Cheth Enterprises Limited [2009] NZLLA 954 (19 August 2009)

Last Updated: 26 January 2012

Decision No. PH 954/2009

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an appeal by CHETH ENTERPRISES LIMITED pursuant to s.137 of the Act against a decision of the Dunedin District Licensing Agency granting an application for an on-licence in respect of premises situated at 101 Great King Street, Dunedin known as “The Liberty Lounge”

BEFORE THE LIQUOR LICENSING AUTHORITY

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

HEARING at DUNEDIN on 11 August 2009

APPEARANCES

Ms T J Surrey – for appellant
Sergeant W D Pitcaithly – NZ Police – in opposition
Dr J D Holmes – Medical Officer of Health – in opposition
Mr A S Mole – Dunedin District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This is an appeal brought by Cheth Enterprises Limited (hereafter called “the company”), against a decision of the Dunedin District Licensing Agency (hereafter called the Agency). On 15 June 2009, the Agency granted a new on-licence to the company pursuant to s.9 of the Act. The company had originally sought trading hours at any time on any day. At the hearing before the Agency the company amended its application. The hours sought were Sunday to Wednesday 7.00 am to 3.00 am the following day, and Thursday to Saturday 7.00 am to 5.00 am the following day.

[2] In granting the application the Agency fixed the trading hours from 9.00 am to 3.00 am the following day seven days a week. It was this aspect of the decision that resulted in the appeal. The appellant accepted that the 9.00 am opening hour was appropriate. However, it sought a later closing time. Ms T J Surrey appeared for the company. In addition to arguing for a more liberal trading regime she contended that the Agency did not have the statutory authority to hear the application at any event. She argued that given the general opposition to later trading hours the application should have been treated as being opposed and forwarded to the Authority in accordance with s.12 of the Act.

[3] As is required by the Act the appeal was conducted by way of a rehearing.

The Appeal

[4] Mr S E R Rodrigo and his wife emigrated to New Zealand in June 2007. Prior to that time Mr Rodrigo had managed a restaurant and a nightclub in the United States of America over a period of 12 years. On his arrival in New Zealand Mr Rodrigo was appointed as the manager of a licensed function venue in Invercargill. The company purchased “The Liberty Lounge” in December 2008. Mr Rodrigo and his wife are the shareholders. After carrying out renovations to the premises the company commenced trading on a temporary authority in February 2009. Although the original licence authorised trading at any time on any day the temporary authorities only authorised trading from 7.00 am to 3.00 am the following day.

[5] “The Liberty Lounge” is a large venue with a maximum capacity of 714 patrons. The building includes a function room, dining room, gaming machine area, nightclub/restaurant and an area for playing pool. Mr Rodrigo advised that the nightclub/restaurant was the most regularly used part of the premises. He stated that there were as many as 150 patrons present mainly on Thursday, Friday and Saturday nights.

[6] Mr Rodrigo gave evidence about the staff structure, the company’s training policies and security systems he had put in place. He spoke about the company’s host responsibility policy. He accepted that the company had failed a controlled purchase operation in April 2009 and the base licence under which the company has been operating, had been subsequently suspended. The incident had resulted in much greater vigilance in the way that the premises were managed.

[7] There had been another complaint made to the Police about the hospitalisation of a young man who alleged that he had consumed shots on the premises. However, Mr Rodrigo argued that there had never been any proof that the company’s premises were involved and the Police confirmed this. No further action had been taken.

[8] The Police produced a letter from a nearby business complaining about rubbish and vomit regularly found outside the premises on a Monday morning. The writer of the letter suggested that the company’s patrons had been responsible. Mr Rodrigo denied that the complaint was linked to the company’s patrons. In the event the Police confirmed that since June 2009 there had been no further issues raised by the complainant.

[9] Mr Rodrigo made a good impression in the witness box. He appeared to be genuinely concerned about any potential impact his business might have on the community. In our view the company is suitable to hold a liquor licence and the Dunedin District Licensing Agency has already made a similar finding. Mr Rodrigo gave an undertaking that if granted the opportunity to trade to a later hour he would institute a one-way door policy from 3.00 am. He confirmed that no other patrons would be admitted to the premises after that time.

[10] Mr Rodrigo’s main concern was that at 3.00 am he lost all his customers to neighbouring licensed premises. The evidence showed that his closest neighbours are only able to trade to 3.00 am. However, there are two premises on the same street with 24-hour licences and there are similar late licences in the Octagon.

[11] The most compelling aspect of Mr Rodrigo’s submission was his recognition of the potential problems arising from over indulgence and his desire to co-operate with the agencies. Not only was he prepared to invoke a one-way door policy but he stated that if ever an accord was reached for all premises to close at 3.00 am then his company would reduce any extended hours automatically. We were left with the impression that Mr Rodrigo would treat any trading extension with respect and would operate the business with the Act’s objective in mind.

[12] When the hearing commenced Mr Rodrigo amended his application for a third time. He sought a closing time of 4.00 am on the Thursday, Friday and Saturday of each week, rather than the 5.00 am closure that had been argued before the Agency. At the conclusion of the hearing and after further thought Mr Rodrigo said that he would settle for a 4.00 am closing on Saturday night only. Thus the application is quite different from the one argued before the District Licensing Agency.

[13] Mr A E Broad gave evidence on behalf of the property owners. He fully supported the company’s request for later opening hours. He stated that the owners were very pleased with the way that the company had changed and improved the business. He advised that an absentee owner had operated the previous licence. He suggested that prior to the company taking over, the business had acted as a life support system for gaming machines as well as a venue for beer swilling students. He believed that the company had been singled out as a result of proposed changes in community thinking about the way the sale of liquor should be regulated.

The District Licensing Agency Inspector

[14] Mr A S Mole has been a Liquor Licensing Inspector with the Dunedin District Licensing Agency for the past nine years. He is one of the most experienced and knowledgeable Inspectors nationally. Apart from the incident in which the company had failed a test in a controlled purchase operation, Mr Mole had no issue with the way that the business was being managed.

[15] Mr Mole produced the relevant sections of the Dunedin City Council’s Sale of Liquor Policy 2006. This document explains how applications for extended trading hours are dealt with. The policy states that the hours of operation of on-licensed premises in non-residential areas will be restricted to 7.00 am to 3.00 am the following day. The policy then states that applications for hours outside this recommended regime will be accepted and forwarded to the District Licensing Agency Committee for their determination at a public hearing. These words appear in the preamble to the policy:

“Licenses for hours outside those set in the policy may be granted but the application will be determined at a public hearing convened by the District Licensing Agency Hearings Committee. The applicant will be given the opportunity to demonstrate a commitment to the application by explaining how he/she will comply with the provisions of the Sale of Liquor Act and reduce alcohol related harm.”

The Police

[16] Sergeant W D Pitcaithly has held the Liquor Licensing portfolio for the Dunedin area since March 2007. He advised that there was a loose accord among the licensees holding late licences to operate a one-way door policy from 4.00 am. He confirmed that when the application was first received, he reported under the heading ‘Application Opposed’. After a discussion with the Agency, he was advised that such a report could be seen as containing matters in opposition requiring the Agency to forward the file to the Authority. As he wanted the issue decided locally he sent another letter without the offending words. In the second letter he recommended that an on-licence be issued but with a closing hour of 3.00 am.

[17] Sergeant Pitcaithly noted that the original application was to trade at any time on any day. He quoted from our decision in Bar Bar Black Sheep Limited LLA PH 1438/2008 as follows:

“Our policy is to act conservatively when fixing the operating hours for a new licence. This is an important point particularly where there is public opposition as well as concerns expressed by the monitoring agencies. It seems to us that later trading hours should be earned, particularly on renewal when the neighbours and the reporting agencies the opportunity to assess the impact of the new business.

In our view 24-hour trading needs exemplary management systems. The difficulty about 24-hour licences is that there will be times that they attract people who have already been drinking. Furthermore, they encourage patrons to stay out late. Although the company’s reputation has been damaged by correctly having to turn away potential patrons who are intoxicated, the fact of the matter is that its business will continue to attract those people. The longer a person is able to drink the greater the likelihood of intoxication.

... It could be argued that the company had a reasonable expectation that the existing conditions would be rolled over. However, the policy does not say this, and nor does the Act. A licence has never been a guarantee of profitability.”

[18] The Sergeant questioned how a licensee could show exemplary management when it had only been trading for six months. That argument had merit originally. However, this is no longer an application for a 24-hour licence. Consequently it may well be that there is no longer a need to show exemplary management systems.

The Medical Officer of Health

[19] Doctor J D Holmes is a Medical Officer of Health based in Dunedin. He has held the position of Medical Officer of Health for 16 years. It was his evidence that although the previous licensee held a 24-hour licence, it did not trade past 3.00 am. He argued that any request to extend the hours recommended in the City Council’s policy should be accompanied by measures to:

• Improve public safety (and perceptions of safety) in the area.

• Decrease the level of nuisance such as litter, vandalism and noise that affect neighbouring businesses.
• Demonstrate a commitment to a safer environment for the tertiary student population by reducing opportunities to drink hazardously.

[20] Dr Holmes suggested that the company should have the opportunity to apply for special licences from time to time to cover events of such a nature that a later trading time would be acceptable. These special licences would then demonstrate whether there was a demand and whether the company was capable of managing the later hours without stimulating liquor abuse. He recommended a closing time of 3.00 am because any later time might attract more patrons to the area between 2.00 am and 3.00 am when other premises were closing. He said that he was concerned about a repetition of the crowding outside “The Monkey Bar” that had been the subject of a previous hearing (see paragraph 17 above).

The Authority’s Decision and Reasons

[21] We first propose to deal first with Ms Surrey’s argument about jurisdiction. It seems to us that the way the Council’s Sale of Liquor Policy is worded closely follows the procedures in the Act. Pursuant to s.12 of the Act the Agency must decide whether to grant the application if no objection is filed and no reports containing matters in opposition have been received. In this case there were no public objections to the grant of the licence. It will be noted that an objection about the trading hours would have automatically resulted in a public hearing before the Authority. In this case the reporting agencies were careful not to refer to any matters in opposition. Indeed a grant of an on-licence was recommended. Accordingly we believe that the Agency had every right to determine the application.

[22] Ms Surrey maintained that it was obvious that the reporting agencies did not support the issue of a 24-hour licence and therefore the application should have been deemed to be opposed. But that is not what the Act says. In our view the Agency was right in accepting that the application was not opposed. Therefore its first step was to decide whether to grant the application. Having done so the Agency was then required to consider s.14(5)(a) of the Act. This section reads:

On granting an application for an on-licence, the Licensing Authority or District Licensing Agency, as the case may be, may impose conditions relating to the following matters:

The days on which and the hours during which liquor may be sold.

[23] In carrying out this task the Agency was effectively exercising a discretion. In other words if the Agency grants a licence it must then turn its mind to whether to impose conditions about the trading hours. It did so. The Council has been pro-active in setting out its expectations if hours are being sought in excess of those recommended by the policy. It requires an applicant to satisfy the committee of a commitment to the application and the provisions of the Act. Such a procedure seems to us to be an excellent way of dealing with the issue of trading hours on a local level. It is not as if there are no checks and balances in place. In this case the company has exercised its right to have the decision tested by way of appeal.

[24] Judging by its decision the Dunedin District Licensing Agency is very experienced and/or well briefed to deal with such matters. Either way we believe the Agency had no obligation to forward the file to the Authority. In our view the grant or refusal of a licence is quite different to the fixing of conditions of the licence once the primary decision has been made. There is nothing in the Act that should give an applicant an expectation that the hours that have been sought will be granted.

[25] The result is that in some areas or districts if the hours sought are unacceptable then adverse reports will be filed and the application will be sent to the Authority for a ruling. In other cases where the Agency has a clear liquor licensing policy (such as in this case) the applicant has the opportunity to obtain a local ruling. This has the advantage in that the application is likely to be dealt with more promptly and the people dealing with the matter are likely to have a better knowledge of the premises and the way they have been operated. In summary and in our view it was within the Agency’s jurisdiction to determine the application.

[26] We now deal with the second issue. The question is what trading hours should be fixed. We can well understand how the Agency Committee came to its decision. The members were confronted by an applicant who was new to Dunedin and whose company had only recently failed a controlled purchase operation. Although the company had offered to institute a one-way door policy it was seeking to open to 5.00 am on three nights a week. That is a different proposition to the one now before the Authority. What the company is now seeking is the opportunity to open for one extra hour a week. The request is coupled with a one way door policy restricting entry to the premises after 3.00 am on that night. The company has now been trading for six months. There have been no reported incidents involving liquor abuse. No Alco-Link data were presented.

[27] The difficulty is that the Dunedin City Council’s Sale of Liquor Policy only applies to new licences. Those businesses that currently trade with a 24-hour licence are allowed to renew their licences. Inevitably this leads to a playing field that has elements of unfairness about it. As Ms Surrey pointed out the policy includes this statement:

“The Dunedin City Council believes there is a need for premises to be allowed to open to cater for the increasing late night demand.”

[28] There is another factor. The Policy states that in order to obtain extended hours an applicant must demonstrate a commitment to the application by explaining how he or she will comply with the provisions of the Act and “reduce alcohol related harm”. That requirement goes further than the Act’s objective which is to sell and supply liquor with the aim of “contributing” to the reduction of liquor abuse. Licensees are expected to play their part in meeting and not stimulating demand for liquor. They are expected to ensure that people are not harmed by over-indulgence. There is a subtle difference between meeting that expectation and actually reducing alcohol-related harm.

[29] In this case the company has given evidence that on Saturday nights six security people are employed. The company currently employs three certificated managers. Another employee has applied for her certificate and two others are in the process of completing training. On Saturday nights the duty manager is not involved in serving liquor or food. He or she walks the floor. All staff are trained in safe practices regarding the service of liquor. Food is promoted at all times. In our view the company has answered the issues raised by Dr Holme, bearing in mind the limited trading extension that it had requested. We think this case was quite different to the application relating to “The Monkey Bar”.

[30] It is accepted that there was an issue about supplying liquor to a minor. On the other hand there were a number of factors that had a positive influence on our decision. These included:

• [a] The very limited nature of the proposal;
  
• [b] Mr Rodrigo’s obvious sincerity and willingness to co-operate;
  
• [c] His commitment to achieving the Act’s objective;
  
• [d] The undertaking to operate a closed-door policy at 3.00 am;
  
• [e] The company’s agreement to join any accord that settles the closing time at 3.00 am;
  
• [f] The lack of intoxication issues after six months of trading; and
  
• [g] The fact that the on-licence lasts for a probationary period of one year.
  

[31] Therefore for the reasons we have attempted to articulate the decision of the District Licensing Agency is modified. We grant the company an on-licence for the sale and supply of liquor for consumption on the premises to any person present on the premises. A copy of the licence setting out the conditions to which the licence is subject is attached to this decision. The gaming lounge is designated as restricted. The balance of the premises will be designated as supervised.

[32] The hours of operation will be Sunday to Friday 9.00 am to 3.00 am the following day and Saturday 9.00 am to 4.00 am the following day. The licence may issue immediately:

[33] The company’s attention is drawn to ss.25 and 115(3) of the Act obliging the holder of an on-licence to display:

• [a] A sign attached to the exterior of the premises so as to be easily read by persons outside each principal entrance stating the ordinary hours of business during which the premises will be open for the sale of liquor; and
  
• [b] A copy of the licence and the conditions of the licence attached to the interior of the premises so as to be easily read by persons entering through the principal entrance; and
  
• [c] The name of the duty manager placed inside the premises so as to be easily read by persons using the premises.
  

DATED at WELLINGTON this 19th day of August 2009

Judge E W Unwin
Chairman

The Liberty Lounge.doc