Lyger Investments Limited v Young
[2018] NZHC 3222
•7 December 2018
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2018-470-167
[2018] NZHC 3222
UNDER the Sale and Supply of Alcohol Act 2012 IN THE MATTER OF
an appeal pursuant to section 162 against a decision of the Alcohol Regulatory and
Licensing Authority
BETWEEN
LYGER INVESTMENTS LIMITED
Appellant
AND
GARETH NORMAN EDWARD YOUNG
First Respondent
COMMISSIONER OF POLICE
Second Respondent
Hearing: 5 December 2018 (last submission received 7 December 2018) Counsel:
R L M Davies for applicant A J Pazin first respondent
R W Jenson for second respondent
Judgment:
7 December 2018
JUDGMENT OF KATZ J
[Stay application]
This judgment was delivered by me on 7 December 2018 at 3:00 pm pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Harkness Henry, Hamilton
Buddle Findlay, Wellington
Pollett Legal Limited, Tauranga
LYGER INVESTMENTS LIMITED v YOUNG & COMMISSIONER OF POLICE [2018] NZHC 3222
[7 December 2018]
Introduction
[1] Lyger Investments Limited (“Lyger”) operates a nightclub in Tauranga known as the Bahama Hut. On 26 October 2017, Lyger applied to the Tauranga District Licensing Committee (“Committee”) to renew its on-licence for the Bahama Hut. The Commissioner of Police (“Commissioner”) and the Tauranga District Licensing Inspector (“Inspector”) both opposed the renewal application.
[2] After hearing from the parties, the Committee granted the renewal, albeit for 17 months (until February 2019) rather than three years, and subject to stringent conditions. That decision was overturned on appeal by the Alcohol Regulatory and Licensing Authority (“Authority”). The Authority determined that the renewal should not have been granted and has directed that the Bahama Hut’s on-licence will expire on 10 December 2018.
[3] Lyger has filed an appeal against the Authority’s decision. It seeks a stay of the decision pursuant to s 153 of the Sale and Supply of Alcohol Act 2002 (“Act”) until its appeal is heard and determined. The stay application is opposed by both the Commissioner and the Inspector.
Background
[4] The Act puts in place a system of control over the sale and supply of alcohol, for the benefit of the community as a whole.1 The object of the Act is to ensure that the sale, supply, and consumption of alcohol is undertaken safely and responsibly, and to minimise the harm caused by the excessive or inappropriate consumption of alcohol.2 The harm caused by the excessive or inappropriate consumption of alcohol includes:3
(a)any crime, damage, death, disease, disorderly behaviour, illness, or injury, directly or indirectly caused, or directly or indirectly contributed to, by the excessive or inappropriate consumption of alcohol; and
1 Sale and Supply of Alcohol Act 2002, s 3.
2 Section 4(1).
3 Section 4(2).
(b)any harm to society generally or the community, directly or indirectly caused, or directly or indirectly contributed to, by any crime, damage, death, disease, disorderly behaviour, illness, or injury of a kind described in paragraph (a).
[5] In deciding whether to approve the renewal of a licence, the Committee must have regard to a range of matters, including:4
(a)the object of the Act;
(b)the suitability of the applicant;
(c)the days on which and the hours during which the applicant proposes to sell alcohol;
(d)the design and layout of any proposed premises;
(e)whether (in its opinion) the amenity and good order of the locality would be likely to be reduced, to more than a minor extent, by the effects of the issue of the licence;
(f)whether the applicant has appropriate systems, staff, and training to comply with the law; and
(g)any matters dealt with in any report from the Police, an inspector, or a Medical Officer of Health made under section 103.
[6] On 19 July 2018, the Committee granted Lyger’s renewal application, by a margin it described as “very close indeed”.5 The renewal was subject to various conditions and undertakings. The Committee expressed a number of serious concerns
4 Sections 131(1) and 105(1)(a)–(b), (d)–(e), (h), and (j)–(k).
5 In the matter of an application by Lyger Investments Limited 21/ON/22067/2018, 19 July 2018 (“Licensing Committee decision”).
about the operation of the Bahama Hut. The key concerns (as summarised by the Authority in its subsequent appeal decision) included:6
(a)“significant deficiencies uncovered within the business as to its levels of formal training, training manuals and policies”7 which were “inexcusable”;8
(b)“overloading and the installation of a ‘cage’” not being “the actions of a responsible and competent licensee”;9
(c)being “dismayed” to find that an additional bar had recently been installed downstairs such that “any credit gained for moving the bar upstairs has now been compromised”;10
(d)it being “unacceptable” that door staff were not properly trained, managed and operating within the law;11
(e)Mr Gordon (a director and shareholder of Lyger) being “sadly mistaken” in his belief that his staff are trained to assess intoxication under the conditions in the premises, including the darkened dance floor;12
(f)Mr McCarthy’s (the Venue Manager of the Bahama Hut’s) knowledge of occupancy numbers as being “naive and unprofessional”;13
(g)it being “unbelievable” that Mr Gordon and Mr McCarthy allowed the head of security to have his 15/16-year-old brother with him on the door late at night for nearly a year;14 and
6 Young v Lyger Investments Limited [2018] NZARLA 299-300 (“Authority Decision”).
7 Licensing Committee decision, above n 5, at [207].
8 At [208].
9 At [201].
10 At [202].
11 At [209].
12 At [39].
13 At [71].
14 At [44].
(h)Mr McCarthy downplaying an incident where he received diversion for an assault on a patron.15
[7] The Committee expressed particular concern that CCTV evidence showed “systematic thuggery on the part of the door staff”, noting that “[t]his should never had occurred in the first place if the team was properly trained and managed by Mr Gordon and his managers. They failed to recognise the issue in its infancy and deal with it effectively”.16
[8] The “very poor record keeping and a lack of policies in place for staff and management” was also an area of concern. The Committee stated that:17
…These safeguards are designed to keep abreast of the risk factors of being in business and to guide and support staff when things go wrong as they will do from time to time in most businesses. We note for the record that Mr Gordon has recently had prepared or written a suite of policies and procedures.
[9] The Committee expressed its surprise that Lyger holds a Hospitality NZ membership “but clearly, they did not think that they required the support and guidance that this valuable organisation offers”.18
[10] In light of the various areas of concern identified, the Committee observed that:19
We suspect the regulatory agencies will be keeping a very close eye on the operation of Bahama Hut…No doubt, if offences are detected, conclusive evidence will be gathered and put before [the Authority] by way of enforcement actions or to the [Committee] for regulatory action.
[11] The Committee was not satisfied that the sale, supply and consumption of alcohol at the Bahama Hut was being undertaken safely and responsibly. Nor was the harm caused by the excessive or inappropriate consumption of alcohol being minimised. In the Committee’s view, the operation of the Bahama Hut was contributing to alcohol-related harm being experienced in the Hamilton Street area of
15 At [83].
16 At [220].
17 At [221].
18 At [222].
19 At [219].
Tauranga, and was adversely affecting the amenity and good order of the area by more than a minor extent.
[12] Nevertheless, the Committee was prepared to renew the on-licence for the premises. In essence, the Committee was satisfied that its concerns regarding the operation of the Bahama Hut could be mitigated by the imposition of “several conditions that we think are necessary to ensure compliance with [the] Act”.20 Notably, the Committee reduced the Bahama Hut’s hours of operation, requiring it to close at 2.00 am rather than 3.00 am. It also required undertakings from Lyger that it would have a full audit of various policies and procedures undertaken by Hospitality NZ (or a similar consultancy); that it would implement formal training for all staff; that a dedicated certificated manager (not Mr McCarthy) would be on duty and responsible for compliance with the Act; that staff would be trained on identification of intoxicated persons; that a trespass notice system would be implemented and strictly enforced; and that a comprehensive incident report form would be developed and used (and that any incident reports would be forwarded to the relevant regulatory agencies).
[13]The Committee concluded that:21
We suspect this will be a severe wake up call for Mr Gordon and his team. He needs to fully comprehend that alcohol is no ordinary commodity and it is a privilege to hold a licence to sell alcohol, not a right.
[14] In summary, although the Committee was of the view that the object of the Act could not be met by the application as presented by Lyger, it was satisfied that it could be met if, in effect, a modified application was granted, including reduced licence hours and the imposition of a number of conditions and undertakings. The parties do not appear to have been consulted regarding the conditions that the Committee imposed (and whether such conditions would adequately address the concerns that had been identified).
[15] The Inspector and Commissioner appealed the Committee’s decision to the Authority. On 12 November 2018, the Authority allowed their appeals, thereby
20 At [226].
21 At [237].
reversing the Committee’s decision.22 It directed that Lyger’s on-licence for the Bahama Hut would expire at 3.00 am on Monday 10 December 2018. (The effect of allowing the appeal was that the various conditions imposed by the Committee, including the earlier closing time of 2.00 am, were no longer in force).
[16] The Authority noted that it was apparent that the Committee was of the view that the object of the Act could not be met by the renewal application as presented by Lyger, but that it could be met by the application if it were subject to shorter licence hours and a number of conditions and undertakings.23 It identified the central issue in the appeal as follows:24
More precisely, the primary issue in this appeal is whether having formed the view that the application did not meet the object of the Act should the [Committee] have declined the application at that point, or was the [Committee] able (unilaterally) to ‘cure’ the deficiencies it saw with the application through the imposition of conditions thereby enabling the renewed licence to be issued?
This issue turns on whether the imposition of conditions forms part of the [Committee] standing back and considering whether the application is consistent with, or capable of meeting the object of the Act. Or, is the [Committee]’s imposition of conditions a step that can only be taken if a [Committee] considers that the application is, on balance, capable of meeting the object of the Act?
[17] The Authority’s view was that the imposition of conditions on a licence is a subsequent consideration for a Committee, after it has first determined that the application is capable of meeting the object of the Act. Accordingly, the power to impose conditions should not be used to “cure” an otherwise defective application (one that does not meet the object of the Act). The appeal was accordingly allowed.
[18] Lyger now appeals the Authority’s decision to this court. It seeks a stay of the decision pending the hearing of its appeal. In the absence of a stay it will need to close the Bahama Hut on 10 December 2018, until its appeal is heard and determined.
22 Authority Decision, above n 6.
23 At [79].
24 At [83]–[84].
Legal principles
[19]Section 153 of the Act relevantly provides as follows:
153 Effect of appeal against other decisions
…
(2) A decision to which this section applies has effect during the period allowed for filing an appeal against the decision and, if an appeal is filed against the decision, also has effect while the appeal is pending.
(3) However, the appellate tribunal may, on its own initiative or on an application made for the purpose, order that a decision to which this section applies is not to have effect while the appeal is pending.
(4) Despite subsection (3), an appellate tribunal may not make an order under that subsection in relation to a decision made under section 286 (which relates to the suspension of licences for non-compliance with public health or fire precaution requirements).
(5) Where an appellate tribunal makes an order under subsection (3) in relation to a decision to refuse to renew, … any licence … the licence … must, if the appeal is not finally determined on or before the expiry of the licence … be deemed to be extended until the final determination of the appeal.
[20] In Cats Niteclub (1991) Ltd v the Police, Hansen J confirmed that the Court’s discretion in relation to stay applications in this context is wide-ranging.25 The onus is on the applicant to satisfy the Court that a stay should be granted. His Honour noted that:26
... this Court is unlikely to grant the suspension unless it is satisfied the appeal is bona fide; unless it is satisfied that there is some substantive merit in the appeal; and unless the consequences of the appeal are such it would be completely unjust not to allow the suspension.
[21] In DJM Enterprises Timaru v McCrostie, Chisholm J observed that27 when deciding whether or not to grant a stay it is necessary for the Court to balance competing considerations, including those set out in Dymocks Franchise Systems
25 Cats Niteclub (1991) Ltd v Police [1996] 3 NZLR 581 (HC) (this decision was under s 147A of the former Act). See also Ka Pai Kaiti Trust v Kaiti Club Hotel Ltd [2018] NZHC 1332.
26 At 584.
27 DJM Enterprises Timaru Ltd v McCrostie HC Timaru CIV-2007-476-581, 5 December 2007 at [7].
(NSW) Pty Ltd v Bilgola Enterprises Ltd).28 The factors identified in Dymocks were summarised in that decision as follows:29
(1)If no stay is granted will the applicants’ right of appeal be rendered nugatory?
(2)The bona fides of the applicants as to the prosecution of the appeal.
(3)Will the successful party be injuriously affected by the stay?
(4)The effect on third parties.
(5)The novelty and importance of the questions involved.
(6)The public interest in the proceedings.
(7)The overall balance of convenience.
[22]The factors identified in Dymocks are non-exhaustive.30 Other factors that may
be relevant to the exercise of the Court’s discretion in this case include:
(a)The apparent strength of the appeal.31 (A stay will not be granted if there is no real prospect of the appeal succeeding).32
(b)The reasons given by the Authority (as a specialist Tribunal) for refusing the application.33
(c)Operational concerns and the seriousness of them. (Where there are operational concerns, the Courts are less likely to grant a stay.)34
(d)The timeframe of the stay operating (the likely delay until the appeal is heard and a decision given).35
28 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (CA).
29 At [9].
30 Property Ventures Investments Limited v Commissioner of IRD [2010] NZCA 217, (2010) 20 PRNZ 757 at [11].
31 Property Ventures Investments Limited v Commissioner of IRD, above n 30, at [11], based on Body Corporate No 188529 v North Shore City Council (No 6) HC Auckland CIV-2004-404-3230, 11 February 2009.
32 McCarthy Enterprises Ltd v Paulin [2016] NZHC 2316.
33 Three Bros Limited v Rotorua District Licensing Agency HC Rotorua (1999) M76/99 18 August 1999 at 6.
34 Three Bros Limited v Rotorua District Licensing Agency, above 33, at 1 and 5.
35 See for example Linwood Food Bar Limited v Davison [2014] NZHC 2062, [2014] NZAR 1277 at [15].
(e)Evidence of hardship in the absence of a stay is not enough36 (it will often be the case that the refusal to renew a licence will cause some degree of hardship). Evidence of serious financial difficulties arising in the absence of a stay (for example impending liquidation, bankruptcy, job losses) may, however, be relevant.37 Ultimately, however, the licensee’s commercial interests are subject to the object of the Act.38
(f)That a stay may improve, rather than preserve, the position of a party can be relevant.39
[23] It is also important that the Court keep in mind that there is no presumption that a licence will be renewed.40
[24] The key factors focussed on by the parties were whether Lyger’s appeal is bona fides; the merits of its appeal; whether the appeal will be rendered nugatory if a stay is not granted; the financial impact on Lyger of not granting a stay; and the risks of alcohol-related harm if the stay is granted. I will address each issue in turn, before standing back and considering whether, viewing all matters in the round, the Court should exercise its discretion to grant a stay.
Lyger’s bona fides
[25] The Inspector submitted that the appeal is not being brought bona fide. Rather, Ms Pazin submitted, there is a “hidden agenda” behind the appeal and stay application, namely to keep the Bahama Hut business “on life support” until a new applicant can take over. Ms Pazin referred to evidence that in September 2018, Mr Gordon advised
36 L & H Graces Place Mangere Limited v Abbott [2017] NZARLA 395 at [31].
37 Pizza on the Run Limited v Abbott [2017] NZARLA 242 at [24]; Avondale Peninsula Hotel Limited v Police HC Auckland HC 130/96, 24 October 1996 at 5.
38 Medical Officer of Health (Wellington Region) v Lion Liquor Retail Ltd [2018] NZHC 1123, [2018] NZAR 882 at [50]–[51]. It confirmed the decision in Re Lion Liquor Retail Ltd [2016] NZDLCWN 1572.
39 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377, (2017) 23 PRNZ 598 at [21].
40 Medical Officer of Heath (Wellington Region) v Lion Liquor Retail Limited, above n 38, at [46(a)] citing Christchurch Medical Officer of Health v J & G Vaudrey Ltd [2015] NZHC 2749, [2016] 2 NZLR 382 at [55].
that he intended to convert the premises into a different operation under a new company, pursuant to a new licence application. At that time, Lyger was seeking that the appeals by the Commissioner and Inspector against the Committee’s decision be adjourned, on the basis that those appeals would be rendered moot by a new licence.
[26] On 20 September 2018, the new applicant filed a licence application for a new operation at the premises. That application was rejected as incomplete for lacking the requisite building certificate. The new applicant applied for the required building certificate on 25 September 2018. It has not yet been granted, due to building issues at the premises. The Inspector is concerned that there are significant building issues and issues around fire safety at the Bahama Hut.
[27] Lyger denied that its appeal lacks bona fides, or that its appeal is being brought solely or primarily for tactical reasons. Mr Davies submitted that there is substantial merit in the appeal. Lyger’s current intention is to pursue its appeal through to a determination.
[28] I have not been persuaded that the appeal lacks bona fides. In my view, there is nothing inherently improper in Lyger having and pursuing a “plan B”. There is (obviously) no guarantee that Lyger will succeed in its appeal. It is therefore in the company’s best commercial interests to explore other avenues to preserve shareholder value. Other options being explored or pursued by Lyger may ultimately supersede the need for the present appeal, or they may not, depending on a range of factors (including whether the new applicant succeeds in obtaining a licence). At this stage, however, there is insufficient evidence to persuade me that the appeal lacks bona fides.
The merits of the appeal
[29] The key issue on appeal will be whether the Authority erred in law in determining that the Committee was wrong to find that an application’s non-compliance with the object of the Act could be cured by the imposition of conditions and undertakings.
[30] It is difficult at this preliminary stage, in the context of a stay application argued and determined in circumstances of urgency, to fully and fairly assess the
strengths of the appeal. As Ms Pazin accepted, however, the appeal raises a legitimate question of law. Further, Lyger was successful at first instance. Its appeal is clearly arguable.
[31] Ms Pazin submitted that, even if Lyger were to win on the legal issue, it would not necessarily follow that it would succeed in having its licence re-instated. Indeed, she went so far as to suggest that there was no real prospect of the appeal succeeding to that extent, due to factual findings by the Authority that have not been challenged on appeal. Ms Pazin referred, for example, to findings related to the lack of staff, systems and training, as well as issues with the design and layout of the premises. Ms Pazin noted that the Court is generally reluctant to interfere with factual findings of a specialist tribunal such as the Authority. The High Court has observed that there is “necessarily a very high threshold” to such factual challenges.41
[32] Some of the factual findings identified by Ms Pazin (including those related to staff and training) would not necessarily be fatal to a successful appeal, given the Committee’s view that such matters could be addressed by the imposition of conditions. In respect of other matters, they may well impose additional hurdles to an appeal succeeding, but none of them appear to be a “king hit”. One possible outcome could be that the renewal application would need to be referred back to the Authority (or Committee) for further consideration, which may or may not ultimately result in the licence renewal application being granted.
[33] In conclusion, it is not possible to accurately assess the strength of the appeal at this preliminary stage, but I reject any suggestion that it is doomed to failure. The appeal raises a genuine legal issue on which the Committee and Authority differ. Success on that issue may (or may not) ultimately result in a different substantive outcome (ie the granting of the renewal).
41 Christchurch Medical Officer of Health v J & G Vaudrey Ltd, above n 41, at [17]. Other grounds are said to lack sufficient particularisation and/or have little substantive merits.
Will the appeal be rendered nugatory if a stay is not granted?
[34] In her oral submissions at the stay hearing, Ms Pazin submitted (somewhat in passing) that the appeal would likely be rendered nugatory if the stay were not granted. She noted, however, that this is only one factor to be considered, and is not determinative. In essence, her argument (as I understood it) was that if the stay is not granted then the licence will have expired prior to the appeal being heard. Ms Pazin suggested that, in such circumstances, a successful appeal could not then “revive” the expired licence.
[35] This argument had not been advanced by Mr Davies, in his submissions on behalf of Lyger. Nor was it included in Ms Pazin’s written submissions. My preliminary view (which I expressed to counsel) was that the argument did not appear to be supported by either case law (there are cases where appeals have been heard notwithstanding the prior expiry of a licence) or the overall legislative scheme. Nevertheless, I gave leave to the parties to file further submissions on the issue. Ms Pazin and Mr Davies both took advantage of that opportunity. Mr Jenson supported the submissions filed by Ms Pazin.
[36] In short, on further reflection, Ms Pazin withdrew her previous submission and said that it was not an accurate statement of the law. She explained why the appeal would not be rendered nugatory in the absence of a stay at some length (six pages of written submissions).
[37] Mr Davies, on the other hand, pursued the argument advanced by Ms Pazin orally at the hearing, and submitted that the appeal would indeed be rendered nugatory if a stay were not granted.
[38] I find Ms Pazin’s reasoning to be persuasive. Correctly interpreted, I do not believe that the Act requires that a licensee be effectively deprived of its second right of appeal (absent a stay) if the appeal cannot be heard and determined in the relatively brief period (a maximum of three months) prior to the licence expiring.
[39] In this case, the present position (in the absence of a stay) is that the terms of the licence as determined by the Authority apply, that is, the licence will expire on
10 December 2018. However, if the Authority’s decision is overturned on appeal (with or without a stay in the meantime) the result will be to “undo” the effect of the Authority’s decision on the licence (including the 10 December 2018 expiry date). In that event the licence will return to the previous terms and conditions (i.e. those following the Committee’s decision). Those terms and conditions include a 7 February 2019 expiry date. Accordingly, in order to protect its position going forwards, it will be necessary for Lyger to file a (further) renewal application, in order to ensure that its appeal is not rendered nugatory. Mr Davies indicated at the hearing that such an application would be filed.
Financial impact on Lyger of not granting a stay
[40] Lyger submitted that one of the key factors supporting a stay is the financial impact of the loss of the Bahama Hut on-licence on its business during the period between 10 December 2018 (when its current licence expires) and early next year when the appeal is likely to be heard (or some time later, given that any decision is likely to be reserved).
[41] Lyger has provided evidence that the financial effects on its business from being closed at what is the busiest time of year for the hospitality industry will be serious. The company’s accountant projects a loss of around $130,000 for the year ending March 2019 if the premises have to close. Revenue from the Bahama Hut operation comprises approximately 45 per cent of Lyger Investment’s total annual revenue. Without this revenue, the company believes that its other licensed premises may also be forced to close. Further, the employment of ten part-time workers is at risk. Those employees will lose income of approximately $4,400 per week if the premises are closed.
[42] The Inspector challenged the general nature and accuracy of the financial information provided by Lyger. Further, in terms of staff, Ms Pazin noted that the employees are all employed part-time, working between 3.5 hours and 25 hours per week maximum (at the busiest times). She suggested that other hospitality or retail roles in Tauranga would likely be available.
[43] Mr Jenson, for the Commissioner, supported the submissions of the Inspector and submitted that the matters of financial hardship raised by Lyger must be secondary to the need to meet the object and purpose of the Act (namely, minimising alcohol- related harm). Further, any possible impact on other licences held by Lyger ought to be disregarded. Mr Jenson submitted in his written submissions that:
…The fact that the applicant has set up its businesses in such a way that the collapse of one may drag down the others should not bolster its case on this particular licence, particularly in the circumstance where shortcomings in the management of the premises by the applicant have contributed to this outcome.
[44] Mr Jenson argued that the consequences to be considered in a stay context ought to be restricted to the direct consequences on the licence that is before the Court, not the indirect (and speculative) possible impact on licences that are not before the Court. This, he submitted, is consistent with the objects of the Act.
[45] As I have noted above, evidence of hardship in the absence of a stay is not enough. It will often be the case that the refusal to renew a licence will cause some degree of hardship. That is a natural consequence of an applicant failing to satisfy the Committee (or Authority) that a renewal is justified. Evidence of serious financial difficulties (for example impending liquidation, bankruptcy, job losses) may, however, be relevant.42 Ultimately, however, the licensee’s commercial interests are subject to the object of the Act.
[46] I accept in this case that the financial consequences for Lyger of having to close the Bahama Hut on 10 December 2018, and the associated job losses, are a relevant (but not determinative) consideration.
The alcohol-related harm that may be caused by the ongoing operation of the premises pending the appeal
[47]As noted above, relevant considerations in the stay context include:
(a)whether the successful parties will be injuriously affected by the stay;
42 Pizza on the Run Limited v Abbott, above n 37, at [24]; Avondale Peninsula Hotel Limited v Police,
above n 37, at 5.
(b)the effect on third parties;
(c)the public interest;
(d)the reasons given by the Authority (as a specialist Tribunal) for refusing the application; and
(e)operational concerns and the seriousness of them.
[48] A matter that arguably is relevant under all of these heads is the respondents’ submission that allowing the Bahama Hut to continue trading over the busy Christmas holiday period will significantly heighten the risk of alcohol-related harm, contrary to the object of the Act. As Ms Pazin put it, “granting a stay would enable extended ongoing trading of a problem premises”.
[49] Mr Davies challenged this assertion, and referred to affidavit evidence filed by Lyger to the effect that it has made a number of changes to its staff, systems and training since the decisions of the Committee and Authority were delivered. In particular, Lyger says that it has continued to work with its contracted security provider; installed CCTV to monitor the street outside the premises; moved Mr McCarthy from a general manager role to a promotions role; increased the “hands on” involvement of Mr Gordon and Mr Jenkins during high-risk trading times; and asked Hospitality NZ to review the company’s training systems.
[50] Ms Pazin submitted, in response, that the changes identified by Mr Davies have only been made very late in the piece, and only address a narrow range of the concerns identified by the Committee and Authority. In relation to the security provider, she noted that the provider had been changed prior to the Committee hearing, so this is not something new. Further, overhauling systems and policies is only effective if such systems and polices are implemented. Ms Pazin submitted that there is no evidence of such implementation. She also queried the claim that Mr McCarthy is no longer in an operational role, given that he was heavily involved in dealing with “the October incidents” referred to below, including allegedly falsifying an incident report in relation to one of them. As for Mr Jenkins, Ms Pazin queried whether his increased involvement would truly bring a fresh approach to the management of the Bahama
Hut, given that he has had a long-term involvement (albeit at a higher level) and is therefore implicated in the lack of systems and training criticised by the Committee. Overall, Ms Pazin submitted that the changes made by Lyger were simply “too little, too late”. She submitted that the Court cannot take comfort that there have been material changes in the management of the premises since the decisions of the Committee or Authority were delivered.
[51] Particular concern was expressed by the respondents that, if a stay were granted, Lyger could continue to sell alcohol at the premises until the appeal is determined, and potentially well beyond that if the matter was remitted to the Licensing Authority. Continued operation, especially over the busiest time of the year with greater risk of alcohol-related harm, and in the face of ongoing significant concerns, is contrary to what was expressly intended by either the Authority or the Committee. Ms Pazin noted that the Authority could have allowed Lyger to continue trading over the Christmas period, but elected not to do so. It determined that it would allow a period of less than one month (against the maximum of three months)43 for Lyger to continue trading because it was “conscious” that the “upcoming Christmas period heightens the risk of alcohol-related harm, contrary to the object of the Act”.44
[52] Ms Pazin further submitted that even the Committee (which was willing to renew the licence, and did so) was conscious of the need for Lyger to be subject to significantly increased scrutiny and assessment during the renewed licence period. It truncated the expiry (of the renewal) to 7 February 2018, and required Lyger to prove compliance with various undertakings and conditions at the time of any further renewal application.45 Ms Pazin submitted that granting a stay would therefore provide a significant advantage to Lyger, by securing ongoing trading well beyond these timeframes. It would not simply preserve Lyger’s position, it would improve it.
[53] Sergeant Trevor Brown swore an affidavit in which he outlined recent incidents (in October 2018) of apparent gross intoxication at the premises, together with other concerns. The respondents submitted that the incidents described by Sergeant Brown
43 Sale and Supply of Alcohol Act, s 135(2).
44 Authority Decision, above n 6, at [115]–[116].
45 See appendix 1 to the licence.
are evidence of Lyger’s apparent failure to comply with the undertaking it gave to report all such incidents to the Police and Council. Indeed, Sergeant Brown’s affidavit indicates that until spoken to by Sergeant Brown, Mr Jenkins (the manager of the premises) was completely unaware of the two incidents captured on CCTV, and stated that he should have been advised of them. At least one incident report appears to have then been completed retrospectively, with a false date.
[54] The respondents submitted that these events illustrate a continuation of concerning incidents at the premises, and an associated unwillingness or inability on the part of Lyger to effectively manage the premises in a manner that minimises the risk of alcohol-related harm occurring. The risk of such incidents continuing to occur, the respondents submitted, will inevitably increase during the busy summer period. The continued failings of Lyger, as recently as October, are said to give the respondents little confidence that the situation will improve over a peak period when the number of patrons and demand for alcohol at the premises will increase. Both the police and the Inspector are concerned that the systems that should be in place to monitor and control alcohol-related harm are still lacking. They submitted that management at the premises appear to be disengaged with the incidents that are occurring and/or have failed to report them in line with their earlier undertaking.
[55] In conclusion, the respondents submitted that there is a real likelihood of continued alcohol-related harm at the premises if a stay is granted, and that this mitigates strongly against the grant of such a stay.
[56] The Inspector also raised building and fire safety concerns relating to the premises. In particular, on 15 October 2018, the Fire Service wrote to the management of the premises raising several fire safety concerns. A fire safety engineer engaged by Lyger, however, appears to be of the view that the premises comply with all current regulatory requirements. I am unable to reach a view on this issue on the evidence before me, and therefore put it to one side.
Should the stay application be granted?
[57] I have addressed above all of the key arguments advanced by the parties either in support of, or in opposition to, the granting of a stay.
[58] I am satisfied that the appeal is being brought bona fide and that it has merit, in that the legal issue being advanced on appeal is clearly arguable. I am not in a position to assess the strength of the appeal beyond that. I also accept that closure of the Bahama Hut will have a significant financial impact on Lyger. In addition, third parties will be impacted, including in particular the part-time staff who will likely lose their jobs (unless they can be employed at one of the other venues operated by Lyger). Those staff may, or may not, be able to find alternative employment over the busy summer period. This is an unfortunate consequence of the manner in which Lyger has managed its premises, but is nevertheless a relevant consideration.
[59] On the other hand, both the Committee and the Authority have identified very serious operational concerns regarding the operation of the Bahama Hut in their decisions. Those findings (most or all of which have been appealed) must be given very significant weight. Further, the Authority had the option of allowing the Bahama Hut to continue in operation over the busy Christmas holiday period. It was not prepared to allow this, however, due to its concerns regarding the risks of on-going alcohol related harm. As specialist tribunals, the views of both the Committee and Authority deserve considerable respect from this Court.
[60] I also note that the Commissioner and the Inspector are both highly sceptical of the claims that the concerns previously identified have now been adequately addressed. On the evidence before the Court, their scepticism appears to be justified.
[61] Taking all of these matters into account, I am satisfied that granting a stay would likely enable the ongoing trading of a “problem” premises for at least four months or so over the busiest time of the year, with an associated significant increase in the risk of alcohol-related harm. That is contrary to the public interest, and the
object of the Act. As this Court has previously confirmed, the object of the Act outweighs a licensee’s commercial interests.46
[62] Overall, the applicant has failed to persuade me that a stay should be granted. On the contrary, the purposes and objects of the Act, the overall interests of justice, and the interests of the community will be best served by the stay being declined. The risk of ongoing alcohol-related harm if the premises remain open over the busy Christmas period is simply too high. The serious operational concerns identified by both the Committee and the Authority (as summarised at [6] to [9] above) significantly outweigh any potential hardship to Lyger.
Result
[63]Lyger’s application for a stay is declined.
[64] If costs cannot be agreed between the parties, then any memorandum on costs on behalf of the respondents is to be filed by 18 December 2018. Any memorandum on behalf of the applicant is to be filed by 30 January 2019.
[65] Given that I have declined the stay application it is imperative that the appeal now be heard as soon as reasonably possible. I accordingly direct that the appeal be set down for hearing in the Tauranga High Court at 10.00 am on 15 February 2018. I further direct that a case management teleconference be scheduled before me on 17 or 18 December 2018 to make timetable directions regarding the appeal. Counsel are to file either joint or separate memoranda by 4.00 pm on 13 December 2018 addressing the matters set out in Schedule 6 to the High Court Rules, and any other relevant matters.
Katz J
46 Medical Officer of Health (Wellington Region) v Lion Liquor Retail Ltd, above n 38, at [51].
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