Fix [2011] NZLLA 876 (11 August 2011)

Last Updated: 31 August 2011

[2011] NZLLA PH 876-885

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by STAR METRO HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 139 Cuba Street, Wellington known as “Fix”

AND

IN THE MATTER of an application by STAR METRO HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated in Shop 7 and 8, Grand Arcade, 16-18 Willis Street, Wellington, known as “Fix”

AND

IN THE MATTER of an application by STAR METRO HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at the corner of Courtenay Place and Tory Street, Wellington, known as “Fix”

AND

IN THE MATTER of an application by STAR METRO HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 49 Manners Street, Wellington, known as “Fix”

AND

IN THE MATTER an application by STAR METRO HOLDINGS LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 56 The Terrace, Wellington, known as “Fix”

AND

IN THE MATTER of an application by STAR SERVICE STATIONS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at the corner of Courtenay Place and Tory Street, Wellington, known as “Star Mart Courtenay Place”

AND

IN THE MATTER of an application by STAR SERVICE STATIONS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at shops 7 and 8 Grand Arcade, 16-18 Willis Street, Wellington, known as “Star Mart, Grand Arcade”

AND

IN THE MATTER of an application by STAR SERVICE STATION LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated on the ground floor, Aurora House, 56 The Terrace, known as “Star Mart The Terrace”

AND

IN THE MATTER of an application by STAR SERVICE STATIONS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at 139 Cuba Street, Wellington, known as “Star Mart Cuba Mall”

AND

IN THE MATTER of an application by STAR SERVICE STATIONS LIMITED pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at 49 Manners Street, Wellington, known as “Start Mart Manners Street”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge J D Hole
Member: Ms J D Moorhead

HEARING at WELLINGTON on 8 July 2011

APPEARANCES

Mr D S McGill – for applicants
Mr B J Lupton – for Wellington District Licensing Agency Inspector – in opposition
Sergeant J R Lewis – NZ Police – in opposition

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This decision relates to five applications for off-licences pursuant to s.31 of the Act in respect of premises situated at 139 Cuba Street, Wellington, 16-18 Willis Street, Wellington, 57 Courtenay Place, corner of Courtenay Place and Tory Street, Wellington, 49 Manners Street, Wellington, and 56 The Terrace. The applicant trades all of the above premises under the name “Fix”.

[2] Off-licences for the premises have previously been held in the name of Star Service Stations Limited. Before the Authority there are five applications for the renewal of the off-licences granted in respect of the same premises to Star Service Stations Limited.

[3] If there is to be a final determination of the five applications for the off-licences by Star Metro Holdings Limited, then Star Service Stations Limited seeks leave to withdraw the applications for renewal.

[4] The five Wellington “Fix” stores are almost identical to the two “Fix” stores which were the subject of a decision of the Authority in Star Metro Holdings Ltd [2011] NZLLA PH 253-254 issued on 30 March 2011. That decision decided that the principal business of the Auckland “Fix” stores was not the sale of main order household foodstuff requirements. On that basis an application made under s.36(1)(d)(ii) of the Act for an off-licence in respect of both the Auckland “Fix” stores was refused.

[5] As a result of decision [2011] NZLLA PH 253-254, the applicant elected not to continue its applications for off-licences pursuant to s.36(1)(d)(ii) of the Act but instead relies on s.36(2)(b) of the Act which reads:

36 Types of premises in respect of which off-licences may be granted

(1) ...

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

(a) ...

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

[6] Section 36(4) of the Act is also relevant. It reads:

(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.

Applicant’s case

[7] The applicant submitted:

• [a] As at least 50 percent of the products sold in the “Fix” stores are not food and groceries, the “principal business” of the “Fix” stores is not the sale of food and groceries. This is supported by the Authority’s decision [2011] NZLLA PH 253-254. Accordingly in terms of s.36(4) the “Fix” stores are not supermarkets or grocery stores, “or any other premises on which the principal business is the sale of food or groceries”;
  
• [b] Notwithstanding that the “Fix” stores are not “grocery stores”, the applicant has established them as niche grocery and general merchandising stores. Accordingly, the sale of alcohol would be an “appropriate complement to the kind of goods” sold in the stores;
  
• [c] Section 36(2)(b) of the Act does not require alcohol to be an appropriate complement to all of the goods sold in the premises. Rather, liquor must be an appropriate complement to the “kind” of goods sold, namely grocery and general merchandising products. In this case, not only is food sold in the stores but also items such as newspapers and magazines, gifts and picnic ware, all of which constitute the kind of goods to which liquor is an appropriate complement;
  
• [d] Section 36(2) of the Act is permissive and not mandatory. It involves the exercise of a discretion. It is necessary to stand back and look at the applications as a whole and take into account surrounding circumstances. One of those matters is the object of the Act as set out in s.4 of the Act and the fact that this applicant is an eminently suitable potential licensee;
  
• [e] Section 4 of the Act requires the Authority to act reasonably.
  

Inspector’s case

[8] On behalf of the Inspector it was argued that s.36(4) of the Act precluded the grant of this application:

• [a] Notwithstanding decision [2011] NZLLA PH 253-254, the Wellington “Fix” stores are in the nature of grocery stores or supermarkets. (Significantly, this decision did not specifically address whether or not the Auckland “Fix” stores were “grocery stores”. The decision concentrated on whether or not the principal business of each store was the sale of main order household foodstuff requirements);
  
• [b] Further, the principal business of the stores is the sale of food or groceries. (This submission was made without the benefit of some of the evidence adduced by the applicant at the hearing).
  

[9] In addition, the applicant has not proved that the sale of liquor is an appropriate complement to the kind of goods sold in the premises as required by s.36(2)(b) of the Act.

[10] Finally, the Inspector submitted that the applicant’s interpretation of the legislation subverts the restrictive nature of s.36 of the Act. Rather than off-licences being restricted to the types of businesses listed in s.36(1) of the Act (as well as those that satisfy the criteria of s.36(2) of the Act) the applicant is saying that any store that sells food or groceries (provided they are not the store’s principal business) would be entitled to a “complementary” off-licence under s.36(2)(b) of the Act. This would be contrary to the purpose of the Act and existing case law, namely The Warehouse Ltd PH 1673/2008 and Combined Rural Traders Ltd NZLLA PH 957/2008.

Authority’s decision and reasons

Section 36(4) exclusion

[11] The applicant did produce a “full products list”. On behalf of the applicant, Ms Mason (its operations manager) stated that each store carries between 2,800 and 2,900 separate products all of which can be found in the list. Not all the products mentioned in the list are found in each store. It also produced details of sales revenue derived from sales at each of the stores from January 2011 to June 1011.

[12] The evidence indicates that these stores are neither supermarkets nor groceries. Further, on the facts it is difficult to argue that they constitute “any other premises on which the principal business is the sale of food or groceries”. Exhibit C attached to Ms Mason’s evidence is support for this. In her evidence, Ms Mason indicated that all the Wellington “Fix” stores operated a similar type of business. In none of the stores does the sales revenue derived from food exceed 50 percent of total sales. Indeed, for example, in respect of the “Fix” Manners Street store, the total revenue derived from sales of food amounts to 45.7 percent of total sales. In respect of “Fix” Manners Street, the Authority notes that 54.3 percent of total sales revenue is derived from non-food items. The evidence adduced in respect of the Wellington “Fix” stores confirms the overall nature of “Fix” stores as set out in decision [2011] NZLLA PH 253-254. However, that decision related specifically to “main order household foodstuff requirements” whereas the percentages mentioned in this paragraph include all food items.

[13] The better test is to determine what the principal business of the stores is. They were described by Ms Mason as grocery and general merchandising stores. “General merchandise” comprises a specific item in the Exhibit C list and in the case of “Fix” Manners Street produced 0.9 percent of total revenue. The balance of the products listed clearly are not all groceries. They include health and beauty products, magazines, ‘Snapper’ products, ‘Snapper’ travel cards, Telco products, tobacco (which arguably can come into almost any classification) and transport products. In the case of “Fix” Manners Street all of these provide 54.3 percent of total revenue. Ms Mason described them as “general merchandising products” at paragraph 20 of her evidence.

[14] As has been the case in so many of the applications under s.36 of the Act, very real difficulty arises when attempting to determine from sales revenue figures what the principal business of a store might be. However, as the Inspector argued, the various tests referred to in Jay and H Company Ltd NZLLA PH 155/2001 are helpful. The number and range of items as set out in the “Full Products list” does not greatly assist because not all the listed products are to be found in each store, thus potentially distorting the picture. Nevertheless, Mr Kemps’ evidence on this topic lends support to the view that the stores may come within s.36(4) of the Act. However, the applicant’s photographs (which can be misleading) indicate a limited range of food or groceries. The evidence of Sergeant Lewis supports the notion that the stores are “unashamedly ... busy providers of convenience food, drink and other non grocery products”. He describes them as “convenience stores”, noting single aisles, the absence of trolleys, and the limited range of grocery products.

[15] The convenience store theme was confirmed by Mr Buckley (the general manager of the applicant) who said (in answer to questions by the Authority):

“Our reason for being is satisfying customers’ needs and their needs are constantly changing – a base of needs remains constant; but on top of that a range of needs that is constantly changing”.

[16] The Authority concludes that the stores are in the nature of convenience stores. They are not groceries or supermarkets although they do have some of the characteristics of each genre. Their principal business is the sale of a mixture of miscellaneous items which include food and groceries. However, the evidence is not sufficiently clear to hold that their principal business is the sale of food or groceries (in its widest definition which includes non food items). Thus, s.36(4) of the Act does not preclude the grant of an off-licence to the applicant if the applicant can bring its case within s.36(2)(b) of the Act.

Section 36(2)(b)

[17] The issue, then, is whether the sale of liquor would be an appropriate complement to the kind of goods sold in the Wellington “Fix” stores.

[18] In respect of the words in s.36(2)(b) of the Act “appropriate complement” at paragraph 28 of his judgment in Combined Rural Traders Society Limited v Batcheler and Ors HC Christchurch CIV-2008-409-1813, 12 February 2009 Chisholm J adopted the Authority’s definition of those words stating:

“Obviously the words “appropriate complement” in s.36(2)(b) are critical. Like the Authority I do not find it necessary to go past the ordinary meaning of those words. The Shorter Oxford Dictionary includes the following definitions:

““appropriate”: make, or select as, appropriate or suitable

“complement”: a thing which, when added, completes or makes up a whole”.

Using its expertise as a specialist Tribunal the Authority was required to exercise an overall judgment about whether, on the evidence before it, the sale of liquor would be an ‘appropriate complement’ to the kind of goods sold in the premises. The statutory comparison is between the proposed sale of liquor and the other goods sold in the premises.”

[19] In The Warehouse Ltd (supra) the Authority referred to a number of principles. First, it is for the applicant to satisfy the Authority that the sale of liquor will be an appropriate complement to the kind of goods sold in the premises. Second, the Act does not permit complementary style licences to be issued to large stores or businesses which sell a great variety and range of products, particularly when the sale of liquor would complement only a few of them. Third, it is necessary to step back and view the business as a whole and if there is a clear expectation that liquor would not appropriately complement the general items being sold, then that is the end of the matter. Fourth, assessing goods that the sale of liquor would complement should not be an exercise in imagination: there needs to be a nexus between the goods being sold and the sale of liquor. Fifth, s.36 of the Act is a restrictive provision and the kind of premises that may be granted an off-licence is limited. Finally, s.36 (2) of the Act gives the Authority a discretion as to whether or not it should grant an off-licence; and that discretion must be exercised having regard to s.4 of the Act. This requires the promotion of the object of the Act which is the reduction of liquor abuse. When exercising this discretion matters such as the density of outlets, the potential for increased availability of liquor and the link with hazardous drinking are relevant.

[20] Paragraphs 14 and 15 of this decision have attempted to define the principal business of the stores, concluding that they are convenience type stores. However, paragraphs 12 and 13 were concerned with the principal business of the premises whereas s.36(2(b) of the Act requires “the kind of goods sold in the premises” to be considered. In this regard the principles referred to in paragraph 19 are helpful.

[21] The Authority notes the evidence of Ms Mason to the effect that general merchandise, health and beauty, magazines, newspapers, ‘Snapper’ products, ‘Snapper’ passes, Telco, tobacco, and transport items constitute a total of 54.3 percent of total revenue in respect of “Fix” Manners Street. The other stores return similar percentages. None of these items (except, possibly, general merchandise and barbecue accompaniments), come within the kind of goods mentioned by Ms Mason as being an appropriate complement to the sale of liquor. At paragraph 23 of her evidence she set out various types of product which she considered were appropriate complements to the sale of liquor. The Authority accepts that such items as evening cooked meals, pre-packaged dinners, barbecue accompaniments, delicatessen foods and drinks accompaniments such as nuts and snacks may well appropriately complement the sale of liquor. If one looks at Exhibit C, the kind of goods where “the connection is instant and realistic” (The Warehouse Ltd decision – paragraph [62]) are these items. However, these comprise about 16 percent of total revenue which is a relatively small proportion of the total range. The Authority doubts that plastic cups and similar items, or magazines and newspapers would come within such a category. Possibly, gift accompaniments might do so; but they comprise a very small percentage of total sales revenue.

[22] If one stands back and looks objectively at the overall operation of the Wellington “Fix” stores it is clear that the kind of products sold by those stores which can be regarded as appropriately complementary to the sale of liquor is small. There is a concentration on other products which have nothing to do with and have no connection with the sale of liquor.

[23] The applicant argued that in terms of s.36(2)(b) of the Act, regard should be had to customer convenience. Whilst this is a factor that can be considered, it is clear from paragraph 30 of Chisholm J’s judgment in Combined Rural Traders Society Ltd (supra), that customer convenience is not an overriding factor.

[24] Chisholm J pointed out at paragraph 32 of his judgment that as a matter of overall judgment the Authority is entitled to take a less liberal approach than it did previously. Accordingly, s.36(2)(b) of the Act should only apply in limited situations. As McGechan J observed in Buzz and Beer Ltd v Woodruffe [1996] NZAR 404 at 410, circumstances change and it is important that the Authority, as a specialist Tribunal, be aware of social trends and attitudes.

[25] In exercising its discretion, the object of the Act has been considered as part of the overall mix. Problems associated with an increased availability of liquor are mentioned in The Warehouse Ltd at paragraph 67. If this application were granted then there would be an expectation that all convenience stores should have off-licences thus increasing significantly the availability of liquor. Significantly, the Alcohol Reform Bill 2010, following the Law Commission Report, has introduced the concept of the proliferation of liquor outlets as being part of the criteria to be considered for off-licence applications. The Bill is not yet law; but the proposal has considerable public support which the Authority cannot ignore.

[26] The Authority concludes that the sale of liquor is not an appropriate complement to the kind of goods sold in the Wellington “Fix” stores. It follows, that each of the five applications for an off-licence is refused.

[27] As there has been a final determination of the five applications for off-licences, it is appropriate that the applications for the renewal of each of the licences held by Star Services Stations Limited should be withdrawn with effect from 1 September 2011. This will enable the applicant to dispose of its existing stock of liquor. Leave is granted accordingly.

DATED at WELLINGTON this 11TH day of August 2011

B M Holmes
Secretary

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