BERRY v BLACKBULL LIQUOR HASTINGS LIMITED [2014] NZHC 314

BERRY v BLACKBULL LIQUOR HASTINGS LIMITED [2014] NZHC 314 [27 February 2014]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYCIV-2013-441-000360[2014] NZHC 314UNDER Sale of Liquor Act 1989 ("the Act")IN THE MATTER of an appeal pursuant to s 139 of the ActBETWEEN NORMAN BERRY, VALDA BERRY,JACQUELINE HUNT, ROYSTONHUNT, ANN MICHELLE AND ADRIANPRITCHARDAppellantsAND BLACKBULL LIQUOR HASTINGSLIMITEDRespondentHearing: 27 February 2014Counsel: S H Smith for AppellantsJ B Forret for RespondentsJudgment: 27 February 2014JUDGMENT OF COLLINS JIntroduction[1] The question I have to consider is whether the Liquor Licensing Authority (the Authority) made an appealable error of law when it granted an off-licence to Blackbull Liquor Hastings Ltd (Blackbull).Context[2] On 25 October 2012 Blackbull applied for an off-licence for a retail liquor outlet at premises in Karamu Road North, Hastings.[3] Blackbull's sole shareholder and director is Mr Mann, who has interests in sixother liquor retail outlets that trade under names which feature "Blackbull".[4] On 10 April 2013 the Authority heard Blackbull's application. Theapplication was opposed by the Hastings District Licensing Agency Inspector and by eight other objectors, including Mr and Mrs Berry, Mr and Mrs Hunt, Ms Michelle and Mr Pritchard, who are the appellants in this appeal.[5] On 26 June 2013 the Authority issued its decision in which it grantedBlackbull's application subject to a modification of the hours of trading specified inthe application.[6] The appeal identifies three questions which the appellants say constitute appealable errors of law. Those grounds of appeal are that:(1) The Authority erroneously treated the grant of the off-licence as a form of trial period.(2) The Authority applied an incorrect test when deciding that Blackbull was entitled to an off-licence.(3) The Authority failed to give proper effect to the object of the Sale of Liquor Act 1989 (the Act).[7] When Mr Smith, counsel for the appellants presented his oral submissions, he submitted that the first ground of appeal identified the Authority's principal error.Mr Smith submitted that the Authority's other errors stemmed from it deciding togrant the off-licence for a trial period.[8] Before addressing these grounds of appeal I shall:(1) summarise the Authority's decision;(2) explain the statutory framework; and(3) explain the legal test that governs this appeal.The Authority's decision[9] The Authority explained the basis of Blackbull's application and in particularMr Mann's intention to manage the premises for the first two months of the business operation after which an experienced manager would become the outlet's permanentmanager.[10] The Authority summarised the objectors' concerns which included:(1) That Mr Mann had been involved in two previous incidents in which liquor outlets he was associated with had sold alcohol to prohibited persons.(2) That school children pass the premises.(3) Issues about tasteless advertising.(4) Issues about poor management.[11] The Authority explained its reasons for deciding Blackbull was a suitable entity to hold an off-licence. Those reasons included its evaluation of the effect of the earlier sales of liquor to prohibited persons, how the premises would be managedand Blackbull's intentions in relation to advertising. The Authority also assessedMr Mann's suitability "as the alter ego" of Blackbull.[12] The Authority explored police concerns about the proposed operating hours and how Blackbull had modified its application to address those concerns. The Authority also noted that two other liquor outlets had closed in the vicinity1 of the proposed premises and that this indicated that the local market was likely to be able to accommodate a new liquor outlet.1 One of the closed outlets traded from the same premises that Blackbull proposes trading from.[13] After taking into account all of these factors the Authority decided to grantBlackbull's application.Legislative framework[14] Blackbull's application was required to be determined under the Sale ofLiquor Act 1989.2[15] Section 4(1) explains that the Act's objective was to establish a reasonablesystem of control over the sale and supply of liquor to the public with the aim of contributing to the reduction of liquor abuse, so far as that can be achieved by legislative means.[16] Off-licences were primarily regulated by Part 2 of the Act. The criteria for an off-licence included:3(1) The suitability of the applicant.(2) The days and hours during which the applicant proposed to sell liquor.(3) The areas of the premises that the applicant proposed designating as restricted and supervised areas.(4) The steps the applicant proposed to take to ensure liquor is not sold to prohibited persons.(5) Whether the applicant proposed to sell goods or provide services not connected with liquor.(6) Any matters dealt with in any report prepared by the police or an inspector under s 33 of the Act.2 Since replaced by the Sale and Supply of Alcohol Act 2012.3 Sale of Liquor Act 1989, s 35.[17] Off-licences were issued for a period of one year and could be renewed for a three year period.4Legal requirements for an appeal[18] Where a party is dissatisfied with any determination of the Authority "... asbeing erroneous in point of law, that party may appeal to the High Court on thatquestion of law".5[19] In Bryson v Three Foot Six Ltd6 the Supreme Court discussed what amounted to a question of law for appeal purposes. The Supreme Court has revisited this topic on other occasions such as in R v Gwaze7 and Vodafone New Zealand Ltd v Telecom New Zealand Ltd.8 From these authorities, and for present purposes I note that an error of law may arise if the Authority has:(1) misdirected itself when making a decision pursuant to the requirements of the Act;(2) reached a factual finding that is "so insupportable – so clearly untenable – as to amount to an error of law".9[20] It will be apparent that the appellants face a high hurdle when they base their appeal on the contention that the Authority did not deal adequately with the evidence put before it.First ground of appeal[21] The first ground of appeal is that the Authority erroneously treated the grant of an off-licence as a one year trial period. The appellants submit:104 Sections 40(1)(a) and 46(3).5 Sale of Liquor Act 1989, s 139(1).6 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [24]-[27].7 R v Gwaze [2010] NZSC 52, [2010] 3 NZLR 734 at [50].8 Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [2012] 3 NZLR 153 at [51].9 Bryson v Three Foot Six Ltd, above n 5, at [26].10 Appellants' submissions at [31]-[32].... The Authority had an inappropriate eye on the transitional provisions of the Sale and Supply of Alcohol Act 2012 (the 2012 Act). While the application was decided as if the 2012 Act had not been enacted, the licence will come up for renewal after one year and that renewal will be consideredagainst the more stringent 2012 Act's criteria. The Authority appears to havetaken that renewal, as an opportunity to give the applicant a chance, and to see how it goes.That is an error of law: if the licence was not warranted at the time of their decision it should not be granted – there is no trial period to find out.[22] In my assessment there is nothing in the Authority's decision that supportsthe contention that it "had an inappropriate eye on the transitional provisions of the Sale and Supply of Alcohol Act 2012". In fact, the Authority's decision does notrefer to the 2012 Act at all.[23] The Authority did comment that:11Given that this licence will come up for renewal in 12 months time, the applicant would be foolish if it fails to abide by its stated intentions.However, this is not evidence of the Authority applying a trial period or failing toconsider Blackbull's suitability at the time of the application. The Authority was simply stating that licences under the Act are granted for one year before they can be considered for renewal. The Authority was pointing out that renewal of the licencewas an opportunity to review Blackbull's stated intentions. Blackbull's commitmentto its intentions would obviously be a factor that the Authority would consider whenconsidering Blackbull's application for a renewal of its off-licence.[24] I can find no appealable error of law in the approach taken by the Authority in relation to the first ground of appeal.Second ground of appeal[25] The appellants submit the Authority applied the wrong test when deciding Blackbull was entitled to an off-licence.[26] This ground of appeal is explained by the appellants' submission that:1211 Blackbull Liquor, above n 10, at [17].12 Appellants' submissions at [3].The Authority too readily accepted assertions made by [Blackbull], and failed to require [Blackbull] to properly address serious concerns raised by [the appellants]. By contrast the Authority seems to have expected a higher level of proof from [the appellants]. This misplaced the onus of proof that rests with [Blackbull] to affirmatively satisfy the Authority that it warranted a licence.[27] The appellants illustrate their concerns by reference to the way the Authority:(1) Dealt with the appellants' concerns that school children would be passing the proposed premises.(2) Dealt with the appellants' concerns about the harm caused by sales ofready-to-drink (RTDs) and that 70 per cent of the retail space in the proposed premises would be devoted to RTDs.(3) Concluded there was capacity in the local market to accommodate another liquor outlet.[28] The appellants' assertion that the Authority "too readily accepted assertions raised by [Blackbull]" does not constitute a question of law. However, I willexamine in more detail the appellants' concerns.Passing school children[29] The Authority said:13[The appellants] were also concerned that school children pass the premises although the evidence in this regard was not compelling ......There are schools in the vicinity of the proposed premises. However, the Authority accepts the evidence that school pupils will generally walk on the opposite side of Karamu Road from these premises.[30] The appellants say the Authority dealt inadequately with the evidence concerning school children passing the proposed premises. In particular, the appellants submit the Authority did not deal adequately with the following evidence:13 Blackbull Liquor [2013] NZARLA PH 579 at [10] and [24].(1) Mr and Mrs Hunt's evidence that their child goes to a primary schoolnear the proposed premises and pass by the proposed premises each day on their way to and from school.(2) The evidence from Mr and Mrs Berry, Ms Couchman-Eyles and Ms Michelle concerning the location of schools near the proposed premises.[31] The appellants say the Authority took too much notice of Mr Mann'sevidence when he said he observed 22 students in uniform pass the proposed premises on foot or on bicycles and that school pupils normally walked on the other side of the road from the proposed premises. The appellants also say the Authority placed too much weight on Mr Mann's evidence that students in school uniform willnot be sold anything in the proposed liquor outlet.[32] The Authority recognised the appellants' concerns but concluded that theevidence that underpinned their submissions was not "compelling". Furthermore, there is nothing before me to suggest Mr Mann's evidence was wrong.[33] In these circumstances, I am bound to conclude that the appellants' concernsabout school children walking past the proposed premises, while no doubt very genuine, do not provide a basis for me to quash the Authority's decision. When distilled to its most basic components the appellants' submission is a challenge tofindings that were open to the Authority.Promotion of RTDs[34] The Authority said:14An issue affecting the suitability of [Blackbull] is that it has an agreement with its liquor wholesaler to the effect that 70 per cent of the retail space of the premises and 70 per cent of the chiller space must be devoted to RTDs. There was no direct evidence that RTDs are the liquor purchases of choice by young persons although this is generally believed to be the case. Any off-licenced store that targets young persons with cheap "easy to drink" liquor runs the risk of an adverse finding as to the licensee's suitability. Whilst the14 Blackbull Liquor, above n 10, at [15].Authority is not prepared to make an adverse finding of absence of suitability, it does express its concern in this regard. It considers that its concern in this case can be remedied by imposing a restricted designation in respect of the premises rather than the more usual supervised designation. It would not surprise the Authority if, in the future, direct evidence were adduced indicating that with such a large proportion of premises being devoted to RTDs potential breaches of s 4 of the Act may result. This would have a direct bearing on the suitability of the licensee.[35] The appellants submit that there was in fact evidence from Mr and Mrs Hunt about the marketing of RTDs to young offenders.[36] Mr Hunt had previously been a Liquor Licensing Inspector. He said that:15From [his] extensive years involved in liquor licensing ... it's becomepatently obvious ... that people that advertise, particularly Woodstock, in the frontage of their businesses are targeting young people, and that has been found to be true throughout [his] many years of being involved in [the alcohol] industry.Mrs Hunt, who works with youth offenders, also gave evidence about young peoplepreferring RTDs to "get wasted".[37] The appellants say the Authority was plainly wrong when it concluded that there was no direct evidence before it that linked RTDs to the youth market, andtherefore the Authority's approach to this issue justifies me quashing the Authority'sdecision.[38] While it may have been preferable for the Authority to have considered Mr and Mrs Hunt's evidence on this issue in more detail, I understand the Authoritywas conveying that it did not have the benefit of independent marketing evidence to support the proposition that RTDs are the purchases of choice for young people.[39] The Authority could only make a decision on the basis of the evidence beforeit. The Authority did this. The appellants' real concern is that the Authority did not give the weight to the appellants' evidence that they wanted from the Authority. The weight that the Authority gave to the evidence before it was a matter for the Authority. Arguments about the degree to which the Authority relied on aspects of the evidence do not constitute an appealable question of law.15 Transcript of evidence at 234.The closure of other liquor outlets[40] The Authority said:16... [It] accepts that any new liquor store in a particular area may result in more liquor becoming available in that area. However, it is significant that two bottle stores in the area have closed recently and thus there seems to be a void in the market....However, in this case it seems that the market will be able to accommodate a new store without alcohol abuse issues arising. Further, the evidence is that whilst the general area is regarded as a hotspot, the spot is not sufficiently"hot" for the Authority to have concerns about the introduction of a bottlestore in the proposed area. There was no evidence of any causal nexus between the establishment of another liquor store in the area and potential liquor abuse problems.[41] The appellants contend that there was no basis for the Authority to conclude there was capacity in the local market for a new liquor outlet. The appellants say theAuthority's decision was contrary to the evidence of the Hastings Liquor LicensingInspector who told the Authority two liquor outlets had closed in the vicinity of the proposed outlet. The Inspector suggested that the market was saturated. However,the Inspector's evidence on this point was challenged in cross-examination when it was suggested that the stores which closed may have cut their prices to the point of becoming unprofitable.[42] The Authority did consider the Liquor Licensing Inspector's concerns that two liquor outlets had closed but found there was "no concrete evidence" that they closed because of intense competition. Having concluded there was no reliable evidence as to why the other outlets had closed, the Authority simply drew an inference that was reasonably available to it, namely, that the closure of the two other outlets created an opportunity in the local market for Blackbull. This process of reasoning did not constitute an appealable error of law.[43] I can find no basis to conclude that the Authority applied an incorrect test when assessing the evidence before it. The Authority weighed the evidence it was entitled to consider and drew conclusions and inferences that were reasonably16 Blackbull Liquor, above n 10, at [22] and [28].available to it. The Authority's approach did not constitute an error of law.Accordingly the appellants' second ground of appeal must be dismissed.Third ground of appeal[44] The appellants' third ground of the appeal is that the Authority failed to give proper effect to the objects of the Act.[45] The appellants submit that the Authority did not give proper effect to the objects of the Act because it did not fully comply with the steps set out by the High Court in Otara-Papatoetoe Local Board v Joban Enterprises Ltd. In particular, the appellants say the Authority failed to undertake the final step in Joban, which states:17Having considered all of that information, the Authority must stand back and determine whether the application should be granted (whether on conditions or not) or refused. This step requires the Authority to form a view on whether there is any evidence to suggest that granting the application will contrary to s 4(1), increase the risk of alcohol abuse. While a causal nexus is required between such evidence and the relevant risk, it is unnecessary toqualify the nature of the link by reference to such words as "powerful" or "direct".[46] In my assessment, the Authority did evaluate whether or not the granting ofBlackbull's application would be contrary to the objects of the Act. The Authorityconsidered the relevant factors in s 35 of the Act and concluded the application should be granted with modifications.[47] While it would have been desirable for the Authority to have made an"overall" assessment, the approach taken by the Authority gave proper effect to the objects of the Act and did not constitute an appealable error of law. Accordingly, theappellants' third ground of appeal must be dismissed.Conclusion[48] The appeal is dismissed.17 Otara-Papatoetoe Local Board v Joban Enterprises Ltd [2012] NZHC 1406, [2012] NZAR 717 at [31].[49] The respondent is entitled to costs on a scale 2B basis.___________________D B Collins JSolicitors:Lawson Robinson Limited, Napier for AppellantsHarkness Henry, Hamilton for Respondent