Combined Rural Traders Society Limited [2008] NZLLA 957 (11 July 2008)

Last Updated: 26 January 2012

Decision No. PH 957/2008

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by COMBINED RURAL TRADERS SOCIETY LIMITED for an off-licence pursuant to s.31 of the Act in respect of premises situated at 418 West Street, Ashburton, known as “Combined Rural Traders”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Member: Dr J Horn

HEARING at CHRISTCHURCH on 24 June 2008

APPEARANCES

Mr M B Couling – for applicant
Ms A R Batcheler – Ashburton District Licensing Agency Inspector – in opposition
Senior Constable D C Oliver – NZ Police – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an opposed application for an off-licence made by Combined Rural Traders Society Limited (hereafter called the company). The company wishes to sell liquor as part of its business as a 'FarmCentre' or rural retail supplier. The application is brought under s.36(2)(b) of the Act. In other words the company contends "that the sale of liquor would be an appropriate complement to the kind of goods sold in the premises". It is this aspect of the application that is the sole basis for the opposition.

[2] The application was filed with the Ashburton District Licensing Agency on 8 February 2008. The principal purpose of the company’s business was shown as rural retail supplies. The premises consist of a relatively new purpose-built building situated at 418 West Street, in Ashburton. The premises were completed in April 2008. The company sought authorised trading hours from 7.30 am to 6.00 pm from Monday to Saturday inclusive. The company intends to sell beer, wine and spirits from the site. There is no intention to sell RTDs.

[3] The company is a well-established rural agent and retail supplier. There are 30 retail sites located throughout the South Island. In excess of 22,000 farmers are members and shareholders in the co-operative. The company’s annual revenue is in the region of $500 million.

[4] Among the services supplied to the rural community are retail 'FarmCentres'. These 'FarmCentres' stock a range of rural merchandise of the type one would normally associate with the agricultural industry. There are several hundred different rural product lines. Ten of the centres have current off-licences similar to the style of licence being applied for.

[5] In the majority of cases, the purchase of products is made by way of a company shareholder card (CRT card). These cards may be used to purchase a variety of products and merchandise (including liquor) from other retailers. A discount is available when the card is used. The evidence showed that the sale of liquor plays a small part in the company’s overall business.

[6] The application was accompanied by a certificate from the Ashburton District Council confirming that the proposed use of the premises meets the requirements of the Resource Management Act. There was no public opposition to the proposal. However, the application attracted opposition from the Police and District Licensing Agency Inspector. The Police opposition was unspecified. However, the Inspector stated in her report that the Police did not believe that the sale of liquor was a “suitable accompaniment to the sale of other goods in the proposed store”. She was of the same view that the premises did not meet the criteria in s.36(2)(b) of the Act. Accordingly the application was set down for a public hearing.

The Application

[7] Peter Gordon Menzies is the company’s Compliance and Quality Assurance Manager. His areas of concern include the Sale of Liquor Act. He confirmed that selling liquor from the various 'FarmCentres' was driven by the company’s shareholders’ requirements and was based on convenience. He said that space limitation as well as competition from other outlets limited the range and prices of liquor sold by the company. As an illustration of its commitment to host responsibility, the company offered to restrict the space used to display liquor, to 10% of the total floor area. In addition he stated that there would be no brand advertising that could be viewed from off site.

[8] Mr Menzies stated that the company’s 'FarmCentres' sold a wide variety of goods under such categories as clothing, fencing equipment, animal health and animal management, agrochemicals and spray equipment, farm merchandise and maintenance equipment, irrigation equipment, stock and pet foods and household supplies. He advised that the household goods comprised groceries as well as toilet paper, soap powder, electrical goods, cleaners, and disinfectant. He stated that on a national (South Island) basis, each main item category contributes the following percentage to total group sales:

Agrichemicals 19.4%

Stockfood 15.1%

Animal Health Products 13.6%

Fencing 7.5%

Household items 2.2%

Liquor (10 stores out of 30) 0.5%

[9] Mr Menzies stated that 10 of the 'FarmCentres' had been granted off-licences on the basis that the sale of liquor was considered to be an appropriate complement to the kind of goods sold in the premises. He contended that another consideration was that the company was carrying on the tradition of stock and station agents, albeit without the stock. He noted that the Temuka store had been selling liquor since 1995.

[10] Mr Menzies gave evidence that the company’s 22,000 shareholders came from a wide range of backgrounds, but were primarily farmers and lifestyle block owners. To become a shareholder a person must derive some form of income from a farming related business. He argued that many farmers had a minimum amount of time when they came to town, and the "one-stop" shop appealed to such time constraints. He submitted that many farmers purchased liquor at the same time as rural products. He acknowledged that the shareholding members could also purchase liquor by using their CRT cards at other licensed outlets including supermarkets.

[11] Mr Menzies produced sales records to show that about 7% of sales are made to members of the public. He concluded:

“The sale of liquor through CRT FarmCentres is simply an addition to the already large range of existing services, which we offer to our shareholders. The sale of liquor and other general goods such as groceries do have a specific connection with farming activities and are considered to complement each other. Farmers and farm staff work hard and in my experience they enjoy a drink after work”.

[12] Mr Murray David Bayly is the company’s General Manager, Corporate Services. He said that the company could trace its origins back to 1927 when a retail trading store was opened in Dunedin called "Producers Ltd". The company was formed as a result of a number of mergers between farmers’ co-operatives. The company continues to trade as a co-operative.

[13] Mr Bayly stated that some 4000 different products are sold through the 'FarmCentres'. He advised that the CRT cards could be used by shareholders at 2300 suppliers nationally. The company operated a loyalty programme like "FlyBuys", and one of the ways that shareholders could redeem their loyalty points was by purchasing liquor.

[14] Mr Bayly gave evidence that although the company had expanded into many divisions, its core business was the provision of farmer supplies to its large farmer client base. He argued that stock and station agents had traditionally sold liquor to their clients and such a service had always been seen as an appropriate complement. He suggested that the shareholders often arrived in working clothes and for that reason did not like to shop in other retail outlets. He said that the company focussed on convenience to farmers.

[15] Mr Bayly confirmed that the decision to sell liquor was based on shareholder demand. In that regard the company had no intention of stimulating demand. He contended that very few if any shareholders came to the store just to buy liquor. He said that 50% of all liquor sales was for beer. He noted that the business was not open at night and generally closed at midday on Saturday. He stressed that the sale of liquor provided a convenient opportunity for the company’s shareholders to get their business done with a minimum of fuss.

[16] Mr M B Couling based his argument on the definition of "complement" in the Collins Concise Dictionary that states:

“A person or thing that completes something.”

[17] He submitted that the availability of liquor for the company’s shareholder farmers provided convenience and a one-stop service that enabled them to complete their business. He therefore contended that liquor was an appropriate complement to rural goods, at least in the eyes of the shareholders. He accepted that not all the rural goods would be an appropriate complement to liquor but the company sold a limited amount of groceries that were clearly acceptable.

[18] In support of his argument Mr Couling referred to the decisions of Elders Pastoral (NZ) Limited LLA 753/94, and Taylors (1998) Limited LLA PH 1161/2000.

[19] Mr Couling stressed that on at least 10 occasions, the relevant District Licensing Agency had considered whether the sale of liquor would be an appropriate complement to the kinds of good sold in one of the company’s 'FarmCentres', and had ruled that it was. He contended that an off-licence was a valuable asset, and argued that it would be an unjust exercise of our powers to refuse the application given the company’s history of compliance, commitment to host responsibility, and the issue of other off-licences to the company.

[20] Mr Couling referred to the evidence that shareholders commonly visit the 'FarmCentres' in order to purchase liquor at the same time as other rural products, so as to avoid having to make another stop somewhere else. He suggested that a drink at the end of a long day outside was an important part of the farming tradition.

The District Licensing Agency Inspector

[21] Alison Rosemary Batcheler is a licensing Inspector with the Ashburton District Licensing Agency. She argued that the sale of liquor was not an appropriate complement to the kind of good sold by the company. While she accepted that similar styled off-licences had been granted she suggested that none had been argued before us save for the decision of Elders Pastoral NZ Limited (supra). In that decision she contended that the principal basis for objection was the storage of liquor in an area with poisons.

[22] Ms Batcheler advised that there were two off-licences granted in the district under s.36(2)(b) of the Act. The principal business of both shops was the sale of tourist items promoted to overseas tourists. She said that both businesses sold a limited amount of New Zealand made wines to complement other New Zealand products. She disputed any suggestion that rural people were any different to town people in their preference for a "one-stop" shop. Ms Batcheler confirmed that there were a number of liquor outlets in Ashburton that accepted CRT cards.

The Police

[23] Senior Constable Douglas Charles Oliver is attached to the Alcohol Strategy and Enforcement Team for the Canterbury Police District. He believed it was the duty of the regulatory agencies to act as "watchmen" for the Authority. He contended that when the boundaries that Parliament had placed around the sale of liquor were threatened, it was their duty to issue adverse reports so that issues such as the present one could be determined.

[24] The Senior Constable maintained that the application was contrary to s.36(2)(b) of the Act, and that any interpretation linking alcohol to farm supplies was far too liberal. He had no concerns about the company’s suitability. He suggested that Parliament had intended that food would be an appropriate complement to liquor. His concern was the effect of such a precedent. He argued that if the application was granted, liquor could be seen to be an appropriate complement to a wide range of products. He submitted that such a precedent would inevitably lead to an increase in the number of liquor outlets and consequential liquor abuse.

[25] The Senior Constable expressed his concern that liquor was being regarded as a normal commodity and not a drug. He produced a copy of a brief of Mr P Menzies to a Resource Consent Committee hearing in Dunedin in which Mr Menzies had stated: “Effectively, liquor becomes another product on the shelf.”

[26] In support of his argument the Senior Constable produced a CRT advertising brochure dated April 2008. This shows a wide variety of farm products for sale including shotgun ammunition, a variety of drenchs and herbicides, fencing gear, dog food, and hardware. He argued that there was no one item that could be regarded as an appropriate complement to the sale of liquor. He also produced the company’s May edition of 'Agline'. This extensive booklet features an advertisement from “Liquorland” offering CRT cardholders 'FlyBuys' points, as well as special prices for certain brands of beer, wine, and spirits.

The Authority’s Conclusion and Reasons

[27] Section 36 of the Act seeks to describe the types of premises in respect of which off-licences may be granted 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.

(2) The Licensing Authority or District Licensing Agency, as the case may be, may grant an off-licence in respect of other premises if the Licensing Authority or District Licensing Agency as the case may be, is satisfied, in a particular case, -

(a) That, in the area in which the premises are situated, the sale of liquor in premises of a kind described in paragraph (c) or paragraph (d) of subsection (1) of this section would not be economic; or

(b) That the sale of liquor would be an appropriate complement to the kind of goods sold in the premises.

(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.

(4) Nothing in subsection (2) (b) of this section shall authorise the grant of an off-licence in respect of any supermarket or grocery store, or any other premises on which the principal business is the sale of food or groceries.

[28] It is up to the company to satisfy us that the sale of liquor in its Ashburton 'FarmCentre' would be an appropriate complement to the kind of goods sold in the premises. In assessing Parliament’s intention it is necessary to look at the words that are used in the section as well as the relevant case law.

[29] On 1 November 1999, the law in relation to the interpretation of statutes was changed. The Act Interpretation Act 1924 was replaced by the Interpretation Act 1999. Previously the interpretation of statutes was governed by s.5(j) of the former Act as follows:

Every Act, and every provision or enactment thereof, shall be deemed remedial, whether its immediate purport is to direct the doing of anything Parliament deems to be for the public good, or to prevent or punish the doing of anything it deems contrary to the public good, and shall accordingly receive such fair, large, and liberal construction and interpretation as will best ensure the attainment of the object of the Act and of such provision or enactment according to its true intent, meaning and spirit.

[30] Now the position is different. The replacing s.5(1) reads:

The meaning of an enactment must be ascertained from its text and in the light of its purpose.

[31] Although it has been accepted that the established jurisprudence under the old Act continues to apply, it seems to us that it is necessary to look first at the text, and then ensure that the meaning ascertained from that text does not offend against the statute’s purpose. It seems to us that it is no longer appropriate to adopt a fair, large and liberal construction and interpretation. Prima facie the words in the statue will bear their plain and ordinary meaning: CIR v Alcan New Zealand Ltd [1994] 3 NZLR 439,443.

[32] Mr Couling referred to the Collins Concise Dictionary definition of "complement" as – "A person or thing that completes something". It is of interest that the third edition of the Collins English dictionary also refers to – "One or two parts that make up a whole or complete each other". The Shorter Oxford English Dictionary (sixth edition) has seven suggestions of which "a completing accessory" seems to be the most relevant. The Concise Oxford Dictionary (ninth edition) suggests "one of a pair or one of two things that go together".

[33] "Appropriate" is defined in the Shorter Oxford English Dictionary (third edition) as – "specially suitable, proper, fitting" and in the Concise Oxford Dictionary as – "suitable or proper".

[34] Mr Couling referred us to Wine & Spirit Merchants of NZ Inc v James Gilmour & Co Ltd [1997] NZAR 134, in which Tompkins J discussed s.36(2)(b) of the Act. This was an appeal against a grant of an off-licence. The appellant argued that the Authority had not considered whether the sale of liquor was an appropriate complement to the kind of goods sold in the premises. In granting the appeal His Honour made these comments:

"Subsection 2(b) is not an easy section to apply. Neither in the section nor elsewhere in the Act is the expression “an appropriate complement” defined. In any application in reliance on that subsection there will need to be detailed evidence of the kind of goods sold on the premises. The Authority will need to decide, having regard to the meaning of that phrase, interpreted in the context of the section and the Act and in accordance with the purposes of the provision, whether, in the particular circumstances of the case, the sale of liquor was an appropriate complement to the kind of goods sold. Each case will need to be decided having regard to its own facts."

[35] Having heard the evidence we are far from satisfied that the sale of liquor is an appropriate or a "fitting" or "proper" or "suitable" complement to the kinds of goods that are sold by the company. We do not believe that the sale of liquor is an appropriate complement or "accessory" to the items in the company store. We do not accept that liquor "goes together" with the goods in the store, nor that it completes the range of goods on display. There may be a link between a hard working farmer and having a drink at the end of a tiring day, but not only is that argument not relevant to the criteria, it could be applied to many vocations.

[36] Mr Couling suggested that buying liquor allowed farmers to complete their business. While this is an ingenious argument, the complement in the section relates to the items for sale and not the convenience of the purchasers. He suggested that household goods could be seen as an appropriate complement. However, his submission was undermined by the evidence that household goods, (including non-food items), represented only 2% of turnover.

[37] The next test is to see whether our interpretation offends against the purpose of the Act. This is set out in s.4 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.

[38] We do not believe that this objective provides much assistance in the construction of s.36 of the Act. It could be argued that a decision to refuse the application would result in an unreasonable system of control. On the other hand while liquor abuse issues are non-existent in this case, there is a potential for more outlets to follow if the precedent is set. In particular there would be an increased opportunity for the sale of spirits and RTDs. According to the Australian National Drug Research Institute (2007), the greater availability of alcohol in a society will increase the average consumption of its population when such changes reduce the "full price" of alcohol, i.e. the real price of beverages at retail markets plus the convenient cost of obtaining them.

[39] Prior to 1989, many stock and station agency premises held wholesale licences authorising the sale of all types of liquor. They were able to continue when the Act was passed by virtue of a converted off-licence. However, when such premises changed hands or a new licence was applied for, technically a new licence could not be granted, because stock and station agents were no longer mentioned in the types of premises that could hold an off-licence.

[40] The Authority at that time decided that since the Act was a liberalising enactment it would be inconsistent with the spirit of the Act to decline off-licences for premises that had previously held off-licences. Accordingly, off-licences continued to be granted to stock and station agents on the basis that the sale of liquor was an appropriate complement to the kinds of goods being sold in the premises.

[41] Mr Couling quoted the decision of Elders Pastoral NZ Limited (supra). This was an application by a stock and station agent for an off-licence under s.36(2)(b) of the Act. As Ms Batcheler pointed out the primary concern was the storage of poisons in the same area as liquor. The evidence was that the applicant sold agricultural chemicals, hardware, stock food, clothing, animal health foodstuffs, and swimming pool equipment and accessories. The Authority said:

“In contrast the sale of liquor from the premises of stock and station agents – for off premises consumption – is a long standing tradition in New Zealand. In most provincial cities and towns under earlier sale of liquor legislation wholesale licences were held by the likes of Wright Stephenson, Dalgetys, NZ Loan and Merc, Williams and Kettle Limited , Hawkes Bay Farmers, Common Shelton to name but a few. As submitted by Mr Swain if one has regard to the object of the current Sale of Liquor Legislation as set out in s.4 “...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,...” – the sale of liquor by a stock and station agency firm, as distinct from other premises licensed for off sales, is not going to result in increased liquor abuse.

We regard the sale and supply of liquor from stock and station agency businesses – including delivery to rural clients by either the licensee or an independent contractor – as an appropriate complement to the other goods sold by stock and station agents. We acknowledge that liquor cannot be said to be as directly complementary to such goods as say the sale of wine might be said to be complementary to the sale of food.”

[42] The subsequent decision of Taylors (1998) Limited (LLA PH 1161/2000) was an application to renew an existing off-licence. The main emphasis of the case was whether the business was trading as a service station. The application was granted because the sale of fuel and oil represented 10% of total turnover.

[43] In our view the Interpretation Act prevents the adoption of such a liberal approach as was shown in the Elders decision. Furthermore we believe that if decisions are made solely on the basis of pragmatism, or common sense, or the fact that other licences have been issued in similar circumstances, then such decisions establish a precedent from which other consequences flow.

[44] An example can be found in the decisions made by the Authority to allow off-licences to "convenience stores" to sell wine and beer on the basis that they qualified as groceries. Such decisions were said to reflect a change in shopping patterns. See Caltex New Zealand Limited and another LLA PH 1082-1083/2000 and Caltex New Zealand Limited LLA PH 167/2001.

[45] In the first decision the Authority confirmed that it had already issued ‘on the papers’ grocery style off-licences to five “Star Mart” premises. In that decision the Authority said:

“In the 10 years since the passage of the present Act, the parameters have changed. In our view the ‘convenience store’ should be added to supermarkets, groceries and superettes as premises from which wine and beer can be sold, with only the traditional small corner dairy being excluded. We do not want to impose a restrictive definition of what is and what is not a dairy by reference to the size of premises in terms of square metres. Nevertheless, it is probably relevant to mention that in a recent decision “Patamahoe Superette” 1081/2000 we accepted premises of between 288 and 302 square metres as being larger than a dairy; with the present two applications we have a Star Mart of 156 square metres and a Seven to Eleven of 190 square metres.”

[46] Considering that the Authority had to be satisfied that the principal purpose of the convenience store had to be the sale of main order household foodstuff requirements, this was a major shift away from the original intent of the Act. Indeed in the second decision the Authority said that it did not feel bound by a position enunciated a decade ago shortly after the Act first came into effect.

[47] As a consequence of the decision to allow such stores to sell wine and beer there has been a proliferation in the number of off-licences being granted to convenience stores (or ambitious dairies), that portray themselves as scaled down supermarkets. Consideration is now being given for the Act to be amended to restrict these types of licences.

[48] It is impossible not to feel a degree of sympathy for the company. It has meticulous quality control systems in place. It takes its responsibilities under the Act seriously. It has been virtually trouble free in operating the current licences. The sale of liquor is a minor aspect of the business. The company has pointed out that other licences have previously been granted to 10 of its 'FarmCentres'. It may well be that the Agencies accepted that the sale of liquor was an appropriate complement to the kind of goods being sold in those premises. There may be differences between those stores and the one in Ashburton.

[49] There is a potential for such licences to continue in force. This may depend on whether there is opposition to any renewal. In some areas there may be an argument for a licence to be granted under s.36(2)(a) of the Act. The fact of the matter is that we are not bound by decisions made by an Agency, and this is the first time that the issue has been argued before us. We are unable to grant licences based on the convenience or demand of the customers.

[50] We accept that the types of premises in which the sale of liquor would be an appropriate complement are limited. Three examples would be souvenir and tourist shops selling New Zealand made wine and the like, duty-free shops, and gift shops. In addition there are one or two large department stores that sell delicatessen items along with wine. In the past, off-licences were issued to delicatessens but the High Court held that s.36(4) of the Act prevents such licences being issued. See Michael John Lopdell and another v Deli Holdings Limited and others AP 97-99/01 Auckland High Court 10 December 2001,Randerson J.

[51] In summary, we believe that when the Sale of Liquor Act was passed in 1989, without any reference to premises such as stock and station agents, there was no longer an opportunity for such premises to sell liquor, on the basis that it was an appropriate complement to the kind of goods being sold. Accordingly, and for the reasons we have set out in this decision, the application is refused.

DATED at WELLINGTON this 11th day of July 2008

Judge E W Unwin
Chairman

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