Major v Raj Gurinder Holdings Limited and Singh [2007] NZLLA 816 (30 August 2007)

New Zealand Liquor Licensing Authority

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Major v Raj Gurinder Holdings Limited and Singh [2007] NZLLA 816 (30 August 2007)

Last Updated: 13 February 2010

Decision No.PH 816/2007
PH 819/2007

IN THE MATTER of the Sale of Liquor Act 1989

IN THE MATTER of an application pursuant to s.132

of the Act for cancellation of off-licence number 025/OFF/42/2002 issued to RAJ GURINDER HOLDINGS LIMITED in respect of premises situated at 21 State Highway 30, Te Teko, formerly known as “Ross Four Square Discount” and now known as “Te Teko Suppa Market”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for cancellation of General Manager’s Certificate number GM 025/26.13.30500 issued to GURINDER SINGH

BETWEEN IAN PAUL MAJOR

(Whakatane District Licensing Agency
Inspector)

Applicant

AND RAJ GURINDER HOLDINGS LIMITED

First Respondent

AND GURINDER SINGH

Second Respondent

AND

IN THE MATTER of an application by RAJ GURINDER HOLDINGS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at 21 State Highway 30, Te Teko, known as “Te Teko Suppa Market”

AND

IN THE MATTER of an application by GURINDER SINGH pursuant to s.123 of the Act for renewal of a General Manager’s Certificate

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Members: Ms J D Moorhead
Mr P M McHaffie

HEARING at ROTORUA on 26 July 2007
Submissions received from respondents 5 August 2007
Submissions received from applicant 8 August 2007

APPEARANCES

Mr I P Major – Whakatane District Licensing Agency Inspector – applicant and in opposition to renewal of off-licence and manager’s certificate
Mr P D Swain – agent for first and second respondent and applicants for renewal
of off-licence and manager’s certificate

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] There are effectively four matters before the Authority for determination. They all relate to a supermarket situated on State Highway 30 in the small township of Te Teko. The business used to be known as “Ross Four Square Discount”, and its name has recently been changed to “Te Teko Suppa Market”. The premises have been trading with a supermarket style off-licence, (allowing for the sale of wine and beer), since November 2002. The licence fell due for renewal on 20 November 2006. The authorised hours for liquor sales are from 7.00am to 10.00pm daily.

[2] The off-licence is held by Raj Gurinder Holdings Limited (hereafter called the company). Mr Gurinder Singh and his wife Manjit Kaur are the company’s directors and shareholders. Mr Gurinder Singh has held a General Manager’s Certificate since 2004 and his certificate fell due for renewal on 31 October 2006.

[3] This is the second occasion that the company has been before us for licensing breaches. In December 2004, the business failed a controlled purchase operation. On that occasion, the company was sent a warning letter. In November 2005, the company failed a second test. Ms Manjit Kaur was the duty manager at the time and made the sale. Both the company and Ms Kaur accepted that suspensions were appropriate.

[4] In the decision of Adrian Bernard Hilterman v G S Trading (NZ) Limited and others LLA 392-400/2006, the Authority issued an ‘on the papers’ decision covering a number of premises that had failed the test, including the company and Ms Kaur. Pursuant to the decision the company’s off-licence was suspended for seven days from 7.00am on Monday 3 July 2006. Ms Kaur’s General Manager’s Certificate was suspended for a month from 1 July 2006.

[5] It was decided that checks would be made to see whether the company was complying with the suspension order. On the evening of Friday 7 July 2006, a young female aged between 10 and 12 was observed walking out the front door of the store carrying a carton of beer. She was Ms Kaur’s daughter. She appeared to be heading for an open door of a car parked outside the premises. When she saw the Police car parked further down the street, she turned and ran back inside the store. It was established that the carton of beer had been sold to a member of the public for $23.95.

[6] As a consequence the company and Mr Gurinder Singh and Mrs Kaur appeared before us on 28 August 2006 in respect of an application to cancel the off-licence. (See Ian Paul Major v Raj Gurinder Holdings Limited and others LLA PH 709-712/2006). The basic allegation was that liquor had been sold when the licence was suspended. It was revealed that Mrs Kaur had been convicted and fined $5,000 in the District Court for selling liquor at a time when there was no authorisation to do so. There was also an allegation that the company had failed to appoint a manager, and notify the appointment. Following the hearing, the off-licence was suspended for three months from October 2006 to January 2007. In addition Mr Singh’s General Manager’s Certificate was suspended for two months. Mrs Kaur’s application to renew her certificate was refused.

[7] Two further enforcement applications were filed by the District Licensing Agency Inspector on 18 April 2007. The grounds for the application to cancel the off-licence are that the licensed premises have been conducted in breach of ss. 165(1), 49(1), 130 and 115 of the Act. The Inspector’s allegations referred to the fact that there was no authorised manager on the premises making any sale of liquor illegal. His basic concern was that there had been no appointment of a duty manager since the licence was issued. This was an issue raised at the previous hearing.

[8] The ground for the application to cancel Mr Singh’s manager’s certificate is that he has failed to conduct the licensed premises in a proper manner. The allegation in respect of Mr Singh was the same as for the company. In other words the conduct complained of was the failure to appoint a manager, and notify the authorities of that appointment.

[9] The third matter before us is Mr Singh’s application to have his General Manager’s Certificate renewed. He duly obtained the Licence Controller Qualification. In view of the history of the matter, the Inspector decided to test Mr Singh as to his knowledge of the Act. He was given a closed book test which he failed, gaining a mark of 65% as against the expected pass mark of 85%. He was given a second different test but failed that also, with a mark of 68.9%. Accordingly the Inspector opposed the renewal of the certificate.

[10] The fourth and final matter to be determined is an opposed application to renew the off-licence. The application drew three objections from members of the public. These objections were based on the hours of operation and the company’s suitability. In the event the objectors did not appear to support their allegations. There was no explanation given for their non-appearance. In those circumstances we are unable to give any substantive weight to the objections.

[11] When objectors fail to appear, and no explanation is given for their absence, it is very difficult to assess whether they are still concerned about the renewal of the licence, or whether they may have changed their minds. The safest course is to treat the objections as having been filed, but carrying little probative value. The same logic applies to the letter received from the Police. They indicated that they would not be supporting the renewal application. Although Senior Sergeant M R Van der Kley was called by the Inspector to give evidence, there was no formal appearance on the part of the Police.

[12] Prior to the hearing the Inspector reported that the company was still failing to comply with s.130 of the Act. This was the main basis for his objection to the renewal of the licence.

The Hearing

[13] Senior Sergeant M R van der Kley is in charge of the Kawerau Police Station in the Eastern Bay of Plenty. He referred to the licensing history of the premises. He stated that the Police firmly believed that both renewal applications should be refused. However, he candidly acknowledged that he had no evidence of any further licensing breaches since the respondents had been the subjects of enforcement orders imposed on 13 September 2006. (See paragraph [6] above). He obliquely referred to phone calls that the Police had received about the company’s trading activities, but accepted that no allegations of impropriety had been established.

[14] Mr I P Major has been a Liquor Licensing Inspector with the Whakatane
District Licensing Agency for the past four years. Because of the history of licensing breaches, he decided that it would be appropriate to test Mr Singh’s current knowledge of the Act before reporting on his application to renew his manager’s certificate. He was aware that Mr Singh had sat and passed the transition test for his Licence Controller Qualification.

[15] On 12 January 2007, Mr Singh completed a written closed book examination. He failed four of the 17 questions giving a mark of 65.6%. We understand that a pass of 85% is regarded as satisfactory. Mr Major advised Mr Singh of the results and suggested that he study the Act before sitting another test. He also advised Mr Singh that the company needed to appoint a manager pursuant to s.130 of the Act. A copy of the notification form was left with Mr Singh.

[16] On 1 February 2007, Mr Singh sat a different closed book test. On this occasion he answered 20 questions out of the 29 that were posed. This represented a mark of 68.9%. Once again Mr Major advised Mr Singh of the results and once again he reminded Mr Singh that no managerial appointment had been made.

[17] Two months passed. Because there was still no response to the request for notification of a manager, the enforcement applications were filed. Once these had been served, Mr Singh took advice from Mr P D Swain, a licensing consultant. Mr Swain immediately arranged for the necessary appointment to be made and notified.

[18] Mr Swain made the observation that the Agency’s renewal application form was deficient in that from 1 April 2004, the Sale of Liquor Regulations 1990 had been amended. In the new renewal form, the applicant is required to state the names and certificate numbers of those persons that the licensee had appointed as duty managers. Had the form been altered in line with the amended Regulations, then Mr Singh would have been required to state the name of all managers currently employed by the company. In that situation the company would have been compliant with its obligations under s.130 of the Act, (apart from the lack of further notification to the Police and the Authority).

[19] Mr Singh accepted that he had made errors of judgement in trying to personally complete all the paper work associated with the licence. He accepted that he could have done a better job. Our refusal to renew his wife’s General Manager’s Certificate compounded his problems. Mr Singh was adamant that the company’s internal procedures had now been toughened up as a consequence of the appearances before us. For example it was confirmed by Mr Major, that on the day of the hearing, there was a large sign at the shop to state that no liquor could be sold to the public as the duty manager was away.

[20] Mr Singh pointed out that when he had sat the transition test he had obtained a 100% pass mark. He stated that he was nervous when he sat the tests with Mr Major, and given that English is his second language, he had difficulty in understanding some of the questions. He acknowledged that he had ample time to understand the transition test as he had the paper in advance.

The Authority’s Decision and Reasons

[21] In any application to renew a General Manager’s Certificate, the starting point must be the criteria to which we are required to have regard. These criteria are set out in s.126 of the Act and are:

(a) The character and reputation of the applicant;
(b) Any convictions recorded against the applicant since the certificate was issued or last renewed;
(c) The manner in which the manager has managed the sale and supply of liquor with the aim of contributing to the reduction of liquor abuse;
(d) Any matters dealt with in any report made under section 124 of this Act.

[22] The previous appearances before us are helpful as background material and are relevant in particular to the manner in which Mr Singh has managed the sale and supply of liquor over the last three years. It is noted that his certificate was suspended for two months in October 2006 with the Authority commenting:

“As the dominant partner in the relationship and the person who made the managerial decisions for the business, Mr Singh failed to conduct the premises in a proper manner.”

[23] On the other hand, Mr Singh has been sanctioned for his conduct, and it would be unfair to use that conduct as a basis for imposing any further penalty such as the loss of the certificate.

[24] The basis for the objection to the renewal of the certificate is Mr Singh’s failure to pass the closed book tests to a level of 85%. In Brian Lawrence Pardoe LLA PH 1948/99 comment was made about an applicant’s objection to an Inspector’s request for an interview and a test. The Authority commented:

“What appears to be argued is that the Inspector has no right to ask preliminary questions, either in written form or face to face interview. If we were to uphold that position, the process of renewal of certificates once granted throughout New Zealand would tend to become a ‘right’ rather than a privilege.”

[25] On the other hand, Mr Singh passed the Licence Controller Qualification transition test with a pass rate of 100%. It is clear that the transition test is in standard form applicable to all applicants. The Agency test was prepared for the occasion. Taking into account Mr Singh’s explanation, we think that the two marks of over 65% are sufficiently high to warrant a renewal of the certificate.

[26] However, we believe that a reduced period of renewal is appropriate. This is partly because of the concerns raised by the Inspector and partly because of Mr Singh’s conduct as licensee in failing to respond to the calls to notify the appointment of a manager. We believe that it is appropriate to review the situation concerning his manager’s certificate in a year’s time.

[27] We turn to the application to cancel Mr Singh’s manager’s certificate. It was alleged that he had failed to conduct the licensed premises in a proper manner. However such conduct must be managerial misconduct if his certificate is to be suspended or cancelled. In this case Mr Singh’s misconduct was said to be his failure to appoint a manager, and notify the authorities of that appointment.

[28] Pursuant to s.130 of the Act, it is the licensee who must give notice of the appointment of any manager or temporary or acting manager. Mr Singh is the alter ego of the company and in reality the licensee. However, he was also from time to time the manager of the business. The two concepts are different. As the de facto licensee, Mr Singh failed to give notice that he had been appointed. However, this was not a managerial duty. In those circumstances the claim that he failed to conduct the premises in a proper manner cannot be sustained.

[29] The renewal of the off-licence is governed by the criteria set out in s.45 of the Act as follows:

(a) The suitability of the licensee;
(b) The conditions attaching to 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.

[30] In this case the manner in which the licensee has conducted the sale and supply of liquor over the last three years is an important consideration. On the other hand it has already been severely punished. The licence has already been suspended for a week, followed by a further suspension for three months. In addition there has been a Court imposed financial penalty of $5,000. We believe that it would be unfair to use the same facts to refuse to renew the licence.

[31] On the one hand the failure to appoint a manager is serious. As Mr Major pointed out, it has been held that if a licensee fails to give notice of the appointment of a manager, pursuant to s.130 of the Act, then any sale of liquor under the licence is in breach of s.165 of the Act. That section carries a maximum penalty of $20,000. See Taylor v AAA New Zealand Limited LLA PH 1150/00.

[32] There are two aggravating features. The failure continued from the issue of the off-licence in November 2002 to 28 May 2007, a period of four and a half years. The failure continued despite the Authority’s comments in its decision in Ian Paul Major v Raj Gurinder Holdings Limited and others (supra).

“In addition, there has been no notification of the appointment of either Mr Singh or Ms Kaur as managers. The penalty for such default under s.172A of the Act is $5,000. Mr Singh needs to take advice as soon as possible if he is to retain his business. It is imperative that the company complies with the law.”

[33] There are some mitigating features. These include

(a) The failure to alter the renewal document in accordance with the amended regulations;

(b) The lack of any evidence that the premises was ever operated in the absence of a certificated manager;
(c) Mr Singh’s inability to understand his obligations; and
(d) Mr Swain’s prompt attention to the requirements once he had received instructions.

[34] The issue is not one that would lead us to refuse to renew a licence. However, we believe that either the period of renewal should be reduced, or the licence should be suspended or both. We believe that it has been established that the licensed premises have been conducted in breach of ss.165(1), and 130 of the Act. There is no evidence that no manager was appointed but there is ample evidence that the appointment was not notified. We regard the failure to take any action between our decision last September, and May of this year as an aggravating factor.

[35] On the other hand, we agree with Mr Swain. It is our view that cancellation of the off-licence would represent an unreasonable response to what is after all a technical (albeit important) breach of the provisions of the Act. We trust the company can comply with the law during the suspension period.

Orders

[36] For the reasons we have given we make the following orders.

(a) Off-licence number 025/OFF/42/2002,issued to Raj Gurinder Holdings Limited, is suspended for five days from 7.00am on Monday 24 September 2007 to 7.00am on Saturday 29 September 2007.

(b) The off-licence issued to Raj Gurinder Holdings Limited is renewed for two years to 20 November 2008.

(c) The General Manager’s Certificate issued to Gurinder Singh is renewed for two years to 31 October 2008.

(d) The application for the cancellation of Mr Singh’s General Manager’s Certificate is refused.

DATED at WELLINGTON this 30TH day of August 2007

Judge E W Unwin
Chairman

Te Teko Suppa Market.doc