Meads Brothers Limited v Rotorua District Licensing Agency

IN THE COURT OF APPEAL OF NEW ZEALAND

CA46/01

BETWEEN	MEADS BROTHERS LIMITED
Appellant

AND	ROTORUA DISTRICT LICENSING AGENCY
First Respondent

AND	NEW ZEALAND POLICE
Second Respondent

Hearing:	23 April 2001
Coram:	Thomas J Keith J Blanchard J
Appearances:	G D S Taylor for Appellant J P Temm and A J Gordon for Respondents J A Oliver for Liquor Licensing Authority
Judgment:	30 April 2001

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

This is an application for special leave to appeal from the High Court under s150(3) of the Sale of Liquor Act 1989 (the Act). This Court may in its discretion grant special leave if in the Court’s opinion “the question of law involved is one that by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for decision.” The language is the same as in s144 of the Summary Proceedings Act 1957. Accordingly an appeal must raise some question of law transcending the particular instance.
The present matter arises from a decision of the Liquor Licensing Authority at Rotorua on 22 March 2000 on an application by Meads Brothers Ltd (the applicant) to renew an on-licence held in respect of premises at 8 Ti Street, Rotorua known as “The Ace of Clubs”, which is a nightclub. One of the conditions of the licence was that liquor could be sold only between the hours of 6pm and 4am.
There were five objections from the operators of nearby motels. The Rotorua District Licensing Agency (the Agency) nonetheless gave the appellant an indication that it would not be opposing the renewal, although it said that the application should be considered at a formal hearing “at which all objectors and the applicant may present their cases”.
At the hearing the moteliers objected to the 4am closing time, saying that their guests were being disturbed by noise from the nightclub.
The applicant was represented by Mr P D Swain who is not legally qualified but appears as an advocate in liquor licensing matters. Evidence was given on behalf of the applicant by Mr Meads who dealt with the question of noise. He maintained it was not a major issue because of the construction of the building. Three of the moteliers then gave evidence of disturbance by noise. Mr McKenna, an Agency inspector, presented a report which included some material about noise complaints.
At the end of the hearing Mr McKenna and another inspector, Ms Smale, in what was clearly a change of position from that which had been indicated to Mr Meads prior to the hearing, made a recommendation that the hours of operation be reduced from 6pm to 3am.
The Authority gave the applicant an opportunity after the hearing to submit affidavit evidence in response to the recommendation made by the inspectors. In an affidavit Mr Meads said that reducing the hours so as to close at 3am would have a dramatic effect on the operation of the business because nightclubs traditionally are open later than hotel or tavern bars and need to trade later than taverns to survive.
In its decision the Authority took this response into account but said that the evidence for the moteliers and the reports of the inspectors at the hearing satisfied it that the manner in which the licensee had conducted the sale and supply of liquor had resulted in guests in nearby motels having their sleep disturbed in the small hours of the morning. It accepted the recommendation that the closing time for the nightclub should be brought back to 3am. It did not attach any weight to Mr Meads’ assertion that “nightclubs need to trade later than taverns to survive”, saying that the economics of survival of a liquor outlet was not a matter that the Authority was required to take into account when considering an application for renewal.
The licence was renewed but with the condition about hours of operation varied.
The applicant appealed to the High Court at Rotorua pursuant to s139 of the Act which provides for an appeal based on error of law. It was submitted, first, that the Authority had taken into account matters that it was not empowered to do by s22 of the Act. In particular, it was said that the Authority should not have taken into account, in determining the trading hours, the position of the moteliers. But Potter J concluded that the Authority was perfectly at liberty to respond to the objections of the neighbouring motels by varying the condition as it had done and did not need a recommendation from the inspector to do so. That recommendation was no doubt helpful but it was not necessary to the Authority’s decision. Nor, said Potter J, could any unfairness be claimed by the applicant, who was aware of the nature of the objections from the neighbours and had full opportunity to address all issues, including closing hours, if it thought fit.
Then it was said for the applicant that the Authority had erred in law in declining to take account of the economic viability of its business. It was suggested that if it cannot trade until 4am the nightclub may have to close down. Potter J observed that there was no requirement in the Act for the Authority to consider the economic effects of its decisions on licensees, applicants, or anyone else. She said that if the Authority were to extend its enquiries to include economic effects, then a much wider ranging and more detailed enquiry would need to be undertaken than the consideration of the affidavit evidence by the applicant based on its assertions and conclusions. The Judge said that the Act was directed to broader policy concerns than the financial viability of a licensee or applicant.
The third ground of appeal is no longer relevant. The fourth ground was that the Authority, if it was entitled to vary the hours of trading, should have done so only on the basis of “clear and compelling evidence” which justified a reduction in trading hours. Potter J rejected this ground also. She said that the Authority was empowered to respond to objections. It had heard the evidence both for the applicant and the objectors and had been prepared to receive evidence after the hearing in the form of affidavits. Any further evidence that might be regarded as contrary to the interests of the applicant had been directed at an issue other than the opening hours. The applicant had also submitted further evidence. The appeal on a question of law did not provide the applicant an opportunity to re-litigate the facts.
The last ground was “in the nature of estoppel”. It related to the Agency’s alleged agreement with the applicant prior to the hearing that no reduction of bonus hours would be sought. It was submitted that the Authority had been in breach of natural justice in varying the hours in these circumstances. However, Potter J said that the Authority was the body with responsibility for determining the application where objections had been lodged. It could not be bound by a purported agreement or arrangement made by the Agency and it was empowered by s23 to respond to objections under s19. The manner in which it did so was for the Authority to decide, not the inspector.
The appeal was accordingly dismissed. The applicant then applied to the High Court for leave to appeal to this Court. Three grounds for further appeal were advanced: breach of natural justice and estoppel relating to the Agency’s change of position; breach of natural justice relating to the Authority’s receipt of a letter after the hearing; and economic viability. Potter J concluded that only the second of these raised an issue of public and general importance capable of a bona fide and serious argument. She gave leave on this ground only.
The present application to this Court for leave to appeal on the other two grounds concerns (a) the failure of the Authority to take into account the economic viability of the applicant’s business, and (b) the question of whether there was a breach of natural justice arising from the change in the Agency’s recommendation.
The economic viability argument underwent some change as Mr Taylor developed it before us. He began with the proposition that where a variation of licence can remedy a particular problem being experienced with the operation of the licence only by reducing patronage at a premises, then the effect of that reduction on the business becomes legally relevant. Then, looking at the matter from a different viewpoint, counsel advanced the alternative submission that the Authority could not, in purporting to vary a condition, do something which was in effect a cancellation or refusal to renew the licence. Where an action, ostensibly to do one thing, has the effect of doing something else, which there was no power to do by the means chosen, then the action is invalid as being for an improper purpose (Brownells Ltd v Ironmongers Wages Board (1950) 81 CLR 108). Mr Taylor accepted, however, that he was not able to say on the basis of the evidence that the Authority had the purpose of closing down the business. In Brownells the Board’s purpose was obvious from the condition it imposed. Not so in the present case. Indeed, the purpose would appear to have been merely to mitigate the noise problem.
Nor was the argument tenable when it was alternatively formulated by counsel on the basis of a lack of power in the Authority to vary the licence by reducing operating hours. The variation may have a drastic effect on the business, and possibly it may have to close, but in the absence of any ulterior purpose of the Authority it remains in law merely a variation.
We consider however that, shorn of these attempted refinements, a question of law of general and public importance has been shown to exist, namely, whether, notwithstanding any absence of reference to economic effects in the statute, the Authority was in the particular circumstances bound to consider such effects on the applicant’s business when deciding on variation of a condition in the context of a renewal application for an existing license.
Mr Taylor submitted in support of the other suggested ground of appeal that although the Authority was not bound by what the Agency may have done before the hearing, when the inspectors changed their recommendation, the Authority should have afforded the applicant an opportunity to call further evidence on the subject of noise levels as it affected the motels and also a further opportunity to cross-examine the moteliers on that subject. It was said that it was not enough for the Authority merely to give an opportunity for the filing of affidavits and the making of written submissions.
It is plain, however, that the applicant knew all along that it was facing objections under s19 from the moteliers. Section 23(1)(b) empowered the Authority to renew the licence on different conditions as it thought fit, and s23(2)(a) authorised it to do so in response to an objection duly made under s19. As the Authority had before it several s19 objections, it must have been obvious that a variation reducing the trading hours was a possible outcome of the hearing. Three moteliers gave evidence and there was an opportunity of cross-examining them on the subject of noise complaints. That opportunity was not taken, which would have been a risky strategy even if the Agency had, in the end, not changed its position.
In the circumstances the argument that natural justice required an entire reopening of the issue is weak, particularly when it appears that, when given the opportunity of making written submissions, the applicant still did not ask for this to be done. Furthermore, even if the argument were somewhat stronger, it faces the difficulty under s150 that it is so tied to the particular facts of the case as to have no general or public importance.
Leave to appeal to this Court is granted in respect of the following additional issue only:
Whether the Authority was correct in concluding that it was entitled to disregard the economic consequences for the applicant of a variation of the condition of the licence when considering the application for renewal because the economics of operation of a liquor outlet is not a matter the Authority is required to take into account.
Because leave is not granted in respect of the other ground it is not necessary for us to consider the application for an order that the Authority produce and file a transcript of the hearing. That application is dismissed.
There will be no order for costs on this application for leave.

Solicitors

Robert Vigor-Brown, Rotorua for Appellant

Davys Burton, Rotorua for Respondent

[2001] NZCA 136

30 April 2001