Burr v Trust House Limited and others [2007] NZLLA 563 (31 May 2007)

Last Updated: 30 January 2010

Decision No.PH 563/2007 –
PH 564/2007

IN THE MATTER of the Sale of Liquor Act 1989

IN THE MATTER of an application pursuant to s.132 of the Act for the suspension or cancellation of on-licence number 044/ON/148/2005 and off-licence number 044/OFF/149/2005 issued to TRUST HOUSE LIMITED in respect of premises situated at The Square, Martinborough, known as “Pukemanu Tavern”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for the suspension or cancellation of General Manager’s Certificate number 044/GM/373/2007 issued to PARE RURU

BETWEEN WARWICK JOHN BURR
(Police Officer of Masterton)

Applicant

AND TRUST HOUSE LIMITED
First Respondent

AND PARE RURU

Second Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Member: Mr P M McHaffie

HEARING at MASTERTON on 22 May 2007

APPEARANCES

Sergeant W J Burr – NZ Police – applicant
Mr A G Sherriff – for respondents

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] These applications concern a tavern located in The Square in Martinborough, trading under the name of “Pukemanu Tavern”. The on and off-licences are held by Trust House Limited (hereafter called the company). The company was formed in 1998 to separate the Masterton Licensing Trust’s social and community functions from its business enterprises. The company owns and operates some 22 licensed premises in the general area, including three supermarkets. The on and off-licence for the “Pukemanu Tavern” permit trading from 7.00 am to 1.00 am the following day seven days a week. Although there is a separate bottle store, off-licence sales may also be made from anywhere on the premises.

[2] There are effectively three matters for determination. They are applications to (a) suspend or cancel the on-licence, (b) suspend or cancel the off-licence, and (c) suspend or cancel a General Manager’s Certificate. The applications relate in part to a controlled purchase operation that was conducted back in December 2005. The operation was carried out by the Police, Choice Health, and the Masterton District Licensing Agency. The “Pukemanu Tavern” was one of the premises that were visited by an underage volunteer. The duty manager, Mr Marshall John Te Tau made an off-licence sale to the 17-year old volunteer without the volunteer being challenged as to his age or being asked to provide acceptable means of identification.

[3] Applications for the suspension of the company’s off-licence, as well as Mr Te Tau’s General Manager’s Certificate, were duly filed by the Police. Both the company and the duty manager consented to the imposition of suspension orders. In a decision dated 28 June 2005 in the name of Warwick John Burr v Rajendra Kumar Patel and others LLA 477- 483/2006, the company’s off-licence was suspended for three days from 7.00am on Wednesday 26 July 2006. Mr Te Tau’s General Manager’s Certificate was suspended by consent for 30 days.

[4] The present applications stem from a further operation which was aimed at testing the company’s willingness to sell liquor for consumption off the premises, during the time that the off-licence was suspended. On Friday 28 July 2006 an undercover member of the Police was able to purchase a bottle of wine from the bar as a takeaway item. The sale was made by a bar-person employed by the company. Ms Pare Ruru was the manager on duty that evening, but was working in the TAB area when the sale was made. She had not been granted her General Manager’s Certificate at the time although it was clear that she fulfilled the general criteria. Her certificate was issued 10 days later on Monday 7 August 2007. It is therefore inferred that she was working as an acting or temporary manager on the night.

[5] The current application for the suspension or cancellation of the on and off-licences and the General Manager’s Certificate, were filed with the Authority on 1 November 2006, and amended applications were filed a month later. The ground for the application to suspend or cancel both licences was that the licensed premises had been conducted in breach of s.165 of the Act. Section 165 creates an offence for any licensee or manager to sell or supply liquor to any person at any time when the licensee is not authorised by the licence or the Act to sell liquor to that person.

[6] The ground for the application to suspend the General Managers’ Certificate is that the manager had failed to conduct the licensed premises in a proper manner. In this case Ms Ruru did not make the sale. It is alleged that since she was the duty manager (albeit by virtue of a temporary manager’s appointment), and therefore responsible for the company’s compliance with the Act, she should be held accountable.

[7] Mr A G Sherriff had received instructions to appear on behalf of the company. He was critical of the fact that it had taken the Police three months to file the applications. He submitted that cancellation of either or both licences, or cancellation of the General Manager’s Certificate would be an unreasonable response to the facts of the case. He argued that there could be no enforcement action taken against the on-licence because the on-licence was being operated legitimately on the night in question. He contended that there could be no action taken against Ms Ruru’s General Manager’s Certificate because it had not been granted when the sale was made. He submitted that there was no proof that the bottle of wine was ‘liquor’ in terms of s.4 of the Act. Finally he argued that there was insufficient proof that the salesperson intended to sell the wine for consumption off the premises.

The Background to the Applications

[8] Mr B J Teahan is the company’s Chief Executive. He had previously been the Chief Executive for 24 years from 1978 to 2002, and had left for five years to undertake university based research study. When he returned to take charge of the company, he noted that its compliance regime had become much more rigid as a consequence of an increased emphasis on licensing standards from the three monitoring agencies. He thought that this had resulted in compliance orientated training (rather than business training). He noted erosion of trust among members of the company’s staff as well as with the Police. He commented that in his view the controlled purchase operations did little to advance his company’s relations with the Police, and that there were better ways to audit the company’s processes. He further advised that the company had introduced internal mystery shopper sting operations subsequent to the controlled purchase operations in 2005 and 2006 and stated that two staff members had been dismissed as a result.

[9] While Mr Teahan is entitled to his views, for his benefit we set out very briefly what happened while he was away from the industry. It is now nearly seven years since the age to purchase liquor was lowered from 20 to 18. This significant reduction in the legal age to purchase liquor was a major social change in New Zealand, and was accompanied by a number of measures, which were designed to bolster the detection and enforcement of breaches of the new law.

[10] When Parliament decided to amend the law, it took the view that the sale and supply of liquor to minors would be treated as a very serious liquor abuse issue. Accordingly, it gave the Act the necessary teeth to actively discourage those who might be tempted to supply liquor to persons under age. Penalties were doubled for all offences, and the penalty for supplying liquor to minors was increased to a maximum of $10,000 (for managers and licensees).

[11] Over the last six and a half years, Parliament, the hospitality industry, District Licensing Agencies, the Police, and officers from Regional Public Health have all responded to widespread public concerns about teenage liquor abuse. A number of initiatives were introduced designed to bring the issue to the attention of those who sell liquor to the public. Among the education methods employed by the agencies, has been the controlled purchase operation. By using this method, the agencies have for the first time, been able to check to see whether off-licences were playing their part in reducing liquor abuse. Every licensee should now be well aware of community concerns about under age access to liquor, and the impact of such access on the safety of the community, as well as the efforts being made to address the problem.

[12] On 7 May 2002, the Authority issued its decision in John Francis Armstrong and anor v The Brougham Tavern Limited and others LLA PH 216 – 229/2002. This became known as the “Karara” decision. In that case, the Authority was confronted by seven applications for suspension following a controlled purchase operation. Three of the licensed premises were supermarkets. One was a convenience store. The other three premises were off-licences associated with a tavern. Six of the off-licences were suspended for five days. The seventh was suspended for three days. All had exemplary records. No specific warnings had been given, and no prosecutions were taken in the District Court against the licensees or the managers. In the decision we said at paragraph [86]:

"Attaining the objective of the Act can be compared with a three-legged stool. The three legs are training, experience and enforcement. All three are necessary to keep the stool standing."

[13] The case was followed by an appeal to the High Court, which effectively stated that the Authority had exceeded its jurisdiction. Subsequently, the Court of Appeal restored the original orders. See Christchurch District Licensing Agency Inspector and another v Karara Holdings Limited and others NZAR [2003] 752. In that decision the Court of Appeal stated:

“This indicates that the function of s.132 is to enable the Licensing Authority to enforce sound management of licensed premises. Its particular role is to enable the Licensing Authority to secure management compliance by licensees, through enforcement steps, in those cases brought before it by the Police or District Licensing Agencies where it appears there have been breaches in licensing standards which are reflected in the grounds for applying for and making orders under s.132”.

[14] On 17 December 2002, the Minister of Justice and the Associate Minister of Health announced that “The Government is very concerned about the widespread negative impacts of alcohol and illicit drugs on the health and social wellbeing of individuals, families and communities. Of special concern is the impact on our young people.” They announced the establishment of a Ministerial Action Group on Alcohol and Drugs. Part of the Action Plan was aimed at examining what further steps needed to be taken to prevent the sale of liquor to underage drinkers. The plan stated that ALAC and the Police would identify ‘best practice’ procedures in enforcing controls of the purchase and consumption of alcohol by those under age, with a view to developing and implementing more effective practices. The Minister of Justice subsequently spoke with industry leaders about the seriousness of the problem. As part of the Action Plan, a new tax was imposed in July 2003 on drinks containing 14 to 23 percent alcohol. The tax increase was intended to counter the growing popularity of ‘alcopops’ favoured by younger drinkers. A special report compiled by ALAC in 2003, showed that up to 87% of young people aged between 14 and 18, defined themselves as current alcohol drinkers.

[15] There was a concern that the use of volunteers to purchase liquor could be seen as an offence against s.162(1) of the Act which reads:

Every person commits an offence and is liable to a fine not exceeding $2,000 who, being under the age of 18 years, purchases any liquor on or from licensed premises.

Consequently, Parliament passed an amendment to the Act in April 2004. This amendment established an exception to the above offence as follows:

Subsection (1) does not apply to a person who purchases liquor on or from licensed premises at the request of a member of the police acting in the course of his or her duties.

[16] This short summary shows that the issue of the controlled purchase operation as an auditing tool has been specifically addressed by Parliament, the High Court, and the Court of Appeal.

The Factual Issues

[17] Constable R R Matthews is a Police officer stationed at Masterton. He has maintained an active interest in liquor licensing issues since 2001. On Friday 28 July 2006 at 7.09 pm he entered the “Pukemanu Tavern” from the entrance closest to the TAB. He noted that the bottle store was closed with appropriate signage. He walked up to the bar where he also noted that there were signs at the point of sale advising patrons that the bottle store was closed. He spoke with Ms H J Mann who was serving behind the public bar.

[18] The Constable commented that the bottle store was closed, but asked whether he could buy over the counter. He observed Ms Mann seeking advice from a more senior male who was also serving behind the bar. She then told him that he could buy anything behind the bar but not from the bottle store. He asked if he could buy beer. The male stated that the undercover Constable was confusing him, so the Constable asked for a bottle of wine to take away. There was a fridge behind the counter with wine in it. Ms Mann went to the fridge asking whether the Constable would like Riesling or Chardonnay. When he answered Chardonnay, Ms Mann returned with an unopened screw top bottle of Five Flax Chardonnay. She advised that the cost was $15. The Constable paid for the wine and left the same way he had come in.

[19] The Constable then wrote up his notes of what had happened. He returned to the bar at 7.34 pm and asked to speak with the duty manager. This time he was in full uniform. Ms Mann was given a warning and was asked a series of questions. The questions and her answers were written down. At the conclusion of the interview she signed the notes and confirmed that they were true and correct. She stated that she was aware of the suspension and understood that this meant that there were to be no sales from the bottle store or the front. She said that she had asked for advice from John Tunnicliffe because she thought “only those bottles of wines were allowed to be sold.” She could not give any rational explanation for why those bottles could be sold.

[20] Ms Ruru was also spoken to. She had no knowledge of the sale. She stated that she was aware that there was to be no sales from over the bar or from the bottle store during the suspension period. She confirmed that her application for a General Manager’s Certificate was being processed at the time.

[21] Ms Mann gave evidence. She is 20 years of age. She confirmed that she had assisted counsel to prepare her brief. She stated that she had started working for the company as a casual bar person in late June 2006 so she was quite inexperienced. She said that she had been called upon at short notice to work on the Friday and this was the busiest she had been. She had never before been asked to sell off-licence liquor over the bar, but had done so once from the TAB room. The evidence showed that the TAB room is the area commonly used by locals to buy off-licence liquor if the bottle store is closed. This is partly because the TAB room used to be the bottle store. The evidence was that it is unusual for patrons to go to the main bar to purchase liquor to take away.

[22] Ms Mann stated that when the patron had asked to buy a bottle of wine, she had a discussion with John Tunnicliffe who was working beside her. He had apparently confirmed that it was all right to sell the particular bottles of wine in the fridge at the bar. We did not hear from Mr Tunnicliffe. Since the incident he had left his employment with the company. When she gave evidence, Ms Mann changed her position. She stated that she had made the assumption that the patron wanted to take the bottle of wine into the restaurant because he had said he was going to take it away. She stated that she did not think he was going to take it home. This was the first mention of the restaurant either at the time of the sale or immediately afterwards. Ms Mann thought she might have made prior sales of wine to restaurant patrons although she was not clear on this issue.

[23] Ms Mann said that it had never occurred to her that the patron might have wished to take the wine home. She produced the sticker on the fridge that advertised bottles of wine at a price of $15 or at $3.50 a glass. Ms Mann stated that the bottle store price for the same wine was $9.95. She said that she did not put the bottle in a paper bag as would normally have happened had the bottle been destined to leave the premises. She also gave new evidence that prior to starting work that evening, Mr Tunnicliffe had told her that nothing in the fridge could be sold to customers who wanted to take it away. When questioned Ms Mann indicated an understanding that wine destined for the restaurant would normally be opened.

[24] Mr M J Te Tau is the outlet manager for the premises. He also gave evidence and confirmed that Ms Mann had not been present when he briefed the staff as to what was to happen during the suspension period. This was partly because she was not rostered on for the days in question. Both he and Ms Ruru stated that the premises had been busier than normal on the night in question. He was not present when the sale was made but called a meeting the next morning. He said that Ms Mann was quite emotional and seemed unsure of what had happened. She nevertheless told him that she had assumed that the bottle of wine was to be taken to the restaurant. He said that when takeaway bottles are sold from the TAB area, they are always placed in a paper bag.

[25] Mr Te Tau gave evidence that because the bar had been busy in the July/August period, they had not opened bottles destined for the restaurant, but they had changed that practice after complaints from the restaurant staff. Although the evidence was not particularly clear, it seems that at the time of the incident the company had a system that there was no wine service in the restaurant, and that diners had to come through to the bar to purchase their requirements. It was not stated whether they were also given glasses. However, since that time, we understand that a full liquor service is now available in the restaurant.

Authority’s Decision and Reasons

[26] The first issue to be resolved is a factual matter. Was there a sale of a bottle of wine for consumption off the premises or was it an on-licence sale? The answer to this question depends on our assessment of the witnesses. This necessitates certain findings of credibility. In our view the best evidence is what is said and done at the time. It is less likely to be inaccurate and untruthful. What witnesses may say at a later time is more likely to have been affected by reflection as well as comments and suggestions from others. This is such a case.

[27] When she was cross-examined Ms Mann acknowledged that she was not sure about whether she should sell the wine or not and had therefore taken advice from a senior bar person. It was clear to us that the answer she had received had nothing to do with whether the wine was to be consumed in the restaurant. On the issue of credibility, we do not accept that Ms Mann made the assumption that this was an on-licence sale at the time. We have a level of scepticism about the explanation subsequently given by Ms Mann and the other witnesses.

[28] We note that there was no mention of the restaurant at the time when the sale was made. The patron did not come from the restaurant area. We note that the Constable had started the conversation with a statement that the bottle store was closed. We note that there was no mention of the restaurant when Ms Mann made her statement half an hour later. To suggest that the liquor was going to be consumed in the restaurant, because the customer stated that he wanted to take it away is, in our view, inherently implausible. Our view of the evidence is that it was a fair test to see whether a member of staff was prepared to sell liquor for consumption off the premises. In summary, the Police have established that the premises were conducted in breach of s.165 of the Act.

.

[29] Before dealing with the issue of the definition of liquor, it is appropriate to confirm that we accept the majority of the remaining submissions made by Mr Sherriff. It is not within our jurisdiction to impose any sanction in respect of the on-licence. The premises were trading legally. We also accept that cancellation of the off-licence would be an unreasonable response given the circumstances. Normally, if licensed premises were found to be trading in breach of a suspension order, we would consider cancellation of the licence. In this case we accept that Ms Mann was inexperienced, and that she may have been confused working in an on-licence and making an off-licence sale from the public bar for the first time. We also note that she had not been briefed by senior management, and she may have been misled by Mr Tunnicliffe. In our view, this was not a deliberate attempt to evade and breach the law. It happened because of the company’s systems failed and its management proved to be inept in enforcing the suspension of the off-licence.

[30] We accept that we are unable to impose any sanction against Ms Ruru’s General Manager’s Certificate. Section 135 of the Act is framed to give us the jurisdiction over persons who are the holders of such certificates. The legislation does not cover persons who are about to be granted a certificate. Senior Sergeant Burr suggested that it was illogical not to discipline a person who was a temporary manager at the time. In Ms Ruru’s case an alternative response would have been to file a late objection to her application, even if it was well advanced. Both the Agency and the Police had 10 days in which to act. In our view we only have jurisdiction over holders of certificates. Therefore the application for the suspension or cancellation of Ms Ruru’s General Manager’s Certificate is dismissed.

The Definition of Liquor

[31] Section 2 of the Act provides that:

Liquor means any fermented, distilled or spirituous liquor (including spirits, wine, ale, beer, port, honeymead, stout, cider, and sherry) that is found on analysis to contain 1.15 percent or more alcohol by volume.

[32] One of the elements to be established is that liquor was sold at a time when the licensee was not authorised by the licence or the Act to make the sale. Put in another way, if the liquid sold was not liquor as defined, then there was no breach. Notwithstanding previous decisions of the Court of Appeal, it is clear from the parentheses used in the 1989 Act, and Part II of the Laking Report, that the analysis applies to all forms of fermented, distilled or spirituous liquor.

[33] Under Standard 2.7.1 of the New Zealand (Australia New Zealand Food Standards Code) Food Standards 2002, the label on a bottle of wine containing more than 1.15 percent alcohol by volume must contain a statement of the alcohol content accurate to within 1.5 percent. The manufacturer of the wine will have subjected the product to analysis, and according to the label will have found it to contain 13 percent alcohol by volume. Bearing in mind the required standard of proof we considered whether a level of 13 percent was sufficiently greater than the 1.15% benchmark to make a finding. However, absent access to the wine company’s methodology and results, and notwithstanding our ability to receive evidence not otherwise admissible (s.109(1) of the Act), we have decided that such a finding would represent a bridge too far.

[34] Section 179 of the Act provides:

In any proceedings for an offence against any of the provisions of this Act in relation to any spirits, wine, ale, beer, port, honeymead, stout, cider, sherry, or other fermented, distilled or spirituous liquor it shall not be necessary for the prosecution to prove that it contains 1.15% or more alcohol by volume unless at least 20 working days before the hearing the defendant puts the question in issue by written notice to that effect served on the prosecution.

[35] We accept that this section does not apply to enforcement proceedings before us. The words “for an offence” and “defendant” and prosecution” give a clear indication that such proceedings are in the nature of summary proceedings in the District Court. It is anomalous that proof can be automatically dispensed with in criminal proceedings from which a conviction may result, yet proof could still be required in a s.132A application following the entry of such conviction.

[36] Accordingly, we accept that Mr Sherriff has the right to call for an analysis. The bottle of wine was produced. It showed on the label that it was “13.0% Vol.”, which could be more explicit. The analysis will be obtained by the Police if a request is now made. Two points need to be made. We see no reason as a matter of the efficient administration of the Act that respondents should not be encouraged to give the same notice to applicants as is currently required by the Act. Mr Sherriff referred to the inconsistency between the 20 working days notice and the 10 working days needed to advise the date of hearing. But all applications are served on respondents well before any hearing. We will certainly refer to this issue in our next annual report to Parliament. The second matter is that if there is a proliferation of such requests, then in the absence of some reasons, the issue of the cost of the analysis may also need to be considered by Parliament.

[37] The remaining application for the suspension of the off-licence will be adjourned pending a decision from Mr Sherriff. If a request is made, an analysis will be obtained. If the analysis shows a level of more than 1.15 percent alcohol by volume, or if no request is made, we will issue a further decision addressing the exercise of our discretion and if necessary, any consequential order. If the analysis shows that the wine is less than 1.15 percent alcohol by volume, the application will be dismissed.

DATED at WELLINGTON this 31st day of May 2007

Judge E W Unwin
Chairman

PukemanuTavern.doc