McCarthy Enterprises Limited v Police
[2016] NZHC 77
•9 February 2016
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2015-412-000086 [2016] NZHC 77
BETWEEN MCCARTHY ENTERPRISES LIMITED
Appellant
AND
NEW ZEALAND POLICE Respondent
CIV-2015-412-000087
BETWEEN BONNIE JOY TUMAI TOTOREWA Appellant
ANDNEW ZEALAND POLICE Respondent
Hearing: 3 February 2016 Appearances:
P J Egden for Appellant
R P Bates for RespondentsJudgment:
9 February 2016
JUDGMENT OF VENNING J
This judgment was delivered by me on 9 February 2016 at 10.00 am, pursuant to Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Werner van Harselaar, Dunedin
Crown Solicitor, Dunedin
Copy to: P J Egden, Christchurch
MCCARTHY ENTERPRISES LIMITED v NZ POLICE [2016] NZHC 77 [5 February 2016]
[1] In a decision delivered on 31 July 2015 the Alcohol Regulatory and Licensing Authority (the Authority) suspended the off-licence held by McCarthy Enterprises Limited (McCarthy) in respect of premises at 460 Anderson’s Bay Road, Dunedin, known as Super Liquor Anderson’s Bay, for a period of 21 days. McCarthy appeals against that decision. The suspension was stayed pending
determination of the appeal.1
[2] In a decision delivered the same day the Authority suspended the manager’s certificate held by Bonnie Joy Tumai Totorewa (Ms Totorewa) in relation to the same incident at the premises for a period of one month. Ms Totorewa has served her period of suspension.
Background
[3] The agreed facts record the following. On Friday 24 October 2014 the Police, Dunedin City Council and Public Health South conducted a controlled purchase operation in Dunedin City to ascertain compliance with the Sale and Supply of Alcohol Act 2012 (the Act), and in particular as it related to the sale of alcohol to minors.
[4] At the time of the operation both volunteers were aged 16 years old. Neither volunteer carried identification into the licensed premises. Both volunteers had parental permission to take part in the operation.
[5] At approximately 9.30 pm both volunteers entered the licensed premises known as Super Liquor Anderson’s Bay situated at 460 Anderson’s Bay Road, Dunedin operated by McCarthy.
[6] The volunteers took a four pack of Fever brand ready to drink (RTD’s) from
the shelf and took them to the counter where Bonnie Totorewa was serving. Ms
Totorewa did not ask the age of the volunteers, nor did she ask for identification.
1 In fact the company served three and a half days’ suspension before the stay was granted.
[7] The volunteer Gemma tendered $20 cash and was given $10 change. The volunteers then left the premises with the alcohol.
[8] At the time the duty manager of the premises was Bonnie Totorewa.
Preliminary matter – further evidence
[9] McCarthy seeks to lead evidence of hospital records confirming Ms Totorewa visited the hospital that night and second, to admit a certified copy of her birth certificate establishing that at the relevant time she was 20 years of age. (In its decision the Authority mistakenly referred to her as being 19 years old).
[10] Under s 161(4) of the Act the Court has full discretionary power to hear and receive further evidence on appeal. While the evidence could have been put before the Licensing Authority, it is a matter of record. Mr Bates did not oppose its admission. The evidence is admitted for the purposes of this appeal.
Submissions
[11] Mr Egden accepted that while a licensee such as McCarthy in this case is required to take all reasonable steps to ensure it and its employees comply with the Act, simply because an employee breached the Act does not mean that a licensee should face an automatic sanction. The question to be asked in each case is whether the licensee could have done more to prevent a breach of the Act by its employee. Put another way, the “sound management” principles in the Act required a licensee to take all reasonable steps to ensure it and its employees comply with the Act and McCarthy had done so in this case.
[12] He submitted the Authority did not specifically turn its mind to the issue of whether it was desirable that suspensions should be imposed in this case. The Authority incorrectly seemed to consider there were no procedures in place for a manager on her own (such as Ms Totorewa) to take toilet breaks or have meal breaks despite the fact Mrs McCarthy, the principal of McCarthy, had explained in evidence that in those cases staff are to lock the door. Further, while the Authority had suggested the procedure Mrs McCarthy had in place to prevent illegal sales was “a
little simplistic” Mr Egden submitted there was evidence from Mrs McCarthy about a number of steps McCarthy had taken to comply with the Act since an earlier breach in 2012.
[13] Mr Egden submitted it was reasonable to conclude that, were it not for Ms Totorewa suffering a head injury and concussion immediately prior to the sale, it was highly unlikely the breach would have occurred. He noted that in a number of previous decisions the Authority had found that unexpected events had led it to a conclusion that, despite a breach of the Act, it was not desirable to impose suspension.2
[14] In the alternative, Mr Edgen submitted the period of suspension was excessive.
Decision
[15] The application for suspension of McCarthy’s licence was made under s 280 of the Act. As relevant that section provides:
280Variation, suspension, or cancellation of licences other than special licences
(1) Any constable or any inspector may at any time apply to the licensing authority for an order—
…
(3) The grounds on which an application for an order may be made are as follows:
(a) that the licensed premises have been conducted in breach of any of the provisions of this Act or of any conditions of the licence or otherwise in an improper manner:
(b) that the conduct of the licensee is such as to show that he or she is not a suitable person to hold the licence:
2 Lower Hutt Liquor Limited v Alana Cusin [2012] NZLLA PH1141-1142; Sargent v Lower Hutt Liquor Limited [2014] NZARLA 335 (2 June 2014); and Tutty v Te Awamutu Wines & Spirits (1998) Limited [2006] NZLLA 558.
(c) that the licensed premises are being used in a disorderly manner so as to be obnoxious to neighbouring residents or to the public.
…
(5) If the licensing authority is satisfied that any of the grounds specified in subsection (3) is established and that it is desirable to make an order under this section, it may, by order,—
…
(c) suspend the licence for such period not exceeding 6 months as the licensing authority thinks fit; or
(d) cancel the licence.
(6) Instead of making an order under subsection (5), the licensing authority may adjourn the application for any period it thinks fit to give the licensee an opportunity to remedy any matters that the licensing authority may require to be remedied within that period.
[16] The grounds relied on in the present case were that the licensed premises had been conducted in breach of a provision of the Act, namely by the sale of alcohol to minors. The breach was effectively admitted. As a result s 280(5) applied. As one of the grounds specified in s 280(3) was established then if the Authority was satisfied it was desirable it could make an order suspending the licence.
[17] It is apparent that although s 280(3) talks of the licensed premises having been “conducted” in breach of the Act a single instance of conduct amounting to an offence under the Act will support an application: Christchurch District Licensing Agency Inspector v Karara Holdings Ltd.3
[18] A number of considerations may influence whether it is desirable to suspend a licence. As the Court of Appeal observed in Karara Holdings Ltd:
[40] … The purpose of the power of suspension and cancellation under the Act, as it indicated, is to enforce proper standards of conduct by licensees of their licensed premises in the public interest. The powers may be applied as a consequence of conduct that is in breach of the law, as s132(3)(a) specifically allows, but that does not mean that the powers are criminal in nature. …
[41] … The purpose of Part VI in general and s132 in particular in the scheme of the Act is to maintain the integrity and effectiveness of the
3 Christchurch District Licensing Agency Inspector v Karara Holdings Ltd [2003] NZCA 96.
licensing system through management compliance with standards. Provided the use of the power is within the scope of that purpose it is authorised by the Act. Whether the effect, from a licensee's perception, is disciplinary or even punitive is then irrelevant as long as it is merely an incidental effect to the genuine use of the power for the authorised purpose. …
[19] The object is to maintain the integrity and effectiveness of the licensing system. An important feature of that is the control of the sale of liquor to minors.
[20] In the present case the appellant McCarthy essentially argues that there were sufficient management controls and processes in place and that the breach of the Act in this case is explained by Ms Totorewa, the duty manager, being momentarily distracted and affected by an injury she sustained to her head.
[21] Ms Totorewa gave evidence that, after serving a customer at about 9.20 pm she went to the storeroom and opened the garage door slightly and squatted down to have a cigarette. As she finished she saw some rubbish behind the skip, lent forward to grab it but fell forwards and hit her head on the garage door. She fell back a bit and sat down as she felt light-headed and nauseous. She then went back to the office to see if it was as bad as it felt and to wipe away some blood from her head.
[22] It was about this time the customers (including the volunteers) walked into the store around 9.30 pm. She served them and accepts she was not doing her job properly and did not ask for ID. She said normally that she would have, not because the person (Gemma) looked under 18 but because she looked under 25. She then dealt with another customer who she asked about an ID.
[23] Shortly afterwards the policeman and another person entered the store and advised her that she had just served a minor in an operation. She said she was asked how old she thought the person looked and said 19. She said that while talking to the policeman she still felt light-headed. The policeman helped her by breaking the ice at the bottom of the freezer in the storeroom and said she should put it into a bag and hold it against her head. She served other customers and closed the store as soon as it was possible. She then had her mother pick her up and drive her to hospital and she could not remember where she had left the bag of ice. She continued to the
hospital and was seen at 11.30 pm. She said she had a headache and felt ill but the doctor did not consider she suffered a bad concussion and just needed to go home.
[24] Ms McCarthy gave evidence of the steps taken by McCarthy to ensure compliance with the Act. The company has zero tolerance for managers who breach the Act (with the exception of Ms Totorewa because of her injury). New staff are inducted to the policies and expectations and must sign an acknowledgement of their responsibilities. That is renewed each quarter. Staff training is ongoing. Staff are put through courses to obtain manager’s certificates. Incidents are recorded and assistance provided to police. A till prompt asks for date of birth before a sale can be completed.
[25] Despite the evidence for McCarthy, there are aspects of the licensee’s management and supervision of the premises in this case which support the conclusion that is desirable for there to be a suspension. While McCarthy has taken some steps to address its obligations since a previous breach of the Act, even on its case, the procedures around breaks and staffing contributed to this offence.
[26] The procedures were insufficient to provide appropriate support for the manager for toilet breaks, meal breaks or emergency situations. Ms Totorewa was only 20 years old, six and a half months pregnant, managing the premises by herself after 9.30 at night. The injury occurred in circumstances where Ms Totorewa was taking a break but had left the premises open for business rather than locking it.
[27] Next, the breach occurred after Ms Totorewa overrode the computer prompt to verify the purchaser’s age. In response to questions from the Authority as to computer prompts Ms Totorewa said:
A. Then scan the product and then the, “Date of birth” pops up and the
you put it in –
Q. How do you, how does the “Date of birth,” do you have to key it in?
A. Yes, so you scan the object and then it will pop up saying, like you can’t proceed with the sale if you haven’t put in the date of birth. So then if you had have asked for ID then you put the date of birth in, press “Enter” and it says, oh, yeah.
Q. But if you use the F2 button, where would you use that?
A. So you just press F2 and it just goes away and then it just makes the sale a wee bit quicker.
Q. So on this particular case, tell me how it happened.
A. I scanned the product, pressed F2 and then you press it again to get to the paying stage, so pretty much just scan it, F2, F2, and then go down to whatever they’re paying with, cash or Eftpos, in this case it was cash so it was very quick, easy lot, at the time it was, just get everybody served and out of the store so I could go to the hospital to make sure that me and my baby were all right.
[28] Ms McCarthy was also asked about the F2 button. She responded in the following way:
Q. At paragraph 10 of your brief of evidence Mrs McCarthy you say that you have a till prompt in all of your stores.
A. Correct.
Q. Which asks for a date of birth before a sale can proceed. A. Mhm.
Q. But you then go on to say this can be overridden by pushing the F2 button. In what circumstances does that happen then?
A. Okay. To explain a little bit, and we don’t write the point of sale system and, so we can’t, they say they can’t do nothing about that. An F2 button is used a lot to clear things and it’s just, if something is not working F2 seems to fix it, so it, the instructions to all staff are it is not to be overridden. If you haven’t asked for ID we have a set date of birth that we put in, if you have asked for ID you must put in the actual date of birth.
Q. Well in what circumstances does one ask for ID? A. If one person in front of you looks under 25 –
Q. Well these are 16.
A. That’s, yeah, we understand that. In normal circumstances and this is why Bonnie is still in our employ, anyone else that has served a minor has been instantly dismissed. Because of Bonnie’s head injury and because of her physical state after that she is still in our employ. In normal circumstances and I’ve seen Bonnie serve many, many people this would never have happened.
[29] While I accept that McCarthy may not be able to change the software, the prompt system can readily be overridden as it was by Ms Totorewa in this case. At the very least the written instructions to staff should direct them not to override the
system in that way. Further, the ease by which Ms Totorewa overrode the prompt and her attitude towards it suggests it was not an unusual practice.
[30] As for the suggestion that Ms Totorewa was distracted there is evidence that points the other way, namely that Ms Totorewa adopted a proper process when she served the second customer. There is also the evidence of Sergeant Paulin that when he spoke to Ms Totorewa shortly after the breach, while he noticed a small graze to her forehead it was not a significant injury and her responses were perfectly clear. She did not appear to be affected by the injury. That is consistent with the report from the hospital recording that she was discharged after being seen. I consider the appellants have overemphasised the effect of Ms Tarawera’s injury on her behaviour.
[31] Also relevant is that the appellant had been the subject of a previous application for suspension: Paulin v Mosgiel Super Liquor,4 a company also under the control of the appellant. In the course of that decision Judge Hole had stated:
[10] It is no coincidence that the problems associated with these applications have arisen. The licensee, who gives the impression of being a very experienced and concerned licensee, was inclined to blame inexperienced staff members for the problems that have arisen. Issues arising out of these incidents which the licensee needs to address are:
(a) The rapid increase in the size of the entire business with the corresponding need to put in place systems appropriate to that sized business to avoid breaches of the Act occurring in respect of its premises;
(b) Appropriate supervision of staff;
(c) Appropriate appointment procedures for the employment of staff;
(d) Procedures to prevent underaged persons entering supervised premises even before they attempt to purchase liquor; and
(e) Any further measures which may arise as a result of discussions with the Inspector, the Police, the franchisor and the licence holder.
…
[12] Should, after the date of this decision, further breaches of the Act occur in respect of any of the premises owned and operated by the
4 Paulin v Mosgiel Super Liquor [2012] NZLLA 1409.
licensee, then the Authority would be entitled to deal with future transgressions on a cumulative basis as this would involve unresolved systemic problems.
[32] In that case the licence was suspended for 24 hours. Apart from that case, there have been three other instances of breaches of the Act by the sale of liquor to minors from premises operated by McCarthy, with the most recent in 2012 from the same premises in Anderson’s Bay.
[33] That leaves the issue of penalty. Counsel were unable to point to any other authority where a suspension of 21 days had been imposed on a licensee. I agree with Mr Bate’s submission that the closest case is Staub v NK Sahay Limited & Kumar.5 That involved a second breach within a period of four years by a licensee controlled by the same businessman.
[34] In fixing the penalty the Authority was entitled to take into account the previous history of McCarthy. As noted, and even taking account of Mr Egden’s submissions as to the extent of McCarthy’s business, this was a second controlled purchase operation failure at Super Liquor Anderson’s Bay premises, the first being in December 2012, less than two years earlier. However, while I am satisfied it was desirable for McCarthy’s license to be suspended, I consider that, given the steps more recently taken by McCarthy to comply with the Act, the suspension for 21 days was too harsh. A lesser period is sufficient, even bearing in mind the maximum period of suspension is six months.
Ms Totorewa’s appeal
[35] Ms Totorewa’s manager’s certificate was suspended under s 285 of the Act. She had failed to conduct the premises in a proper manner by selling alcohol to minors. It is of particular concern that she so readily overrode the computer prompt.
Her appeal will be dismissed.
5 Staub v NK Sahay Limited & Kumar [2015] NZARLA PH 598-599.
Result
[36] The appeal by McCarthy is allowed to the extent that the period of suspension is reduced to 10 days. As McCarthy has already served three and a half days’ suspension, the suspension is to apply from 8.00 am Monday, 15 February
2016 until 12.00 pm Sunday, 21 February 2016.
[37] The appeal by Ms Totorewa is dismissed.
Venning J
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