Hina's Foodmarket [2012] NZLLA 1131 (11 October 2012)

Last Updated: 7 November 2012

[2012] NZLLA PH 1131

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by ATUL PATEL pursuant to s.41 of the Act for renewal of an off-licence in respect of premises situated at 343 Adelaide Road, Newtown, Wellington known as “Hina’s Foodmarket”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge J D Hole
Members: Mr D E Major
Mr R S Miller

HEARING at WELLINGTON on 1 October 2012

APPEARANCES

Mr A Patel – applicant
Mr M J Kemp – Wellington District Licensing Agency Inspector – to assist

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] The applicant’s off-licence in respect of premises situated at 343 Adelaide Road, Newtown, Wellington became due for renewal on 3 December 2011. Initially, the Inspector opposed the application as he considered that the premises were not trading as a grocery store pursuant to s.36(1)(d)(ii) of the Act. The Inspector considered that the turnover figures supplied by the applicant indicated that only 35.06 percent of turnover related to the sale of main order household foodstuffs. Thus, the principal business of the store was not the sale of main order household foodstuff requirements.

[2] Accordingly, pursuant to s.34(2) of the Act the application was referred to the Authority.

[3] On 1 August 2012 the Authority’s secretariat sent an email to the Inspector requesting him to compile a supplementary report covering all the criteria referred to in Jay and H Company Limited NZLLA PH 155/2001 (except the turnover figures).

[4] By letter dated 14 September 2012 the Inspector advised that the District Licensing Agency had received an updated sales analysis. This was for the month of August 2012. The figures were certified by an accountant. They showed that 52.46 percent of the takings were from the sale of main order household foodstuff requirements. In the circumstances the Inspector no longer opposed the application. The letter did not address the matters set out in the email of 1 August 2012.

[5] Whilst the application was no longer opposed by the Inspector, the Authority considered that the discrepancies indicated in the turnover figures supplied by the applicant needed to be explained. The Authority needed to be satisfied that an off-licence for the premises was applicable in terms of s.36(1)(d)(ii) of the Act.

Applicant’s Evidence

[6] The Authority was impressed both with Mr Patel and his evidence. He had researched the salient issue well and his evidence had strong probative value.

[7] Mr Patel explained that because he did not possess point of sale software he had endeavoured to produce details of sales revenue by taking the costs of purchases and adding to it 23 percent across the board. His mark up on sales averaged 23 percent.

[8] In April 2012 he submitted figures for February and March using this system. The percentage of total sales constituting main order household foodstuffs requirements amounted to between 51 and 53 percent of total. In August 2012 he recorded each sale manually and again noted that between 52 percent and 55 percent of total sales constituted main order household foodstuff requirements. Finally, since then he had installed point of sale software and the figures for the period from 18 September 2012 and 29 September 2012 indicated that between 53 percent and 59 percent of total sales constituted main order household foodstuff requirements.

[9] He stated that the reason that the earlier figures indicated a smaller percentage of total sales constituting main order household foodstuff requirements was that the categories of product were more restricted which meant that items which came within the definition were excluded because they were included in another broad category.

[10] Mr Patel informed the Authority that baskets were available for customers. There are no trolleys.

[11] He stated that there was a variety of main order household foodstuffs which included:

• [a] 10 separate flavours of tuna;
  
• [b] Seven different flavours of sardines;
  
• [c] 20 different tins of soup flavours;
  
• [d] Baby foods;
  
• [e] Baked beans;
  
• [f] Three varieties of baking;
  
• [g] Three varieties of salami;
  
• [h] Hams;
  
• [i] Four flavours of sausages;
  
• [j] Luncheon sausage;
  
• [k] Frozen chicken.
  

He conceded that no steak or lamb chops were sold on the premises. Likewise he recognised that there were few vegetables available for sale although there was quite a lot of fruit, including fruit for sale on the counter for single sales.

[12] Mr Patel was supported by a number of his customers. Two of them gave evidence. They were also supported by Mr N N G Patel who is the President of the New Zealand Association of Dairies, Groceries and Small Businesses. The customers indicated that they purchased a significant proportion of their weekly groceries at the store. They stated that Mr Patel was a good operator of the business and that the business constituted the hub of the local community.

The Inspector’s Report

[13] In evidence, the Inspector stated that he had accepted the revised figures because the accounts were certified by an accountant (in accordance with reg.8(2)(j) of the Sale of Liquor Regulations 1990 – which pertains to applications for off-licences). It was disappointing to learn that the Inspector had not visited the premises personally since 2011. Given the large discrepancy in the figures, this was surprising. He admitted that certification by an accountant does not mean that the accountant has personally inspected the raw material from which the figures were analysed.

[14] Had the Inspector undertaken appropriate checks to see if the new figures were sustainable, this hearing would have become unnecessary. A decision could have been given on the papers.

Decision of Authority and Reasons

[15] C H and D L Properties Limited v Christchurch District Licensing Agency and Ors 27 July 2010 (CIV 2009-409-002906) per Fogarty J confirmed that the criteria set out in Jay and H Company Limited NZLLA PH 155/2001 was useful in determining the principal business of a store in accordance with s.36(1)(d)(ii) of the Act.

[16] Analysing purchase figures to determine sales revenue can be misleading. Taking an average mark up over the whole of the products purchased can result in inaccurate data being received as the mark up for different products varies across the board. In this case, however, the recent sales evidence obtained after the point of sale software was introduced has confirmed that between 53 percent and 59 percent of total turnover constitutes main order household foodstuffs requirements. The Authority has no reason to question Mr Patel’s analysis in this regard as it is supported, in the main, by its conclusions reached in respect of the other criteria referred to in Jay and H Company Limited.

[17] From Mr Patel’s evidence, the variety and range of products available for sale is quite extensive. However, despite the evidence of Mr Swan (one of the customers) the Authority doubts that there is sufficient range and variety of product to enable a person on a regular basis to purchase all one’s weekly groceries from these premises. Nevertheless, (except for meat and vegetables) there is quite a good range and variety of main order household foodstuff requirements available for sale. Stock seems to be turned over regularly. However, the total range of product is undoubtedly restricted because the premises themselves are very small. There is evidence of sufficient main order household foodstuffs being sold to avoid a finding that only impulse purchases occur.

[18] The premises are so small that normally they would be insufficient in size to constitute a grocery.

[19] Wine and beer are displayed quite prominently in the store. However, the premises could not be construed as being primarily a liquor store.

[20] Mr Patel claimed that baskets were available for customers. The Authority noticed no trolleys and no baskets.

[21] There is adequate parking available in the vicinity of the premises.

[22] The evidence (and other testimonials) of customers confirmed Mr Patel’s assertion that customers do purchase main order household foodstuffs requirements from the premises although the Authority doubts that many customers would purchase their full requirements from these premises.

[23] Members of the Authority inspected the premises after the hearing. The overall impression gained was that this was a small grocery. It certainly was not a dairy. It was not a liquor store. From the Authority’s inspection it seemed that the turnover analysis relied upon by Mr Patel was justified.

[24] Notwithstanding some of the negative evidence, the Authority has little difficulty in concluding that the premises constitute a grocery where the principal business of the store is the sale of main order household foodstuff requirements.

[25] Accordingly, the application is granted.

DATED at WELLINGTON this 11th day of October 2012

B M Holmes
Secretary

Hina’s Foodmarket-Hearing.doc(aw)