Davidson v Crosseroads Holdings Limited and Crosse [2008] NZLLA 1439 (16 October 2008)

New Zealand Liquor Licensing Authority

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Davidson v Crosseroads Holdings Limited and Crosse [2008] NZLLA 1439 (16 October 2008)

Last Updated: 9 February 2010

Decision No. PH 1439-1442/2008

IN THE MATTER of the Sale of Liquor Act 1989

IN THE MATTER of an application pursuant to s.132 of the Act for suspension of on-licence number 064/ON/5/2007 issued to CROSSEROADS HOLDINGS LIMITED in respect of premises situated at 30 Cains Terrace, Timaru, known as the “Royal Hotel”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number 064/GM/26/2007 issued to GAIL HELEN CROSSE

BETWEEN ANNETTE ELIZABETH DAVIDSON

(Timaru District Licensing Agency Inspector)

Applicant

AND CROSSEROADS HOLDINGS LIMITED

First Respondent

AND GAIL HELEN CROSSE

Second Respondent

AND

IN THE MATTER of an application by CROSSEROADS HOLDINGS LIMITED pursuant to s.18 of the Act for renewal of an on-licence in respect of premises situated at 30 Cains Terrace, Timaru, known as the “Royal Hotel”

AND

IN THE MATTER of an application by GAIL HELEN CROSSE 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
Member: Dr J Horn

HEARING at TIMARU on 25 September 2008

APPEARANCES

Mrs A E Davidson – Timaru District Licensing Agency Inspector – applicant and in opposition to applications for renewal of on-licence and General Manager’s Certificate
Mr P C Dalziel – for respondents and applicants for renewal of on-licence and General Manager’s Certificate
Sergeant G A McCrostie – NZ Police – in opposition to applications for renewal of on-licence and General Manager’s Certificate
Mr P N Shaw – representing Medical Officer of Health – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] There are effectively four matters before the Authority for determination. They all relate to a hotel, trading as the “Royal Hotel”, situated in Cains Terrace, in Timaru. The premises have been trading under present ownership since the existing business was purchased in March 2007. The on-licence was granted to Crosseroads Holdings Limited (hereafter called ‘the company’) on 18 June 2007.

[2] The “Royal Hotel” is a long established hotel with accommodation on the first floor for 35 persons, including private quarters for management and staff. There is a public bar, guest dining room, and kitchen on the ground floor. Mrs Gail Helen Crosse is the company’s sole director. She has held a General Manager’s Certificate since 8 June 2007, and is the holder of the Licence Controller Qualification. Mrs Crosse had previously signed an undertaking that she will only use the manager’s certificate while managing the “Royal Hotel”.

[3] Pursuant to the on-licence, liquor may be sold at any time on any day to any person who is for the time being living on the premises, whether as a lodger or an employee. Subject to the provisions of s.14(2) of the Act, the authorised trading hours for the licence are:

Monday to Sunday 7.00 am to 3.00 am the following day

[4] Both the company and Mrs Crosse duly applied for renewal of the licence and the General Manager’s Certificate. No changes to the conditions of the licence were sought. The District Licensing Agency Inspector opposed both applications on the grounds that the company had twice failed a controlled purchase operation. The Police and the Medical Officer of Health also opposed both applications, but only after the company had apparently failed a second controlled purchase operation on 3/4 May 2008.

[5] The first controlled purchase operation took place on 16 September 2007. At that time Mrs Crosse was not the manager on duty. As a consequence of the illegal sale, the company agreed that the on-licence would be suspended for 24 hours (see LLA 1199/2007). In their respective reports, the monitoring agencies alleged that the company had failed a second test on 3/4 May 2008. It was claimed that Mrs Crosse was the duty manager at the time of the sale. The two illegal sales in September 2007 and May 2008 were the sole basis for the adverse reports.

[6] On 17 July 2008, the Authority received applications for the suspension of the company’s on-licence, as well as Mrs Crosse’s General Manager’s Certificate. The grounds for the application to suspend the on-licence were that the licensed premises had been conducted in breach of ss.155(1) and 164(1) of the Act. These sections create offences for selling or supplying liquor to minors, and permitting minors to be in a restricted or supervised area. The ground for the application to suspend the General Manager’s Certificate was that Mrs Crosse had failed to conduct the premises in a proper manner. The particulars in support of both applications referred solely to the two illegal sales.

[7] Mr P C Dalziel appeared for Mrs Crosse and the company. On their behalf he acknowledged that the sales had taken place, and accepted the evidence of the minor without requiring her to appear at the hearing. Mr Dalziel pointed out that when they took over the business, neither Mrs Crosse nor her husband had experience in controlling licensed premises. He asked the Authority to note that because of its location, migrating drinkers often called at the premises on their way to other late night premises at the southern end of the town. He submitted that Mr and Mrs Crosse had worked hard in response to the agencies’ concerns. He accepted that a reduced period of renewal might be appropriate in the circumstances.

[8] Mr Dalziel was aware that the Police were going to lead evidence about licensing incidents other than the sales to minors. He re-iterated that the Police had no issue with the renewal of the licence or the certificate until the second illegal sale had been made. He contended that there was no evidence that any of the patrons had been served with liquor while being in an intoxicated state.

[9] As a matter of convenience, it was decided to hear the enforcement applications in conjunction with the renewal applications. However, we believe that as a matter of fairness, the evidence of the Police can only be used in relation to the two renewal applications. It seemed to us that the respondents were fortunate not to be facing other enforcement applications.

The Hearing

[10] The minor was aged 17 years and 10 months at the time of the sale. She said that she walked straight to the bar at about 12.20 am on 4 May 2008. There were no people at the door. The other two volunteers accompanied her. She ordered two “Smirnoff Ices”, and these were supplied without hesitation, and without any request for identification. She then took a sample of the liquor before leaving.

[11] Mrs Annette Elizabeth Davidson is a Liquor Licensing Inspector employed by the Timaru District Council. She gave evidence that on 15 September 2007, a controlled purchase operation had been conducted in Timaru. On that occasion the manager on duty had sold liquor to a volunteer minor without requesting identification. She confirmed that in decision LLA 1199/2007, the on-licence had been suspended for 24 hours.

[12] Mrs Davidson confirmed that three volunteers aged 17 years were used in the controlled purchase operation that took place on the evening of 3 May 2008. She noted that the three volunteers had been allowed into the bar, which is designated as a supervised area by the on-licence. The following day she had visited Mrs Crosse to advise her that an illegal sale had taken place. Mrs Crosse had acknowledged that she was the duty manager at the time of the sale. At a subsequent interview Mrs Crosse was asked what steps she had taken after the first incident, to prevent a recurrence of this type of activity. She answered by asking what more could she do? She did say that verbal instructions had been given to staff, although no specifics were mentioned.

[13] Geoffrey Alan McCrostie is a Police Sergeant based in Timaru. He holds the licensing portfolio. He contended that the “Royal Hotel” had been a cause for concern since being taken over by Mr and Mrs Crosse. The concerns related to intoxication levels in the early hours of the morning. He submitted that the problems were partly the result of the licensee’s lack of experience.

[14] The Sergeant referred to a number of incidents indicating disorder. He did so by producing briefs and summaries of facts rather than the evidence of an eyewitness. The first incident occurred on 7 September 2007, at about 1.00 am. Three people were drinking at the premises. They went outside where they had a heated discussion. This argument deteriorated into a fight. The participants were on the ground when the Police arrived. One of the participants had just vomited before the Police arrived. He was described as “extremely intoxicated”. A woman, who was described as intoxicated, was heard to be yelling and screaming.

[15] The second incident was said to have taken place at 2.35 am on 8 September 2007. A woman was outside the “Royal Hotel”. She had been drinking and was said to be intoxicated. Her partner had been arrested. She tried to prevent the arrest from being effected. She ended up kicking the door of the Police car. The third incident occurred at 12.40 am on Saturday 15 September 2007. A patron was at the hotel. She threw a bottle at a lead-light window causing damage. She was spoken to and found to be very intoxicated.

[16] Sergeant B J Ennis conducted a licensing check of the “Royal Hotel” on Sunday 26 August 2007, at 12.35 am. He spoke with Mrs Crosse who identified herself as the duty manager. He noted that there were about 100 people present listening or dancing to a live band. The only food appearing to be available was a supply of pies. The Sergeant noted that there were no doormen on duty. He observed that broken glass, vomit, and cannabis material were found on the footpath outside the hotel. Although Mr Crosse had stated that he would sort out the broken glass, it was still there an hour or so later.

[17] Constable Kerry Lancaster is from Christchurch. She carried out a covert study of six licensed premises in Timaru on Saturday 26 July 2008. She entered the bar of the “Royal Hotel” at about 11.55 pm. She noted that there were no security people on the door. She estimated that there were 200 people inside the premises. She noted that the most popular drinks were shots, and that light beer was only available on tap. She asked for a non-alcoholic drink, and was advised that all they had was ginger ale. The bar person had difficulty in completing the sale, and she gained the impression that providing non alcoholic-drinks was regarded as a hassle.

[18] The Constable saw a shot glass being smashed, but the person who had smashed the glass was not spoken to. A highly intoxicated patron accused the Constable of breaking the glass. She ignored the person and he stumbled away. She saw another patron who she thought was intoxicated. He was on the back of one of his friends, swinging his legs about. She noted that two females were asked for identification before being served with drinks.

[19] The Constable was in the premises for about half an hour. She had seen a male at other premises earlier in the evening. That man entered the bar with his friend. The Constable thought he looked extremely intoxicated. The two men walked straight up to the bar where they were served drinks without hesitation. The Constable noted that members of the public were able to gain unrestricted access to the bar via a third unmanned door. The Constable thought that the bar was far too busy not to have a much greater security presence.

[20] The Constable made a number of suggestions aimed at improving the management. These suggestions included:

• [a] Limiting the number of people who could be present at any one time;
  
• [b] Employing security to check for intoxication and identification;
  
• [c] Promotion of non-alcoholic drinks;
  
• [d] Staff monitoring intoxication levels;
  
• [e] Ensuring that the duty manager is managing the premises rather than serving liquor; and
  
• [f] Reducing the amount of shots being sold.
  

[21] Sergeant D T Murray was on duty on Sunday 4 May 2008 and was observing the “Royal Hotel” at about 1.00 am. He observed two patrons embroiled in an argument. They were pushing and shoving each other. The ruckus continued even though other patrons tried to separate them. When other members of the Police arrived, the Sergeant entered the premises to arrest the parties for disorderly behaviour. In doing so, he thought it unusual that he did not receive any assistance from members of staff. He considered that both parties were heavily intoxicated. He later discussed his concerns with Mrs Crosse. These concerns included the unrestricted ability of patrons to access the bar from more than one entrance, as well as the ability of patrons to take their drinks outside.

[22] When she gave evidence, Mrs Crosse confirmed that she has given up a lot of the personal management of the business, and now leaves this to her husband. She stated that there had been a lot of Police visits but as far as she was concerned, no official complaints had been made to her. She confirmed that the company had now closed two of the entrances to the bar. In addition she had more security people available. These door-people are instructed to check identification of the patrons entering the premises, as well as intoxication levels. They also assist in ensuring that liquor is not taken outside. Patrons who get through the system are given a stamp on the hand to assist bar staff, although the expectation is that bar staff will also check at the bar.

[23] Mrs Crosse apologised for the fact that minors had been sold liquor. She seemed receptive to assistance being offered particularly in the area of staff training. She said she had appreciated the advice she had received from the Police after the visit of Constable Lancaster.

The Authority’s Decision and Reasons

[24] We deal first with the company’s application for the renewal of its on-licence. The application is governed by s.22 of the Act. We are required to have regard to the following matters:

• (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 supply of liquor pursuant to the licence:
• (d) Any matters dealt with in any report made under section 20 of this Act.
  

[25] The renewal application is the first to be dealt with since the business was established, and is therefore the most important. As a matter of law, all new licences are granted for one year. This gives the agencies and members of the public the opportunity to monitor the business. If an applicant shows a lack of commitment to host responsibility, or to the conditions of the licence, then the Authority has the power to refuse to renew the licence, or alter its conditions, with particular attention to the trading hours. In this way all licence holders have a clear incentive to show not only that they are committed to the welfare and safety of their patrons, but also the object of the Act.

[26] In this case, the company carries the onus of establishing issues such as its suitability, and the manner in which the sale and supply of liquor has been conducted. In this case the first year’s report card has been less than impressive. Under the heading of suitability, Mrs Crosse was not only the duty manager, but also the company’s alter ego. Her lack of experience in the industry revealed her inability to focus on licensing issues. For example, she needs to address the security and liquor abuse issues that have resulted from the unlimited public access to the bar. It will be a matter of considerable importance to see what steps she has taken to address the suggestions made by Constable Lancaster. Mrs Crosse could do a lot more about staff training and promoting the availability of food.

[27] Under its on-licence, the company has the following responsibility in relation to the supply of food.

“Food must be available for consumption on the premises as follows:

At all times when the premises are authorised to be open for the sale of liquor, food of a range and style similar to that shown on any menu submitted, or a range of snack foods in the nature of pies, sandwiches, filled rolls, pizzas and the like, must be conveniently available for all members and their guests and the availability of those foodstuffs must be notified to them by appropriate notices throughout the premises.”

[28] On Sunday morning 4 May 2008, three minors were on licensed premises in breach of s.164 of the Act. One had been served liquor in breach of s.155 of the Act. At that time, Mrs Crosse was the manager on duty. The sale was aggravated by a similar type of sale, made eight months earlier. While it is accepted that the company has already paid a penalty, the facts show that it has yet to learn from its earlier mistake. In such circumstances, a licensee must expect that the sanctions will become more and more punitive. It is simply not good enough for Mrs Crosse to ask what more she could do.

[29] And of course we have the evidence about levels of intoxication. Mrs Crosse is aware of the Act’s objective under s.4 of the Act as set out below. She may be unaware that whenever we exercise a discretion, we are required to do so in a manner that will promote that objective as follows:

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.

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.

[30] If there are incidents of liquor abuse then we are much more likely to exercise what discretion we have, against the licensee. The only factors saving the company are that the conduct was not included in the grounds for suspension of the licence or the certificate. Further, the proof of intoxication levels was not to the standard that we might expect. In a perfect world, we would expect a member of the Police to interview the patron, and then have his or her assessment corroborated by a colleague. The duty manager would then have an opportunity to talk with the patron and form a separate judgement. Generally such assessments will be conducted away from the bar.

[31] We expect to hear evidence about the loss or impairment of the patron’s bodily or mental faculties. A general statement such as, “There were a number of patrons, many of whom were intoxicated” is not likely to have enough probative value to result in a finding that there has been a breach of the Act. The observation that a person was moderately intoxicated would be equally lacking in evidential value, even from an experienced officer. What is needed is a description of the loss or impairment, or the reasons why the patron is said to be demonstrably intoxicated. On the other hand, there will be occasions (such as the one described by Constable Lancaster), when such assessments are impracticable.

[32] In all the circumstances we do not believe that it would be reasonable to refuse to renew the licence. We agree with the suggestion that there should be a reduced period of renewal to give the company a further ‘probationary’ year. The company will have a little more than 12 months to show that new systems are in place, and the management is robust enough to ensure that the company operates within the law. The company needs to be able to demonstrate that the lessons from the hearing have been learned, and the recommendations in this decision have been implemented.

[33] We turn to the application to renew the General Manager’s Certificate. We are governed by s.126 of the Act. That section reads:

In considering any application for the renewal of a manager’s certificate, the Licensing Authority shall have regard to the following matters:

(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 pursuant to the licence 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.

[34] The onus is on Mrs Crosse to establish that she is suitable to continue to hold the certificate. A person’s character and reputation have always been accepted as crucial components of a person’s suitability to manage licensed premises. In addition she is required to show that she has managed the business sufficiently efficiently and well, so as not to interfere with the certificate being renewed. Not only was she the duty manager when a sale was made to a minor, but also the incidents described in the Police evidence hardly display that the aim has been to contribute to the reduction of liquor abuse. It could be argued that on the facts presented to us, liquor abuse has been encouraged. And all this happened within the first probationary year of the certificate.

[35] We do not believe that it would be reasonable to refuse to renew the certificate. We agree with the suggestion that there should be a reduced period of renewal to give Mrs Crosse a further ‘probationary’ year. She will have a minimum of 12 months to demonstrate that the lessons have been learned, and her management of the premises is much more focussed.

[36] The final issue is to determine whether it is desirable to make suspension orders against the company and Mrs Crosse. We have concluded that the licensed premises were operated in breach of ss.155 and 164 of the Act. We believe that it is desirable to make orders in this case. As was said by Gendall J in the High Court decision The Mill Liquorsave Limited v Grant David Verner CIV-2003-485-874:

“I have no doubt at all that deterrence (i.e.to “discourage” others) from selling to minors, as well as special deterrence to the licensee before the Authority, is a relevant consideration and squarely within the objects of the Act. A reasonable system of control of the supply of liquor includes the need to be able to secure compliance with licence conditions and the law through the exercise of discretionary disciplinary powers specifically given to the Authority by Parliament. If it could not suspend a licence given to a corporate body where a “fault” or breach of the Act was that of a manager, its powers of control over licensed persons or bodies could be rendered nugatory or severely curtailed.

In my view the phrase “licensing end” is no more than shorthand for “advancing the purposes of the legislation” which places liquor licensing and enforcement largely in the hand of the Liquor Licensing Authority. General deterrence of other licensees from breaches of the law, where there are general concerns of an increasing degree of access by underage persons to liquor often through direct purchases from licensees, is a factor or consideration which squarely falls within a legitimate licensing end or aim to be considered by the Authority when exercising its discretion to suspend a licence or not.”

[37] Any financial loss associated with the suspension of a licence or certificate, should be measured against the social costs that society absorbs in respect of alcohol related harm experienced by young people. In this way, recognition will be given to those premises and managers who, when offered the same opportunity to sell to the minor, resisted the temptation to do so.

Orders

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

• [a] On-licence number 064/ON/5/2007, issued to Crosseroads Holdings Limited, will be renewed for 18 months. The licence will next fall due for renewal on 18 December 2009.
  
• [b] General Manager Certificate number 064/GM/26/2007, issued to Gail Helen Crosse, will be renewed for 18 months. The certificate will next fall due for renewal on 8 December 2009.
  
• [c] The on-licence issued to Crosseroads Holdings Limited is suspended for two days from 7.00 am on Saturday 29 November 2008 to 7.00 am on Monday 1 December 2008.
  
• [d] The General Manager’s Certificate issued to Gail Helen Crosse is suspended for four weeks from Monday 10 November 2008.
  

DATED at WELLINGTON this 16th day of October 2008

Judge E W Unwin
Chairman

Royal Hotel.doc