Big Barrell Wholesale Liquor [2012] NZLLA 124 (14 February 2012)

New Zealand Liquor Licensing Authority

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Big Barrell Wholesale Liquor [2012] NZLLA 124 (14 February 2012)

Last Updated: 6 March 2012

[2012] NZLLA PH 124

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of an application by BIG BARREL ENTERPRISES LIMITED pursuant to s.31 of the Act for an off-licence in respect of premises situated at 150 Oxford Street, Levin known as “Big Barrel Wholesale Liquor”

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge J D Hole
Member: Dr J Horn

HEARING at LEVIN on 5 December 2011 and 26 January 2012

APPEARANCES

Mr A G Sherriff and Mr M Harrop – for applicant
Sergeant S P Chamberlain – NZ Police – in opposition
Ms L Roiri – Horowhenua District Licensing Agency Inspector – to assist

Objectors
Mr A S Judd
Mr L MacDonald
Mr A J Little
Mr G G Good
Ms V G Dawson
Mrs O Burbey
Mr C T Blake
Mr D S Green
Mr A Fraser
Mr D Mercer

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] This decision relates to an application for an off-licence in respect of premises situated at 150 Oxford Street, Levin to be known as “Big Barrel Wholesale Liquor”.

[2] It is proposed that the business will be that of a stand alone bottle store.

[3] The premises have been constructed but remain to be fitted out.

[4] A “Gull” self-service petrol station is located on the southern side of the premises. The two buildings are separated by a right of way but presently share the same forecourt. Both premises, together with an empty shop to the north of the proposed liquor store, are owned by the same landlord. Beyond the service station are the premises of the Horowhenua District Council and beyond them is a “Super Liquor” off-licence store. Over the road, which is the state highway, is a large park.

[5] At the hearing the applicant indicated that the hours of operation should be amended so that the business would remain open as follows:

Sunday and Monday 9.00 am to 7.00 pm

Tuesdays 9.00 am to 8.00 pm

Wednesdays 9.00 am to 9.00 pm

Thursdays 9.00 am to 10.00 pm

Fridays and Saturdays 9.00 am to 11.00 pm

[6] The proposed hours of operation are significantly less than those set out in the guidelines of the Horowhenua District Council’s Sale of Liquor Policy 2006. They are less than the hours that have been granted to three other stand alone bottle stores within the Levin liquor ban area.

[7] It is proposed that the premises will be designated as supervised.

[8] Resource management consent for the building to operate as retail premises has been obtained.

[9] The District Licensing Agency Inspector does not oppose the application.

[10] The Police did oppose the application questioning the suitability of the applicant.

[11] 112 objections (including petitions) were received. Most of the objections did not comply with s.32(3) of the Act. Of the 112 objectors, 10 elected to give evidence and present submissions at the hearing.

The Applicant

[12] The applicant was incorporated under the Companies Act 1993 on 17 May 2011. Its directors are Avtar Singh and Palwinder Singh. Its directors are its sole shareholders.

[13] Avtar Singh is aged 46. He was born in India. He came to New Zealand in 1989. He is married with four children and lives in Napier. He obtained a General Manager's Certificate in May 2003 and that was renewed on two occasions. That certificate expired in 2010 whilst Mr Singh was in India. He reapplied for a General Manager's Certificate and this was granted on 31 October 2011.

[14] His brother, Palwinder Singh is aged 33. He came to New Zealand in 1999. He also lives in Napier and holds a General Manager's Certificate.

Big Barrel Group

[15] As at the date of the hearings, eight companies comprise the Big Barrel Group . Their details are as follows:

• (a) Details of the directorate and ownership of Big Barrel Enterprises Limited have previously been detailed. Big Barrel Enterprises Limited owns the majority of shares in Just Liquor Limited which owns a bottle store in New Plymouth. In addition, it owns all the shares in Sparkling Enterprises Limited which owns a bottle store at Waitangirua Mall, Porirua. Big Barrel Enterprises Limited has applied for off-licences in respect of proposed bottle stores at Wanganui, and Lower Hutt.
  
• (b) Big Barrel Group Limited is the group’s operating company. Avtar Singh and Palwinder Singh are its directors and sole shareholders. It holds the head leases and is the “Big Barrel” franchisor of stores at Karamu Road, Hastings Stortford Lodge, Hastings and Havelock North all of which are owned by Sandhu Brothers Limited. In addition, it holds the head leases and is the Big Barrel franchisor of bottle stores at Princes Street, Tremaine Street and Summerhill in Palmerston North all of which are owned by I S Dhillon and Sons Limited.
  
• (c) The sole directors and shareholders of Padda Enterprises Limited are Avtar Singh and Palwinder Singh. Padda Enterprises Limited owns the “Big Barrel” bottle stores at Marewa and Tamatea in Napier, the “Big Barrel Store” at Clive, and a “Liquorland” store in Carlisle Street, Napier.
  
• (d) Sandhu Brothers Limited owns Big Barrel bottle stores at Karamu Road, Stortford Lodge, Hastings, and Havelock North. At the time of the hearing its directors were Balwinder Singh Sandhu, Avtar Singh and Palwinder Singh. Its sole shareholder is Balwinder Singh Sandhu who is a brother in law of the other two directors.
  
• (e) D S Padda Family Foods Limited owns a “Four Square” grocery and off-licence at Maraenui in Napier. Its directors are Avtar Singh and Palwinder Singh. Its shareholders are Avtar Singh, Palwinder Singh and Mr K K Parihar.
  
• (f) Just Liquor Limited owns a bottle store in New Plymouth. Its directors are Avtar Singh, Palwinder Singh and Mr M S Walia. The majority shareholder is Big Barrel Enterprises Limited. U R Walia has a minority shareholding in the company.
  
• (g) Sparkling Enterprises Limited owns the “Big Barrel” bottle store at Waitangirua Mall, Porirua. Its directors are Avtar Singh and Palwinder Singh. Its sole shareholder is Big Barrel Enterprises Limited.
  

[16] In summary, as at the date of the hearings:

• [a] Companies owned and directed by Avtar Singh and Palwinder Singh hold five off-licences in Napier, one off-licence in New Plymouth and one off-licence at Porirua;
  
• [b] A company, two of whose directors are Avtar Singh and Palwinder Singh, holds three off-licences in Hastings and Havelock North;
  
• [c] A company owned and directed by Avtar Singh and Palwinder Singh holds at least six head leases and is the “Big Barrel” franchisor in at least six bottle stores in respect of which neither Avtar Singh nor Palwinder Singh has any ownership interest;
  
• [d] A company owned and directed by Avtar Singh and Palwinder Singh is presently attempting to set up two new bottle stores in Wanganui and Lower Hutt;
  
• [e] The “Big Barrel” Marewa bottle store opened in 2003. “Big Barrel” Karamu opened in 2005. “Big Barrel” Tamatea opened in 2008. Big Barrel Havelock North opened in 2009. The Four Square store at Maraenui opened in 2009. The “Liquorland” store in Carlisle Street, Napier opened in 2010. The “Big Barrel” store at Clive opened in 2010. The “Big Barrel” store at Stortford Lodge opened in 2010. All of these bottle stores are situated in the Napier, Hastings, Havelock North area.
  
• [f] The “Just Liquor” bottle store at New Plymouth was acquired in 2011. The “Big Barrel” bottle store at Porirua opened in 2012.
  
• [g] The three Palmerston North franchised operations commenced operating in 2008, 2010 and 2011 respectively.
  

The Proposed Management Structure

[17] If the application is granted it is intended that initially the store will be managed by a team consisting of Avtar Singh, his wife Ester (who holds a General Manager's Certificate) and Natasha Ann Nordell (who also holds a General Manager’s Certificate). Each member of this management team lives in Hawkes Bay. It is intended that this management arrangement will subsist for approximately three to four months. During that time suitably qualified local duty managers will be obtained and initiated into the business. It is clear that Mrs Nordell will play a significant role in mentoring the new employees. However the prime responsibility for their training will be with the group’s consultant, Mr Roy Hunt.

[18] Mr Hunt is a former liquor licensing inspector having worked both in Auckland and more recently in Napier. In 2011 he set up business as a liquor licensing consultant and has advised the applicant in respect of liquor licensing matters since then.

[19] It is proposed that the new employees will obtain General Managers’ Certificates. They will be subject to the employee principles adopted by the Big Barrel Group for all its employees. These were largely prepared by Mr Hunt. They contain a provision that in the event that a general manager employed by one of the group’s companies fails a controlled purchase operation or a simulated controlled purchase operation then that employee’s employment will cease immediately.

[20] The directors and Mrs Nordell have a good working relationship with the District Licensing Agency Inspectors in both Hastings and Napier and with Sergeant Formosa who is the Alcohol Harm Reduction Police Officer at Napier. It is anticipated that a similar relationship will develop with the Horowhenua District Licensing Agency Inspector and local Police.

[21] When the new employees have been initiated into their roles, it is intended that the initial management team will cease to exist. Thereafter Avtar Singh will be the director primarily responsible for the Levin operation although Palwinder Singh will call in at the premises from time to time. Ultimately these premises will be owned by an absentee licensee.

Objectors

[22] Because of the outcome of this application, it is not necessary to consider the objections in detail. Generally, the objectors were concerned with the high incidence of juvenile alcohol abuse in the Levin area. It was noted that Levin is of a lower socio-economic grouping than much of the country and that there is a higher level of Social Welfare dependency than occurs in general throughout New Zealand. (The evidence of the applicant in this regard notes that Levin’s population is of a higher average age than is common throughout New Zealand). Objectors noted the presence of the park opposite the premises which is used by young persons. Of particular significance were comments made by various objectors concerning the self-service petrol station. Concern was expressed by one of the objectors, Mr Blake, that the applicant had failed to satisfy him that in the future it would have the capacity to manage a difficult site appropriately with the adjacent self-service petrol station posing unusual special difficulties.

[23] The Authority notes that some of the objectors (but not including Mr Blake) failed to satisfy it that they had a greater interest in the application than the general public. In the circumstances there is no necessity for the Authority to rule specifically in this regard.

Positives

[24] Various matters were raised on behalf of the applicant which support the application. These include:

• [a] Since 2009 the directors of the applicant have successfully been involved in the operation of various bottle stores without having come to the adverse attention of the authorities. In particular, there have been no further failed controlled purchase operations or other management deficiencies. (This submission ignores the 2010 incidents involving Sandhu Brothers Limited’s Havelock North bottle store);
  
• [b] The proposed amended hours are less than those contained in the Horowhenua District Council’s licensing guidelines and are particularly conservative;
  
• [c] Marketing of liquor at the premises will be aimed at the mature market. It is intended that there will be wine tastings and liquor of high quality will be stocked. There will be no loss leading or sales below cost;
  
• [d] As is the case in Hawkes Bay, advertising at the premises will be submitted to the District Licensing Agency for scrutiny;
  
• [e] Prices will be determined only after there has been input and scrutiny in that regard by the District Licensing Agency;
  
• [f] There will be regular random mystery controlled purchase operations in respect of the premises;
  
• [g] It is intended that good relationships will be developed with both the District Licensing Agency and the Police;
  
• [h] The applicant has obtained favourable testimonials from Sergeant Formosa, and the two District Licensing Agency Inspectors in Napier and Hastings respectively;
  
• [i] There will be no party pills or similar substances sold on the premises;
  
• [j] Employees will be required to hold General Managers' Certificates and be subject to a stringent employment contract;
  
• [k] Mr Hunt will be retained as a consultant;
  
• [l] There is in existence an appropriate host responsibility statement;
  
• [m] Before an employee commences a shift, he will be required to sign a memorandum setting out briefly his responsibilities in terms of the Act;
  
• [n] There will be point of sale software in existence to assist in preventing sales to under-aged persons;
  
• [o] There is a business plan in existence in respect of the premises and directors of the applicant will visit regularly;
  
• [p] Patrons of the “Gull” petrol station will not be able to visit the premises so long as their vehicles are parked within the confines of the service station. A planter box will be erected by the mutual landlord between the service station complex and that area of the front yard which is intended to be used by patrons of the bottle store for parking purposes. Thus, to some extent, walking between the service station premises and the bottle store premises will be discouraged.
  

Negatives

[25] There are various matters of concern that do not favour the application:

• [a] Formosa and Hunt v Padda Enterprises Limited and Singh PH NZLLA 288/2009 details sales to underaged persons and other management deficiencies. The incidents referred to in that decision occurred in 2008. The Authority considered that the various incidents referred to in that decision of selling liquor to minors was one of the worst cases of liquor abuse that had come before it. The Authority accepted that some important steps had been taken by Padda Enterprises Limited and its directors to ensure that there would be no repetition of sales to minors and similar management deficiencies. However, the Authority noted that it was not impressed with the company’s cavalier attitude to the appointment of managers and its clumsy attempts to evade responsibility. In that case, the Authority suspended the off-licence issued to Padda Enterprises Limited for seven days which is a reflection of the seriousness of its misconduct;
  
• [b] Police evidence detailed incidents which occurred on 24 December 2010 at the “Big Barrel” bottle store at Havelock North. These involved a duty manager (whose name was on the board) not being present and the failure to display the off-licence. (An alleged deficiency affecting the Stortford Lodge “Big Barrel” store was not substantiated at the hearing.) However, it is clear that in respect of the Havelock North store management difficulties subsisted and the directors of the applicant cannot resile from their responsibilities in this regard. The Havelock North store is owned by Sandhu Brothers Limited and Avtar Singh and Palwinder Singh are two of its three directors;
  
• [c] The decision by this Authority in Poonam Enterprises Limited [2011] NZLLA PH 698 relates to a previous application (sponsored by the Big Barrel Group) for an off-licence in respect of the premises at 150 Oxford Street, Levin. The Authority determined that the applicant was not suitable. In its decision, the Authority commented adversely as to the involvement of Big Barrel Group Limited and its directors: See paragraphs [21] and [26]. The Authority concluded that it considered that a significant period of time needed to elapse before Big Barrel Group Limited was able to satisfy the Authority of its credentials. Significantly, the directorate and shareholding of Big Barrel Group Limited and the applicant are the same. Poonam can be described as a disastrous attempt by the directors of the applicant (and Big Barrel Group Limited) to assist an unsuitable applicant to obtain an off-licence for the premises. It involved a serious lack of judgement on the part of the directors of the applicant when considering a suitable licensee for the premises;
  
• [d] The 2008 incidents (involving Padda Enterprises Limited), together with failures detailed in December 2010 (affecting Sandhu Brothers Limited) and the lack of judgement involved in Poonam all confirm the comment made in Poonam to the effect that a significant period of time needed to elapse before Big Barrel Group Limited was able to satisfy the Authority as to its credentials. With the same directorate and shareholding in Big Barrel Enterprises Limited, the same comment remains worthy of consideration;
  
• [e] The proposed site has peculiar management difficulties. It is in a low socio-economic district where there is a history of juvenile liquor abuse. Perhaps, more importantly, however, is the fact that it is adjacent to the “Gull” self-service petrol station. Section 36(3)(a) of the Act prohibits the granting of an off-licence to anyone operating a service station. The fact that the proposed bottle store is adjacent to the service station together with the location of the “Gull” sign could create confusion amongst motorists as to whether the proposed bottle store is associated with the Gull petrol pump. In the absence of the typical staffed retail store normally present at petrol stations, the Police are concerned as to the likelihood of service station patrons with queries or wanting refreshment venturing into the liquor store and the ultimate sale of liquor to them. Whilst this does not constitute a breach of the Act, nevertheless it is contrary to its spirit and has s.4 of the Act ramifications. In addition, as Mr Blake submitted, if intoxicated persons are sold liquor at the bottle store (which is prohibited by the Act) there is a possibility that they could then venture on to the premises of the unsupervised petrol station and cause a serious conflagration to occur. The presence of the planter box would not be sufficient to prevent such mutual migration;
  
• [f] Whilst the proposal for the management team to manage the premises initially seems a good one, the future management of the premises is inevitably somewhat vague. The management of premises some distance from the home base in Hawkes Bay will inevitably create difficulties for the applicant. These difficulties are almost certainly amplified by the presence of the unsupervised petrol station next door. Sophisticated management will be required in this regard;
  
• [g] Initially the applicant confined its activities to the Hawkes Bay area where good management could be achieved. Recently it has extended its activities to various locations in the lower North Island and it continues to do so with some rapidity. It is questionable whether it has the capacity to develop its activities so quickly and remain compliant in all respects with the requirements of the Act.
  

Decision of Authority and Reasons

[26] In his submissions in support of the application, Mr Sherriff correctly reminded the Authority that it needs to look at the big picture. In Page v Police and Anor (unreported HC Christchurch AP 84/98, 24 July 1998), Panckhurst J said the same thing when he stated that there was an onus on an applicant for a licence to demonstrate his or its 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 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.”

[27] This case is about the suitability of the applicant. Suitability is the relevant criterion set out in s.35(1) of the Act. Superficially, when one considers only the various positive aspects set out in paragraph [24] of this decision, the applicant might seem to satisfy the suitability requirement.

[28] However, the negatives referred to in paragraph [25] raise other suitability issues.

[29] The directors of the applicant have had chequered careers with statutory compliance since setting up their first off-licence in 2003. Adverse comments were made concerning them by the Authority in the Padda Enterprises Limited decision of 2009. They are partly responsible for the deficiencies affecting Sandhu Brothers Limited’s Havelock North store in December 2010. Their judgement in promoting the recent Poonam application has been found wanting. On the other hand, there has been a distinct improvement in statutory compliance since 2009, relationships with the Hawkes Bay authorities seem excellent, and the applicant’s employment of Mr Hunt as a consultant is reaping beneficial results. Of course, Mr Hunt is merely a consultant whose services can be terminated at any stage. In addition, he did have some involvement with the ill fated Poonam application. Thus his judgement can be called into question.

[30] These matters need to be considered, first, in relation to the proposed site. As indicated previously, the site creates particular difficulties because the adjoining petrol station will be unsupervised. This effectively raises the threshold insofar as suitability assessment is concerned.

[31] The matters referred to in paragraph [29] become of even greater concern when it is appreciated that at the present time the applicant and associated companies are involved in a rapid and large expansion of their activities. The rapid expansion of the Big Barrel Group empire does not merely involve the expansion of retail activities per se. Where the sale of liquor is concerned, special statutory responsibilities become an added but very important part of the management requirements of a licensee.

[32] With such a short history of redemption following serious misconduct, continued poor judgement, a difficult site and all the demands of the rapid expansion, this applicant faces real difficulties in satisfying the Authority that it has at the present time the requisite suitability to hold a licence in respect of the Levin premises. Individually, some of these concerns may seem insufficient reason to justify an adverse suitability finding. However, it is the whole picture that needs to be considered.

[33] The legal obligation is on the applicant to satisfy the Authority as to its suitability. When everything considered together, the applicant is unable to satisfy the Authority as to its suitability.

[34] Accordingly, the application is refused.

DATED at WELLINGTON this 14th day of February 2012

B M Holmes
Secretary

Big Barrel Wholesale Liquor.doc(aw)