Surreal Bar and Restaurant v Newell [2008] NZLLA 602 (23 April 2008)

Last Updated: 3 October 2010

Decision No.PH 602/2008-
PH 604/2008

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application pursuant to s.132 of the Act for suspension of off-licence number 068/ON/49/02 issued to SURREAL BAR LIMITED in respect of premises situated at 7 Rees Street, Queenstown, known as “Surreal Bar and Restaurant”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number 068/GM/119/2006 issued to ERICH STADLER

BETWEEN KEITH PHILIP NEWELL

(Police Officer of Queenstown)

Applicant

AND SURREAL BAR LIMITED

First Respondent

AND ERICH STADLER

Second Respondent

AND

IN THE MATTER of an application by ERICH STADLER 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 QUEENSTOWN on 23 April 2008

APPEARANCES

Sergeant K P Newell – NZ Police - applicant
Mr N B Horn – agent for both respondents
Ms T J Surrey – Queenstown - Lakes District Licensing Agency Inspector – to assist
Mrs A M Fowler - representing Medical Officer of Health – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] Surreal Bar Limited (hereafter called the company) is the holder of an on-licence for licensed premises in Queenstown known as the “Surreal Bar and Restaurant”. Ms Melissa Colleen Stadler is the company’s sole director and shareholder. She operates the business with her husband Erich Stadler. Mr Stadler has held his current General Manager’s Certificate since 15 September 2006.

[2] The tavern style on-licence authorises trading hours from 12.00 noon to 5.00 am the following day, seven days a week. Pursuant to the licence, the whole of the premises are designated as supervised.

[3] On Monday 8 December 2003, the on-licence was suspended for three days. (See LLA PH 886-888/2003). The order was made because a 16 year old male had been found on the premises on one occasion, and three 16 year olds had been found on the premises two days later. In addition, there was a separate incident involving an intoxicated patron.

[4] There are two related enforcement applications currently before us. The first application is for the suspension of the company’s on-licence. The application is based on the sole ground that the licensed premises had been conducted in breach of s.155(2) of the Act. This section creates an offence for any person other than the licensee or manager, to sell or supply liquor, or allow any liquor to be sold or supplied, to any person under the age of 18.

[5] The allegations were that in the course of a routine Police visit to the premises on Thursday 21 June 2007 at 2.45 am, two minors aged 16 and 17 were found playing pool. One of the minors (the elder one), had been able to purchase two bottles of beer, which both minors were consuming when the Police arrived. He was not asked for his age or for identification. He apparently told the Police that he knew about this bar and others like it, because usually bar staff do not ask for identification. The person who made the sale was subsequently fined $300 and costs in the Queenstown District Court.

[6] The second application is for the suspension of the General Manager’s Certificate issued to Mr Stadler. The ground for this application is that the manager failed to conduct the licensed premises in a proper manner. The application is based on the allegation that Mr Stadler was the manager on duty at the time of the incident, and failed to supervise the salesperson to ensure that the Act was not breached.

[7] There is a third matter to be dealt with concerning the renewal of Mr Stadler's General Manager’s Certificate due on 15 September 2007. The application was opposed ‘pro forma’ because of the outstanding enforcement application.

[8] Mr N K Horn appeared as agent for the company and for Mr Stadler having recently received instructions. On his clients’ behalf he accepted that a sale had been made. Indeed the parties were good enough to agree on a statement of facts, which closely follows the above summary.

[9] The parties also agreed to accept the Authority decision and discretion as to whether a sanction was appropriate, and if so, the nature of such sanction. It was also accepted that the salesperson had received appropriate training on his responsibilities, and that the breaches were viewed seriously by the respondents. In particular it was acknowledged that since the licensee had appeared before us in September/October 2006, there had been a dramatic improvement in the running of the bar, and no other adverse matters had been reported.

[10] Mr Horn submitted that the failure was that of the employee salesperson rather than systemic. He argued that the salesperson had been properly trained, and that if the duty manager had been aware of the situation there would have been no sale.

[11] Mr Horn also referred to the original Karara decision in the name John Frances Armstrong & another v The Brougham Tavern Limited and others LLA PH 216-229/2002. In that decision we commented that we did not consider it desirable that managers who had no physical involvement in the sales should have their certificates suspended. Effectively Mr Horn contended that it was undesirable to order any sanction, because proper controls had been put in place, and that both the company and Mr Stadler had done everything they could to prevent an illegal sale occurring.

[12] Mr Stadler gave evidence and stated that it was a quiet night/morning in the bar. There was a doorman at the front door, two bar staff downstairs, and the salesperson upstairs. He was present as duty manager although there was no evidence about where he was. He said he was shocked that the two people upstairs looked so young. Ms Stadler stated that he was heavily involved with staff training and after making so much effort, was not happy with what had happened. He said that he relied on the salesperson to monitor the upstairs bar and felt let down.

[13] The salesperson had subsequently told him that he had made the sale because he had seen the two young people drinking in other bars. He received a verbal warning. He wrote a letter confirming that he had received proper training about not selling to prohibited persons. Mr Stadler confirmed his belief that “Surreal Bar and Restaurant” was well managed but the bartender had taken an unacceptable approach. He suggested that as duty manager he could not be everywhere.

[14] Ms Stadler spent considerable time preparing her statement. She opined that the salesman had taken a lazy and foolish approach. She felt surprised that the matter had been taken to an enforcement application because of the bar’s improvements, and because there had been no pattern of minors being located on the premises. She also submitted that manager cannot be everywhere, and they have to put their trust in members of staff.

[15] Ms Stadler seemed to place some of the blame on the back door that apparently has to remain open for fire safety reasons. The implication is that the minors entered the premises in this way. She seemed unaware of the possibility of having a one-way door system. She produced a copy of the bar’s alcohol management programme and host responsibility. We accept that the document is a good model of its kind and addresses the relevant issues head on. We understand that staff training now includes a three-day orientation and training programme, followed by a test for which a mark of 100% is required. Ms Stadler pointed out it had been five years since there had been a similar incident involving minors.

[16] By way of a challenge Ms Stadler said that she hoped that any decision would tell her what more she could do. Both she and her husband were at a loss as to why the young person would have suggested that the bar was a soft touch in that staff did not usually ask for identification.

The Authority’s Decision and Reasons

[17] In this case there is clear and undisputed evidence that liquor was sold to two minors in breach of s.155(2) of the Act. Indeed the respondents accepted that this was the case. Accordingly, we find that (a) the licensed premises were conducted in breach of s.155(2) of the Act, and that Mr Stadler failed to conduct the premises in a proper manner.

[18] On 1 April 2000, the law in respect of the management of licensed premises was altered by Parliament. Section 115(1) provided that:

At all times when liquor is being sold or supplied to the public on any licensed premises, a manager must be on duty and responsible for compliance with the Act and the conditions of the licence.

[19] On 1 April 2006, the section was again amended and strengthened. Section 115 now reads:

(1) At all times when liquor is being sold or supplied to the public on any licensed premises a manager must be on duty.

(2) A manager on duty in respect of licensed premises is responsible for-

• (a) The compliance with and enforcement of-
  
  • (i) The provisions of the Act; and
  • (ii) The conditions of the licence in force in respect of the premises; and
    
• (b) The conduct of the premises with the aim of contributing to the reduction of liquor abuse.
  

[20] The latest amendment requires the holders of General Manager’s Certificates not just to comply with the Act but to enforce it as well. Duty managers are now responsible for the way the premises are operated, with the aim of reducing the potential for liquor abuse. Duty managers must now hold the prescribed qualification thereby ensuring that they have been properly trained.

[21] As can be seen, over the last eight years, here has been a dramatic shift in responsibility from licensee to manager. In our view, control of a bar can only be satisfactorily achieved if the duty manager is located at or near the point of sale. In this case we do not know where the duty manager was, but he himself has acknowledged that had he seen the young people they would have been evicted instantly.

[22] The person in charge of the premises is the person whose name is displayed as the duty manager. Pursuant to the provisions of ss.128 and 129 of the Act, licensees are given the power to appoint acting or temporary managers if a manager is temporarily absent for any reason. That means that the appointee’s name is then displayed and the legal responsibility shifts. What we are saying here is that it is not appropriate to expect a person who has had less training and carries no responsibility to act in a managerial capacity unless he is specifically requested and appointed to do so. In our view, the argument that Mr Stadler and/or the company had taken all reasonable steps cannot be sustained.

[23] In the Karara decision we did not make orders against the duty managers who were present but unaware that sales were taking place. However, we gave a general warning that we would do so in the future, and have consistently done so ever since. The period of suspension for such lapses has been steadily rising. We said at paragraph [91]:

“We do not consider it desirable that the managers who had no physical involvement in the actual sale should have their certificate’s suspended. On the other hand the message that managers are vicariously liable will need to get through to the industry. In the future, there would have to be strong reasons advanced, for us not to impose suspensions on managers who have not exercised the control expected of them by law.”

[24] We believe that it is desirable to make suspension orders in this case. We take the view that the making of orders will help secure future managerial compliance. In doing so we take into account that this is a second occasion that the company has been taken before the Authority, and that in this case a sale was made. This is much more serious than the mere finding of a minor on licensed premises.

[25] In the decision of Christchurch District Licensing Agency Inspector v Karara Holdings Limited [2003] NZCA 96; [2003] NZAR 752, 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.”

[26] We accept that the company has already shown new initiatives aimed at ensuring a much greater success rate in the future. We also accept the level of co-operation showed at the hearing, as well as the company’s sincerity about its attitude to the incident. It would not have been possible for us to have issued this decision in this way absent such an approach. In particular we give credit for the dramatic turnaround since the company last appeared before us. We note the invitation to attend the forthcoming drink-safe seminars. If the matter was not so serious, we would have considered exercising our discretion in the respondents’ favour.

[27] On the other hand, any financial loss associated with the suspension of a licence, has to be measured against the social costs that society absorbs in respect of alcohol related harm experienced by young people. All parties accepted that the sale of liquor to minors is regarded as one of the most serious examples of liquor abuse. (See s.4(2) of the Act). The orders to be made reflect that concern.

[28] We are not unaware of the impact that a suspension order is likely to have on the company’s business. For the reasons we have given we have tried to ameliorate the impact of such an order by not imposing a suspension on the day that the minors were found on the premises. We have a policy that sanctions involving minors will generally be heavier where offending is discovered other than through a Controlled Purchase Operation. In the case of Mr Stadler we take the view that the fault was his, rather than his employee’s. We propose to reduce the period of renewal of his certificate. Such action will be reflected in a reduced period of suspension.

Orders

[29] For the reasons given we make the following orders.

• [a] On-licence number 068/ON/49/02, issued to Surreal Bar Limited, is suspended for three days from 12 noon on Sunday 18 May 2008 to 12.00 noon on Wednesday 21 May 2008.
  
• [b] General Manager’s Certificate number 068/GM/119/2006, issued to Erich Stadler, is suspended for 14 days from Sunday 18 May 2008.
  
• [c] Mr Stadler’s General Manager’s Certificate is renewed for 18 months to 15 March 2009, thereby giving him a further ‘probationary’ year.
  

DATED at QUEENSTOWN this 24th day of April 2008

Judge E W Unwin
Chairman

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