane. The commercial building in which the business is to be sited, has three shops. One of the shops is a fish and chip takeaway premises. The other two shops currently consist of one area known as the “Mananui Dairy”.

[2] The dairy is being operated by a company owned by Mr Karamjeet Singh Hothi and his wife, Armardeep Kaur. If the licence is granted, they plan to subdivide the shop into two. Apparently no building consent is required. It is intended that the middle shop will then operate as a separate stand-alone liquor store, the principal business of which, will be the sale of liquor. This part of the shop is presently used for storage. The hours requested are from 7.00 am to 11.00 pm. The trading hours for the dairy are not as extensive as this, and it is not expected that the new business will be open during the proposed hours either. The company is simply seeking flexibility.

[3] Mr Hothi and Ms Kaur are the shareholders and directors of the new company. They have both completed a course of training for their General Managers’ Certificates, and prior to moving to Whakatane, they obtained experience in operating a stand-alone bottle store. Both have undertaken, that if General Managers’ Certificates are granted, such certificates will be used exclusively in the bottle store.

[4] The application was accompanied by a certificate from the Whakatane District Council confirming that the premises are situated in the Commercial A zone of the Transitional Whakatane District Plan. The site is zoned Business 1 under the proposed Whakatane District Plan. The certificate confirmed that the proposed use of the premises meets the requirements of the Resource Management Act 1991. In other words, the retail selling of liquor on the site is a permitted activity, and according to the District Plan, the proposed business is unlikely to have any significant impact on the surrounding amenities.

[5] There was no opposition from the Police. In his report, Senior Sergeant Jenkins suggested that it would be helpful if a condition of the licence required the licensee to have 24-hour recorded video surveillance at the entrance and counter areas, as well as a monitored burglar and panic alarm system. The Police had no issue with the suitability of the applicants.

[6] The District Licensing Agency Inspector noted that the Whakatane District Council did not have an approved liquor policy, although he understood that one might be considered in 2006. He entered a pro forma objection on the basis that the premises are currently trading as a dairy, and no alterations to the premises have taken place. Under the Act, it is not permissible for an off-licence to be granted in respect of a shop which is commonly known as a dairy. Subject to the physical separation of the premises, he considered that the application meets the requirements of the Act.

[7] The Inspector had checked the premises after the application had been filed, and believed that the notice attached to the front door was quite small. As there was considerable public interest in the application, he prepared a larger notice for public display. In making up the notice, he inadvertently wrote 2/200 King Street rather than 2/200 James Street. The committee of residents opposing the application, sought to have the advertising process repeated. However, the error was not the company’s doing, and the media publicity has been such that nobody could seriously claim that they had incorrect knowledge about where the premises are to be located. In those circumstances, we have no hesitation in issuing a s.111 waiver.

[8] Judging by the letters of opposition, we believe that there was initially widespread confusion if not suspicion, about the application. Many residents had difficulty in reconciling the present dairy with the proposed liquor store. Some felt they had been misled by the two different names. Public notification of the application attracted no less than 115 objections, a few of which have since been withdrawn. Most of the objectors addressed resource management issues such as the location of the premises being too close to schools, increased traffic noise, increased traffic pollution, lack of lighting, and the presence of unsupervised children in the area. Some contended that there were enough licensed outlets in the area, and others referred to potential anti-social behaviour, and noise nuisance. In many cases, the criteria contained in s.35(1) of the Act were not addressed.

[9] A standard complaint was that there is insufficient opportunity for residents to exercise their rights to protect a residential area from the establishment of a liquor outlet, that might increase the level of anti social activity.

[10] Some objectors referred to the proposed hours of trading, and the company’s suitability. Even though the hours are consistent with others of the genre, the objections met the criteria, and accordingly, a public hearing was scheduled. At the hearing, approximately 45 citizens/objectors were in attendance. They were skilfully represented by three of the objectors, and we appreciated their presence. In addition, a written submission was received from a Mr L Searle. It is abundantly clear that the proposal has aroused considerable public antipathy.

[11] A public meeting to discuss the issue was held on 17 October 2005. It was chaired by Neighbourhood Watch co-ordinator, Margaret Dee, and attended by about 110 residents. Most if not all were opposed to the application. The meeting reinforced the community’s decision to oppose the application.

The Application

[12] Mr K S Hothi confirmed that the proposed shop will have a separate access from James Street, and the bottle store will be entirely separate from the dairy. He advised that the dairy currently trades from 6.00 am to 8.00 pm in the summer, and 6.30 am to 7.30 pm in the winter. He tried to allay the fear of the objectors by stating that the company intended to adopt a policy of requesting identification of persons appearing to be 25 or under. Although the company had not initially applied for any designation, Mr Hothi confirmed that a supervised designation would be appropriate. This would make it an offence for any minor to be on the premises, without a parent or legal guardian.

The District Licensing Agency Inspector

[13] Mr I P Major is the Liquor Licensing Inspector for the Whakatane District Licensing Agency. He provided extensive background material to the application. He explained that the proposed shop is approximately 600 metres to the east of the James Street Primary School, and the Whakatane Intermediate School which are both opposite each other. There is also a small reserve close by, incorporating swings and a scout den.

[14] He noted that there are four off licence premises in King Street approximately two kilometres from the proposed shop. These are two supermarkets, and two stand-alone bottle stores. All have varied authorised trading hours between 7.00 am and 11.00 pm.

The Police

[15] Senior Sergeant B R Jenkins has been in charge of the Whakatane Police Station since July 2004. He set out some of the concerns held by the Police if the off-licence were to be granted. The Police felt that with its location in the heart of the residential area, the shop could be targeted by juvenile offenders. The Police believed that if alcohol was more readily accessible, there was a potential for an increase in youth alcohol related crime. He noted that in each of the four controlled purchase operations in the area over the 12 months to November 2005, 50% or more premises had sold liquor to the volunteer. In the last operation in November 2005, 40% of the sales were made from off-licence premises. He confirmed that the Police had no concerns about the suitability of the company to be the holder of a licence.

The Objections

[16] In terms of research and documentation, the objectors had mounted a major campaign to stop the establishment of the bottle store. There is a large group of sincere people who have grave concerns about the proposed business. The quality of the material presented to us had a significant impact on us. On the other hand, we could have been forgiven for thinking we were presiding over a resource consent application. Although the objectors tried to stay within the criteria set out in s.35(1) of the Act, the arguments inevitably embraced their major concerns of the potential impact of the new business on their quality of life.

[17] Mrs R E Clunie lives close to the proposed shop. She referred us to a joint submission made by the Ministry of Health, the Police and ALAC to a Ministry of Justice consultation paper on the sale of liquor and enforcement issues. The submission referred to a number of small family owned licensed grocery and convenience stores, where the law in relation to the presence of certificated managers was often ignored. We agree that this is the case. On the other hand, in the present case, the company has seen fit to employ a liquor consultant. Our experience is that businesses which are advised by such consultants, are less likely to neglect to follow the law.

[18] In terms of the hours and days of trading, Mrs Clunie referred to the unsupervised children who walk past the shop on their way to and from school. She produced a letter from the principal of the Intermediate School expressing concern about increased vandalism. It was Mrs Clunie’s evidence that the reserve close by, was already a congregating place for unsupervised children in the evenings and weekends. Mrs Clunie also referred to the insufficient lighting in the immediate area. She suggested hours of trading as follows:

Monday to Friday 10.00 am to 6.00 pm
Saturday 10.00 am to 4.00 pm
Sunday Nil

[19] Mrs Clunie also contended that the designation of the premises should be restricted. She referred to the object of the Act, and produced the Toi Te ora Public Health report on ‘Alcohol, Gambling and Fast Food Outlets within the Bay of Plenty and Lakes Region’. The report states that local authorities within the Bay of Plenty and Lake regions are over-represented in off-licences. That document includes the comment:

International evidence confirms that a high density of alcohol outlets is directly correlated with increased alcohol-related harm.

[20] On the other hand, it needs to be stressed that the Sale of Liquor Act 1989 no longer requires an applicant to establish need. Parliament has essentially legislated for a ‘free market’ for liquor outlets. Other licensed premises are prevented from opposing any new applications. (s.35(2)).

[21] Mrs Clunie presented a petition signed by 203 residents who currently support the “Mananui Dairy”, but who stated that if the dairy sells alcohol, they would re-assess their support for the dairy. It is not clear whether they still believe that there is no intention for the dairy to sell alcohol. As stated above, the Act specifically disenfranchises any dairy from selling liquor.

[22] In summary, Mrs Clunie made a plea for a district liquor policy which might limit the number of liquor outlets in the community. She contended that fears about the reduction of the community’s safe, desirable, and healthy environment, were the major reason for the vigorous opposition to the licence.

[23] Mrs M Dee noted the lack of any realistic opportunity given to the community to voice an objection to a licence in the absence of any Council policy. She correctly perceived that given the suitability of an applicant, the Act places emphasis on the conditions which may be negotiated in granting a licence. She submitted that the applicant has shown a lack of suitability because one of the directors did not appear to understand or accept the community’s concerns about social responsibility and neighbourhood care.

[24] Mrs Dee also referred to the presence of school children, the locality of the bus stop, the nearby playground, and the fact that unsupervised children frequent the fish and chip shop and the dairy. Mrs Dee expressed reservations about the potential for alcohol abuse if the licence was granted with a consequential reduction of community safety, including in particular, the insidious spread of domestic violence. It was her belief that the presence of a liquor store would reverse the good results which had been achieved by the Police in reducing crime in the area. Mrs Dee produced a number of letters from supporting agencies all concerned about the impact of the store on the community’s quality of life.

[25] Mr L Searle sent in a submission which supported the previous comments. He suggested trading hours of:

Monday to Saturday 11.00 am to 6.00 pm

Sunday 11.00 am to 5.00 pm

[26] In what could have been seen as ‘the smoking gun’, Mr Mark Valach, the manager of Bethel House (a Christian Rehabilitation House for Men), called a young male witness to give evidence. “Levi” was born on 29 December 1988. He gave evidence that he visited the dairy more than 15 times. He had done so to purchase cigarettes. He stated that he had never been asked for identification. On some occasions he had been served by Ms Kaur and on other occasions he had been served by Mr Hothi. He stated that he had not complained to the Police because he wanted to keep purchasing cigarettes. This evidence had been put in summary form to Mr Hothi when he gave evidence. Mr Hothi denied selling tobacco products to minors, and stated that he did not remember “Levi”.

The Authority’s Decision and Reasons

[27] As all parties appreciate, the criteria to which we must have regard when considering an application for an off-licence are restricted to the matters set out in s.35(1) of the Act. The criteria are:

(a) The suitability of the applicant:

(b) The days on which and the hours during which the applicant proposes to sell liquor:

(c) The areas of the premises, if any, that the applicant proposes should be designated as restricted areas or supervised areas:

(d) The steps proposed to be taken by the applicant to ensure that the requirements of this Act in relation to the sale of liquor to prohibited persons are observed:

(e) Whether the applicant is engaged, or proposes to engage , in –

(i) The sale or supply of any other goods besides liquor, or

(ii) The provision of any services other than those directly related to the sale or supply of liquor, -

and, if so, the nature of those goods or services:

(f) Any other matters dealt with in any report made under section 33 of this Act

[28] The only criteria which could be regarded as relevant to this application are the suitability of the applicant company, and the days and hours of proposed trading. In this case, certain issues were raised about the suitability of the company, and in particular the evidence of sales of tobacco to a minor. On this issue, it is regrettable that there was no complaint made to the Police. Although we found that '’Levi'’ was quite credible, in our view it would be quite wrong to refuse a licence based on unsupported evidence. On that basis, any person could come before us, and complain that he/she was allowed to become intoxicated, or was the subject of a variety of abusive behaviour from an applicant. These types of issues are better resolved in a criminal court.

[29] The preferred approach to the issue of suitability is contained in the comments of Panckhurst J in Page v Police (unreported HC V Christchurch AP 84/98 24 July 1998). He stated:

“Section 13(1)(a) provides that the applicant for an on-licence must demonstrate his or her suitability. In other words what is required is a positive finding. That implies an onus upon the applicant to demonstrate suitability. Such suitability is not established in a vacuum but in the context of the particular case: for example, the place, the intended business (here in a difficult central city location), the nature of the business itself, the hours of operation and the intended activities, provide the basis for the assessment of the individual.”

[30] In this case, we are discussing the establishment of an off-licence in a small block of shops. The issue is whether we are satisfied that the company and its directors and employees will obey the law, particularly with regard to the sale to prohibited persons as defined in s.2 of the Act. There is a reasonably high threshold to be met, to displace the absence of concerns by the reporting agencies. The evidence in this case created a doubt in or minds about the suitability of the company.

[31] On the other hand, the licensee will commence business against a background of judicial and parliamentary acceptance of controlled purchase operations. Small businesses of this type, do not have a good record of refusing sales to minors. However, in view of the potential loss of business if systems are not put in place, we are confident that the company and its directors will obey the law.

[32] In Cayman Holdings Limited LLA 145/2001 the Authority stated:

“The Authority’s approach has been to satisfy itself that the applicant is suitable and will uphold the law. The Police or District Licensing Agency Inspector are empowered to apply to vary, suspend or cancel a licence pursuant to s.132 of the Act if problems arise. Apprehension of problems alone is not sufficient to prevent a suitable applicant, particularly one supported by a District Licensing Inspector and the Police from exercising rights granted by the District Council.”

[33] In other words concerns by residents about increased criminal or anti-social behaviour, will not in themselves be sufficient to prevent the grant of a licence. In the majority of licence applications, the essential issues to be determined by the Authority will relate to the suitability of the applicant, and the days and hours of operation. The tailoring of conditions in each licence to meet each particular factual situation is the responsibility of the Liquor Licensing Authority, or if unopposed, the District Licensing Agency.

[34] Pursuant to s.37(5) of the Act, we are given power to have regard to the site of the premises in relation to neighbouring land use, only when fixing the days and hours of trading. In such circumstances, we are entitled to take into account the predominantly residential nature of the area, and the presence of the two schools, and the reserve. Our policy has been to act in a conservative way when granting a new licence on the basis that an applicant may request extended hours after the first probationary year.

[35] Parliament has deliberately separated the process of determining site suitability with licence suitability. It is the local authority which determines whether the site is suitable. It does so by reference to planning requirements including the particular zone in which the proposed business is located. It is the Agency or Authority which then determines whether an applicant is suitable.

[36] The applicants and the objectors need to be reminded that a liquor licence is granted in the first instance for 12 months. If renewal is sought some of the community concerns can be re-examined in the light of evidence then available. In this way the applicant has a clear incentive to ensure that it complies with the resource management requirements of the Whakatane District Council.

[37] We do not accept the argument that the establishment of an off-licence will lead to an increase in liquor abuse or disorderly behaviour, although we agree that there is potential for this to happen. Although there have been instances where licensees have sold to person under the age of 18, our experience is that there are few if any incidents of liquor abuse in and around off-licence premises. We accept that a different scenario can arise if liquor can be purchased by young people and subsequently consumed to excess. Both Mr Hothi and Ms Kaur will be aware that it only needs one incident of a sale to a minor or an intoxicated person, and suspension applications would follow.

[38] There is a final and important consideration involved. As the objectors pointed out, section 4 sets out the Act’s objective as follows:

• (1) The object of this 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 as far as that can be achieved by legislative means.
  
• (2) The Licensing Authority, every District Licensing Agency, and any Court hearing any appeal against any decision of the Licensing Authority, shall exercise its jurisdiction, powers and discretions under this Act in the manner that is most likely to promote the object of the Act.
  

[39] In an appeal by Goldcoast Supermarket Limited and Klmos Supermarkets Limited, Wellington High Court AP123/00 dated 9 February 2001, Wild J considered the relationship between s. 35 and the Act’s objective. He stated:

“Section 4(2) required the Authority in hearing the application to exercise its functions under the Act “in the manner that is most likely to promote the object of this Act” (again my emphasis). In practical terms, I think that means granting applications only to responsible applicants who satisfy the Authority that they have suitable premises and will have proper controls over the sale of liquor from those premises during the hours of sale which they are seeking. Section 4 is not itself a consideration under s. 35(1). There is no requirement on the Authority in s 35(1) in granting an application to achieve a reduction in liquor abuse.”

[40] The latter emphasis is ours, but the message is clear. We cannot ignore the statutory criteria, and refuse an application on the grounds that to do so will contribute to the reduction of liquor abuse. We have no power to refuse the grant of a licence to further the aim of the Act, or in response to local opinion on issues which may not be a ground of objection – i.e. matters not specified in s. 35(1) of the Act.

[41] For our part, we are satisfied as to the matters to which we must have regard as set out in s.35(1) of the Act. Given that the applicant is suitable, and has a resource management certificate, then an off-licence is appropriate. We grant the applicant an off-licence for the sale or delivery of liquor on or from the premises described in the licence to any person for consumption off the premises.

[42] Having regard to the site of the premises, the authorised trading hours will be 10.00 am to 9.00 pm, seven days a week. The premises will be designated as supervised. A copy of the licence setting out the conditions to which the licence is subject is attached to this decision.

[43] The licence will not issue until the expiry of 20 working days from the date of this decision. That period is the time provided by s.140 of the Act for the lodging of a notice of appeal. In addition we will require a final building certificate that physical separation has been achieved. The applicant is not entitled to sell liquor until the licence is issued.

[44] The applicant’s attention is drawn to ss.48 and 115 of the Act obliging the holder of an off-licence to display:

(a) A sign attached to the exterior of the premises so as to be easily read by persons immediately outside each principal entrance, stating the ordinary hours of business during which the premises will be open for the sale of liquor; and

(b) A copy of the licence, and the conditions of the licence, attached to the interior of the premises so as to be easily read by persons entering through the principal entrance; and

(c) The name of the manager on duty is to be displayed in a prominent position inside the premises, so as to be easily read by persons using the premises.

DATED at WELLINGTON this 6th day of April 2006

Judge E W Unwin Mr J C Crookston
Chairman Member

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