Yummy Indian Food & Sweets Shop Limited [2006] NZLLA 764 (25 September 2006)

Last Updated: 22 January 2012

Decision No. PH 764/2006

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by YUMMY INDIAN FOOD & SWEETS SHOP LIMITED for an off-licence pursuant to s.31 of the Act in respect of premises situated at 124D Fraser Street, Tauranga, known as “Fraser Street Foodmarket”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at TAURANGA on 29 August 2006

APPEARANCES

Mr Pardeep Singh – agent for applicant
Ms D L Daubney – Tauranga District Licensing Agency Inspector – in opposition

DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application for an off-licence. The applicant is a company known as Yummy Indian Food & Sweets Shop Limited (hereafter called the company). Mr Puran Bhag Singh is one of the company’s two directors and shareholders. The issue in this case is whether the applicant has established that its premises can accurately be described as a grocery store with its principal business being the sale of main order household foodstuff requirements.

[2] Pursuant to s.36 of the Act the company must also show that the business is not a shop of a kind commonly known as a dairy. The point about the latter requirement is that children are attracted to dairies because of the range and display of confectionery, ice creams and milk shakes. When it was agreed that grocery stores would be able to sell wine and beer, Parliament made it clear that shops that cater for large numbers of unaccompanied children may well create an unacceptable risk in terms of liquor abuse.

[3] The business is known as the “Fraser Street Foodmarket”. The shop has been operated as a convenience store on the corner of Fraser Street and Fifteenth Avenue in Tauranga for more than 20 years. The company purchased the business earlier in the year and it is the first occupier to apply for an off-licence. There was no objection from the Police. The District Licensing Agency Inspector opposed the application on the grounds that the applicant failed to meet the criteria in s.36 of the Act. The application was accordingly set down for a public hearing.

The Application

[4] In its application the company supplied a number of supporting documents including turnover figures for the two months of April and May 2006, and confirmation that the proposed use of the premises met the requirements of the Resource Management Act 1991 and the Building Act 2004. The figures were accompanied by a letter which read:

Because the groceries are dated we have at least 4 of each item, the rep only comes once a week with small goods, and the perishables only have a 2-3 week date. We sell a lot more small goods in the summer.

We sell a lot of canned foods and household items.

[5] The figures were as follows:

9 April 2006 1 May 2006

Bread $1,140.00 $940.00 Eggs $350.00 $300.00

Milk $2,470.00 $2,070.00

Grocery $2,600.00 $2,100.00

Tobacco/Cigarettes $14,000.00 $13,000.00

Confectionery $2,000.00 $1,500.00

IceCream/Milkshakes $1,200.00 $600.00

Magazines/Newspapers $1,600.00 $1,100.00

Drinks $5,650.00 $4,497.19

Hardware/Lightbulbs $500.00 $500.00

Pies $500.00 $600.00

FrozenFoods $600.00 $500.00

Total takings $32,610.00 $27,707.19

[6] In addition, the company forwarded the yearly turnover figures from the previous owners. These figures were not certified as required by Regulation 8(2)(j). The letter from the previous owners suggested that groceries accounted for 41% of the total turnover although it is not clear how that figure was reached.

[7] The figures do not make very convincing reading. As can be seen from the details referred to in paragraph [5] above, the sale of tobacco and cigarettes accounted for 43% of the total turnover in April 2006 and 47% of the turnover in May 2006. When items such as confectionery, ice creams, milkshakes and hardware are added (even without drinks), the percentage of non-main order foodstuffs is well over 50%. At first blush therefore, the business may well be trading as a popular convenience store, but it is unlikely that the principal business of the store could be described as the sale of main order household foodstuff requirements.

[8] The applicant had requested hours of trading of Monday to Sunday 7.00 am to 10.00 pm. The size of the premises was said to be a little over 100 square metres.

[9] At the hearing, Mr P Singh represented the company although Mr P B Singh was present. Submissions had been prepared by Mr W ah Chan a licensing consultant in Rotorua. New figures were presented. These figures were again uncertified as required by the Regulations. They were said to be for a recent week’s trading. They showed an astonishing turnround. The sale of cigarettes and tobacco had dropped from over 40% of turnover to 15%. The turnover from the sale of pies had risen from 2% to 30%. This latter figure had been added as a main order household foodstuff bringing the alleged turnover in grocery items to just over 70%.

[10] In our view, given the earlier figures, (supported by the percentages from the previous owner), the figures had been somehow contrived to make the store appear more in keeping with a grocery store.

[11] The District Licensing Agency Inspector visited the store in June 2006. She noted that the range of perishable goods was very limited. Not only was the fridge containing pre-packaged meats almost empty, but the variety of fresh fruit and vegetables was minimal. The quantity of goods was certainly increased by the time of a later visit. The Inspector doubted that the shop was patronised specifically to purchase main order foodstuffs as there were two supermarkets within 700 metres. She contended that the main counter was very like that of a dairy with mainly confectionery on display. She spoke to Mr P B Singh who said that he sold about $60 worth of fruit and vegetables a week.

The Authority’s Decision and Reasons

[12] The Authority has attempted to define main order household requirements from time to time. In Application by Douglas-Oliver Corporation LLA 6/90 the Authority stated:

We regard the latter (main order household requirements) as being easily recognisable by most New Zealanders. They are the items the majority of New Zealand families purchase once a week from either a supermarket or a grocery.

[13] In recent cases the Authority has accepted that this definition is no longer appropriate. In Caltex New Zealand Limited LLA 167/2001 the Authority had this to say:

As “convenience stores” have proliferated, shopping patterns have changed; not surprisingly so too has the range of goods offered in particular stores. Rather than buying “once a week”, a market for more frequent “convenience” or “impulse” purchases have been met.

[14] The company is governed by the provisions of s.36(1) and (3) of the Act. These are as follows:

(1) Except as provided in subsections (2) and (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.

[15] This means that the applicant company has 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.

[16] Secondly, the applicant company must satisfy the Authority that the premises are not a shop commonly known as a dairy.

[17] 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 presence of trolleys in 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.

[18] We apply the J and H Company criteria to the present case.

The Turnover Percentages

[19] On the uncertified figures provided, there is no way that the applicant can establish that main order household foodstuffs are the principal items sold. Because of the variety of goods for sale, it may be more difficult to classify the premises as a dairy. It seems to us that the reason for the store’s popularity is its convenience.

Number and Range of Items

[20] We acknowledge that the greater the number and depth of foodstuff items available, the more likely a premise may be classified as a convenience or grocery store and not a dairy. However, the range of products is not as important as the quantity of products that are sold. In other words, there is no point in stocking a large range of items in order to be classified as a grocery, if those items are rarely if ever sold.

[21] In the present case, 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. The corollary to the first argument is 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.

Size of the Premises

[22] In terms of the supervision of licensed premises, and compliance with the Act and the off-licence, 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. In a small crowded shop without designation an off-licence can be inappropriate.

[23] 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.”

[24] In the present case, the size of the shop is in the marginal category.

The Layout of the Premises

[25] The layout gives the appearance of being a dairy. The grocery products are limited and the shop is cluttered with the products such as confectionery. The main counter is full of items designed to attract children and the impulse buying of sweets and chips. There is a large ice cream container for scoops for children. There are no trolleys although there is a limited number of shopping baskets.

The View of the Premises

[26] Our view of the premises confirmed the figures. The company is restricted by the size of its premises as to the range and quantity of foodstuff items that it can sell as well as the need to maintain the stock levels for the popular items. We accept that that the shop could be categorised as a convenience store and not a dairy. For us the issue of whether the premises could be classified as a dairy or a convenience store was a more marginal call.

[27] Nevertheless we had the clear view that combined with the findings listed above, the premises did not give the appearance of a grocery store of the type described in s.36(1)(d)(ii) of the Act. Its principal business is not the sale of main order household foodstuffs.

[28] The application must therefore be refused.

DATED at WELLINGTON this 25th day of September 2006

Judge E W Unwin Ms P A Ballard
Chairman Member

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