Ch and DL Properties Ltd v Christchurch District Licensing Agency HC Christchurch CIV 2009-409-2906
[2010] NZHC 1329
•27 July 2010
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV 2009-409-002906
BETWEEN CH AND DL PROPERTIES LTD Appellant
ANDCHRISTCHURCH DISTRICT LICENSING AGENCY
First Respondent
ANDNEW ZEALAND POLICE Second Respondent
AND MEDICAL OFFICER OF HEALTH FOR CHRISTCHURCH
Third Respondent
Hearing: 6 and 7 July 2010
Counsel: GDS Taylor and K Lane for Appellant
KG Smith and V Tuck for First Respondent
T J Mackenzie and A Raj for Second and Third Respondents
Judgment: 27 July 2010
JUDGMENT OF FOGARTY J
Introduction
[1] The appellant is the proprietor of a shop trading downtown in Christchurch as Victoria Night ‘n Day Foodstore. It appeals against a decision of the Liquor Licensing Authority (LLA) (District Court Judge E W Unwin and Mr P M McHaffie) delivered on 11 November 2009, renewing the company’s licence to sell wine, beer and mead until 5 March 2010 but indicating that it was probable given present conditions that any application for renewal beyond that date
would be declined. I refer to this decision under appeal as the Victoria decision.
CH AND DL PROPERTIES LTD V CHRISTCHURCH DISTRICT LICENSING AGENCY AND ORS HC CHCH CIV 2009-409-002906 27 July 2010
[2] The LLA was applying a section of the Sale of Liquor Act 1989, s 36, which was introduced into the Bill by supplementary order paper during a conscience vote debate, and after a number of other versions had been rejected by narrow margins. In the 20 years since it has been enacted various panels of the Liquor Licensing Authority have given the sections different interpretations and/or applications.
[3] Prior to this Victoria decision the LLA had a policy of not granting any new off-licences to stores such as this, which it calls convenience stores, but was renewing existing licences.
[4] About a decade after the statute was passed the then LLA adopted an
‘ambulatory’ approach to the interpretation of the section, taking into account changing shopping patterns, and applying the statutory test to meet changing circumstances. It recognised convenience stores as being appropriate for off- licences. In 2008 the LLA, under a different chairman, Judge E W Unwin, reverted back to the original interpretations of the section that had been taken in the year
2000. This appeal tests this most recent shift of interpretation or policy.
The interpretation problem
The statutory provision
[5] Section 36 of the Sale of Liquor Act 1989 provides:
36 Types of premises in respect of which off-licences may be granted
(1) Except as provided in subsections (2) to (5) of this section, an off- licence shall be granted only—
(a)To the holder of an on-licence in respect of a hotel or tavern, in respect of the premises conducted pursuant to that licence; or
(b)To the holder of a club licence, being a club that is entitled under paragraph (i) or paragraph (j) of section 30(1) of this Act to hold an off-licence, in respect of the premises conducted pursuant to that licence; or
(c)In respect of premises in which the principal business is the manufacture or sale of liquor; or
(d) In respect of -
(i)Any supermarket having a floor area of at least 1000 square metres (including any separate departments set aside for such foodstuffs as fresh meat, fresh fruit and vegetables, and delicatessen items); or
(ii) Any grocery store, where the Licensing Authority [or District Licensing Agency, as the case may be,] is satisfied that the principal business of the store is the sale of main order household foodstuff requirements.
(2) The Licensing Authority or District Licensing Agency, as the case may be, may grant an off-licence in respect of any other premises if the Licensing Authority or District Licensing Agency, as the case may be, is satisfied, in a particular case, -
(a)That, in the area in which the premises are situated, the sale of liquor in premises of a kind described in paragraph (c) or paragraph (d) of subsection (1) of this section would not be economic; or
(b)That the sale of liquor would be an appropriate complement to the kind of goods sold in the premises.
(3) Nothing in subsection (1) or subsection (2) of this section shall authorise the grant of an off-licence in respect of—
(a)Any service station or other premises in which the principal business is the sale of petrol or other automotive fuels; or
(b) Any shop of a kind commonly known as a dairy.
(4) Nothing in subsection (2)(b) of this section shall authorise the grant of an off-licence in respect of any supermarket or grocery store, or any other premises on which the principal business is the sale of food or groceries.
(5) This section applies subject to sections 51 and 52.
(Emphasis added)
The emergence of convenience stores
[6] Section 36 was enacted as part of the new Sale of Liquor Act 1989. At that time there was not the proliferation of inner city stores such as the franchises
“Night ‘n Day” or “7-Eleven”. These are commonly known as convenience stores. That is an industry term. It was used by the appellant to self describe this store.
[7] Such convenience stores are typically found in the central areas of cities. They operate for very extended hours, if not 24 hours a day. They sell groceries, bread, milk, fruit juices and cordials, and typically have been granted off-licences to sell wine. They also sell numerous other convenience items such as basic toiletries, magazines and newspapers.
The categorisation of s 36
[8] It is not possible to argue that Parliament intended to divide all foodstuff stores into three categories: of a supermarket or a grocery store or a dairy. This is because subs (4) contemplates that there might, but for subs (4), be an application under s 36(2)(b) for the grant of an off-licence to “any other premises in which the principal business is the sale of food or groceries”. In Victoria the LLA said:
[46] … In the modern context asking such a simple question can lead to difficulty. For example it is possible to reach the answer that if the business is not a dairy it must be a grocery. However the store might be neither.
An ambulatory issue?
[9] Section 6 of the Interpretation Act 1999 provides:
6 Enactments apply to circumstances as they arise
An enactment applies to circumstances as they arise.
[10] The traditional corner IGA or 4 Square grocery store has disappeared almost completely in the suburbs. Most suburban shopping for groceries is at supermarkets. On the other hand, downtown convenience stores stock a much wider variety of goods than traditional diaries. Such stores can be called modern dairies, ambitious diaries, or grocery stores. They can meet the needs of apartment dwellers in the inner city, who are themselves relatively speaking a new phenomenon. Such dwellers, often particularly if they are living alone or just as a couple, both of whom
are working, may be attracted to the convenience rather than low prices, to make their grocery purchases from such stores. The appellant argues that these changes in social circumstances should be recognised in the interpretation of s 36. I defer evaluating that proposition to later in the reasoning.
The application problem
[11] The appellant in this case was first granted an off-licence for these premises in Victoria Street back in 2001. At that time the LLA was following a policy of recognising such convenience stores as grocery stores, qualifying under s 36(1)(d)(ii).
[12] The decision which confirmed this as a policy was decision 10/82-
10/82/2000, being two applications: one by Caltex New Zealand for an off-licence for a Star Mart shop on the corner of Colombo and Cashel Streets in Christchurch and the second being an application by Kasha for an off-licence at 759 Colombo Street, Christchurch, known as “7-Eleven” (the Caltex and Kasha decisions).
[13] In 1999 an off-licence had been granted on the premises for the first Caltex Star Mart at the corner of Courtenay Place and Tory Street in Wellington. This matter came before the LLA because the police and an inspector said they wanted a public hearing to give the authority an opportunity to address the issue of “whether this relatively new bred of shop is a dairy or a grocery”. The police had queried whether at a Star Mart of a 7-Eleven the items to be sold were “main order household foodstuffs requirements”. Mr Richards as an agent for Caltex New Zealand and Mr James as counsel for Kasha both relied on changing social conditions. The LLA’s conclusions and reasonings contain the following passages which are indicative of how it reached the view that these two premises were grocer shops for the purposes of s 36(1)(d)(ii):
Authority’s Conclusion and Reasons
15. In a recent High Court decision Meads Brothers Limited v The
Rotorua District Licensing Agency (HC Rotorua AP 26/00 2 August
2000) Potter J at page 11 set out the object of the Act and emphasised: -
“… control over the sale and supply of liquor with the aim of contributing to the reduction of liquor abuse, must be the primary concern and focus of the Authority.”
16.We are not aware of any instances of liquor abuse having arisen from off-licences having been granted in respect of inner city convenience stores. In the year 2000 it is appropriate that we move on from the somewhat restrictive definition of “main order household foodstuff requirements” spelt out by the Authority in Douglas-Oliver Corporation Limited [9/90] in 1990 as “items the majority of New Zealand families purchase once a week from either a supermarket or a grocery”.
17.We accept the evidence given on behalf of Caltex New Zealand Limited addressed in the submission of Mr Richards that inner city apartment dwellers, visitors to a city, including tourists from overseas, staying in motels and apartments with kitchens, want to purchase grocery items in smaller packs, at more frequent intervals than “once a week”. In Mr Richards’ words “the inner city dwellers, back packers and visitors expect to be able to purchase household goods without a journey to the outer limits of the CBD and the supermarkets”.
…
20.In the 10 years since the passage of the present act, the parameters have changed. In our view the “convenience store” should be added to supermarkets, groceries and superettes as premises from which wine and beer can be sold, with only the traditional small corner dairy being excluded. We do not want to impose a restrictive definition of what is and what is not a dairy by reference to the size of premises in terms of square metres. Nevertheless, it is probably relevant to mention that in a recent decision Paramahoe Superette
1081/2000 we accepted premises of between 288 and 302 square metres as being larger than a dairy; with the present two applications we have a Star Mart of 156 square metres and a Seven to Eleven of
190 square metres.
21.It is for the District Licensing Agencies and this Authority to determine each application on its own facts. A physical inspection of the premises in question often assists in distinguishing the small shop “of a kind commonly known as a dairy” where children regularly attend to purchase sweets, ice-cream and the like from the slightly larger and more widely stocked premises that will rate as a convenience store or superette.
[14] It would appear that this policy remained in place until there was a change in chairman, Judge Unwin replacing Judge Gatley. In 2008 there came two decisions under the chairmanship of Judge Unwin: The Woodward Group Ltd LLA PH1145/2008 and M K Devereux Limited LLA PH1532/2008. The first of these, the Woodward case, was on the merits hopeless, even under the Caltex and Kasha
approach. It was an application for an off-licence for a new business to be called “Cargo” to be established on the ground floor of the main terminal building of Wellington Airport adjacent to the baggage claim area. The business had just opened. The highest percentage, by sales, was of takeaway hot beverages. (One waits a long time for bags in Wellington.) Many of the foodstuffs sold were small quantities of breakfast materials obviously geared for travellers intending to stay overnight at motels or hotels.
[15] Having reviewed the past liberal policy in Caltex and Kasha, the LLA said:
[43] With the benefit of hindsight, it seems that this decision to allow a convenience store to be classified as a grocery was a turning point in the off- licence industry. There has since been a proliferation in the number of off- licences being granted to convenience stores that have portrayed their businesses as scaled down supermarkets, when in fact some of them were nothing more than ambitious dairies.
[44] Considering that the law in relation to the interpretation of statutes was amended on 1 November 1999, the decision to apply such a liberal construction was even more surprising. On the above date, the Acts Interpretation Act 1924 was replaced by the Interpretation Act 1999. Previously the interpretation of statutes was governed by s.5(j) of the former Act as follows:
Every Act, and every provision or enactment thereof, shall be deemed remedial, whether its immediate purport is to direct the doing of anything Parliament deems to be for the public good, or to prevent or punish the doing of anything it deems contrary to the public good, and shall accordingly receive such fair, large, and liberal construction and interpretation as will best ensure the attainment of the object of the Act and of such provision or enactment according to its true intent, meaning and spirit.
[45] As from 1 November 1999 the replacing s.5(1) reads:
The meaning of an enactment must be ascertained from its text and in the light of its purpose.
[46] Although it has been accepted that the established jurisprudence under the old Act continues to apply, it seems to us that it is necessary to look first at the text, and then ensure that the meaning ascertained from that text does not offend against the statute’s purpose. It seems to us that Parliament had declared that it was no longer appropriate to adopt a fair, large, and liberal construction and interpretation of any statute. Put in another way, statutes should be interpreted on the basis that the words should bear their plain and ordinary meaning, provided that any resultant interpretation did not offend against the statute’s object. The proliferation of small off-licensed stores throughout the country illustrates what can happen when legislation is interpreted liberally.
[47] An argument could be mounted that when one examines the Sale of Liquor Act’s objective, the reduction of liquor abuse might well be encouraged if the number and type of off-licences nationally, was reduced. However, it is not our intention to rely on this provision in declining this application. What can be said is that the adoption of a strict interpretation of the wording in s.36 will not offend against the purpose of the Act. On the other hand, the adoption of a liberal approach could do so.
[48] In this case the meaning of the words in s.36(1)(d)(ii) are crystal clear. We can only grant an off-licence under that section to a grocery. That is the very first element that must be established to our satisfaction. The Act does not say ‘grocery or convenience store’. Once an applicant has established the bona fides of the type of premises it must then show that the grocery’s principal business is the sale of main order household foodstuffs. It is of interest that the Sale and Supply of Liquor and Liquor Enforcement Bill currently before Parliament continues to use the same wording.
…
[51] In summary, therefore, and after careful consideration, we consider that the Authority’s earlier decisions to issue off-licences to convenience stores were contrary to the correct interpretation of the Act, and should no longer be regarded as good law. The current application illustrates the point that the Authority’s relaxed interpretation of a grocery store in 2001, has led to unrealistic expectations that inappropriate businesses could qualify for a grocery-style off-licence.
[52] This ‘line in the sand’ decision means that no new off-licences will be issued where the business is plainly a convenience store and not a grocery (as in this case). It is time to return to a principled approach based on what is stated in the relevant section, and not on what commentators might think was intended by Parliament.
[53] We appreciate that this decision could have major ramifications for some businesses. We anticipate a reduction in applications such as the present one. As to current off-licences issued to convenience stores, that will be a matter for the monitoring agencies to reflect upon. In some cases the difference between the grocery and the convenience store will be marginal. A request for certified turnover percentages over the previous twelve months might be helpful. In many cases it may be advantageous to await the outcome of the current Bill before Parliament. We note that the Bill allows for a three-year sunset provision.
[16] The LLA went on to reject the application. About a month later it decided the Devereux case. This was an application for the first time for an off-licence for a Night ‘n Day franchise at 18 Princes Street in the Octagon in Dunedin. The LLA followed its Woodward Group reasoning. Dealing with the turnover data to be analysed the authority said:
[26] In summary we have slowly but inevitably been drawn to the realisation that the way in which certain premises have been licensed must
stop. We have been too inclined to accept turnover figures at face value. It seems to us that it has become easy for applicants to include in the percentage figures, items that do not qualify. Mr Lane had a different perception than us as to what qualified for main order household foodstuffs. We have no doubt he was sincere in his belief. However, we believe that even in a modern context, main order household foodstuffs that are purchased from a grocery are those food items that the majority of New Zealand families purchase to take home for preparation and consumption. They will generally not include impulse purchases of food items such as confectionery.
[27] There is no question that these premises are well lit, bright and attractive. The franchise has a lot of advantages for the purchasing public. This new business is likely to attract a great deal of passing pedestrian traffic. The issue is whether we have been satisfied that people go there primarily to purchase their main order household food requirements.
[28] The decision of Jay and H Company Limited LLA PH 155/2001 is the normal guideline for determining the principal business of a store. However, it needs to be borne in mind that the decision was written in order to determine whether a store was a dairy. The Authority approached its task by asking whether a store was a dairy or a grocery. Modern dairies and general stores carry such a large range of products that sometimes it is not possible to categorise them. They may be convenience stores or general stores or even markets. In the current context, it is preferable to focus on whether a particular store is a grocery. The decision is helpful in assessing the answer by reference to the following factors:
In determining the ‘principal business’ of any store we endeavour to apply a broad common sense approach. Consideration includes-
(1) The turnover percentages produced in accordance with
Regulation 8(2)(j).
(2) The number and range of the items available. The greater the number and depth of foodstuff items available, the more likely the premise is to be a grocery store in terms of s.36(1)(d)(ii).
(3) The size of the premises. Larger premises are less likely to be categorised as a dairy.
(4) The layout of the premises. The presence of trolleys in multiple rows of goods assist categorisation as a grocery store.
(5) A view of the premises. The evidential weight given by the
Authority to a view is usually considerable.
[29] Looking at the above criteria we comment as follows:
(1) The turnover percentages produced in accordance with Regulation
8(2)(j).
[30] We have now received the turnover figures and they are better than we anticipated. A reputable firm of accountants confirmed that the company had provided them with a summary by category of all sales which occurred in the week six to 12 October (inclusive). They had checked the multi-sales transactions and then matched those back to the summary by category. The percentages by category were:
Main Order Foodstuffs (the word 'household' was omitted) 46.50% Takeaway Foods 12.52%
Tobacco 16.97% Phone Cards 3.97% Non-Food Items 4.06%
Food items – non-main order 15.93%
[31] The difficulty about the figures as that the accountants rely on the company’s category determination. For example, the category of main order household foodstuffs included pies, beverages, ice cream, medical, pet food and water. Multisales of single sealed beverage products and confectionery were also included. Clearly some if not all of these items should have been excluded. We do not accept that water, or medical, or pet foods can be categorised in this way. We note the instore bakery has been included in two categories (main order and non-main order), and assume that a separation has been made between what is to be consumed before the items get to the home. We have also assumed that the sale of takeaway coffee has been included in non-main order food items.
[17] It also went through the other criteria from Jay and H Co Limited LLA PH
155/2001. It considered that a majority of the food items were there for the convenience of passing pedestrians. It acknowledged that given its locality and size it could be classified as a grocery but it could also be classified as a convenience store. It considered the layout was an important feature, including as it did seating for eating takeaway food and takeaway coffee which undermined the claim that the business was a grocery and having taken a view of the premises: “The business did not look like a grocery store and it did not seem like one either”.
[18] The application was declined. At first the initial application by the LLA of this new policy was to decline new licences. I was told from the bar that the LLA did not stop renewing licences.
The appellant’s application for renewal
[19] The appellant’s Victoria Night ‘n Day food store is located in Victoria Street, opposite the Christchurch Casino. Its area is about 165 square metres. The surrounding area has a commercial flavour but the LLA noted there are residences including flats and apartments in the neighbourhood. The Victoria application for renewal attracted no public objection, and initially the police had no opposition. But following the Devereux decision the police and the licensing inspector contended that the business should not have been granted a licence in the first place.
[20] It needs to be kept in mind that s 44 of the Act enables unopposed applications for renewals to be granted and provides for opposed applications to be forwarded to the Licensing Authority. By s 43 of the Act an inspector and the police must file reports. If their reports do not contain any matters in opposition then the application is treated as unopposed, if as well no public objection is filed. If the police or the inspector do have matters in opposition then it becomes an opposed application to be heard by the Licensing Authority. Section 45 provides the criteria for renewal and sub-paragraph (d) includes any matters dealt with in any report under s 43. The Authority considered that s 45(d), coupled with the opposition from the inspector and the police enabled the LLA to consider whether or not it was a type of premise in respect of which an off-licence might be granted under s 36. That aspect of its decision was argued before it and rejected and has not been taken forward on appeal.
[21] The LLA traversed its change in policy in this the Victoria decision. It went on to develop one of its main reasons for its shift in stance:
[43] We firmly believe that much of the current debate about liquor abuse has its genesis in the 2000 decision to allow convenience stores to be licensed. With the benefit of hindsight, that was a turning point in the off- licence industry. There has since been a proliferation in the number of off- licences being granted to convenience stores that have portrayed their businesses as scaled down supermarkets, when in fact some of them were nothing more than ambitious dairies. When one examines the Sale of Liquor Act’s objective, the reduction of liquor abuse might well be encouraged if the number and type of off-licences nationally was reduced.
[22] It then adopted the Devereux test as the guide to defining main order household foodstuffs:
[44] We then turn to see whether the issue raised by the Inspector has been satisfactorily answered by the company. In the M K Devereux Limited decision (supra) we attempted to define main order household foodstuffs in a modern context as follows:
“However, we believe that even in a modern context, main order household foodstuffs that are purchased from a grocery, are those food items that the majority of New Zealand families purchase to take home for preparation and consumption. They will generally not include impulse purchases of food items such as confectionery.”
[23] It went on to note some of the difficulties of applying the guidelines in Jay and H which, as noted, were designed to distinguish whether the store was a dairy or a grocery and then applying the Jay and H criteria (set out above) it commented:
The Turnover Percentages Produced in Accordance with regulation 8(2)(i)
[49] The figures were, at best, marginal. We have difficulty in understanding how in a modern technological society it is not possible to obtain more accurate and detailed figures. The confidential detailed figures that were produced clearly show that the business cannot claim to be a grocery in the true sense of the word. For example, 18.67 percent of the total main order food lines comprised confectionery. These were listed under Assorted Family Confectionery, Boxed Chocolates, Family Bags Confectionery Large, and Large Blocks, King Bars & Boxed Chocolates.
[50] A further 17.78 percent of the main order food lines comprised drinks. Granted such drinks were a litre or more but we do not accept the inclusion of such major selling items as “main order”. The drinks included items that had been transferred from the non-main order food lines. They were listed as Fruit Juices 1L Plus, Soft Drinks 1L Plus, Water Drinks 1L Plus and Multi drinks Sales Equalling 1L Plus. If these items are deducted from the total then the percentage of sales of main order household foodstuff requirements reduces to just below 30 percent of total.
The Number and Range of the Items Available. The Greater the Number and depth of Foodstuff Items Available, the More Likely the Premise is to be a Grocery Store in Terms of s.36(1)(d)(ii)
[51] The largest sellers by generic product lines are drinks, confectionery, tobacco products, liquor and takeaway foods. In our view most of the items on display are there for the convenience of passing pedestrians. To suggest that the majority of items in the store are foodstuffs that are taken home for preparation and consumption is, with respect, unrealistic.
The Size of the Premises, Larger Premises are Less Likely to be
Categorised as a Dairy
[52] This is not a large store by any means. But it is busy. There is no sense of space. In our view the business is like any convenience store. The company apparently has an advertising jingle with words to the effect that it has whatever is required, whenever the item is required. The store reflects the advertisement.
The Layout of the Premises. The Presence of Trolleys in Multiple Rows of
Goods assist Categorisation as a Grocery Store
[53] See comments above. The inclusion of a takeaway area for prepared hot food items near the entrance is more akin to a convenience store activity.
A View of the Premises. The Evidential Weight given by the Authority to a
View is Usually Considerable
[54] We took time to view the premises. The business did not look like a grocery and it did not seem like one either. Our observations tended to confirm the list of products referred to above. We note that the store was described as a convenience store by the owner in her letter to the Mayor.
[55] There is one other matter. The trading hours. There were no details of the sales of liquor made after 11.00 pm. Experience has taught us that sales of liquor made after 11.00 pm are more likely than not to be consumed immediately and in a public place or car. The owner did not share our views and seemed to believe that selling liquor late at night and in the early hours of the morning was unlikely to contribute to liquor abuse issues. This is a case where the company has the benefit of the law. We are unable to alter the trading hours unless it is in response to a report under s.43 of the Act. Although there was a report, there was no issue taken with the 24-hour licence. The parties were all focussed on whether the business is a grocery. We suggest that the trading hours also require consideration in terms of the Act’s objective.
[56] In summary there have been an unfortunate series of events that have brought us to the conclusion that the way in which certain premises have been licensed must stop. We believe that the licensing of convenience stores is contrary to the terms of the Act. A system has developed whereby applicants have been allowed to include in the percentage figures items that do not qualify. They have a different perception of the meaning of main order household foodstuff requirements. The reality is that a large number of convenience stores have joined the bandwagon, and obtained licences which should not have been granted in the first place. There have been consequences in terms of achieving the Act’s objective.
[57] In our view the company is not a grocery whose principal business is the sale of main order household foodstuff requirements. It has no entitlement to having its off-licence renewed. However, given the extent of the opposition, and the consequences of a refusal, we have decided that the “reasonable” approach is to renew the licence for 18 months. This means that the licence will next fall due for renewal on 5 March 2010.
[58] The company will be aware that any further renewal may attract opposition both as to the existence of the licence as well as the hours of operation. We are conscious that by taking this course of action we may be depriving the company of appellate rights. On the other hand the time may
give the company the opportunity either to change the nature of the business, or accept what might be seen as a likely refusal to renew the licence, in which case there will be no further renewal. The company may of course decide to re-argue the matter next year. At least it has now had a formal warning of the probability, that given present conditions, the application will be declined.
[59] Accordingly, and for the reasons we have attempted to articulate, the off-licence issued to CH & DL Properties Limited is renewed for 18 months to 5 March 2010.
Grounds of appeal
[24] There are seven grounds of appeal:
Ground 1: That the LLA adopted and applied an incorrect definition of “main order household foodstuff requirements”
[25] This was in effect a direct challenge to the Devereux test that main order household foodstuffs are those that the majority of New Zealand families purchase to take home for preparation and consumption. It was expanded in paragraph [44] to include the following proposition: ‘They will not generally include impulse purchases of food items such as confectionery’.
[26] Mr Taylor submitted that this definition was wrong; that it rejected purchase on impulse and sales to passers-by; that it created a definition that assumed all purchases were planned, a special excursion and strict adherence to what had been planned in advance. It posited that a modern weekly supermarket shopping tripper who would not buy on impulse. Yet, he argued, many shoppers buy confectionery items at supermarkets to take home for consumption. There is much impulse buying at supermarkets. The Devereux decision is wrong to use New Zealand families as part of the test. But attaching “main order” to the way purchasers go about their purchasing is unrelated to the premises which are licensed and cannot logically or practically found a regime for granting licences to premises.
[27] Mr Taylor argued that all these difficulties of trying to apply the test by taking into account what the majority of New Zealand families purchase to take home for preparation and consumption must be abandoned. This left only a meaning
based on the actual buying patterns of particular purchasers. He submitted that a definition which is practical and allows certainty has to be adopted; that it cannot, consistently with the rule of law, depend on having to identify actual reasons for purchase by individual purchasers. He then submitted that the underlying concept of s 36 is of: “foodstuffs that are of a nature that are consumed within a household, including those in single serve quantities, and those consumed with no, or no significant cooking effort”.
[28] That argument of Mr Taylor contends essentially for an objective test being one of measuring the predominance of sales of foodstuffs that can be consumed within a household, whether or not they are. It is advanced deliberately on the basis that it is practical and allows certainty.
[29] This Court regularly receives arguments which seek to devise practical and certain ways of applying statutory standards. The Court must be very wary of succumbing to an argument that it substitute a new test which is different to that posed by Parliament. The ‘Rule of Law’ is not rule by practical and certain tests. Frequently, and inevitably, regulatory statutes enact standards and grant authority to agencies to apply those standards in order to pursue a policy. Standards differ from rules in that in many cases reasonable people could agree to differ on whether a standard applies. That is one of the reasons why Parliament takes great care to define who should apply the standards. It often creates an expert tribunal to be entrusted with the task. Therefore, I reject the submission that: “a definition adopted must be one that is practical and allows certainty”.
[30] I do not agree that in this the Victoria decision the LLA has adopted a definition which rejects impulse purchases of food items. The addition to the Devereux ‘test’ is: “they [the foodstuffs] will not generally include impulse purchases of food items such as confectionery”. That proposition needs to be read in context, and particularly by studying paragraphs [49], [50] and [51] of the judgment set out above.
[31] In paragraphs [49] and [50] the LLA was considering not only the categories of confectionery and drinks, but also the quantities being sold. The LLA was plainly
impressed by the proportion of the sales. The second sentence of paragraph [50] is interesting. It says:
… Granted such drinks were a litre or more we do not accept the inclusion of such major selling items as “main order”.
[32] That reveals a thinking that in a main order you would not expect to see a significant quantity of drinks, out of proportion to basic groceries. Plainly, in applying the standard the LLA in this case were impressed by the sheer quantity of sales of confectionery and drinks.
[33] Mr Taylor correctly pointed out that the figures in paragraphs [49] and [50]
can be somewhat misleading; that one should not be confused in thinking that
18.6% and 17.78% respectively of confectionery and drinks were percentages of the total sales. Given that total main order food lines (as defined in the sales figures) were of the order of 46%, the respective figures are more fairly in the order of about
8% of sales.
[34] So then we come to paragraph [51], which is really an application of the standard rather than an interpretation of it. What has impressed the LLA is that you would not expect a grocery store’s biggest sales of generic products to be drinks, confectionery, tobacco products, liquor and takeaway food. In that sense the LLA say the principal business of this store is not the sale of main order household foodstuff requirements. That decision does not depend on whether they were right or wrong to exclude confectionery or drinks. I do not think the LLA was absolutely excluding the possibility that a main order household foodstuff requirement would ever include confectionery or a drink. It might include a block of chocolate, a packet of sausage rolls, a large bottle of orange juice and a soft drink. But the point being made, as I read it, by the LLA is that such inclusions would not be a significant part of a main order and thereby of the total sales of a grocery store. Whereas here they are faced with a business where the figures are in the reverse, they reached a view
‘this is not a grocery store whose principal business is the sale of main order household foodstuff requirements’.
[35] In Woodward, Devereux and in this Victoria decision the LLA has interpreted sub-paragraph (ii) as identifying grocery stores whose main business is the sale of those food items that the majority of New Zealand families purchase to take home for preparation and consumption.
[36] Plainly the LLA was examining whether this Victoria Street Night ‘n Day convenience store could be said to be a grocery store whose principal business was the sale of main order household foodstuff requirements, meaning requirements as referring to foodstuffs to be taken back to one’s household for preparation and consumption. This is abundantly clear from paragraph [51] of its decision set out above. The last sentence is important and I set it out again:
To suggest that the majority of items in the store are foodstuffs that are taken home for preparation and consumption is, with respect, unrealistic.
[37] As I read that sentence, the LLA is not confining foodstuffs taken “home” to “families”, but would include main orders by couples or single persons to be taken home for preparation and consumption. Such foodstuffs could be single serve quantities, frozen meals, and so on. I do not think the LLA used the phrasing of the Devereux ‘test’ as applied in this case in paragraph [44]) as a substitute for the standard in (d)(ii).
[38] There is no doubt that the LLA has been also impressed by the need to make a separate judgment that the premises is a “grocery store”.
[39] In the course of oral argument there was some discussion as to whether there were two elements of s 36(1)(d)(ii) so that the LLA should ask the question:
1. Is this a grocery store?
2.Is it a grocery store whose principal business is the sale of main order household foodstuff requirements?
[40] The distinction had been made in paragraph [48] of the Woodward Group
decision set out above. For convenience I set out this paragraph again:
[48] In this case the meaning of the words in s.36(1)(d)(ii) are crystal clear. We can only grant an off-licence under that section to a grocery. That is the very first element that must be established to our satisfaction. The Act does not say ‘grocery or convenience store’. Once an applicant has established the bona fides of the type of premises it must then show that the grocery’s principal business is the sale of main order household foodstuffs. It is of interest that the Sale and Supply of Liquor and Liquor Enforcement Bill currently before Parliament continues to use the same wording.
[41] It is always risky to deconstruct or gloss a statutory criterion. I do not think in this case sub-paragraph (ii) can be completely divided into two tests as might be suggested in paragraph [48] of the Woodward decision. Whether or not a store is a grocery store will depend considerably on a consideration of the principal business of the store. Unless it is selling household foodstuffs it is unlikely to be called a grocery store in the first instance. I see the two parts of (ii) as self-reinforcing.
[42] I note that although subs (4) of the section refers to any other premises on which the principal business is the sale of food or groceries, it does not presume that that premise would naturally be called a grocery store.
[43] Mr Taylor sought to rely upon two statements made during the debates in the House of Representatives. When the Bill had been first introduced to the House there was no provision limiting off-licences by types of store. The Select Committee introduced a clause, 33A, to cover the topic now found in s 36. Its equivalent to what is now subs (2) was “the sale of groceries”. The Hon Mr Gair as speaker for the Opposition explained why the Select Committee had made the changes it did. He said:
It was finally decided to limit the off-licence sales recommendations to firms that at present are principally in the business of selling liquor or groceries. Groceries were chosen because, although the Committee did not think it appropriate to recommend to the House a wide distribution of outlets, from the evidence presented to the Select Committee it felt appropriate to suggest to the House that grocers, or those food outlets that are substantially involved in the sale of groceries, should be given the opportunity to market liquor.
[44] During the debate of the Committee of the House on the Select Committee report there were a number of proposed amendments to Clause 33A that failed including:
1.Moves to have all liquor available for sale in supermarkets (lost on a voice vote);
2. Moves to have beer and wine in supermarkets (lost on a voice vote);
and
3. Moves to have wine in supermarkets and grocery shops (lost 33:37). [45] Then subsequently there was a further debate on an amendment proposed by
Mr Gerbic MP rewriting clause 33A to the text which is now in the statute. The supplementary order paper introducing this amendment stated the purpose was:
… permit the sale of … wines pursuant to off-licences granted in relation to supermarkets of a substantial size and grocery stores that principally sell household foodstuffs.
I note that that SOP statement of purpose is at best only a summary of the text of (d)(ii). That amendment was accepted by 31 votes to 34. I note that there was only a small change in voting and infer there were some swing votes that moved.
[46] It is plain that sub-paragraph (ii) has been crafted carefully. The words “main order” and “requirements” are not mentioned in the stated purpose of the SOP. I do not derive assistance from these two statements of purpose.
Ground 2: Substituting “convenience store” for “dairy”
[47] The argument here is that because of the LLA’s repeated use of the concept convenience stores (used 33 times in the judgment) it erred, and has been erring since Woodward, by substituting convenience store for dairy in s 36(3) so as to exclude all convenience stores from s 36(1)(d)(ii).
[48] Mr Taylor submitted that the LLA decisions after Caltex and Kasha mistook the label convenience store for its content. In Caltex and Kasha and up to Woodward it had effectively treated convenience stores as grocery stores. After Judge Unwin became chairman thereafter it did not include them as grocery stores but still maintained them as a category, separate from grocery stores. Mr Taylor
submitted that the LLA has almost adopted the position that convenience stores are the new dairies. As a result it fell into an error of law by taking its attention away from the test in s 36(1)(d)(ii), including the concept and purpose lying behind it.
[49] I observed in the course of oral argument that it was difficult to keep this ground of appeal distinct from the first ground of appeal. It is true that different panels of the LLA since at least Caltex and Kasha have categorised stores such as Star Mart, 7-Eleven, and Night ‘n Day as convenience stores. This is industry jargon. The proprietor of this Night ‘n Day self-categorised the store as a convenience store. It is a useful name. It is not the statutory test. This case dealt with a convenience store downtown, as distinct for example from being located in and as part of a service station premises. In my view, the critical reasoning of the LLA in this case focussed on applying the standard in s 36(1)(d)(ii). That is evident from the paragraphs [49]-[58] of the decision set out in this judgment and analysed in the immediately preceding paragraphs. Inasmuch as the shop can be categorised as a convenience store, and also be neither a dairy or a grocer store whose characteristics fall within s 36(1)(d)(ii), so be it. It does not follow that thereby s 36(1)(d)(ii) has not been applied.
[50] There was an aspect of the labelling of these stores as convenience stores which highlighted usefully a point of contrast from the statutory test. This is the fact that such stores are catering to casual custom from the passing traffic, inviting to a degree greater, than main order purchases, impulse shopping. I have quoted passages from a number of the decisions noting, for example, the provision for sale of takeaways, coffee and seating for consumption on the premises. In that regard I accept Mr Taylor’s submission that the convenience store classification of this business was an integral part of the LLA’s decision making process. But I do not think that it diverted the LLA from applying the criteria in s 36(1)(d)(ii).
Ground 3: Applying the Jay and H Co Ltd criteria, it being an incorrect set
[51] The first argument under this head is that the LLA should not have relied on a sample period of one week’s turnover. This, however, was the period chosen by the appellant. It is obviously up to the appellant to know whether or not this was a
typical week. In any event, the question as to an appropriate period for a useful period of statistics is a matter of fact and not an issue of law.
[52] The second argument was that the LLA took into account that there were significant sales after 11 pm. It did so because it regarded such sales as on any view not likely to be the sale of main order household foodstuff requirements. I have already accepted that it is relevant for the LLA to form some judgment as to whether or not the goods sold are likely to be taken back to a residence or household as distinct from being consumed on the streets. Obviously sales after 11 pm, particularly liquor sales, are likely to fall into the latter category.
[53] Mr Taylor submitted premises cannot logically cease to be eligible to be licensed by the day, let alone by the hour; that it would be illogical to exclude premises from sub-paragraph (ii) when their business qualifies because at some times of the day the patterns of products sold is different from others. I do not agree with this reasoning. There has been no suggestion that this premise is a grocery store during the day and then something different at night. The LLA was simply examining to what extent it could be said overall that this store’s business was a grocery store with the principal business being the sale of main order household foodstuff requirements. It is relevant to take into account its hours of trading when forming that judgment, and that is what the LLA did.
[54] The second sub argument under this head was that the correct application of the test is simply whether the types of product categorised as main order household foodstuff requirement constitute the percentage which is both the largest and is significantly greater than the next category.
[55] Embedded in this proposition is the notion that if a foodstuff falls into the category of “main order household foodstuff requirements”, then it matters not the time of day it is purchased, or whether or not it is purchased to be taken back to a household or residence for preparation and consumption. I have already rejected the notion that these two factors are irrelevant. The LLA was entitled to treat them as relevant considerations as they go to the judgment of what is the principal business of the store.
[56] The third argument is that it is not relevant for the LLA to have regard to the size of the premises. The LLA did not treat it as some kind of criterion that had to be met. It was simply a consideration. The Jay and H factors were designed to assist formulation of a judgment. I consider it is the sort of relevant factor that an agency such as the LLA could develop to apply the test, as it assists again a judgment as to whether the store can reasonably be classed as a grocery store, as distinct from a shop which sells grocery items.
[57] Sub-ground 4 addresses the consideration of the sense of space and fit out as an indication of a grocery. For similar reasons I consider this to be a relevant factor.
[58] The hours of operation, size of the premises and setup of the premises are relevant to the Licensing Authority being satisfied as to the character and principal business of the store.
[59] There is nothing in the statute which says that that judgment has to be made by an analysis of turnover. The regulations focus on turnover, but those regulations cannot further define or confine the statutory test. The LLA applied the Jay and H criteria circumspectly. As I have indicated I think the critical paragraphs of the LLA’s decision are paragraphs [49], [50] and [51]. I did not read the LLA as placing particularly great weight on these other factors. They were factors which, when examined, reassured or confirmed the judgment of the LLA.
Ground 4: Incorrect understanding of “principal business”
[60] This ground argues that where one is identifying principal business at the level of generality of “main order household foodstuff requirements”, the other comparable groups of product must obviously be at the same generality. Accordingly, one cannot separate out carbonated drinks as a category. Second, the definition of principal means a category of sales significantly greater than the next category.
[61] I do not think these refinements can be derived from s 36(1)(d)(ii). To be sure they are encouraged by reg 8(2)(j).
(j) … particulars of the principal business of the store, including evidence and certified accounts showing the percentage of turnover that is derived from the sale of main order household foodstuffs.
But, as already noted, this regulation cannot be used to narrow or otherwise confine the standard contained in s 36(1)(d)(ii).
Ground 5: Excluding confectionery and drinks
[62] This is pleaded as a separate ground of appeal, but as will be obvious from the reasoning, it has already been dealt with under the other grounds of appeal. This argument developed the proposition that they are foodstuffs. They are. But that that is a long way away from bringing them into the concept of “main order household foodstuff requirements:. As noted, even if they will be included these days in main orders, it was part of the reasoning of the LLA that the relative preponderance of sales of these two items was inconsistent with the principal business of the store being the sale of main order household foodstuff requirements.
Ground 6: Renewing the appellant’s licence in fact for 119 days
[63] The argument here is that realistically the decision was not a renewal but in effect a notice of revocation nisi. The relevant passages from the reasoning of the LLA are as set out in paragraphs [57], [58] and [59] (set out above in paragraph [23] above).
[64] I agree that substantively this was a dismissal of the application for renewal. Effectively the Tribunal gave the applicant a period of grace to take the opportunity, if it could, to alter the nature of its business. There is no express statutory basis for this indulgence. Given, however, that this decision marked a development in its policy from not granting convenience stores off-licences, to not renewing existing licences, one can quite understand the straining by the LLA to produce as fair a decision as possible in the circumstances.
[65] If there is any error of law it could only be that the LLA should have simply refused the application for renewal. The appellant obviously does not seek a
judgment in that regard. Counsel agreed that the effect of these appeal proceedings is that the appellant’s licence continues, s 147(1). Therefore essentially this ground of appeal is in my view moot.
Ground 7: That it was an error of law to make this decision on the basis of its altered interpretation of law that had been relied upon by the appellants for about eight years
[66] This ground of appeal was advanced as a form of legitimate expectation that the licence would be renewed.
[67] Mr Taylor accepted that the appellant could not argue that the LLA was bound by previous decisions. There is no question that if an LLA considers an earlier decision of another LLA was an error of law. It has a positive obligation to decide every case on its understanding of the law. It is a another question, not identified by the LLA, as to what it should do if it wanted to change the policy of application of a statutory standard which confers some latitude in decision making.
[68] Mr Taylor argued rather than decide the appellant’s application the LLA should in this case have either referred the question of the ‘proper’ application of s 36(1)(d)(ii) to the High Court by way of case stated or give notice that from an appropriate date in the future it would apply its understanding of the law stated in Woodward to renewals.
[69] After Woodward the LLA could have issued a practice note signalling to holders of off-licences relying on premises categorised under s 36(1)(d)(ii) that from a particular point in time it was going to apply the Woodward reasoning to applications for renewal, explicitly or implicitly inviting the district inspectors to take the point when filing reports under s 43. It did not. I do not think, however, that failure to do so is a procedural injustice in the circumstances. All Night ‘n Day convenience store franchise holders would have known of Woodward by the time the case came to be heard. In this case the appellant’s counsel before the LLA, Mr Trevor Shiels, was fully on notice of the prospect that the renewal would not be granted.
[70] At the heart of consideration of this last ground of appeal is the fact that s
36(1)(d)(ii) is an open textured standard. It is not a precise standard in the character of a rule. The concept of grocery store when applied to convenience stores can invite a range of reasonable but different responses. One person might say a convenience store is a kind of grocery store. Another might say it is not a traditional grocery store. Another might say it is not a grocery store. The criterion of “main order foodstuff requirements” does not say whether the principal business is the sale of such foodstuffs, being purchased for preparation and consumption at home, or is simply the sale of foodstuffs of the same category as those which are typically purchased for preparation and consumption at home.
[71] As this judgment has recorded the LLA under the chairmanship of two different Judges, and over different periods of time, has taken two views as to the application of this standard to the business of convenience stores. In Caltex and Kasha the LLA followed an ambulatory approach.
[72] Mr Taylor invited this Court to follow an ambulatory approach. He opened his submissions on that footing. He regarded it as the key issue of this appeal. This topic is usefully introduced by adopting a passage from Burrows and Carter ‘Statute Law in New Zealand” 4th ed LexisNexis Wellington 2009 at 386 and 387:
Very often, new developments and inventions overtake an old Act. These developments could often not have been foreseen by those who passed it. Questions often arise as to whether these new developments are covered by the Act. The courts normally apply an “ambulatory” or “updating” approach, and find that the Act does cover these developments, provided two conditions are satisfied: first, that these developments are within the purpose of the old Act; and secondly, that the words of the Act, albeit by liberal interpretation, are capable of extending to them.
(Emphasis in original)
[73] In Caltex and Kasha, in 2000, the LLA followed that approach. See the quoted paragraphs from its judgment set out in paragraph [13] above. The LLA at that time thought that a more liberal interpretation of main order household foodstuff requirements could be adopted consistent with the object of the Act.
[74] That liberal policy was rejected by Judge Unwin and his colleagues, as we have seen. Again, it is noticeable that in the Woodward case the LLA saw the liberal interpretation of the standard as causing a mischief and in that sense conflicting with the purpose of the statute. See paragraphs [43], [46] and [47] particularly in the paragraphs of the judgment set out in paragraph [15] above. In my view there was no need for the LLA to justify the shift in interpretation by a comparison between s 5(j) of the 1924 Acts Interpretation Act with s 5(1) of the 1999 Interpretation Act. I doubt that there was any substantive change intended by the reformulation of the basic principle of statutory interpretation in s 5(1). However, it was entirely appropriate, for the LLA to consider the application of the test against the statute’s purpose. Ambulatory interpretation usually places a stress on concepts used in the text. The text is given a liberal interpretation. The danger is that that interpretation will not achieve the purpose of the Act. The problem is compounded where there is doubt as to the purpose of the statutory provision. In Woodward and since the LLA has returned to a more literal and thereby narrower interpretation and restrictive application of the test. It has retreated back to the original approach of the LLA in
1990 in Douglas Oliver Corporation summarised in paragraph [16] of the Caltex and Kasha decision.
[75] The LLA since Woodward was entitled to reject an ambulatory approach because it was concerned that such an approach would not advance the purpose of the Act. The LLA, and this Court, have an ongoing duty to promote the object of the Act. It is set out in s 4(2) of the Act:
4 Object of Act
(1) The object of this 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.
(2) The Licensing Authority, every District Licensing Agency, and any Court hearing any appeal against any decision of the Licensing Authority, shall exercise its jurisdiction, powers, and discretions under this Act in the manner that is most likely to promote the object of this Act.
[76] Mr Taylor criticised the change in interpretation and application of s 36(1)(d)(ii) by this LLA as making policy, that being something that should be left to Parliament. But the same proposition can be laid against the decision of the LLA
in Caltex and Kasha. That decision in turn was moving away from a more restrictive interpretation of the test.
[77] There have been three policy positions taken by the LLAs:
1.The 1990 interpretation that main order foodstuffs reflects the sort of goods that a family would purchase in a once a week order from a supermarket or grocery. Douglas-Oliver Corporation (Decision
9/90).
2.The 2000 ambulatory interpretation reflecting the change in social circumstances encouraging convenience stores and the purchase of part of pre-prepared meals and other “convenience” foods which did not require making, in Caltex and Kasha.,
3.The 2008 return to the restrictive interpretation based on the traditional once a week purchase of groceries (the main order).
[78] In my view these shifts reflect the ability to make policy inevitably delegated by Parliament to the LLA. It has not been delegated by Parliament to the High Court. The task of the High Court on appeals of errors of law is to keep the LLA within the bounds set by Parliament. It is not the task of the High Court to take over the application of standards, and the development of policy within that function, delegated by Parliament to the LLA.
[79] That in itself is a reason why it is not necessary for this Court to consider whether the ambulatory, and modified ambulatory approaches are correct or not. Rather, what this Court is finding is that the very notion of whether the LLA has been correct or not is asking the wrong question. The only question is whether or not the Victoria decision made by the LLA was infected with any material error of law. I am satisfied, after hearing two days of argument of considerable quality from all counsel, that the LLA has not fallen into error. It is not obliged to follow an ambulatory approach, where it considered such an approach lead to consequences contrary to the object or purpose of the Act. It was entitled to revert to the original
policy of application squarely placing the standard of main order foodstuff requirements against the traditional once a week shop. This was its concern. See again paragraph [47] of its decision, set out in paragraph [15] above.
[80] The appeal is dismissed. Costs are reserved. I am inclined to the view that the parties should all bear their own costs. This was an appropriate case for the appellant, probably supported by other Night ‘n Day franchise holders, to bring to the High Court. I will, however, receive argument to the contrary if the police or the Agency wish to pursue an application for costs.
Solicitors:
Katie Lane Law, Dunedin, for Appellant
Buddle Findlay, Christchurch, for First Respondent
Raymond Donnelly & Co, Christchurch, for Second and Third Respondents
Crown Law, Ellington, for Liquor Licensing Authority
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