Membery v Singh [2009] NZLLA 12 (14 January 2009)

Last Updated: 25 January 2010

Decision No PH 0012/2009 –

PH 0013/2009

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by T. K. SODHI HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 205 Ngongotaha Road, Rotorua, known as “Way Home Liquor”

AND

IN THE MATTER of an application pursuant to s.135 of the Act for suspension of General Manager’s Certificate number GM/023/25/04 issued to GURWINDER SINGH

BETWEEN MICHAEL JAMES MEMBERY

(Police Officer of Rotorua)

Applicant

AND GURWINDER SINGH

Respondent

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at ROTORUA on 17 December 2008

APPEARANCES

Mr W R Ah Chan – agent for applicant for off-licence and respondent

Ms J A Smale – Rotorua District Licensing Agency Inspector – in opposition to application for off-licence

Sergeant M J Membery – NZ Police – applicant and in opposition to application for off-licence

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] There are two applications before the Authority. The first application is brought by T. K. Sodhi Holdings Limited (hereafter called “the company”) for an off-licence in respect of premises situated in Ngongotaha, near Rotorua. The business trades as a bottle store in the name of “Way Home Liquor”. The application was filed with the Rotorua District Licensing Agency on 10 July 2008, and was received by the Authority on 3 October last.

[2] The company’s sole director and shareholder is Mrs Tarsem Kaur. Mrs Kaur is described as a 60 year-old Indian national who has acquired permanent residency in New Zealand. She has never had any previous involvement with the hospitality industry. Mrs Kaur is unable to understand the English language or speak it with any degree of fluency. During her interview with the Inspector, she was assisted by Mr Gurwinder Singh who interpreted for her. Mr Gurwinder Singh is a friend of the family.

[3] Through the interpreter, Mrs Kaur indicated that she would have little to do with the management of the business. She stated that Mr Gurwinder Singh would manage the bottle store. She gave the impression that Mr Gurwinder Singh would be managing the business on a temporary basis before returning to another position in Tauranga. Mr Gurwinder Singh was granted a General Manager’s Certificate on 17 August 2004. His certificate has recently been renewed.

[4] The application arises from the purchase of an existing business. The bottle store is one of two off-licensed outlets in the small community of Ngongotaha, near Rotorua. The business has been in existence for a number of years. The company is currently trading under a temporary authority. It seeks trading hours between 8.00 am and 11.00 pm seven days per week. It was proposed that the whole of the premises would be designated as supervised. The application was accompanied by certificates that the proposed use of the premises meets the requirements of the Resource Management Act 1991 and the New Zealand Building Code.

[5] The Police opposed the application on the grounds of the company’s suitability. The Licensing Administrator stated that the sole director and shareholder was unable to understand or converse in the English language. Her initial concerns arose when Mrs Kaur was interviewed. She stated that during the interview Mr Gurwinder Singh appeared to speak on the company’s behalf without reference to the licensee at all. She thought it was difficult to understand who had the overall responsibility for the business.

[6] The District Licensing Agency Inspector Ms J A Smale also opposed the application on the grounds of the company’s suitability. In her report she contended that Mrs Kaur was effectively acting as a front for her son, Mr Kulwinder Singh. During the interview, Mrs Kaur stated through the interpreter that her son would not be working in the business because of ill health. Ms Smale had concerns about the lack of certificate-holding managers, given the proposed trading hours.

[7] The second application is for the suspension of Mr Gurwinder Singh’s General Manager’s Certificate. The Police brought this application on the ground that Mr Gurwinder Singh had failed to conduct the premises in a proper manner. There were three incidents alleged in support of the allegation. The first was that on 28 June 2008, Mr Gurwinder Singh was on duty at the premises. Mr Kulwinder Singh (Mrs Kaur’s son), was also present on the premises, but was extremely intoxicated. While the Inspector was talking with Mr Gurwinder Singh, Mr Kulwinder Singh made a sale of liquor to a member of the public.

[8] The second alleged incident occurred on 28 August 2008. On that day the Police conducted a controlled purchase operation together with Toi Te Ora Public Health and the Rotorua District Licensing Agency. It was alleged that Mr Gurwinder Singh sold liquor to a minor in circumstances that indicated a deliberate attempt to evade the law. He was subsequently dealt with by way of diversion in the District Court. The third incident was said to have happened on 10 November 2008. On that day Mr Gurwinder Singh was the nominated duty manager but he was not present, and no certificated persons were in the premises.

[9] The two applications were heard together. The primary issue in respect of the off-licence is the suitability of the company. As far as the suspension application is concerned, the issue turns to some extent on determinations of fact based on the credibility of the witnesses. It was claimed that Mr Gurwinder Singh believed on reasonable grounds that the person he was serving on 28 August was of or over the age of 18 years.

The Application for the Off-licence

[10] Mr Ah Chan had prepared a brief statement for Mrs Kaur. This was read to her through an independent interpreter, and confirmed. Mrs Kaur said that she had employed Gurwinder Singh as a manager. She stated that her son had no involvement with the running of the business, and did not receive any money from the company. In her answers to questions, she said that it was her idea to buy the shop, and she signed the cheques. However, it was our impression that Mrs Kaur had very little idea of what was going on, either at the hearing or with the business. Although she was in attendance thoughout the hearing, we did not think she had any appreciation of what was being said on her behalf. In summary, we had very little confidence that she was able to operate and direct a business such as this.

The Police

[11] Constable J L I Fredericksen organised the controlled purchase operation on 28 August last. He identified and targeted a number of ‘at risk’ premises including “Way Home Liquor”. He said that he used two volunteers, and they visited seven or eight premises taking it in turns to make a purchase. Only two premises made sales, one of which was “Way Home Liquor”. Constable Fredericksen confirmed that at about 5.47 pm, the two volunteer minors had entered “Way Home Liquor”. One was named “TK”. He was 17 years of age, having been born on 9 March 1991. The other was named “Tahi”. He was 15 years of age and was born on 2 January 1993.

[12] The Constable advised that about five minutes after entering the shop, the two minors came out with a 12-pack of bourbon and cola RTDs. The Constable later entered the store and spoke with Mr Gurwinder Singh. Mr Gurwinder Singh was advised that he did not have to make a statement. In his statement he acknowledged that he was acting as the duty manager and salesperson when the sale was made. He said he had been working at the store for about three months.

[13] Mr Gurwinder Singh stated that he had asked the ‘young guy’ for identification, but he did not have any. He said that he told the ‘young guy’ not to come into his store as he looked too young. Mr Gurwinder Singh stated that he had sold the ‘older fellow’ the liquor because he looked between 23 and 25 years of age. He said he calculated that age by the person’s body structure, his height, and the maturity of his face.

[14] Mr Singh said, “I gave the change to the big fellow because the young one had the money. I told him nicely that he could not do that. I saw them come in together, the ‘young guy’ gave the money”. He was asked whether he thought the ‘big guy’ would give the ‘young guy’ any alcohol, and he acknowledged that he could have. Mr Gurwinder Singh was charged with selling liquor to a minor. He successfully completed diversion in the District Court on payment of $150 to a charity. He was accordingly discharged and has no conviction.

[15] The statement given by Mr Gurwinder Singh was in line with the evidence given by the two volunteers. As stated above they had taken turns to tender the money and attempt to make a purchase. They were not to carry any form of identification. “Tahi” gave evidence that while “TK” asked Mr Gurwinder Singh about prices, he went and picked up a 12-pack of RTDs valued at $19 and took it to the counter. Mr Gurwinder Singh asked him for identification. When he replied that he did not have any, Mr Gurwinder Singh pointed to the other volunteer (the one aged 17), and said, “You can buy it”.

[16] “TK” then approached the counter. “Tahi” asked his colleague if he had identification, and “TK” said he did not. “Tahi” had $20. Mr Gurwinder Singh then took the $20 off “Tahi” and gave the change to “TK”. “TK” picked up the RTDs and took them out of the store. “TK” confirmed what had happened in every detail. He said that “Tahi” had handed the money over, but Mr Gurwinder Singh had told “TK” to carry the liquor out of the store.

[17] Mrs H S Donaldson has been a Licensing Administrator with the Police since 2002. She takes an active part in the vetting process for new licensees and managers. She explained that the object of the vetting process is to ensure that persons wishing to enter or remain in the industry, have the necessary knowledge and qualifications. In addition they try and ensure that those who have shown a disregard for the law and community standards are prevented from entering or remaining in the industry, where there is a perceived risk that their previous behaviour may contribute to liquor abuse.

[18] Mrs Donaldson stated that on 9 January 2008, the Tauranga Police had asked her for information about Mr Kulwinder Singh. She understood that while he was being processed for an Excess Breath Alcohol offence, he had told the officers that he owned a liquor store in Ngongotaha, and was opening another one in the Tauranga area. He had been stopped on 15 December 2007. Because of his level of alcohol, his driver’s licence had been automatically suspended for 28 days. However later on the same night he was again stopped while driving from an appointment at a hospital. He produced a positive breath test on the second occasion as well.

[19] On 25 May 2008, Mrs Donaldson attended a meeting with Ms J A Smale the Inspector, Mrs Kaur, and Mr Gurwinder Singh. She was advised at the meeting that Mr Gurwinder Singh was employed as the duty manager on a temporary basis. She was told that Mr Kulwinder Singh (Mrs Kaur’s son) was on a sickness benefit with a kidney disorder. Because Mrs Kaur was unable to take part in the discussions, she thought the meeting had been unsatisfactory, as she had no way of knowing whether Mr Gurwinder Singh had accurately reported what Mrs Kaur had said. Attempts were made to explain to Mrs Kaur that she carried the final responsibility of ensuring that the business complied with the law.

[20] On 10 November 2008, Mrs Donaldson accompanied Ms Smale on a visit to “Way Home Liquor”. Ms Smale had been advised that a young man was selling liquor at the store. When they arrived, they observed two adults exiting the premises carrying liquor. The duty manager was nominated as Gurwinder Singh but he was not present. In the store were Mrs Kaur and her grandson Mr Barnjit Singh. Mr Barnjit Singh was a few days short of his 18th birthday.

[21] With the help of Mr Barnjit Singh they were able to ascertain that Mr Gurwinder Singh was attending a funeral. When it was explained that there had to be a certificated manager present and they needed to speak to the person in charge, the grandson made a telephone call. He told them that he had rung Mr Kulwinder Singh but he was very sick. Mr Singh’s phone then rang. It was Mr Kulwinder Singh ringing back. He spoke with Ms Smale and then with Mr Barnjit Singh. When they had finished the call, Mr Barnjit Singh stated that they would be shutting the store immediately.

[22] Mrs Donaldson wrote to Mrs Kaur on 11 November 2008 pointing out that the store had been operating illegally in the absence of a certificated manager. She also noted that the decision to close the store had been made by Mr Kulwinder Singh. She suggested that the interaction clearly showed that he was in charge, and that Mrs Kaur was acting as a front on his behalf. No response was received.

The District Licensing Agency Inspector

[23] Ms J A Smale has been a Liquor Licensing Inspector with the Rotorua District Licensing Agency for 11 years. She submitted that Mrs Kaur was acting as a front for her son, who would have great difficulty in obtaining a General Manager’s Certificate or a licence, given his involvement with liquor abuse issues. She submitted that after six months of trading, she had no confidence that the company, or Mrs Kaur, or the members of staff, had the ability to understand and uphold or promote the Act’s objective.

[24] During the interview process in May 2008, Ms Smale was satisfied that Mr Gurwinder Singh appeared to be knowledgeable about the Act. However, she was unable to communicate with Mrs Kaur. She was advised at the meeting that Mr Parmjit Singh, the previous owner of the business, could be a back-up manager.

[25] On 28 June 2008, Ms Smale received advice that an intoxicated male was serving liquor at “Way Home Liquor”. She arranged to meet with Mr S Nunn, a Health Officer with the Rotorua District Council. When they arrived at the store, Mr Kulwinder Singh was sitting behind the counter. The duty manager Mr Gurwinder Singh, was also present, and was standing behind the counter. She thought that Mr Kulwinder Singh was visibly intoxicated, being unsteady on his feet and unable to focus.

[26] Mr Gurwinder Singh confirmed that Mr Kulwinder Singh was intoxicated and said that his friends had just dropped him off from a party. Mr Gurwinder Singh said that Mr Kulwinder Singh was not serving customers. However it was noted that he did so while Ms Smale was talking with Mr Gurwinder Singh. They were standing outside and saw a customer leave with liquor.

[27] On 23 October 2008, at approximately 5.30 pm, Ms Smale received information that the business was selling liquor without a certificated manager being present. She visited the store with Mr Nunn, and discovered that Ms Sapinder Kaur (wife of Mr Kulwinder Singh) had been appointed as a temporary manager, although the letter of appointment was dated three days previously. Ms Smale asked her where Mr Gurwinder Singh was. Mrs Sapinder Kaur said he was at a supermarket and would not be long.

[28] Ms Smale rang Mr Gurwinder Singh on his cell phone, and he said he was in Tauranga visiting a sick uncle in hospital. Mr Nunn gave supporting evidence confirming the above details. Ms Smale thought it unfair to ask Ms Sapinder Kaur to manage the business given her limited ability to speak English, and her lack of experience.

[29] Ms Smale confirmed that on 11 November last, she had spoken on the phone with Mr Kulwinder Singh, and explained to him that without a certificated manager present, the shop was operating illegally. Mr Kulwinder Singh told her he would tell his mother to close the shop immediately, and would only re-open the shop when a manager was present.

Mr Gurwinder Singh’s Response

[30] Mr Gurwinder Singh gave evidence about the controlled purchase operation. He thought the two volunteers looked like brothers. He accepted that “Tahi had picked up the RTDs and taken them to the counter and produced $20. He said that he had asked “Tahi” for identification and that “Tahi” had said he did not have any. He said that he then asked “Tahi” to leave the shop. Both “Tahi” and “TK” deny that this was said. At any event “Tahi” did not leave.

[31] Mr Gurwinder Singh said that “TK” then came forward and stood in front of him. Mr Singh said he thought “TK” looked over 25 because he was heavily built. That was why he did not ask him for identification. He said that he asked “TK” who was going to make the purchase. He argued that the $20 note was on the counter. It will be observed that this statement was quite different from the statement made by Mr Gurwinder Singh straight after the event. Mr Singh said he was scared at the time when he made the statement and this condition may have had an effect on the accuracy of the statement.

[32] Mr Singh made a special plea that when he was granted diversion he had been advised that this would not affect his General Manager’s Certificate. He stated that on 10 November 2008, he had not been attending a funeral, but had been required to go to hospital for an emergency involving a member of the family. He produced a letter from funeral directors explaining that he was involved in arranging and organising a funeral service at that time. He also produced a medical certificate to show that a relative had been admitted to the Emergency Department on 22 October 2008 from 6.53 pm to 10.23 pm.

Mr Ah Chan’s Final Submissions

[33] Mr Ah Chan submitted that the fact that Mrs Kaur could not speak or understand English was not a valid reason for determining that the company was unsuitable, particularly if there was a suitable manager able to operate the business on her behalf. He argued that we did not have the power to lift the corporate veil, and that the company was a separate legal entity to its shareholders and directors. He submitted that the principle had been established by the leading case of Lee v Lee’s Air Farming Limited [1961] NZLR 325 (J.C.),

[34] Mr Ah Chan produced a bank statement to show that the company had a separate trading account, and there was no activity linking its business to Mr Kulwinder Singh. He suggested that there would be nothing wrong with Mr Kulwinder Singh working in the premises provided there was a certificated person on duty. Furthermore he contended that if Mrs Kaur wanted her son to have a share in the company, she could sell shares to him and provide him with an income. Accordingly he submitted that there was no reason why the company should not be granted a licence.

[35] Mr Ah Chan argued that Mrs Kaur could appoint temporary managers for less than 48 hours without giving notice to the authorities. He suggested that this had happened when Mr Gurwinder Singh was absent. He confirmed that Mr Barnjit Singh was about to undergo a course of training leading to the acquisition of a General Manager’s Certificate. He suggested that any sanction imposed against Mr Gurwinder Singh would be in the nature of ‘double jeopardy’ given that he had already been before the District Court.

The Authority’s Decision and Reasons

[36] In considering an application for an off-licence for a stand-alone bottle store we are directed by s.35(1) to have regard to the following matters:

(a) The suitability of the applicant;

(b) The days on which and the hours during which the applicant proposes to sell liquor;

(c) The areas of the premises or conveyance, if any, that the applicant proposes should be designated as restricted areas or supervised areas;

(d) The steps proposed to be taken by the applicant to ensure that the requirements of this Act in relation to the sale of liquor to prohibited persons are observed;

(e) Whether the applicant is engaged, or proposes to engage, in –

(i) The sale or supply of any other goods besides liquor; or

(ii) The provision of any service other than those directly related to the sale and supply of liquor,-

and, if so, the nature of those goods or services;

(g) Any matters dealt with in any report made under section 33 of this Act.

[37] The main issue in this case is the company’s suitability. Also to be taken into account will be the proposed days and hours of trading, and the steps to be taken by the applicant to ensure that the requirements of the Act in relation to the sale of liquor to prohibited persons are observed. The company fulfils the remaining criteria.

[38] In Re Sheard [1996] NZAR 61, Holland J made these comments on the issue of suitability:

“To refuse an application for an on-licence on grounds of suitability the Authority has to be satisfied on the balance of probabilities that the character of the applicant has been shown to be such that he is not likely to carry out the responsibilities that go with the holding of a licence.”

[39] In Page v Police (unreported HC V Christchurch AP 84/98 24 July 1998), Panckhurst J commented on the issue of suitability in this way:

“Section 13(1)(a) provides that the applicant for an on-licence must demonstrate his or her suitability. In other words what is required is a positive finding. That implies an onus upon the applicant to demonstrate suitability. Such suitability is not established in a vacuum but in the context of the particular case: for example, the place, the intended business (here in a difficult central city location), the nature of the business itself, the hours of operation and the intended activities, provide the basis for the assessment of the individual.”

[40] In summary, the company carries the onus of establishing its suitability. The first issue relates to the lifting of the corporate veil. In Lee v Lee’s Air Farming Limited (supra) the Court was concerned about the position of master and servant given that Mr Lee had total control of his company. In this case Mrs Kaur has complete control of the company being the sole shareholder and director. She is the company’s alter ego. It is her suitability that is at issue. In Chef and Brewer Bar and Café Limited v The Police and anor [1995] NZAR 158, Blanchard J made these comments:

“On the assumption that Mr Catchpole was unsuitable to hold an on-licence, it seems to me that it was not only correct but also most sensible for the Authority to try to ensure that he could not, by means of a corporate vehicle which legally or in practical terms he controlled, continue to enjoy the privilege of a licence.”

[41] Given the history of Mr Kulwinder Singh’s earlier comments about his ownership of the business, and his presence at the store making a sale in an intoxicated state, as well as his decision to tell his mother to close the business down until a certificated manager was available, we cannot escape the conclusion that the business has been purchased for him to run. Having listened to Mrs Kaur and observed her we are unable to see how she could operate a business by herself. We believe that she would be unable to show any form of leadership or direction. We took the view that she was simply a front person who had been presuaded to lend her name to the business to give it integrity. We believe that Mrs Kaur would do what she was told to do.

[42] Mr Ah Chan was right when he said that as long as there is a certificated manager available at all times when liquor is being sold, the issue about the licensee’s suitability is not so important. This principle was set out in Waimakariri Tavern & Restaurant Limited and Kent Carnegie Neilson v New Zealand Police and others AP 32/01 High Court Christchurch 11 October 2001 by Hansen J. In that case we had refused a licence to Mr K C Neilson’s company on the grounds of his criminal associates, including his son. The High Court granted the company a licence on the basis that Mr Neilson was a businessman with no relevant convictions. Furthermore certificated managers were in place to run the business.

[43] This position is different. Mrs Kaur has no relevant convictions either but as stated above she has no business experience, and no ability to communicate in English, and a son who has claimed ownership of the business. Furthermore Mr Gurwinder Singh seems to be present only on a temporary basis. The history of the way the business has been operated up until now gives us no confidence that it will be run any better in the future. Mrs Kaur was quite unable to satisfy us of the steps she proposed to take to ensure that the requirements of the Act relating to the sale of liquor to prohibited persons would be observed.

[44] The experience of dealing with licensed premises in Christchurch such as “Christina’s”, “Harrys on Gloucester”, and the “Aranui Café & Bar” have taught us that the use of people like Mrs Kaur in order to obtain a licence is not uncommon. It is not up to the agencies to establish that Mrs Kaur is acting on behalf of her son, it is up to Mrs Kaur to show complete transparency and thereby establish her integrity and credibility. This she has been unable to do.

[45] As was stated by Holland J in Hayford v Christchurch District Licensing Agency (HC Christchurch AP 201/92 3 December 1993):

“A liquor licence is a privilege and not a right.”

[46] If we are to achieve the object of the Act and help to encourage a social change where tolerance of liquor abuse is no longer acceptable, then we must have faith in the ability of operators of licensed premises to uphold the provisions of the Act. Mrs Kaur has failed to achieve that threshold, and was unable to satisfy us that she is suitable to hold an off-licence.

[47] We now turn to the application to suspend Mr Gurwinder Singh’s General Manager’s Certificate. Mr Ah Chan relied upon s.155(4) of the Act. This form of defence provides as follows:

It is a defence to a charge under subsection (1) or subsection (2) of this section if the defendant proves that the person who sold or supplied the liquor believed on reasonable grounds that the person to whom it was sold or supplied had attained the age of 18 years.

[48] It will be noted that it is up to Mr Gurwinder Singh to prove his belief on reasonable grounds. In this case Mr Gurwinder Singh's conduct fell well below expectations. To suggest that the older of the two should make the purchase when the younger person had the money was quite improper and suggested that he was keen to make a sale regardless of who would consume the liquor. Although Mr Gurwinder Singh tried to suggest that there had been a separate sale to the older purchaser, his original statement and the evidence from the two young men clearly shows a contrary set of facts.

[49] In simple terms we do not accept Mr Gurwinder Singh’s explanation, and we do not accept that he had a belief based on reasonable grounds that “TK” was 18 years of age or over. This was a simple attempt to make a sale with the least possible risk. It is not sufficient to rely on looks in such circumstances. Although “TK” is a big boy, his face, as shown in the photographs, was that of a teenager. In our view Mr Gurwinder Singh was much more interested in making a sale than paying any attention to the law.

[50] Mr Gurwinder Singh showed a further lack of appreciation of the Act when he allowed an intoxicated male (Mr Kulwinder Singh) to remain on the premises and make a sale. He clearly failed to conduct the premises in a proper manner. We believe that in the circumstances it is desirable to make a suspension order. Mr Gurwinder Singh asked that no action be taken because he had been discharged in the District Court.

[51] The same type of argument was raised in Super Star Bar (NZ) Limited v Peter Alan Kaveney HC 100/96 Auckland Registry when Fisher J was faced with an appeal against the cancellation of a licence. Related prosecutions were pending in the District Court and an application for an adjournment was refused. His Honour said:

“I am satisfied, however, that this appeal should proceed to a hearing. The standard of proof required for a prosecution is of course proof beyond reasonable doubt whereas a lesser standard applies on an application for cancellation. In strict law, therefore, there would be nothing inconsistent with dismissal of the charges in the prosecution context and an adverse finding of fact in the licensing context on the same factual issues.”

[52] It is clear that the enforcement provisions in the Act can be utilised independently of any prosecution in the District Court. Mr Gurwinder Singh can count himself as fortunate to have been granted the leniency of diversion given his conduct from a licensing perspective. If he was told that the District Court process would make no difference to his certificate then he was misinformed. In assessing the appropriate sanction we have taken into account his lack of previous appearances before us as well as his co-operation in having the application dealt with at the same time as the hearing for the off-licence. Nevertheless the period of suspension will reflect his deliberate attempt to evade the law.

[53] For the reasons given we make the following orders:

(a) The application by T. K. Sodhi Holdings Limited for an off-licence is refused.

(b) General Manager’s Certificate number GM/023/25/04, issued to Gurwinder Singh, is suspended for three months commencing on Sunday 1 March 2009.

DATED at WELLINGTON this 14th day of January 2009

Judge E W Unwin
Chairman

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