DJM ENTERPRISES TIMARU LIMITED V GEOFFREY ALLAN MCCROSTIE HC TIM CIV 2007-476-000581

DJM ENTERPRISES TIMARU LIMITED V GEOFFREY ALLAN MCCROSTIE HC TIM CIV 2007-476- 000581 17 March 2008IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY CIV 2007-476-000581IN THE MATTER OF an appeal pursuant to the Sale of Liquor Act 1989 BETWEEN DJM ENTERPRISES TIMARU LIMITED Appellant AND GEOFFREY ALLAN MCCROSTIE Respondent Hearing: 17 March 2008 Counsel: R J Condon In Person for Appellant C A O'Connor for Respondent Judgment: 17 March 2008ORAL JUDGMENT OF PANCKHURST J The Vertigo Venue and Bar[1] The appellant company, DJM Enterprises Timaru Limited (DJM), operates the Vertigo Venue and Bar at 123 Stafford Street, Timaru. It does so pursuant to an on-licence which entitles it to operate the premises as a night club or entertainment venue. It may open from 7.00 pm to 5.00 am Monday to Sunday. [2] Last year the police applied for a variation to a condition of the on-licence, namely to reduce the operating hours back to 7.00 pm to 3.00 am daily. This variation would have the effect of placing the Vertigo Venue and Bar on the same footing as a tavern. The application reflected the police perception that the premises were not being operated as a night club and therefore that the policy contained in the Timaru District Licensing Agency policy document was not being met. Hence, to my mind, the central issue in the case relates to the nature of the operation. Were thepremises being operated as a night club or entertainment venue, or was the operation akin to that of a tavern style premise? [3] The appeal is one pursuant to s139 of the Sale of Liquor Act 1989. Accordingly it is an appeal on a point, or points, of law. This I think is very material to the outcome of the appeal, since many of the submissions that were made in support of the appeal involved an evaluation of the evidence and an assessment of the weight to be given to that evidence. That, however, is not the function of this Court sitting on appeal in relation to a right of appeal founded on questions of law. The function of this Court is to determine whether the Liquor Licensing Authority erred in law as to approach, either because it made a mistake in relation to the interpretation of the relevant legislation (and in this case policy document), or because it arrived at a decision which was not truly available to it on the basis of the evidence at the hearing.The points of law advanced by the appellant[4] The notice of appeal identified three discrete questions of law. However in the final analysis five separate questions were identified and became the subject of argument this morning. Mr O'Connor for the respondent noted this development, but did not object to the inclusion of questions which had not originally been included in the notice of appeal. [5] As finally framed there were five discrete questions. They were that: 1. the principles of the Sale of Liquor Act were not considered by the Authority, 2. the Timaru District Council's sale of liquor policy was not fully interpreted, 3. the evidence produced on behalf of the respondent was flawed, 4. the respondent's application was vexatious and made with the intention to secure a blanket closing time of 3.00 am, and5. that the process was unfair and resulted in a miscarriage of justice. I shall, however, consider these five propositions under three heads and in a slightly different order. [6] The first question I shall consider is whether the hearing was unfair so as to occasion a miscarriage of justice. The second question is, was there evidence capable of supporting the conclusion that the premises were being operated as a tavern. And the final question is whether the application was brought, and decided, in pursuance of securing a 3.00 am closing time policy in Timaru. [7] I consider that the second question subsumes the first three points that I set out earlier. Before I turn to address these three questions it is necessary to refer to the background in a little more detail.Some further background[8] Mr Robert Condon is a shareholder and director of DJM. He represented the company for the purposes of the appeal. Mr Condon I may say has an obvious knowledge of the Sale of Liquor Act and of the liquor industry generally. More than that I was left in no doubt as I listened to his submissions that he sincerely believed in each of the grounds of appeal which he advanced and developed in the course of argument. [9] The relevant on-licence was first issued in June 2001 to DJM. The Liquor Licensing Authority referred in the present decision to the grant of the licence in 2001 and to the circumstances which prevailed at that stage. The shares in the company were then held by a different person. Subsequently Mr Condon was involved in the running of the company and of the night club operation. In October 2006 he acquired the business by purchasing the shares in the company. As I understand it he has operated DJM since that time.[10] The police over the succeeding months obviously came to the view that not only had there been a change of proprietor, but that there had been a change of operation. Previously the business had operated with an emphasis upon what might be termed adult entertainment. The live entertainment provided to patrons comprised pole dancing, jelly fights and the like. Whereas Mr Condon set out to offer other perhaps less exotic forms of live entertainment. However the police formed the view that such live entertainment was minimal in quantity and that in terms of character it was akin to the entertainment typically offered at a tavern rather than a night club. Hence in August 2007 an application to vary the terms of the on- licence was filed seeking a reduction in the operating hours by bringing back the closing time from 5.00 am to 3.00 am.Was the hearing unfairly conducted so as to occasion a miscarriage of justice?[11] To understand this question of law it is first necessary to set out a chronology pertaining to the variation application. The application itself was filed and served on the company on or about 28 August last. The following day, 29 August, a hearing date was set for 17 September. Mr Condon sought an adjournment of the hearing date but this was declined by the chairman on 5 September. On 7 September the respondent, Sergeant McCrostie, wrote to the Liquor Licensing Authority enclosing three briefs of evidence, being a brief for himself and for two other police witnesses. His letter indicated that the three briefs had been provided to DJM that same day. The hearing duly proceeded on the afternoon of 17 September. In the event the applicant called three police officers and also Mr David Vince a senior licensing inspector and Mr Ronald Dunne, another licensing inspector. [12] Section 132(4) of the Act provides with reference to applications to vary, suspend or cancel a licence, that:The Secretary shall – (a) send a copy of the application to the licensee; and (b) fix the earliest practicable date for a public hearing of the application; and (c) give at least 10 working days' notice of the date, time, and place of the hearing to the applicant and the licensee.That subsection sets the scene for a consideration of the present contention.[13] What, then, is the complaint of the appellant company? It is agreed that the evidence of Sergeant McCrostie and of Sergeant Lord was provided to the appellant, apparently by delivery in an envelope which was left at the night club premises. This was about 10 or 11 days in advance of the hearing. However, Mr Condon argued that the evidence of Sergeant O'Rourke was not provided in advance (whereas Sergeant McCrostie in writing to the Authority said that it had been). It is common ground that the evidence of Messrs Vince and Dunne was not provided until the day of the hearing. [14] A matter which assumed particular concern in the course of the appellant's submissions this morning was whether attachment 5, a three page document dealing with 21 visits made to the premises between 1 July and 25 August 2007 was provided in advance of the hearing. This document is in the form of a schedule. It contains provision to record the outcome of inspections of the premises which, as I have said, were conducted on 21 separate occasions. The schedule contains provision for a note to be made concerning whether there was live entertainment at the time of the visit; whether a door charge was being made and whether substantial food was being served. [15] Mr Condon in the course of his submissions submitted that this document supplied in effect the substance of the police case which he had to meet at the hearing before the Authority. His complaint was, therefore, that having received attachment 5 only on the day, he was in no position to cross-examine upon it, much less to meet the allegations concerning the nature of the night club's operation which the schedule contained. [16] In anticipation of this argument Mr O'Connor had checked the records. On the one hand he accepted that the evidence of Messrs Vince and Dunne had not been provided until the hearing itself. As I have already noted the records indicated that the brief of evidence for Sergeant O'Rourke had been delivered at the earlier date. Moreover Mr O'Connor submitted that when one considered the contents of the police briefs of evidence it was clear that attachment 5 was part of Sergeant McCrostie's evidence. It is referred to as such in the brief. Hence, counselsubmitted, attachment 5 must have been available to Mr Condon by about 11 September. I note that the point was not taken up in reply by Mr Condon. [17] I also note a matter of perhaps more significance, which appears from paragraph [10] of the decision, namely that the Authority said:The application was set down on quite short notice. Mr R Condon requested an adjournment because he said he would like to prepare substantial evidence that he has not operated illegally or conducted the licence in breach of the conditions. The application was declined. Pursuant to s.132(4)(b) of the Act the Authority's Secretary is required to fix the earliest practicable for a public hearing of the application. We indicated that we wished to deal with the case at the same time as a related application for a new licence for the tavern across the road. However we did indicate that after hearing the evidence, we would be prepared to adjourn the application on a part heard basis, to give Mr Condon more time. Mr Condon took advantage of that offer and filed extensive submissions which are referred to throughout this decision.At the hearing itself he had filed a brief of evidence which apparently ran to eight pages. The further evidence or submissions which were filed after the hearing ran to about 16 pages. [18] Returning, firstly, to the evidence of Mr Vince and Mr Dunne it is necessary to assess its significance. In the main Mr Vince's evidence was data related to what is termed "a last drink survey". This is information obtained from police sources concerning persons apprehended in relation to various misdemeanours who are asked where they have had their last drink prior to their apprehension. [19] Mr Dunne in giving evidence produced a number of documents. One in particular assumed significance in the Authority's decision. It is a letter from the appellant company. The letter, written by Mr Condon, contained a split of the revenue figure for the business as between alcohol, food and cover charges, that is the percentage amounts which were obtained from these three sources over a period of time. [20] Having reconsidered the Authority's decision it seems to me that the last drink survey data was accorded little, if any, weight in the course of the decision. On the other hand Mr Dunne's evidence did assume significance, particularly withregard to the revenue percentage figures to which I have just referred. However I accept Mr O'Connor's submission that the fact that this information was only supplied to the appellant at the hearing could not have occasioned prejudice. Afterall the relevant figures were supplied on behalf of the company in the first place. Hence, Mr Condon could not have been taken by surprise. [21] It follows, I think, that the real question is whether the information derived from the 21 police visits to the premises was fairly available to Mr Condon so that he could deal with it at the hearing, or subsequently. I remain unsure when attachment 5 was disclosed to DJM. Despite that uncertainty I am not persuaded that the company was unfairly prejudiced on that score. The Authority itself took steps to ensure that there was no unfairness from late disclosure of information (if such occurred), and of course that opportunity was taken up because, as I have already noted, leave was reserved for further evidence or submissions to be filed, and such was done. [22] I think it is also relevant to note that s107(8) of the Act empowers the Authority to regulate its procedure as it sees fit. The Authority did so in this case, conscious that an adjournment had been sought but declined in anticipation of the hearing and, no doubt to ensure that the appellant had every opportunity to meet the variation case, leave was reserved to enable additional evidence or submissions to be filed. It seems to me therefore that the Authority was alive to the requirements of natural justice and I do not find that there was unfairness, let alone unfairness which occasioned a miscarriage of justice.Was the evidence capable of supporting the conclusion that the premises were being operated as a tavern?[23] This to my mind was the crucial question before the Authority. I stress it is not for me to re-examine this issue. Rather, this Court sitting on appeal must determine whether there was evidence capable of supporting the conclusion reached by the Authority and must also ensure that the approach of the Authority did not involve any error of law.[24] The argument for the appellant included contentions that the principles which underpin the Act were not considered and that the relevant policy which applies here in Timaru was not properly implemented in the course of the decision. I shall consider these two contentions first. [25] With reference to the principles in the Act Mr Condon made some general submissions. The effect of them was as follows. He acknowledged that in previous times there had been problems with the operation of the premises pursuant to the on- licence granted in 2001. He contended that under his management the premises had been effectively "cleaned up" and that the problems of previous times had been solved. For example, there has been a good operating environment and no concerns expressed by the police concerning breaches of the Act in relation to, for example, serving intoxicated persons. The argument continued that evidence to this effect was not contested in the course of the hearing and moreover that it was not considered, even mentioned, by the Authority in the course of its decision. [26] Mr O'Connor was not disposed to disagree with this analysis. He accepted that there was no express reference to the principles which underpin the Act. That said, he also argued that it was implicit upon a reading of the decision as a whole that the Authority was well aware of those principles but found no need to engage with them in the context of this particular variation application. [27] With respect it seems to me that this submission involved a misapprehension. I don't doubt the points made by Mr Condon. But the application that was before the Authority was one for variation of the closing time, based on alleged non- compliance with particular conditions of the on-licence. The police did not allege that Mr Condon was unfit to manage premises pursuant to an on-licence. Nor that the premises were being irresponsibly operated in breach of the Act, at least in the ways that supply the basis of this argument. Rather, the focus of the police application was upon the nature of the operation being conducted. Was it a tavern style operation or, as required in terms of the on-licence, a night club or entertainment venue exhibiting the features that that form of activity must entail?[28] I turn then to the Timaru District Licensing Agency policy document which is dated August 2005. This document is at the heart of the present case. At page 8 under Policy 6 there appears the following:The following are the hours of operation expected and supported by the agency within the Timaru District.· That there be a general policy in respect of tavern style on- licences permitting an opening time of 7.00am and requiring a closing time of 3.00am the following day. Applicants seeking an on-licence for hours outside of the hours mentioned above will be required to provide evidence of the need for such hours. In particular the onus is on those requesting longer hours for late night entertainment to convince the agency that the entertainment, as defined, will be greater than might be expected in tavern style premises. The provision of large screen television, pool tables or video machines is not considered to warrant extended late night hours. The agency would expect that premises operating under this provision would exhibit most of the following characteristics: (a) The main source of revenue would not be the sale of liquor. (b) Facilities for the sale of liquor would not dominate the licensed area. (c) Live entertainment would be provided on a regular, frequent and ongoing basis. (d) A stage, dance floor or similar facility would be available for entertainers and/or patrons use. (e) A cover charge would regularly apply. (f) Extensive provision would be made for the supply of substantial food, tea, coffee and other non-alcoholic drinks.[29] The submission for the appellant was that the Authority misunderstood, or misapplied, the criteria or characteristics set out in Policy 6. Mr Condon stressed that the wording of the policy is that the Agency would expect premises operating under the provision would exhibit "most" of the following characteristics. The argument continued that the facilities for the sale of liquor did not dominate DJM's premises; that there was a stage, dance floor or similar facility which was available for use at all relevant times, and that there was extensive provision made for thesupply of substantial food. Hence characteristics, (b), (d) and (f) were said to be established. [30] At that point attention was turned to the other characteristics, being that the main source of revenue not be from the sale of liquor; that live entertainment be provided on a regular, frequent and ongoing basis and that a cover charge would regularly apply. After reference to the evidence it was submitted that at least one or more of these characteristics was established. Therefore, the argument continued, most of the necessary characteristics were established and therefore it was wrong of the Authority to find that the premises were not being operated as a night club or entertainment venue. [31] I am unable to accept this approach and the analysis which resulted from it. I do not consider that Policy 6 can be viewed in the manner for which Mr Condon contended. The six characteristics or criteria are just that. A preponderance of them is to be expected in answering the question whether premises are being operated as a night club or entertainment venue. But at the end of the day an evaluative assessment is required. The policy document is to be read as a whole and in light of the on-licence itself. The broad issue which must be answered is whether the distinction between a tavern style operation, and a night club or entertainment venue style operation, exists. [32] It follows in my view that the six criteria cannot be approached as a check list. It is not the case that because a score of 4 or 3½ is achieved, therefore the premises are operating in terms of the requirements of the on-licence. What the Authority said on this score is contained at paragraphs [31], [32] and [36] of the decision:[31] In assessing the weight of the evidence, we are conscious that all allegations must be established on the balance of probabilities. The hours of operation of any licensed premises can often impact on the profitability of a business, and it follows, that in assessing the evidence, we will always be careful to ensure that before making any order, the allegations have been properly and reasonably, and fairly established. [32] In this case we have been more than satisfied that the ground has been made out. Although these premises only open three nights a week, on the majority of occasions the premises have not been conducted in accordancewith Condition (b) of the licence. Liquor was being sold when the premises were not operating as a night club or an entertainment venue. It is very clear that during the majority of the opening hours, the premises are being operated as a tavern. [36] In this case it is clear that the "Vertigo Venue and Bar" has become a resort for people to attend to keep on drinking after 3.00 am. The figures show that it is operating as a tavern.[33] These findings followed extended reference to the evidence of the various witnesses and a summary of its effect in the eyes of the Authority members. Reading the decision as a whole I am in no doubt that there was evidence sufficient to support the essential conclusion. That is, the Authority correctly directed itself to the ultimate question, which was not one of applying a check list approach to the six criteria or characteristics, but of assessing in an evaluative way whether the premises were being operated in a tavern style or in a night club style. I am quite unable to conclude that the approach of the Authority involved an error of law or that there was not evidence well sufficient to support the conclusion which was reached.Was the application brought and decided in pursuance of securing a 3.00 am closing policy in Timaru?[34] The basis for the appellant's argument under this head is derived from paragraphs [40] and [41] of the decision. The Authority said:[40] We believe that it is highly desirable that a variation be made. Until such time as Mr Condon can satisfy the Agency or us that his company is operating a genuine night club and entertainment venue, in accordance with the policy's guidelines, then it is important that his premises close at 3.00am. The Timaru District Council has invested time and resources into the problems of migratory drinkers and disorderly behaviour in the early hours of the morning. It is clearly desirable that an opportunity is given to see if the policy makes a difference to the general behaviour patterns. [41] Mr Condon argued that an early closure will have negative effects such as patrons stocking up supplies for consumption after 3.00 am, and the potential consequences when many patrons are let out of licensed premises at the same time. These are matters that have yet to be tested. At any event the merits of the policy are not the issue. The issue is whether Mr Condon's company has been operating in breach of his licence, and thereby gaining an unfair advantage over other licensees.In my view these paragraphs provide no basis for concern that the individual merits of the variation application were not considered or, put another way, that the Authority determined this case by adherence to a set policy. [35] Mr Condon attributed a policy approach to Sergeant McCrostie. He referred to newspaper reports where the sergeant has apparently been reported as saying that he would favour a blanket 3.00 am closing time in the Timaru District. Whether that is in fact so I do not know. What is correct, however, is that the Timaru District Licensing Agency policy does permit and contemplate a 5.00 am closing time, subject to premises closing at that hour providing a night club style of operation. Moreover in my view the Authority undoubtedly approached the case on that footing. I see nothing in the decision and, in particular, in the paragraphs from which I have just quoted to indicate that a policy approach was adopted. To the contrary, the Authority considered the variation application on its merits, evaluated the evidence and reached a conclusion which happened to be adverse to DJM Enterprises Timaru Limited.Result[36] Given my conclusion that none of the three questions of law should be decided in favour of the appellant, the appeal must be dismissed. ____________________________________________________________________Solicitors: Appellant - Mr R J Condon, 123 Stafford Street, Timaru Gresson Dorman & Co, Timaru for Respondent