MEGA TRADE (AKL) LTD AND ANOR V THE COMMISSIONER OF POLICE HC AK CIV 2009-404-001137

MEGA TRADE (AKL) LTD AND ANOR V THE COMMISSIONER OF POLICE HC AK CIV 2009-404- 001137 12 August 2009IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-001137IN THE MATTER OF ss 138 and 147A of the Sale of Liquor Act 1989 AND IN THE MATTER OF of an appeal by Mega Trade (AKL) Limited against a decision suspending for 7 days an on-licence in respect of premises situated at Queen Street, Auckland, known as the "B B Club" BETWEEN MEGA TRADE (AKL) LIMITED First Appellant AND GRACE CHANG Second Appellant AND THE COMMISSIONER OF POLICE Respondent Hearing: 12 August 2009 Appearances: J H Wiles for the Appellants G R Kayes for the Respondent Judgment: 12 August 2009[ORAL] JUDGMENT OF WYLIE JSolicitors: J H Wiles, P O Box 941, Auckland Meredith Connell, P O Box 2213, Auckland[1] This is an appeal against a decision of the Liquor Licensing Authority ("the Authority") dated 19 February 2009. The Authority suspended the first appellant's ("Mega Trade's") on-licence for a period of 7 days. It also suspended the second appellant's manager's certificate for a period of 28 days. [2] The Authority suspended the on-licence and the manager's certificate because it concluded that spirits were sold by the bottle; that the bottles held more than 500ml of spirits; that the bottle was retained behind the bar; and that spirits were dispensed to customers in glasses of less than 500mls when required. The Authority held that this practice was in breach of s 169 of the Sale of Liquor Act 1989 ("the Act"). It also held the practice breached s 154A of the Act because the sale of a bottle of spirits is likely to encourage persons or patrons to consume liquor to an excessive extent. [3] The Authority also took the view that Mega Trade was aware that customers liked to pour spirits sold to them in shot glasses into one litre jugs of green tea and that by selling spirits in this way, Mega Trade was a party to a further breach of s 169 of the Act. [4] The Authority considered that the offending was exacerbated by two factors: a) that it had issued an earlier ruling to the effect that selling spirits in a bottle directly to a customer was a clear breach of s 169 of the Act; b) that warnings had been issued on two earlier occasions to Mega Trade and its staff; and It is also clear that the Authority considered that Mega Trade had continued to sell spirits by the bottle subsequent to a warning given to it by the Auckland District Licensing Agency on 16 October 2008. [5] All of these factors were taken into account in imposing the suspensions.The appeal[6] The appeal was brought pursuant to s 138 of the Act. Section 138(1)(b) reads as follows:(1) Where the Licensing Authority— (b) Cancels or suspends any licence or manager's certificate on the ground of the suitability of the licensee or manager,— the applicant or licensee or manager may appeal to the High Court against the decision of the Licensing Authority on giving notice of appeal within 10 working days after the date on which notice of the decision is given to the applicant, licensee, or manager.[7] It is not clear to me that an appeal under this section is appropriate in the circumstances which have here arisen. [8] An on-licence can be suspended under s 132. The grounds on which it can be suspended are set out in s 132(3)(a) to (c). Relevantly, an on-licence may be suspended if the licensed premises have been conducted in breach of any of the provisions of the Act or of any conditions of the licence or otherwise in an inappropriate manner. It may also be suspended because the conduct of the licensee is such as to show that he or she is not a suitable person to hold the licence. A manager's certificate can be suspended or cancelled for two reasons. They are set out in s 135(3)(a) and (b) of the Act. A manager's certificate can be suspended or cancelled if the manager has failed to conduct any licensed premises in a proper manner, or if the conduct of the manager is such as to show that he or she is not a suitable person to hold the certificate. [9] Here the applications for suspension lodged by the Auckland District Licensing Agency and the Police relied on the way in which the licensed premises had been conducted. [10] The Authority did not make it clear in its decision whether it was suspending the on-licence under s 132(3)(a) or (b); nor did it make it clear whether it was suspending the manager's certificate under s 135(3)(a) or (b). If the Authority wasacting under ss 132(3)(b) and 135(3)(b) – i.e. suspending the licence/certificate on suitability grounds – then the appeal was appropriately brought under s 138(1)(b) and it proceeds by way of a rehearing. If the Authority was acting under ss 132(3)(a) and 135(3)(a) – i.e. misconduct – then the appeal should have been brought under s 139 and it is confined to a question of law. [11] Out of caution and to the extent that it was necessary to do so, Mr Wiles appearing for the appellants sought leave orally to treat the appeal as if it had been brought under s 139. Mr Kayes appearing for the respondent sensibly raised no objection to this application. [12] Although there are indicia both ways in its decision, on balance, I suspect that the Authority suspended the on-licence and the manager's certificate under ss 132(3)(a) and 135(3)(a) and I have therefore treated the appeal as an appeal on a question of law under s 139.The notice of appeal[13] The notice of appeal raises a number of issues. [14] It was asserted that there was no evidence to support the Authority's findings that two prior warnings were given to Mega Trade. Further, it is said that there was no evidence to justify a finding that either s 154A or s 169 had been breached. [15] If the Authority has reached a determination where there is no evidence to support that determination, then that is an error of law – Edwards (Inspector of Taxes) v Bairstow [1956] AC 14 at p 36. [16] One of the grounds raised by way of appeal was to the effect that there was a breach of the rules of natural justice in that Mega Trade was not fully heard. Such an error would also be an error of law for the purposes of the appeal – Local Government Board v Arlidge [1915] AC 120 at pp 126 and 143; Rose v Humbles (Inspector of Taxes) [1972] 1 WLR 33 at p44.[17] One of the principal witnesses for Mega Trade at the hearing was a Ms Lo. The Authority relied on answers she gave in evidence about the practice of selling bottles of spirits. She has filed an affidavit deposing that her first language is Cantonese, that her second language is Mandarin and that, while she has been in New Zealand for 12 years, English is still very much her next language. There was no interpreter available on the day of the hearing before the Authority and Ms Lo has deposed that she did not appreciate the correct meaning of some of the questions put to her. One of the questions relied on by the Authority when it concluded that the practice of the selling spirits by the bottle was still ongoing contained a double negative. Ms Lo answered the question "Yes". She has deposed that that was not what she meant to convey at all and that she was confused by the way in which the question was posed. No issue has been taken with Ms Lo's affidavit by the Commissioner and I have proceeded on the assumption that there is no challenge to the same. [18] A comprehensive and helpful memorandum was filed by the Commissioner in response to the appeal. The Commissioner responsibly accepted a number of the matters raised in the notice of appeal. In particular it was accepted that there was no evidence to suggest that Mega Trade had continued selling liquor by the bottle after 16 October 2008. Secondly, it was accepted that only one warning was given in relation to the sale of spirits by the bottle, and that that warning was given by the Auckland District Licensing Agency on 16 October 2008. Thirdly, it was accepted that the Police were aware of Mega Trade's practice of selling spirits by the bottle as at 24 June 2008, and that nevertheless, the Police did not oppose Mega Trade's application for renewal of its on-licence. Finally the Commissioner accepted that the penalty imposed on Mega Trade and on Ms Chang was based on the assumptions which I have noted above, that the assumptions were incorrect, and that any penalty should be decreased by this Court. [19] Mr Wiles on behalf of Mega Trade and Ms Chang also responsibly accepted that as at 16 October 2008 Mega Trade was breaching s 169 of the Act because as at that date it was selling spirits in bottles. He suggested that that breach was mitigated because the sale of the liquor by the bottle occurred to comply with cultural practices, and because such sales had been tacitly approved by the Police. Hesubmitted that the penalty imposed by the Authority was manifestly excessive, and that a warning, or at worst a small fine should have been imposed under the circumstances. [20] As a result, by the time the matter came before me the issues have been substantially narrowed.Analysis[21] There is no argument that, on the evidence, spirits were being sold to customers in bottles exceeding 500mls as at 16 October 2008. That is a breach of s 169. The Authority was correct to so find. [22] However, it is clear that there was no evidence to support the Authority's finding that there were two prior warnings. There was only one express warning, and that was the warning given on 16 October 2008 by the Auckland District Licensing Agency. An earlier warning had been given by the Police, but it related to the practice of pouring shots of spirits into jugs of green tea. To the extent that the Authority determined and proceeded on the basis that there were two prior warnings, it erred in law. [23] The unchallenged affidavit evidence produced before this Court (but not the Authority) satisfies me that the practice of selling by the bottle ceased as from 16 October 2008. There is no suggestion that the practice has been resumed since that date. The Authority found that the practice did continue after 16 October 2008. It was accepted that there was no evidence before the Authority to justify that finding by the Commissioner. The Authority's finding was made at least in part as a result of an answer given in evidence by Ms Lo. The evidence before me compels the conclusion that there was a misunderstanding as a result of language difficulties. The Commissioner accepted this and did not seek that the matter should be remitted to the Authority to re-hear the evidence. Again, to the extent that the Authority proceeded on the basis that selling spirits by the bottle continued after 16 October 2008, it erred in law.[24] The Authority also found that the practice of allowing customers to pour the contents of shot glasses into jugs of green tea was a further breach of s 169. [25] I have read the passages in the evidence referred to by counsel. It seems to me that the highest it can be put is that Mega Trade and its managers were aware of the practice, and in particular were aware that some customers liked to add a shot glass of spirit to a jug of green tea. The evidence does not compel the conclusion that that practice was encouraged, or even that it was expressly permitted. At best it seems that it was tacitly condoned. [26] I am not satisfied that what occurred amounted to a breach of s 169. Relevantly the section reads as follows:(1) Every person commits an offence and is liable to a fine not exceeding [$2,000] who, being the licensee or a manager of any licensed premises or an employee of the licensee, sells or supplies any spirits to any person, for consumption on the licensed premises, otherwise than in a drinking vessel of a capacity not exceeding 500 millilitres.[27] Here the evidence suggested that customers brought spirits in either 150ml or 200ml glasses. They were sold or given on a complimentary basis jugs of green tea. The customers then took the glasses of spirit and the jugs of green tea to a karaoke room and on occasion some customers added the spirit to the tea. On these facts it does not seem to me that Mega Trade or its manager, Ms Chang, sold or supplied spirits otherwise in the drinking vessel of capacity not exceeding 500mls. The spirits were supplied in drinking vessels of 150ml or 200ml. Moreover the effect of the practice does not infringe the purpose of the section. The effect of the practice was dilute the spirits, not to concentrate them or to add multiple glasses of spirits to bring the total amount of spirits in a drinking vessel to more than 500mls. I cannot see that there has been a breach of s 169. To the extent that it found to the contrary, in my view the Authority misconstrued s 169 and erred in law. [28] It follows that in my judgment the Authority was correct to find that the premises were conducted in breach of s 169 on 16 October 2008 because spirits were then being sold in bottles which exceeded 500mls. However, the Authority erred in law when it concluded:a) that the licensee and its manager had received two prior warnings; b) that the practice of selling liquor in bottles continued beyond 16 October 2008; and c) that tacit condonation of the practice whereby customers added spirits to jugs of green tea breached s 169 of the Act. The appeal is allowed in these various respects. [29] There remains the acknowledged breach of s 169. I agree with counsel that the penalty imposed by the Authority was excessive in the circumstances. Mr Kayes suggested that a penalty of one to two days suspension of the on-licence would be appropriate, and that a period of suspension of 14 days of the manager's certificate would suffice. As I have noted, Mr Wiles submitted that a small fine, or a warning, was more appropriate. [30] The Authority did not have jurisdiction to impose a fine under ss 132 and 135, and of course it did not do so. I am sitting on appeal from the Authority and I have the powers set out in r 20.19 of the High Court Rules. Notwithstanding the power to make any order I think just, I do not consider it appropriate to go outside the statutory powers conferred on the Authority. In other words it seems to me that I can suspend or cancel the licence and/or the manager's certificate, or I can decline to do so. [31] I am mindful that Mega Trade and Ms Chang have been put to considerable cost and no doubt distress in appearing before the Authority and this Court. I am also mindful that the practice of selling spirits by the bottle ceased immediately after an express warning was given on 16 October 2008. There was nothing before the Authority to suggest intoxication, sale to minors, or other such offending. I also accept that the Police were aware of the practice of selling spirits in bottles from mid-2008, but that they did not expressly bring this to the attention of the appellants or oppose the renewal of the on-licence. This may have lulled the appellants into a false sense of security.[32] In my view, the appearance before the Authority, the costs of that hearing, the appearance at this appeal, and the costs of this appeal are sufficient penalty in the circumstances. They should suffice to constitute a sufficient salutary experience for the appellants. No further penalty is in my view necessary or required in the circumstances of this particular case. [33] Mr Wiles sensibly accepted that this is not a case where he can appropriately ask for costs. Costs will lie where they fall. Wylie J