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Armstrong and Ferguson v The Brougham Tavern Limited and others [2002] NZLLA 216 (7 May 2002)

Last Updated: 1 March 2010

Decision No. PH 216/2002 – PH 229/2002

IN THE MATTER of the Sale of Liquor Act 1989

AND

IN THE MATTER of applications pursuant to s.132 of the Act for suspension of off -licences issued to

THE BROUGHAM TAVERN LIMITED:

RC & LF McLEAN LIMITED:

FERRYMEAD TAVERN LIMITED:

CH & DL PROPERTIES LIMITED:

KARARA HOLDINGS LIMITED:

WOOLWORTHS (NEW ZEALAND) LIMITED: and

ROBEADE HOLDINGS LIMITED

AND

IN THE MATTER of applications pursuant to s.135 of the Act for suspension of General Manager's Certificate issued to

JOHN JOSEPH HASKETT:

SHANE ANTHONY MATTHEWS:

DAMIEN GORDON:

DEBORAH LOUISE RITCHIE:

CRAIG ANTHONY GRANT: and

LESLIE JOHN GEMMELL

BETWEEN JOHN FRANCIS ARMSTRONG

(Police Officer of Christchurch)

MARTIN FERGUSON

(Christchurch District Licensing Agency Inspector)

Applicants

AND THE BROUGHAM TAVERN LIMITED: RC & LF McLEAN LIMITED: FERRYMEAD TAVERN LIMITED:

CH & DL PROPERTIES LIMITED:

KARARA HOLDINGS LIMITED:

WOOLWORTHS (NEW ZEALAND) LIMITED: and

ROBEADE HOLDINGS LIMITED

AND JOHN JOSEPH HASKETT:

SHANE ANTHONY MATTEWS:

DAMIEN GORDON:

DEBORAH LOUISE RITCHIE:

CRAIG ANTHONY GRANT: and

LESLIE JOHN GEMMELL

Respondents

AND

IN THE MATTER of an application by DAMIEN GORDON pursuant to s.123 of the Act for renewal of a General Manager's Certificate

BEFORE THE LIQUOR LICENSING AUTHORITY

Chairman: District Court Judge E W Unwin
Member: Mr J C Crookston

HEARINGS at CHRISTCHURCH on 22, 23 and 24 April 2002

APPEARANCES

Sergeant J F Armstong – NZ Police – applicant
Mr M Ferguson – Christchurch District Licensing Agency Inspector – applicant
Mr G J Thwaites – for The Brougham Tavern Limited (The Brougham Tavern) and Mr J J Haskett
Mr F B Barton – for RC & LF McLean Limited (Riccarton Pak N' Save) and Mr S A Matthews
Miss K G Feltham – for Ferrymead Tavern Limited (Ferrymead Tavern), and Mr D Gordon, and Robeade Holdings Limited (Woolston Tavern) and Mr L J Gemmell
Mr E J Tait – for CH & DL Properties Limited (Victoria Night 'N Day Foodstore) and Ms D L Ritchie
Mr K N Hampton QC – for Karara Holdings Limited (Merivale Fresh Choice) and Mr C A Grant
Mr R M Gapes and Miss B F McCaffrey – for Woolworths (New Zealand) Limited (Big Fresh)

RESERVED DECISION OF THE AUTHORITY

Introduction

[1] On 1 December 1999[1] the drinking age for New Zealanders was lowered from 20 to 18. This was a major legislative and social change for the country. In the debate leading up to the law change, issues such as potential liquor abuse and community safety were raised. When it changed the law, Parliament enacted a number of supplementary amendments to the Act. These supplementary amendments were aimed at bolstering the detection and enforcement of breaches of the new law.

[2] These measures included:

(a) Section 2A. The provision of "evidence of age documents".

(b) Section 132A. The mandatory reporting of certain proven offences (including sales to minors) to the Authority, and a requirement for the Authority to consider whether a public hearing to suspend or cancel the licence was appropriate.

(c) Section 172A. A new offence for licensees who failed to appoint managers, or who failed to ensure that the managers complied with the law.

(d) Section 155 (2A). The penalties for all offences were doubled. The penalty for supplying liquor to minors was increased to a maximum of $10,000.00 (for managers and licensees). The District Court was given the power to suspend a licence for up to 7 days for such an offence.

[3] As stated above, one of the potential consequences of the lowering of the drinking age, was an increase of liquor abuse by minors. It is clear that Parliament regarded the supply of liquor to minors as a serious liquor abuse issue. The penalties alone should have acted as a positive discouragement to those involved in the industry.

[4] Over the last two years concerns have been regularly expressed on a nation wide basis about the ability of young people to obtain alcohol. Faced with the disorder associated with the youthful consumption of alcohol, there have been calls for the drinking age to be restored to the age of twenty. Because of concerns about 'problems of excessive drinking by some young people'[2], the Minister of Justice asked the Ministry of Justice to undertake a review of the impact of the lowering of the minimum drinking age.

[5] The report was made public on 22 February 2002. The findings were not conclusive. There was no noticeable increase in the proportion of under 18 year olds who drank. However for those who did drink, there was increased frequency of drinking, and increased alcohol consumption on a typical drinking occasion. In releasing the report, the Minister noted that there would be ongoing input and submissions from all interest groups.

[6] The Authority is aware that for a number of years, the Police and District Licensing Agencies had found that the enforcement of the underage supply provisions of the Act, was time consuming and unproductive. It involved many hours 'staking out' off-licence premises, particularly those thought to be problem premises. Considering the available resources and the large number of off-licences, the exercise received a very low priority.
[7] When members of the community raised concerns about youth access to liquor, the industry was able to point to the lack of prosecutions of off-licensed premises. Up until recently, there has been no practical way of testing claims by the holders of off-licences that they were fully compliant with the law. It was argued that if there were no procedures in place to test and measure compliance by staff, then a licensee would not know whether or not minors were being supplied with liquor.

[8] As has been amply shown in these cases currently before the Authority, the absence of detection does not equate to an absence of offending. A survey commissioned by the Alcohol and Public Health Research Unit[3] showed that in 2000, the most common source of alcohol purchased for drinkers under 18, were friends and parents. The same survey showed that the number of successful purchases by minors (persons aged 16 – 17) from supermarkets, had increased from 8% in 1995, to 15% in 2000. This increase was the first confirmed indication, that minors were targeting supermarkets.

[9] In July 2001 the Authority heard an application[4] to cancel a stand-alone off-licence on the grounds of unauthorised sales to minors. The evidence confirmed ten unauthorised sales to minors over an eight-month period. In addition the Police sought to introduce the evidence of a 17 year-old volunteer who had attempted to purchase a bottle of vodka. The respondent alleged entrapment. This 'defence' was rejected by the Authority with these words:

"We have no hesitation in accepting 'Nicola's' evidence. She was a volunteer. She had her mother's informed consent. She was not asked to make up any story, or be anyone than herself. She carried out the actions of any normal customer. There was no prolonged conversation with Mr Jaewook Kim. No sale took place. The evidence merely showed Mr Kim's inability to police the law in the way expected of the manager of any licensed premises."

[10] In its decision dated 2 August 2001, the Authority cancelled the off-licence. It made the following further comments:

"The hospitality industry has invested a great deal of time and money into training and upskilling management and staff to ensure that such abuses of the law do not happen in licensed premises. It may be that suspension will be appropriate for 'one off' breaches of the law. However in this case, the respondent company and its manager have consistently failed in their duty to control the sale and supply of liquor in a satisfactory manner. When Parliament reduced the age limit to eighteen it doubled the penalties. It was sending a message to the public that people who breached this aspect of the law must expect rigorous enforcement and severe consequences."

[11] The Authority was signalling to the hospitality industry that in the area of sales to minors, there would be cancellations and suspensions. The principle that 'a licence will be easy to get and easy to lose' was first coined by the authors of 'Sale of Liquor'[5]. It was subsequently quoted by the Authority as far back as 1990 in Douglas-Oliver Corp Ltd[6]. It has been cited in a number cases since.

[12] It is against that background that we now seek to discuss and resolve the fourteen applications, which were heard before us over the three days commencing 22 April last.

The First Christchurch Controlled Purchase Operation

[13] Following the ruling in Onehunga Wines & Spirits Co Limited, a number of initiatives were undertaken by the Police and District Licensing Agencies. Various licensed premises were visited by volunteers. The results received considerable publicity. These initiatives were originally called 'sting' operations. However this description had a negative connotation. Accordingly, they became known as 'controlled purchase operations'. Sergeant Armstrong described them as "the first realistic tool to become available to enforcement agencies in relation to off-licences."

[14] In Christchurch Crown Public Health, the Police, and District Licensing Agency Inspectors took a combined approach. According to Mr M Ferguson, a District Licensing Agency Inspector, the reasoning behind the operation was 'the ease at which young people seemed to be able to procure alcohol." Three young people aged 15, 16 and 17 volunteered their services. All had the consent of their parents. The young people received their instructions from Crown Public Health. They were told to wear normal clothing, and not to make themselves look any older than they were.

[15] Each volunteer signed a document which included a number of conditions. These included:

"You must tell the truth about your age if asked by the person serving you.

You will need to leave your identification at home, and then if you are asked for your id – you can tell the truth "I don't have any on me."

All we expect is that you be yourself when entering the shop and attempting to buy alcohol."

[16] On 5 October 2001 the first operation took place. Thirty-four off-licensed premises were visited. Of these 11 were prepared to make sales to minors. Five of these were supermarkets, and five were bottle stores. In the view of those tasked with enforcing the Act, the results were extremely poor. They received considerable publicity in the news media.

[17] A personalised letter was specifically sent to every one of the approximately 150 off-licensed premises in the Christchurch area. The letter gave reasons for the operation. Included in the reasons were the comments:

"Statistics recently released indicate an increase in young people coming to the attention of health services for liquor related problems.

This type of operation is considered as necessary to accurately and quickly identify premises which are falling short of the expectations of adhering to the requirements of the Sale of Liquor Act.

This type of operation will happen again and prosecutions will follow against those who offend.

We consider this past exercise as being a warning."

[18] The letters congratulated those premises which were 'doing it right'. It offered visits and staff training to be conducted by the Police, Crown Public Health and/or the District Licensing Agency.

[19] The District Licensing Agency sent out a newsletter in November 2001. This was sent to all licensed premises. The newsletter referred to the 'controlled purchase operation' which had been conducted the previous October. It confirmed that this type of operation would be carried out again. It reinforced the earlier message that the October exercise had been a warning.

The Second Christchurch Controlled Purchase Operation

[20] On Thursday evening 13 December 2001, the controlled purchase operation was repeated. The same three young people aged 15, 16 and 17 were sent out to visit a number of off-premises. A representative from Crown Public Health, or the enforcement agencies accompanied each volunteer. Thirty premises were visited. Of the 30 premises which were visited, seven made sales to minors. Four of these were supermarkets or convenience stores. Three were taverns which had off-licensed bottle stores. All 11 off-licensed premises which had made sales in the October operation were revisited. Only one failed the test on the second occasion.

[21] 'Edward' was one of the volunteers. He was born on 23 February 1985. He was 16½ at the time of the operation. He visited eight off-licensed premises and was able to purchase liquor at four of them. 'Sylvia' was born on 4 February 1986. She was 15½ at the time of the operation. She visited ten off-licensed premises and was able to purchase liquor at three of them. The third volunteer was a 17 year-old male. He visited 12 licensed premises, but was denied the opportunity to make a purchase at all of them.

[22] All licensees were subsequently spoken to. Decisions were made not to prosecute the holders of the off-licences in the District Court. Instead proceedings were to be issued before the Authority for suspension. Each of the seven managers on duty was to be the subject of suspension applications whether he or she had or had not effected the sale. The four persons who made a sale, and who were not duty managers at the time were to be prosecuted in the District Court. The Police subsequently discovered that the duty manager at 'Big Fresh' in Moorhouse Avenue was not on duty at the time. Accordingly the application to suspend her manager's certificate was withdrawn.

[23] It follows that the Authority is required to make rulings in respect of seven applications to suspend off-licences, and six applications to suspend manager's certificates. When the proceedings were being prepared it was discovered that one of the managers was about to make application to renew his manager's certificate. Accordingly that application has been opposed and is before the Authority for determination.

The Response from The Brougham Tavern

[24] The Brougham Tavern is a well-run business. It normally gives the Police no problems. 'Edward' aged 16½ entered the Super Liquor store at about 5.40 pm on Thursday 13 December 2001. He picked up a six-pack of 'stubbies', and went to the checkout. A staff member came from the back of the premises and effected the sale. His only question to the volunteer was whether that was all? Edward had to return to the bottle store to claim the receipt for evidential purposes.

[25] Messrs B D Hall and P Hodson are partners in the licensee company. Both have extensive experience in the hospitality industry. They confirmed that young people were not part of the tavern's normal customer base. They noted that the tavern had been targeted in October and had passed the test. They said it was regrettable that the duty manager was engaged in another part of the store, and was not on the till when the incident happened. A 25 year-old part-time employee, who had been with the company for nine months, dealt with the volunteer. The company had given him a written warning.

[26] Both partners expressed concern, and apologised for what had happened. The company had an unblemished liquor licensing record up until December. The partners wished to make it quite clear that they had no intention of placing the off-licence at risk for what amounted to approximately $1.00 worth of gross profit. Remedial steps had been taken. In particular the threshold had been raised so that anyone who looked under 25 would be asked for identification. The signage had been altered accordingly.

[27] Mr J J Haskett had been working at the tavern for the past six years. He accepted responsibility for the breach of the law, although he was not in the service area at the time. He thought that the change to the questioning of persons appearing to be under the age of 25, had made enforcement much easier. All employees now had to sign a declaration that they had received instructions on the requirements of the Act, and that they understood that any breach would be regarded as serious misconduct.

[28] Mr Thwaites argued that given the one-off nature of the incident, the tavern's good record, the remedial steps undertaken, and the obvious inference that the incident had brought the message home to management, a warning would be an appropriate response.

The Response from Riccarton Pak N' Save

[29] RC & LF McLean Limited has been in the grocery business for approximately thirty years. Although liquor sales have been a relatively recent phenomenon, its record is spotless. 'Sylvia' aged 15½ was given $10.00. She entered the supermarket in Riccarton at 6.50 pm on Thursday 13 December 2001. She picked up a bottle of wine labelled 'Torlesse Chello' priced at $7.99 and took it to a checkout. No questions were asked, and the wine was sold.

[30] The checkout operator was aged 16. Mr Barton submitted that it was difficult for someone of that age to ask a peer for age identification. Mr Barton pointed out that the supermarket has approximately 36,000 customers a week. Of these, about 10% purchased liquor.

[31] Mr Barton acknowledged that the company's compliance with its legal obligations was dependent on the quality of the staff and its training. It has been company policy to request identification for persons appearing to be 25 years or under, although clearly this did not happen on the one occasion. The training induction course takes approximately twenty hours. Each staff member is the subject of a liquor training assessment questionnaire. As a consequence of the incident the guidelines for checkout operators have been modified.

[32] Mr Barton submitted that the circumstances of the case did not establish that it was desirable to make an order in terms of s.132(6) of the Act. He argued that what had happened was a one-off incident brought about by an 'entrapment' operation on a company which had no known notoriety. He suggested that it was unfair that the premises caught in the first operation in October, had received a warning only. He noted that the duty manager Mr Matthews, had no personal knowledge of the transaction. He confirmed that the company accepted full responsibility for what had happened.

The Response from The Ferrymead Tavern

[33] The Ferrymead Tavern is also a well run licensed premises. It has been under the same management for the past 17 years. It has an attached bottle store with an off-licence. 'Edward' aged 16½ entered the Liquorland store at about 6.35 pm on 13 December 2001. He picked up a six pack of 'stubbies' and took it to the counter. He handed over $10.00 and asked for a receipt. No questions were asked.

[34] The company viewed the incident with 'immense regret'. The tavern is a very busy operation with four bars; four function rooms; two restaurants and a bottle store. The bottle store serves an average of 2,500 customers a week. According to Mr R N Dymand, a director of the company, the company has good staff training programmes, and it conducts regular management and staff meetings.

[35] At the time of the incident, the bottle store worker was out at the back of the bottle store compiling bulk orders for delivery. Because of the number of bottle store customers seeking attention, Mr Gordon came through from the bar where he was working. It was he who made the sale. Mr Gordon holds a General Manager's Certificate, and was the manager on duty.

[36] Mr Gordon had some personal issues on his mind at the time. He was not concentrating on his responsibilities. He said that the incident had shaken his confidence especially as he had previously adopted the '25 and under' rule. In his four years in the hospitality industry, Mr Gordon has never been prosecuted or warned with regard to his performance as a bar manager. He asked that the application be adjourned to enable him to re-establish his reliability as a manager.

[37] Since the incident, the management of the tavern have re-done all the signage to make the signs bigger and bolder. They have now adopted a policy of checking the identity of persons appearing to be 30 years or younger. Given the good record over a long period of time, Mr Dymand and Miss K G Feltham asked that the application be adjourned for sufficient time to allow the company to remedy any perceived shortcomings, and complete further staff training.

The Response from Victoria Night 'N Day Foodstore

[38] Mr and Mrs Ritchie have run the Night 'n Day Foodstore in Victoria Street, Christchurch since September 2001. For the last six years they have operated a similar store in another part of Christchurch. Both stores are part of a franchise operation based in Dunedin. It is the franchise owners who provide the training of staff. Neither Mr nor Mrs Ritchie has been the subject of prosecutions or convictions of any nature. The franchising company holds them in high regard.

[39] The person who made the sale was Mr R L Johnston who is aged 18. He started work for the CH & DL Properties Limited in September 2001. In his contract of employment the following is stated:

"I have read and fully understand the Employment Agreement and Employee Handbook, how the rules will be applied and the penalties for a breach of any of the rules. The rules and their application and penalties have also been explained to me."

[40] 'Sylvia' aged 15½ entered the store at 6.45 pm on 13 December 2001. She picked up a bottle of 'Aquila' wine from a fridge and went to the checkout. She was served by Mr Johnston, who completed the transaction without any questioning. Sylvia asked for a receipt. Mrs Ritchie was the duty manager, but was not in attendance.

[41] Since the incident, the company has adopted a policy of instructing all employees to ask for identification if the person purchasing liquor appears to be under the age of 25 years. Additionally all tills now have a prompting system. It was noted that Mr Johnston was no longer employed with the company.

[42] Mr Johnston sought to exercise the defence contained in s.155(4) of the Act. That section reads:

It is a defence to a charge under subsection (1) or (2) of this section if the defendant proves that the person who sold or supplied the liquor believed on reasonable grounds that the person to whom it was sold or supplied had attained the age of 18 years.

[43] The Police interviewed Mr Johnston in January 2002. Initially he said that he could not remember making a sale to a person under age. When shown the photograph of the volunteer, he told the Police that he genuinely thought that the girl to whom he sold the liquor, was 18 or over. He believed that she was dressed to go to a ball. She was wearing an off the shoulder top, with a long skirt or trousers, and sneakers. At the time of the sale Mr Johnston had just returned from a holiday to Australia. He was within his first hour back at work when the incident happened.

[44] Mr Johnston's evidence suffered in four ways. (1) Mrs Ritchie had subsequently viewed the video of the incident. She accepted that the volunteer did not appear to be over the age of 18. (2) Mr Johnston did not initially recall the incident. (3) The volunteer looked to us to be under the age of 18. (4) She was questioned and refused service by seven out of ten salespersons or bar-persons that night. For those reasons, Mr Johnston was unable to satisfy us that he believed on reasonable grounds that 'Sylvia' had attained the age of 18.

[45] Mr Tait submitted that this was the first time that the principals of the company have been involved in any adverse matter in 13 years of trading. He asked us to take into account that there was only one breach involving one bottle of wine. The company had taken remedial action. No warnings had been given to the company. In view of the fact that this was a 'one-off' incident, he submitted that the matter could be dealt with without suspension.

The Response from Merivale Fresh Choice

[46] Merivale Fresh Choice is owned and operated by Karara Holdings Limited. The company purchased the supermarket in July 1999. Mr M J Prendergast is the sole director. Mr Prendergast has been working in the supermarket industry since 1974. The store puts through some 21,000 transactions a week of which about 10% are liquor related. Mr Prendergast denied ever receiving the October letter from the District Licensing Agency. He could not recall reading the newsletter.

[47] Mr Prendergast advised that the company undertook extensive staff training with regard to both tobacco and liquor. Since the incident the company now ensures that each employee signs an acknowledgement that he or she understands the legal requirements. He noted that in December 2001 the company had been waiting for some time for a new prompting system to be installed. It has since happened.

[48] Despite such precautions, 'Sylvia' aged 15½ was able to purchase a bottle of wine for cash. She entered the supermarket at about 5.05 pm on 13 December 2001. The only question asked of her by the checkout operator, was whether she had had a good day? She confirmed that she had been told to wear what she would normally wear, and not to make herself look older. She was wearing lip-gloss.

[49] The person who served her was aged 18. He had been a part time employee for about six months. He said that nothing unusual had happened during his shift that night. He had no recollection of selling liquor to any person under 18. He said that he was comfortable asking his peers about their ages. Because of the training he had received, it was his belief that he had only sold liquor to people who clearly appeared to be 18. He acknowledged that when he saw 'Sylvia' at the hearing he would not have sold her liquor without asking for identification. Nevertheless it was his view that the top she was wearing made her look significantly older. He has since ceased working for the company.

[50] Mr Prendergast was of the view that his systems worked very well. He felt that his company was the victim of entrapment. He thought that such activity as the controlled purchase operation was counter productive. In his view it would achieve nothing more than what was already happening. On the other hand he accepted that he had made changes to the systems since the incident. Staff are now required to ask for identification of any person appearing to be under the age of 25.

[51] He produced a form which originally related to the sale of tobacco products. This form had been amended since the incident, and then signed by staff members. It was our view that the seriousness of the potential problem required rather more than amending a form which had been prepared for a different product.

[52] Mr C A Grant was the duty manager that evening. However, he apparently takes on the role of store manager. He acknowledged that he was probably in his office at the time of the incident.

[53] Mr Hampton made a number of submissions. He noted that the Police had not brought a prosecution under s.155 of the Act. This had disadvantaged his client. In this regard we refer him to the comments of Fisher J in the unreported judgment of Superstar (NZ) Limited[7]:

"Mr Wiles for the appellant sought an adjournment on the basis that related prosecutions are still pending in the District Court. In that respect the appellant Superstar (NZ) Limited and two of the individuals concerned face prosecutions for the supply of liquor in unlicensed premises contrary to s.151 of the Sale of Liquor Act 1989.

The alleged incidents which gave rise to those prosecutions figure among the grounds for cancellation of the premises licence by the Authority. I am satisfied, however, that this appeal should proceed to a hearing.

The standard of proof required for a prosecution is of course proof beyond reasonable doubt whereas a lesser standard applies on an application for cancellation. In strict law, therefore, there would be nothing inconsistent with dismissal of the charges in the prosecution context and an adverse finding of fact in the licensing context on the same factual issues.

Other considerations are that the hearing before the Authority involves a much wider range of considerations not necessarily dependent upon the particular prosecution allegations in this case, and there is also a statutory obligation to dispose of the application for cancellation as early as possible to be found in s.132(4)(b) and 138 of the Sale of Liquor Act."

[54] Mr Hampton submitted that the evidence showed that the seller of the wine believed on reasonable grounds that the person to whom the bottle of wine was sold was of or over the age of 18. This defence[8] places the onus of proof on the seller. In this case he has been unable to discharge that onus. Firstly he has no recollection of the incident. He has therefore based his belief on his own assessment of his responsibility at the time of the sale. In our view it is equally likely that he was distracted at the time or careless. Second, the girl looked under the age of 18. The seller acknowledged this when he saw her at the hearing, although he expressed reservations whether her clothing made her look older. Third, seven out of ten off-licensed premises asked her for identification, and then refused her a sale.

[55] Mr Hampton referred us to our decision in Vandna Enterprises Limited[9]. In that decision we excluded evidence because the volunteer had been instructed to lie about his age. Mr Hampton submitted that deceit could take many forms. He suggested that a person could disguise his or her age by appearance and demeanour. In this regard we note that Sylvia had never purchased liquor in a conventional way before. There was no evidence that she had acted differently or abnormally. The only conversation recorded was the question asked by the seller whether she had had a good day?

[56] Nevertheless Mr Hampton submitted that this was a case of entrapment. He referred us to a recent House of Lords decision in R v Looseley[10]. It was his submission that the judgment had changed the rules on entrapment. He argued that if there were reasonable grounds to suspect a person or premises of involvement in offending prior to the operation, then the police officers had done no more than give a person an opportunity to commit an offence. On this basis there would be no entrapment. However if there was no reasonable ground to suspect a person or premises of involvement in offending, then a prosecution should be stayed on the grounds of abuse of process.

[57] A number of opinions were delivered in the judgment. It is our view that their Lordships were careful to distinguish police operations which were centred on looking for criminal offending, and police operations which were aimed at detecting regulatory offending. For example Lord Nicholls of Birkenhead[11]:

"Sometimes random testing may be the only practicable way of policing a particular trading activity."

[58] Lord Hoffman made these comments[12]:

"The test of whether the law enforcement officer behaved like an ordinary member of the public works well and is likely to be decisive in many cases of regulatory offences committed with ordinary members of the public, such as selling liquor in unlicensed quantities."

"In the case of some regulatory offences, the effective administration of the law may require enforcement officers to have the power to make random tests."[13]

[59] Lord Hutton considered that the approach which should be taken by a court, and the matters to be considered, had been well set out in a dissenting judgment of McHugh J in Ridgeway v The Queen[14]. The relevant part of that judgment reads:

"(2) Whether, in proffering the inducement, the authorities had reasonable grounds for suspecting that the accused was likely to commit the offence or one that was similar to that offence or were acting in the course of a bona fide investigation of offences of a kind similar to that which the accused had been charged." (Emphasis ours).

[60] Mr Hampton relied on a commentary by Professor Andrew Ashworth[15]. At page 167 the author commented on 'test purchases':

"However, in Looseley their Lordships laid emphasis on the existence of reasonable suspicion as a precondition of a test purchase."

[61] With respect to the learned author, their Lordships were referring to drug test purchases. "Test purchases are used mainly in the drug trade."[16] In fact Lord Hoffman was referring to the Undercover Operations Code of Practice issued jointly by all United Kingdom police authorities and HM Customs and Excise in response to the Human Rights Act 1998. It appears that the use of a test purchaser can only be authorised by a superintendent who must be satisfied that a test purchase is required in support of an investigation into a criminal offence. The superintendent must also be satisfied that reasonable grounds have been established prior to the deployment of a test purchaser, to suspect that such an offence is being committed.

[62] We have considered the implications of the Looseley decision, but we do not accept that it impacts on this case. We note that in the United Kingdom, similar conduct to the 'controlled purchase operation' is in many cases authorised by statute. That is not the case here. We do not consider that the Police or the District Licensing Agency were required to have prior reasonable grounds to suspect that Merivale Fresh Choice were selling to minors. We considered that this was a bona fide investigation in which the volunteer acted normally with no element of persuasion.

[63] Mr Hampton finally submitted that if the arguments did not succeed, then the Authority would not be satisfied that it would be desirable to make an order for suspension[17].

The Response of Big Fresh

[64] We accept that Woolworths (New Zealand) Limited have been the most proactive of all the other off-licence holders following the December incident. On the other hand, the Big Fresh store in Moorhouse Avenue had also failed the test in October.

[65] As a consequence of the sale to a minor the staff learning guide has been updated. Woolworths has its own 'Test Purchase' protocol to test checkout operator compliance. Sales to minors are regarded as serious misconduct and can lead to dismissal. Following the October incident the operator was dismissed. Following the first incident the company instituted a policy of checking identification for anyone appearing to be under 25. In addition, Woolworths have developed changes to its software systems. Management can now detect whether operators check identification on less than the normal number of occasions.

[66] By far the most important innovation has been that the transaction timer is now turned off when age is being checked. This means that a checkout operator's productivity is no longer affected. This new system came into force recently, and has received very positive feedback from staff.

[67] The company also took advantage of the training offered by Crown Public Health and the Police. Despite the steps taken following the October warning, 'Edward' aged 16½ was still able to purchase a six-pack of beer. The only question he was asked was whether he was having a nice day? Regrettably the person who served him had not attended the training day. She has since been dismissed.

[68] Mr Gapes referred us to s.4 of the Act, and in particular the 'reasonable' system of control which is to be established over the sale and supply of liquor. He stressed that the Authority had a discretion whether to suspend or not. He also noted that the Act makes provision for any remedial action undertaken by a licensee. The Authority has the power to adjourn the application to give a licensee an opportunity to remedy outstanding matters.

[69] Mr Gapes asked us to view the breach in the context of the huge number of sales which take place in the store, and the responsible steps taken by the company. He submitted that the circumstances were unique to the company, and should be reflected in the Authority's decision.

The Response of The Woolston Tavern

[70] Robeade Holdings Limited purchased the Woolston Tavern in 1989. It is not a particularly large hotel, but it services a significant area. There are two bars, a bottle store, and a small dining room. In addition there is a gaming room and TAB. A total of eight people are employed. Prior to 1989 the tavern had been run down. Since that time the problems of the past have been rectified. Sergeant J F Armstrong confirmed the effective management and control of the hotel. Mr I R Robertson is a Director of the company. He has been active in the hospitality industry for 27 years.

[71] 'Edward' aged 16½ entered the tavern bottle store at about 6.15 pm on 13 December 2001. He picked up a six pack of beer from a beer fridge and put it on the counter. The person who served him asked if that was it? Edward asked for a receipt and left with the beer.

[72] Together with the staff member concerned, Mr Robertson viewed with great concern the unwitting sale to a minor. Mr L J Gemmell was the duty manager at the time. He was quite distracted. He had two new part time staff members working with him. These were university students. He was advised that a payout was required in the games room. At the same time he noted that there were two people waiting to make a bet at the TAB. After working for 25 years in the industry without conviction Mr Gemmell was very regretful that he had lost concentration, and not requested identification.

[73] Mr Robertson explained the staff training which takes place. Since the incident all signs have been enhanced. A sign has been placed on the till as a reminder to staff. The number of qualified people on any one shift has been increased.

[74] Both Mr Robertson and Miss Feltham requested that in the light of the previous good record, and the remedial work undertaken, the Authority should adjourn the applications for a period to give the licensee, and the manager, an opportunity to remedy any matters that the Authority may require[18].

Conclusion

[75] The applications to suspend the licences were based on the ground contained in s.132(3)(a) of the Act:

"That the licensed premises had been conducted in breach of the provisions of the Act being s.155 - Sale or supply to minors."

[76] The applications to suspend the manager's certificates were based on either of the grounds contained in s.135(3)(a) and (b) of the Act. These were dependent on whether the applications were brought by the Police or the District Licensing Agency Inspector. If the former, the ground was:

"That the conduct of the manager was such as to show that he/she was not a suitable person to hold the certificate."

[77] If the latter, the ground was:

"That the manager had failed to conduct the licensed premises in a proper manner."

[78] Of the two, we suggest that what has been alleged against the managers, goes to conduct rather than suitability. The issue is very much the same in either case.

[79] As indicated above we are satisfied that in each case the ground is established. We have already given our rulings in relation to the defences raised under s.155(4) of the Act, and the issue of entrapment.

[80] There was some argument about whether the matters should have been dealt with by way of a warning. Comment on warnings was made by the Licensing Control Commission in the decision The Bond Street Inn Limited[19]. The Inspector had been cross-examined as to why a warning had not been given prior to the issue of the application for cancellation or suspension. He replied that when the licence had been originally issued, much had been made of the experience and expertise of the company principals and the manager. He did not deem it necessary to give prior warning as the licence holder was obliged to operate within the law. In its decision, the Commission accepted that although the breaches of the licence warranted cancellation, such action would be unduly punitive in the absence of any prior warning. Suspension was therefore ordered.

[81] In these cases, different considerations apply. A significant and far reaching law change had been in force for two years when the incidents occurred. A large amount of media coverage had been given to the issue of access to liquor by minors. The Authority in its decisions, and the Agency in its letters and newsletters, had sent out signals and warnings. In our view it could never be suggested that people involved in the industry would be unaware of the issue. The principle has always been quite simple, and has been constantly stressed within the industry. 'No identification – no sale'. No citizen who commits an offence can expect a warning as of right. What these cases have shown, is that in 75% of the controlled purchase operations, the licensee or his employee was sufficiently alert to prevent a sale. The message had got through to most licensees.

[82] These cases have confirmed the enforcement agencies' suspicions, that liquor is being supplied to minors from supermarkets. They support the findings of the Alcohol and Public Health Research Unit. The facts have shown up a number of deficiencies in the way in which duty managers carry out their responsibility to ensure compliance with the Act[20].

[83] In busy supermarkets a duty manager should not be in an office. Nor should she/he have other duties associated with non-licensed activity. If the duty manager cannot oversee the sale of liquor, then he/she is going to be unable to ensure compliance. If the duty manager were required to shoulder more responsibility, then we would expect the licensee to be more vigilant. If the checkout operator is the weakest link, then he or she should not be discouraged from requesting identification by being penalised on the issue of productivity.

[84] The results also show that the smaller the operation, the greater the focus on the core business, and the greater the likelihood of adequate enforcement. Sixteen stand-alone off-licensed bottle stores were visited on the evening of the 13 December 2001. Not one was prepared to sell liquor to a minor.

[85] Mr Prendergast criticised the controlled purchase operation. With respect, he speaks from a 'vested interest' perspective. One result of these cases has been a long overdue and very loud 'wake up' call to the holders of off-licences. From now on, youth access to liquor in Christchurch should become more difficult. As a consequence the city should be a safer place, not just for the young people, but for all citizens, and indeed tourists. The long-term objective of such operations should be that one day, all test purchases will be unsuccessful.

[86] In terms of the Authority's response to the findings, we repeat what was said by Mr B S McDonald on behalf of the Medical Officer of Health in an unrelated case heard in Christchurch in the same week[21]. Attaining the objective of the Act can be compared with a three-legged stool. The three legs are training, experience and enforcement. All three are necessary to keep the stool standing.

[87] In these cases we have taken into account the amount of money involved, the type of liquor which was purchased and the fact that the 'offending' took place in the context of a controlled purchase operation. We note that if suspensions are imposed, all premises will be able to continue trading, albeit with limitations. It needs to be pointed out that in P E & C A Wheldale[22] there was a single sale of a bottle of spirits to a minor from an off-licensed bottle store attached to an on-licence. There were serious liquor abuse consequences. The Authority suspended both the on and the off-licence for a week.

[88] We accept that all parties have exemplary records in the industry. We trust they will continue to do so. To some extent they are the examples to be set for the industry. Notwithstanding the submissions to the contrary, we see our responsibility in clear terms. These terms are encapsulated in s.4(2) of the Act. Under that provision we are required to exercise our jurisdiction, powers and discretions under the Act in a manner that is most likely to promote the object of the Act. The object of the Act is:

To establish a reasonable system 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.

[89] The only concession we have been persuaded into making applies to Woolworths (New Zealand) Limited. The company deserves some recognition for the efforts it has made, to minimise the potential for harm, resulting from minors having easy access to liquor. We can see no reason to differentiate between the remaining companies.

[90] On this occasion we have decided not to punish those duty managers who were not present when the illicit sales took place. We believe that it is in the area of certificated managerial responsibility that there has been some complacency, or lack of knowledge, particularly by supermarkets. Although they have been diligent in the appointment of general managers, they have neglected to provide them with the resources to ensure compliance with the Act.

[91] We do not consider it desirable that the managers who had no physical involvement in the actual sale should have their certificates suspended. On the other hand the message that managers are vicariously liable will need to get through to the industry. In the future, there would have to be strong reasons advanced, for us not to impose suspensions on managers who have not exercised the control expected of them by law.

[92] In our view it is highly desirable that the off-licences be suspended for a moderate period. This will reflect the objective of the Act and should contribute to an overall reduction in the abuse of liquor. Not to do so would influence the speed at which other off-licensees improve their policies and their compliance with the Act.

[93] For the reasons we have given we make the following orders:

• [a] The General Manager's Certificate issued to D Gordon is renewed for three years.
  
• [b] The applications for the suspension of General Manager's Certificates issued to J J Haskett, S A Matthews, D L Ritchie and C A Grant are declined.
  
• [c] General Manager's Certificate number DLA GM 123/2001 issued to Damien Gordon and General Manager's Certificate number GM 1356/90 issued to Leslie John Gemmell are suspended for four weeks from 6.00 am on Monday 20 May 2002 to 6.00 am on Monday 3 June 2002.
  
• [d] Off-licence number 060/OFF/40/2001 issued to Woolworths (New Zealand) Limited is suspended for three days from 6.00 am on Monday 20 May 2002 to 6.00 am on Thursday 23 May 2002.
  
• [e] Off-licences numbered 060/OFF/57/2000 issued to The Brougham Tavern Limited, 060/OFF/27/2000 issued to RC & LF McLean Limited, 060/OFF/47/2001 issued to Ferrymead Tavern Limited, 060/OFF/88/2001 issued to CH & DL Properties Limited, 060/OFF/18/2001 issued to Karara Holdings Limited, and 060/OFF/61/2000 issued to Robeade Holdings Limited are suspended for five days from 6.00 am on Monday 20 May 2002 to 6.00 am on Saturday 25 May 2002.
  

DATED at WELLINGTON this 7th day of May 2002

Judge E W Unwin Mr J C Crookston
Chairman Member

chchapplications.doc

[1] Section 83(1) Sale of Liquor Amendment Act 1999.
[2] Letter from Minister to Tribunals Division dated 20 February 2002.
[3] "Some Statistics on the Possible Effects of the Sale of Liquor Amendment Act 1999 (Lowering the Drinking Age) – Barb Lash – Ministry of Justice.
[4] Onehunga Wines & Spirits Co Limited LLA 311 – 312/2001.
[5] Dormer Sherriff & Crookston Commentary on the Sale of Liquor Act.
[6] [1990] NZAR 411.
[7] Auckland High Court HC 100/96 17 December 1996.
[8] Section 155(4) Sale of Liquor Act 1989.
[9] LLA 61-63/2002.
[10] [2001] 4 All ER 897.
[11] Paragraph [27].
[12] Paragraph [55].
[13] Paragraph [56].
[14] [1995] HCA 66; (1995) 184 CLR 19 @ 92.
[15] "Re-drawing the Boundaries of Entrapment" [2002] Crim LR 161.
[16] Paragraph [61].
[17] Sections 132(7) and 135(7).
[18] Sections 132(7) and 135(7).
[19] LCC 32/87.
[20] Section 115 (1).
[21] De La Mare Holdings Limited LLA 203-205/2002.
[22] LLA 79-80/2002.