Ole Limited v Benge
[2024] NZHC 284
•23 February 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-166
[2024] NZHC 284
UNDER Sections 280 and 285 of the Sale and Supply of Alcohol Act 2012 IN THE MATTER OF
An appeal against a decision of the Alcohol Regulatory and Licensing Authority
BETWEEN
OLE LIMITED
First Appellant
VIOLETA CALZADILLA
Second Appellant
AND
SHANE DOUGLAS BENGE
Respondent
Hearing: 7 February 2024 Appearances:
T G H Smith for the Appellants
S J Leslie and J A Corbett for the Respondent
Judgment:
23 February 2024
JUDGMENT OF GRICE J
(Appeal)
[1] This is an appeal against the decision1 of the Alcohol Regulatory Licensing Authority (the Authority) to cancel the on-licence of the first appellant, Olé Limited (Olé), and the manager’s certificate of the second appellant, Ms Violeta Calzadilla, on the basis of alleged lack of “suitability” to hold that licence and certificate under ss 280(3)(b) and 285(3)(b) of the Sale and Supply of Alcohol Act 2012 (the Act) respectively.
1 Benge v Ole Ltd [2023] NZARLA 20-21 [The Authority decision].
OLE LTD v BENGE [2024] NZHC 284 [23 February 2024]
Background
[2] Ms Calzadilla is a director of and shareholder in Olé, a small Spanish restaurant in Petone, Wellington. Olé was issued an on-licence in June 2018, which entitled it to sell beer and wine, and on 20 March 2019, Ms Calzadilla was issued a manager’s certificate which entitled her to undertake such sales. At the time that certificate was granted, Ms Calzadilla had four convictions for alcohol-related offending, including drink driving and refusing an officer’s request for a blood sample.2
[3] Both the Police (represented by the respondent) and the Licensing Inspector initially opposed Ms Calzadilla’s applications on the grounds of “suitability”, largely due to her conviction history. The Police also identified several other incidents which raised concern as to Ms Calzadilla’s “suitability” to hold a manager’s certificate, including complaints of family violence and indications of alcohol dependency. Moreover, Ms Calzadilla had undertaken not to apply for a manager’s certificate in the first year of Olé’s operation at the time the on-licence was granted. Nevertheless, she applied earlier, some six months after the on-licence was granted. However, the Police eventually withdrew their opposition and the manager’s certificate was issued, on the condition that it would be granted for a truncated period and only be valid in respect of the Olé premises. Ms Calzadilla remained compliant with those terms.
[4] On 8 November 2021, Ms Calzadilla was convicted on a further charge of drink driving. This was her fourth drink driving conviction, and her fifth alcohol-related conviction. The conviction concerned an incident on 18 June 2021 where Ms Calzadilla was found driving with a blood alcohol content of 235 mg of alcohol per 100 mg of blood (over four times the legal limit). Ms Calzadilla admitted to consuming wine prior to driving home after attending a counselling appointment. Following this conviction, Senior Sergeant Benge, on behalf of the Police, applied for cancellation of the on-licence for Olé and Ms Calzadilla’s manager’s certificate. The
2 Ms Calzadilla’s previous offending: Refused Officers’ Request for Blood Specimen – 3rd or more (3 January 2016, convicted 27 May 2016); Drove with Excess Breath Alcohol – 3rd or subsequent (22 September 2005, convicted 8 December 2005); Breath Alcohol Level over 400 Mcgs/Litre of Breath (30 November 2002, convicted 21 August 2003); and Breath Alcohol Level over 400 Mcgs/Litre of Breath (31 July 2002, convicted 21 August 2003).
Authority granted the applications for cancellation, which is the decision now on appeal before this Court.
[5] Ms Calzadilla has kept Olé open for business since the licence and manager’s certificate were cancelled by the Authority. The hearing of that application was on 13 December 2022 and the cancellation was effective from the delivery of the Authority’s decision on 17 March 2023.
[6] The respondent seeks to adduce new evidence on appeal. He says that Ms Calzadilla has sold liquor to at least one customer at Olé following the cancellation of the licence and certificate. In particular, he relies on an incident in December 2023 when a nonsworn police employee, Ms Ren, at the direction of her manager, Senior Sergeant Benge, was sent into the restaurant with a brief to find out if alcohol was being sold in the restaurant. Ms Ren posed as a customer at the restaurant and asked for a sangria, which Ms Calzadilla gave to her, informing her that it contained alcohol.3 Ms Calzadilla agrees that she responded to Ms Ren’s question that it did contain alcohol, but claims that in fact it did not. As part of the incident two other police officers in uniform were sent into the restaurant by Senior Sergeant Benge to check for alcohol, after Ms Ren texted the Senior Sergeant to inform him that she had been served alcohol. The officers sent in saw no alcohol.
[7] The application to adduce the new evidence is opposed. As is the usual course, the evidence was adduced on the basis that I would rule on its admissibility as part of this decision. I deal with that issue later in this judgment.
Legal Principles
The legislative framework
[8] It is a criminal offence to sell alcohol without a licence.4 Applications for licences are to be initially made to a licensing committee, which may then refer the application to the Authority for decision.5 The decision-making body must have
3 Ms Calzadilla accepted in cross-examination that the Sangria contained wine and orange juice.
4 Sale and Supply of Alcohol Act 2012 [the Act], s 233.
5 The Act, ss 99 and 104.
regard to certain statutory criteria in determining whether to issue a licence.6 The Police, the Medical Officer of Health, and a licensing inspector are also required to inquire into the application.7
[9] The manager of a licensed premises under the Act must hold a manager’s certificate.8 Applications for manager’s certificates are decided by the licensing committee, or by the Authority if the application is referred to it, having regard to the criteria specified under the Act.9
[10] Sections 280(3)(b) and 285(3)(b) of the Act allow for the cancellation of a licence and a manager’s certificate respectively, on the basis that the conduct of the licensee/manager “is such as to show that he or she is not a suitable person” to hold a licence/certificate. “Suitability” is not defined under the Act.
[11] The object of the Act is set out in s 4. It is noted that, compared to its predecessor, the Sale of Liquor Act 1989 (the SLA), the object of the current Act is expressed in stronger terms of harm minimisation, not reduction. It says:
4 Object
(1)The object of this Act is that—
(a) the sale, supply, and consumption of alcohol should be undertaken safely and responsibly; and
(b) the harm caused by the excessive or inappropriate consumption of alcohol should be minimised.
(2)For the purposes of subsection (1), the harm caused by the excessive or inappropriate consumption of alcohol includes —
(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
(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).
6 Section 105.
7 Section 103.
8 Section 216.
9 Sections 221 and 222.
Approach on appeal
[12] Section 159 of the Act provides that a party may appeal the decision of the Authority to the High Court. Both parties note the comments made by Kós J in Triveni Puri Limited v Commissioner of Police in relation to appeals under s 138 of the SLA, which is substantially worded similarly to ss 159-161 of the Act.10 He stated that:11
[19] It has been observed by the Courts that there is a limited scope for appeal from the Authority. The Act puts responsibility for enforcement decisions largely in the hands of the Authority, reflecting Parliament's view of its central importance to the licensing system. This Court is nevertheless bound to reach its own independent conclusion. It may give such weight as it thinks fit to the opinion of the Authority, but must not regard itself as bound by the Authority's opinions, simply because it is a specialist tribunal. However, the Authority is an experienced body, well able to assess evidence and has the advantage of actually seeing and hearing the witnesses in question and listening to the cross-examination.
Leave to adduce further evidence
[13] Under the Act, the Court has full discretionary power to hear and receive further oral or affidavit evidence on questions of fact.12 The High Court Rules 2016 (the Rules) govern when a party to an appeal can adduce further evidence on a question of fact which was not before the original decision-maker.13
[14] The legal test for admissibility of fresh evidence on appeal is well settled. The evidence must be fresh, credible, and cogent.14 Determining whether the evidence is fresh requires an assessment of whether it could have been presented to the previous decision-maker with reasonable diligence.15 The issue is whether it is in the interests of justice for the Court to receive the evidence.
10 Triveni Puri Limited v Commissioner of Police [2012] NZHC 2913, citing Austin, Nichols & Co Inc v Stichting Lodestart [2008] 2 NZLR 141. See also Henwood v Dalziell-Hernohan HC Hamilton CIV-2010-419-983, 17 December 2010 at [36] and Te Awamatu Wines & Spirits (1988) Ltd v Greenwood [2009] NZAR 394 (HC).
11 Triveni Puri Limited v Commissioner of Police, above n 10, (footnotes omitted).
12 The Act, s 161(4).
13 High Court Rules 2016 [the Rules], r 20.16.
14 Lundy v R [2013] UKPC 28, [2014] 2 NZLR 273 at [120]. This test was most recently affirmed by the Supreme Court in Ellis v R [2021] NZSC at [29] and [30].
15 Lundy, above n 14, at [125].
[15] I now turn to the arguments on appeal which, although put in a number of ways, are largely focussed on the allegation that the Authority failed to assess Ms Calzadilla’s “suitability” in the context of the particular case.
The Authority’s decision
[16] The decision of the Authority of 17 March 2023 followed the hearing of the case on 13 December 2022. Ms Calzadilla was represented by counsel, filed evidence and was cross-examined. Senior Sergeant Benge provided a brief of evidence, was cross-examined and adduced evidence of various police reports relating to the earlier alcohol incidents.
[17] The Police took the view that due to Ms Calzadilla’s alcohol dependency, it was inappropriate for her to be in a position of facilitating the safe and responsible sale, supply and consumption of alcohol, as she was unable to meet such standards at a personal level.16 Counsel for Ms Calzadilla, while acknowledging that she had an alcohol problem, submitted that the problematic consumption of alcohol in her personal life did not affect her ability to effectively manage its sale and supply in accordance with the Act, and that any abstract prima facie risk was offset by a strong practice record as a licensee and manager.17
[18] In setting out the relevant law, the Authority highlighted the purpose of the Act as being “to have a system of control over the sale and supply of alcohol so as to achieve the object of the Act”.18 It also noted the object of the Act as expressed in s 4.
[19] The Authority noted with concern that Ms Calzadilla had been uncooperative with the Police and other authorities when apprehended for alcohol related offending in the past. It said the expectation was that she would be cooperative with those whose function it is to reduce alcohol harm in the community.19 The Authority observed that that Ms Calzadilla’s drinking problem spanned at least two decades, and that various interventions during that time had not had any permanent effect.20 It also highlighted
16 The Authority decision, above n 1.
17 At [27]–[28].
18 At [14].
19 At [28].
20 At [33].
her most recent unsuccessful attempts at rehabilitation through the CareNZ programme.21 Ms Calzadilla acknowledged at the hearing that she “had not given up drinking but had reduced her intake”.22
[20] The Authority rejected a submission made by counsel for Ms Calzadilla that her recent conviction was inconsequential. Counsel had submitted that the conviction was part of Ms Calzadilla’s pattern of problematic drinking and therefore any risk was no greater than when her licence was initially granted in 2018. The Authority took the view that Ms Calzadilla’s drinking problem should not be overlooked, noting that “if there is conduct which renders [a licensee or manager’s certificate holder] unsuitable, then suspension or cancellation may well follow”.23 It emphasised that the Act is not only concerned with conduct during the actual time of the sale and supply of alcohol, but also personal conduct which occurs outside of that context.24
[21] The Authority found that Ms Calzadilla’s five alcohol-related convictions to date fell within the meaning of “harm” under s 4(2) of the Act, noting that the definition covered “any crime, directly caused by the excessive consumption of alcohol, and which translates to harm to society generally or the community, indirectly caused or contributed to by any crime”.25 It concluded that, “[p]ut simply, a person cannot be considered suitable to be a licensee or holder of a manager’s certificate when they themselves cannot safely and responsibly consume alcohol, more so when their consumption results in convictions”.26
[22] Moreover, the Authority found that although Ms Calzadilla’s alcohol consumption was a continuing problem at the time when the manager’s certificate was granted, all of her convictions, not just her most recent one, ought properly to be taken into account in considering the application for cancellation.27 It highlighted that the
21 At [34].
22 At [25].
23 At [35]–[36].
24 At [37].
25 At [37].
26 At [37].
27 At [38].
reference to “conduct” in the Act is unqualified, and therefore any conduct pointing to “suitability” was relevant.28
[23] Finally, the Authority noted that holding a licence and manager’s certificate “is a privilege”.29 It observed that Ms Calzadilla had ample time to demonstrate her suitability for that privilege, but instead had “accumulated a further drink driving conviction, putting the lives of others at risk through her conduct”.30
[24] The Authority therefore concluded that it was appropriate to cancel the licence and manager’s certificate, making orders to that effect. It noted that Ms Calzadilla remained free to apply for a licence and manager’s certificate at a later date, if she was serious about dealing with her longstanding drinking problem and could demonstrate her “suitability”.
Appellant’s submissions
[25] Mr Smith for the appellants describes the essential basis of their appeal as the Authority’s failure to consider the specific context of the case, by relying on “misguided” previous Authority thinking, and “inflexibly” determining that a person cannot be suitable to be a licensee or holder of a manager’s certificate when they have convictions relating to their own alcohol consumption. The appellants further contend that the Authority ignores High Court and Court of Appeal case law about the importance of the context of the subject premises, the standard of conduct and risk of harm at the premises.
[26] The appellants also suggest that the Authority’s approach fails to account for particularly damaging impact of cancelling a licence or certificate (as opposed to an initial refusal to grant one). Mr Smith submits that the cancellations imposed were manifestly disproportionate to Ms Calzadilla’s behaviour, and that even if some punitive action were appropriate, it should have been limited to a short-term suspension.
28 At [38]
29 At [39].
30 At [39].
The nature of the business
[27] Mr Smith cites the High Court decision in Page v Police for the proposition that “suitability” is not established in a vacuum but in the context of the particular case”, which may include the nature of the business in question.31 He suggests that the Authority failed to engage in a close examination of the specific context in this case, instead referring to “a long line of ARLA authorities” premised on the idea that there is a necessary “stand down” period following drink driving convictions.32 Mr Smith describes this as “a dogmatic approach” which is unwarranted by the legislation and inconsistent with Page. The appellants therefore submit that the Authority’s statement at [37] that a person cannot be considered “suitable” to hold a licence or manager’s certificate when they have alcohol-related convictions amounted to an error in law.
[28] The appellants emphasise the location and nature of Olé, as a small specialty food restaurant with limited hours of operation, rather than an alcohol-focused premises. Furthermore, they highlight the lack of concerns about its operation to date, or any incidents of alcohol related harm at the restaurant. They argue that the Authority erred by failing to give sufficient weight to these factors, which ought to have been the focus of the “suitability” analysis.
[29] Mr Smith refers to the Court of Appeal case of Christchurch District Licensing Agency Inspector v Karara Holdings Ltd as authority for the proposition that where a licence (or certificate) has been granted, the cancellation provisions are designed to enforce management compliance in the case of breaches in licensing standards, so any assessment of “suitability” must focus on how the licenced premises have been conducted.33 It is noted that Karara Holdings Ltd was decided in the context of the specific wording of the SLA.
31 Page v Police HC Christchurch AP84/98, 24 July 1998 at 9.
32 See, for instance, Re NZ LNQ Ltd [2014] NZARLA 229 at [4(e)]; and Police v Manson [2015] NZARLA 590 at [25].
33 Christchurch District Licensing Agency Inspector v Karara Holdings Ltd [2003] NZAR 752 (CA) at [22].
Respondent’s submissions
[30] Ms Leslie, for the respondent, submits that the Authority’s decision should be upheld. The respondent contends that the appellants’ argument that “suitability” must be assessed in the context of the premises of Olé lacks merit, because the case law and statutory scheme indicate that “suitability” is assessed separately. The respondent cites Police v Casino Bar (No 3), in which the Court accepted the Police’s submission that the Authority had erred in focusing solely on the premises and business.34 Ms Leslie also argues that, contrary to submissions of the appellant, Page does not stand for the proposition that matters beyond what occurs on the premises are irrelevant. Rather, in Page, the premises and business were assessed as being of a particularly high risk due to the location and target clientele.
[31] Furthermore, Ms Leslie notes that the Authority specifically addressed the argument that Ms Calzadilla’s recent conviction was a continuation of a pattern of problem drinking and that the low-risk nature of Olé off-set any abstract risk posed by her problematic alcohol consumption. The Authority considered that this was “not a reasonable argument”, as Ms Calzadilla was not suitable to hold a licence because she could not be trusted to responsibly consume alcohol herself. Moreover, despite the appellants submitting that the focus of the restaurant is food, they also contend that the restaurant is not viable without the ability to sell alcohol. The respondent suggests that this presents a contradictory argument.
[32] The respondent further contends that the financial position of the appellant as a result of the cancellation was not a mandatory consideration for the Authority.
[33]Before analysing the appeal grounds, I summarise the Authority’s decision.
The law
[34] Under s 280 of the Act licenses may be varied, suspended or cancelled by way of an application to the Authority.
34 Police v Casino Bar (No 3) Ltd [2013] NZHC 44, [2013] NZAR 267 at [30].
[35] The relevant grounds and powers of the Authority under that section are as follows:
280Variation, suspension, or cancellation of licences other than special licences
…
(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:
(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,—
(a) vary or revoke any condition of the licence imposed by the licensing authority or a licensing committee: or
(b) impose any new condition…;or
(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.
[36] The plain wording of the section shows that the three grounds are discreet. Section 3(a) relates to the conduct of the licensed premises in breach of any condition or the Act, while subs (c) relates to the disorderly use of the premises resulting in being “obnoxious to neighbouring residents or to the public”. Both of those provisions clearly relate to the conduct and management of the licensed premises. However, the conduct of the licensee, if it shows that they are not a suitable person to hold the licence, is a separate factor to be taken into account.
[37] In relation to the suspension or cancellation of a management certificate under s 285, the grounds are similar to those under s 280, excluding the disorderly use of premises. That provision insofar as relevant provides:
285 Suspension or cancellation of manager’s certificates
…
(3)The grounds on which an application for an order under this section may be made are as follows:
(a) that the manager has failed to conduct any licensed premises in a proper manner:
(b) that the conduct of the manager is such as to show that he or she is not a suitable person to hold the certificate.
…
(5)If the licensing authority is satisfied that either 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,—
(a) suspend the certificate for such period not exceeding 6 months as the licensing authority thinks fit; or
(b) cancel the certificate.
(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 manager an opportunity to remedy any matters that the licensing authority may require to be remedied within that period.
[38] In addition, as submitted by the respondent, breaches or improper conduct in relation to the management of the premises in alcohol sales may give rise to “negative holdings”, each of which, if they accumulate, result in automatic cancellation or suspension is of a licence without any application by the Police.35 These are all responses to breaches of premises requirements which reinforces the fact that “suitability” is not solely related to the conduct of or affecting the premises or the management of the business.
[39] The High Court pointed out in Police v Casino Bar (No 3) Ltd that “suitability” is a distinct consideration.36 The Court in that case accepted the Police’s submission
35 The Act, ss 288–290.
36 Police v Casino Bar (No 3) Ltd, above n 34.
that the Authority had erred in focusing solely on the premises and business. It noted that “suitability” was not limited to how the business was to operate. It said:37
[30] I respectfully agree with Holland J’s practical observations to the effect that “suitability” is commonly used and is well understood so that it is unhelpful to draw on the way it may have been applied in different factual circumstances. Suitability is a relatively broad concept and, in the context of an assessment of an application under s 13 of the Act, it relates to the suitability of the applicant to be granted the privilege of an on-licence to dispense liquor. The decision-maker would run the risk of excluding matters that are relevant to the suitability of an applicant if the analysis of that criterion focused solely on the applicant’s proposals as to how the business is to operate. Although the weight to be given to individual components of the assessment of suitability will vary in each case, the decision-maker errs if it excludes indicators of an applicant’s suitability or unsuitability that are not reflected in the applicant’s proposal as to how the business will operate.
[40] The respondent also points out that in its second report leading up to the Act, published in 2010, the Law Commission observed that there was no statutory definition of “suitability” of the licence applicant, which was the only licence criterion that did not go towards the particulars of how the premises would operate.38 It further commented that “suitability” had developed into the ground upon which the widest considerations could come into a decision on a licence application, allowing the personal characteristics of the licence applicant to be addressed where it is envisaged that harm could arise as a result of those personal characteristics.39 The Law Commission noted that this is consistent with the approach by Australian states such as Victoria and New South Wales, which rejected the narrower Queensland approach of requiring the decision-maker to consider only the applicant’s knowledge of the regulatory regime, repute, lack of behaviour that would render them unsuitable, and attitude to financial obligations.40
[41] This Court has consistently emphasised that “suitability” relates to the “applicant”,41 although in relation to the earlier legislation it highlighted that the criteria must “be read in light of the statutory object”.42
37 Police v Casino Bar (No 3) Ltd, above n 34 (footnotes omitted).
38 Law Commission Alcohol in Our Lives: Curbing the Harm (NZLC R114, 2010) at [7.15] and [7.38].
39 At [7.15] and [7.36]
40 At [7.37].
41 Utikere v IS Dillon and Sons Ltd [2014] NZHC 270, [2014] NZAR 431 at [55].
42 Otara-Papatoetoe Local Board v Joban Enterprises Ltd [2012] NZHC 1406, [2012] NZAR 717 at [23] and [26].
[42] The respondent submits that the cancellation provisions should be read bearing in mind that the licensee has already commenced running the premises, and therefore “suitability” should be interpreted as relating to the conduct of the premises, taking into account the outlay already made by the licensee to establish the premises on the basis that the licence had been granted. Contrary to that submission, there is no reason why the “suitability” consideration should be read down where it appears in the cancellation provisions. As noted, the financial or commercial implications are not of great weight under the present legislation. There is no reason why “suitability” as a discrete factor should not be an ongoing consideration.
[43] The Authority rejected as “not a reasonable argument” the submission that the risk posed by Ms Calzidilla’s alcohol related conviction, in the context of her previous offending and alcohol related difficulties, could be offset by the limited size of the restaurant and its focus on food. The Authority made no error when it said:43
[27] Having regard to the object of the Act, it is submitted that Ms Calzadilla's problematic consumption of alcohol in her personal life does not equate to an unacceptable risk that the objects of the Act will be undermined by her continuing operation of Ole. Her instructions to counsel are that there have been no incidents or concerns with regards to the sale and supply of alcohol and that the Police have not raised any concerns as to her capacity as a licensee or manager, despite regular monitoring by the licensing inspectorate.
[28] It is accepted by counsel that while problematic consumption of alcohol by a licensee/manager poses a prima facie risk to the objects of the Act, in the present instance it is submitted that the abstract risk is sufficiently offset by ’s Calzadilla's strong practice record as a licensee and manager. That there is nothing before the Authority to suggest that her good conduct to date as a licensee and manager will change in the future. In relation to that, the Authority is concerned that Ms Calzadilla has been unco-operative with the Police and other authorities on her various apprehensions for alcohol related episodes. It is expected that she would be co-operative with those whose function it is to reduce alcohol harm in the community.
[29] It is further submitted that her recent conviction is a continuation of the pattern of problem drinking in her life and that there is no greater risk at present than there was in 2018. That Ole is low-risk licensed premises, the focus of which is food and this should be taken into account for the purposes of offsetting the abstract risk to the objects of the Act presented by Ms Calzadilla’s problematic drinking.
43 The Authority decision, above n 1.
[44] The Authority put the issue of Ms Calzadilla’s ongoing alcohol abuse in the context of the licence and the certificate. It identified the risk it posed, and that the risk exists in the of the running of a licenced premises regardless of its size or the fact that it offers food. The fact that Ms Calzadilla may often be the sole staff member running the restaurant may even exacerbate that risk.
[45] I first deal with the initial appeal without reference to the new evidence sought to be adduced. I then deal with the application to adduce new evidence and its relevance to the appeal.
Analysis
[46] The listed factor of “suitability” is a discrete consideration from factors relating to the operation and management of the premises. Of course, the “suitability” must relate in general terms to suitability for operating a licensed premises. The case law confirms there are a wide range of factors which may be taken into account when considering “suitability”.44
[47] Mr Smith argued that the question of “suitability” was of less relevance on an application for cancellation than on an application for renewal or an initial application. That argument overlooks the fact that the wording used in relation to “suitability” is the same for provisions relating to renewal and cancellation.
[48] A consistent approach to assessing “suitability” better aligns with the object under s 4 of the Act, referred to by the Authority in its decision, which emphasises that the sale, supply, and consumption of alcohol should be undertaken “safely and responsibly”, and the harm caused by excessive alcohol consumption should be minimised.
[49] Mr Smith relied on Karara Holdings Ltd as authority for the proposition that there was a difference in the “suitability” consideration on renewal.45 First, I do not consider that this is what the Court of Appeal said in that decision, and secondly, that
44 Singh v Commissioner of Police [2015] NZHC 94, [2015] NZAR 666.
45 Karara Holdings Ltd, above n 33.
decision is in relation to the SLA which did not incorporate the purpose and objects of the present Act.
[50] The SLA was the subject of a review following the Law Commission’s 2010 report.46 That report noted the need to consider personal “suitability” of the licensee to hold a licence. I also note that the cancellation section in the 2012 Act no longer appears in the subpart headed “Management of licensed premises” as it did under the SLA, but now appears in the subpart “Other enforcement provisions”.47
[51] The Court of Appeal in Karara Holdings Ltd allowed an appeal from the High Court which had overturned a decision of the Authority suspending the relevant licence. The facts involved the licensee serving alcohol to underaged patrons. The Court of Appeal in its comments focussed on the meaning of the statutory provisions concerning conduct of licensed premises in breach of any conditions of the Act or licensing standards under s 132(3)(a) of the SLA.48
Impact on the application of revocation
[52] The appellants contend that the Authority erred in fact and law by failing to consider the devastating financial impact of revoking the licence and manager’s certificate on Ms Calzadilla’s livelihood and business. They note that Ms Calzadilla has engaged in a significant financial undertaking in opening her business, and is now 62 years old with limited prospects of future employment. It is submitted that while her restaurant has remained open until now, it will clearly fail should the appeal not be upheld.
[53] Ms Calzadilla produced in her evidence two documents which she said showed the turnover of her business had dropped from $70,011 in the year 17 March 2022 – 6 February 2023, to $57,976 in the year 17 March 2023 – 6 February 2024. The documents appeared to be printouts from the restaurants management software. There were no details of the outgoings nor importantly was there any evidence as to when the restaurant was open nor the hours of opening. The evidence was intended to
46 Law Commission, above n 38.
47 The Court of Appeal refers to this subheading in Karara Holdings Ltd, above n 33, at [29].
48 At [24].
support the appellant’s argument that the lack of liquor licence had led to a falloff in business. Without the background information and proper accounting I would be cautious in relying on that material to support that assertion.
[54] In any event the effect on the business due to the loss of the licence is not a factor which carries much weight in the balancing exercise under the legislation.
[55] Given the focus of the Act on alcohol related harm minimisation, financial consequences are less pertinent than under the previous regime. This has been recognised in Paulin v PC Bar, which noted that it would only be in “exceptional” cases that such consequences should be relevant.49
[56] The High Court also noted in Capital Liquor Ltd v NZ Police that the purpose provisions suggest a deliberate step by the legislative to narrow any potential consideration of commercial interests.50
Disproportionate nature of penalty
[57] Finally, the appellants submit that complete cancellation of the licence, in any event, is a disproportionate punishment when compared to similar situations where parties have merely had suspensions imposed. Mr Smith cites Joliffe v Watene, in which a duty manager was convicted for drink driving, had two previous drink driving convictions, and was given a 42-day suspension.51 He also refers to Craddock v Cole, where a 56-day suspension was imposed in the context of two convictions for drink driving.52
[58] I do not consider the reference to the “tariff” cases is of any assistance here. The Authority in this case did not apply a tariff. While it is important that decisions are consistent, neither of the cases cited were as serious as the case under consideration here. But in any event, the object and purposes of the Act relate to safety in the supply, sale, and consumption of alcohol. The Act allows for a tariff in some cases for
49 Paulin v PC Bar [2018] NZARLA PH 200 at [127] and [129].
50 Capital Liquor Ltd v NZ Police [2019] NZHC 1846 at [79].
51 Joliffe v Watene [2022] NZARLA 72.
52 Craddock v Cole [2022] NZARLA 74.
administrative ease. The Authority must assess each case individually and determine it according to the statutory framework and objects of the Act.
[59] In this case I do not see how a tariff of, for instance, a 42-day suspension would support the objectives of the Act. There has been a pattern of conduct by Ms Calzadilla which indicates that her drinking is not under control. Her alcohol abuse is well documented as is her inability to manage her alcohol problem. She has caused harm to the community by her drink driving. The Authority was not in error when it commented that she could apply at any stage in the future for a licence or certificate, which would be dealt with in the circumstances existing at that time, no doubt including consideration of the steps that Ms Calzadilla had taken in relation to managing her alcohol difficulties.
Other criticism of the Authority’s decision
[60] The appellants criticise the Authority’s decision on a number of other respects. First, they say at the Judge made an error at the end of [37]. The whole paragraph reads:53
[37] Ms Calzadilla’s most recent conviction is her fifth alcohol-related conviction. The overarching object of the Act is that the sale and supply of alcohol should be undertaken safely and responsibly, and any alcohol-related harm should be minimised. This does not mean that the Act is only concerned with conduct during the actual time of the sale and supply of alcohol and not personal conduct outside of that. Harm, as articulated under s 4(2) of the Act includes any crime, directly caused by the excessive consumption of alcohol, and which translates to harm to society generally or the community, indirectly caused or contributed by any crime.54 These would capture the five alcohol-related convictions to date. Put simply, a person cannot be considered suitable to be a licensee or holder of a manager’s certificate when they themselves cannot safety and responsibly consumer alcohol, more so when their consumption results in convictions.
[61] In particular, Mr Smith criticises the last sentence, saying it indicates Ms Calzadilla’s “suitability” is not considered in the context of the case – specifically the small premises that she was looking after and the fact that there had been no issues related to her licence or sale of alcohol according to the evidence.
53 The Authority decision, above n 1 (emphasis added).
54 The Act, ss 4(2)(a) and (b), respectively.
[62] I do not agree with that criticism. The Authority’s comments are made in the context of its rejection of the argument that the drinking problem was an ongoing issue and so did not create a new risk which should be overlooked “because her manager’s certificate was granted after full disclosure.”55 The Authority went on to say that a licensee or holder of a manager’s certificate must be one who is suitable to hold either or both, and “if there is conduct which renders them unsuitable in suspension or cancellation may well follow”.56
[63] The Authority was correct in its assessment on that point. Ms Calzadilla had a continuing alcohol problem, and the Authority was entitled to regard it as such. It was not prevented from considering it in the context of the earlier alcohol problems which had been before the Authority. Those earlier problems had been specifically dealt with by the Authority in relation to the terms of the grant of Ms Calzadilla’s manager’s certificate. Her history of alcohol problems caused the Licensing Inspector to initially withhold consent to the application for the manager’s certificate. Regardless, the previous conduct could be taken into account as part of a pattern to which the latest drink-driving incident was added. To say that the previous conduct could not be taken into account as part of the assessment given the ongoing difficulties that Ms Calzadilla had with alcohol would be contrary to the objects of the Act and unduly impede the administration of the liquor licensing regime.
[64] Mr Smith also objected to the reliance on the evidence of earlier reports which are referred to in the decision. He says these were not tested. However, Ms Calzadilla was represented by counsel at the Authority hearing. If any objection to that evidence was to be taken it should have been raised then to enable the respondent to call the report writers for cross-examination at the time of the hearing. Section 207 of the Act enables the Authority to receive such reports in evidence as it considers appropriate. It did so in this case and no objection was made. The Authority made no error in relying on those reports.
55 The Authority decision, above n 1, at [35].
56 At [36].
Adducing new evidence
[65] The respondent filed an application to adduce evidence on appeal on the basis it was fresh evidence not available at the time of the Authority’s hearing. The incidents referred to in the new evidence occurred well after the decision of the Authority. Ms Ren’s affidavit refers to an incident in December 2023, nine months after the decision was delivered and 12 months after the hearing before the Authority. The evidence was provided by affidavit to which Ms Calzadilla replied by affidavit.57 Four witnesses were relied upon by the Crown. Ms Ren filed two affidavits, however she is presently in China and arrangements could not be made for her to be cross- examined. The respondent accepts Ms Ren is unavailable as a witness. The other deponents, Senior Sergeant Benge, the two uniformed officers (who went into the premises) and Ms Calzadilla gave evidence and were cross-examined at the appeal hearing.
Hearsay
[66] Ms Ren is not available for cross-examination. Therefore, her affidavit is sought to be adduced as a hearsay statement. A hearsay statement is defined as follows:58
hearsay statement means a statement that –
(a)was made by a person other than a witness; and
(b)is offered in evidence at the proceeding to prove the truth of its contents.
[67] Sections 17 and 18 of the Evidence Act 2006 govern the hearsay rule and admissibility of hearsay statements in this case. They provide:
17Hearsay rule
A hearsay statement is not admissible except—
(a) as provided by this subpart or by the provisions of any other Act; or
57 The respondent applied for an adjournment of this appeal to enable Ms Ren to be available for the hearing. The application was dismissed in a Minute dated 2 February 2024. The respondent indicated depending on the outcome of this appeal, it may appeal the dismissal of the adjournment application.
58 Evidence Act 2006, s 4.
(b) in cases where—
(i)this Act provides that this subpart does not apply; and
(ii)the hearsay statement is relevant and not otherwise inadmissible under this Act.
18General admissibility of hearsay
(1)A hearsay statement is admissible in any proceeding if—
(a) the circumstances relating to the statement provide reasonable assurance that the statement is reliable; and
(b) either—
(i)the maker of the statement is unavailable as a witness; or
(ii)the Judge considers that undue expense or delay would be caused if the maker of the statement were required to be a witness.
(2)This section is subject to sections 20 and 22.
[68] In addition to meeting the requirements of the hearsay provisions, the evidence must pass through the ss 7 and 8 gateways for admissibility. These are:
7Fundamental principle that relevant evidence admissible
(1)All relevant evidence is admissible in a proceeding except evidence that is—
(a) inadmissible under this Act or any other Act; or
(b) excluded under this Act or any other Act.
(2)Evidence that is not relevant is not admissible in a proceeding.
(3)Evidence is relevant in a proceeding if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.
8General exclusion
(1)In any proceeding, the Judge must exclude evidence if its probative value is outweighed by the risk that the evidence will—
(a) have an unfairly prejudicial effect on the proceeding; or
(b) needlessly prolong the proceeding.
(2)In determining whether the probative value of evidence is outweighed by the risk that the evidence will have an unfairly prejudicial effect on
a criminal proceeding, the Judge must take into account the right of the defendant to offer an effective defence.
Section 207
[69]Ms Leslie referred to s 207 of the Act which provides:
207 Evidence in proceedings before licensing authority or licensing committee
(1)The licensing authority or licensing committee concerned may receive as evidence any statement, document, information, or matter that in its opinion may assist it to deal effectually with any matter before it, whether or not the statement, document, or matter would be admissible in a court of law.
(2)Subject to the foregoing provisions of this section, the Evidence Act 2006 applies to the authority or the committee and to the members of the authority or committee, and to all proceedings before the authority or committee, in the same manner as if the authority or committee were a court within the meaning of that Act.
[70] Ms Leslie submits in the alternative that s 207 of the Act allows for the Court on appeal to receive as evidence “any statement, document, information, or matter that in its opinion may assist it to deal effectively with any matter before it…whether or not that would be admissible in a court of law”. She points to Court of Appeal authority, LRR v COL, which addresses evidence on appeal in relation to Family Court matters.59 She says s 207 should be interpreted in the same way as the Court of Appeal interpreted s 12A of the Family Court Act 1980, allowing the Court to receive any evidence whether admissible or not under the Evidence Act. That is, s 207, as does s 12A of the Family Court Act, displaces the admissibility provisions under the Evidence Act. In LRR v COL the issue was in relation to the admissibility of expert evidence rather than hearsay evidence as in this case.
[71] The appellant argues that s 207 only applies to evidence before a licensing committee or the Authority and not to evidence on appeal. Mr Smith points to the wording of s 207 of the Act in contrast to the wording in s 12A of the Family Court Act.
[72]Section 12A(4) of the Family Court Act provides:
12A Evidence
59 LRR v COL [2019] NZCA 620.
…
(4) The effect of section 5(3) of the Evidence Act 2006 is that that Act applies to the proceeding. However, the court hearing the proceeding may receive any evidence, whether or not admissible under the Evidence Act 2006, that the court considers may assist it to determine the proceeding.
[73]Also relevant is the appeal provision set out in s 161 of the Act. This provides:
161 Appeals
(1)Every appeal is by way of rehearing.
(2)However, where any question of fact is involved in any appeal, the evidence taken before the licensing authority bearing on the question must, subject to any special order, be brought before the High Court as follows:
(a) as to any evidence given orally, by the production of a copy of the chairperson’s note or of a written statement read by the witness while under oath, or of such other materials as the High Court may consider expedient:
(b) as to any evidence taken by affidavit and as to any exhibits, by the production of the affidavits and such of the exhibits as may have been forwarded to the court by the licensing authority, and by the production by the parties to the appeal of such exhibits as are in their custody.
(3)Despite subsection (2), the High Court may in its discretion rehear the whole or any part of the evidence, and must rehear the evidence of any witness if the court has reason to believe that any note of the evidence of that witness made by the chairperson of the licensing authority is or may be incomplete in any material particular.
(4)The court has full discretionary power to hear and receive further evidence on questions of fact, either by oral evidence or by affidavit.
…
[74] Section 161(3) gives the High Court the discretion to rehear the whole or any part of the evidence, and requires it to rehear the evidence in certain circumstances. It appears appropriate that the High Court on appeal should have the same discretion to receive evidence as does the Authority or licensing committee under s 207. Such an interpretation would support the object and purpose of the Act, which are focused on safe and responsible sale, supply and consumption of alcohol and minimising the harm
caused by excessive or inappropriate consumption of alcohol,60 and the provision of a system which is reasonable and helps to achieve the object of the Act in its administration.61 This suggests that where an appellate court is required to hear new evidence, it should be operating under the same evidential provisions as the primary decision-maker. On the other hand the appellate court does not have the benefit of sitting with members as does the Authority.
[75] As I conclude below that the hearsay statement is admissible under the provisions of the Evidence Act. Therefore it is not necessary to make a final determination on the s 207 argument.
Should the evidence be admitted?
[76] Ms Ren reported her views to Senior Sergeant Benge by text while she was in the restaurant. Therefore, there is a contemporaneous record confirming her statement to him that she had been told she was being served alcohol. In addition, this is confirmed by Ms Calzadilla. The only difference between Ms Calzadilla and Ms Ren in the recounting of the incident is that Ms Ren says she asked for a drink with alcohol at the outset. Ms Calzadilla denies this. However, Ms Calzadilla candidly admitted that she responded, when Ms Ren asked subsequently, that there was in fact alcohol in the sangria. Ms Calzadilla’s explanation for making the statement, which she contends was not correct as there was in fact no alcohol in the sangria, was that Ms Ren was agitated and “a bit weird”.
[77] Ms Calzadilla agreed that Ms Ren came in and sat down asking for a sangria. Ms Calzadilla said that Ms Ren asked the question about alcohol over and over again. Ms Calzadilla agreed that she did not tell Ms Ren that the wine in the sangria was “zero alcohol” (as Ms Calzadilla now contends it was) but rather told Ms Ren it was “real wine”. Ms Calzadilla said she felt threatened by Ms Ren because she was “weird” and the whole situation appeared strange in the context of the two uniformed officers coming into the restaurant to check for alcohol. Therefore, there is some consistency between Ms Ren’s evidence and that of Ms Calzadilla as to what occurred.
60 The Act, s 4.
61 The Act, s 3.
[78] In my view, the circumstances relating to Ms Ren’s statements in her affidavit indicate that the statement is reliable. In addition, it is conceded that the witness is unavailable. In any event, I consider undue delay or expense would be caused if she were required to be a witness. The affidavit is therefore admissible under the Evidence Act.
[79] However, the weight to give to the statements in Ms Ren’s affidavit must be assessed.
[80] The two officers who gave evidence confirmed that they did not find any alcoholic beverages on the premises. They looked in the fridge which was on display, which included ginger beer, zero alcohol beer, zero alcohol wine and water. They also took a photograph of the wine bottle that contained some red non-alcoholic wine, which Ms Calzadilla had mixed with orange juice (also photographed) to make the non-alcoholic sangria for Ms Ren. There was some cross-examination about exactly how much the police officers could see into the kitchen and the cupboards, but I accept they had a reasonable look around, at least on the benches, and there was no sign of any “real wine” bottle which might have been used to make the sangria. The officers did refer to Ms Calzadilla’s strange behaviour in removing the sangria in the glass from Ms Ren’s table when the officers arrived, before she had drunk it. Ms Ren asked for it back. However, the officers did not take a sample of that glass of sangria.
[81] Ms Calzadilla’s behaviour in telling Ms Ren that the sangria was alcoholic is also very odd behaviour. However, there was no alcohol found on the premises. I accept that the two police officers coming onto the premises and Ms Ren persistently asking about the alcohol content of the sangria may have led to Ms Calzadilla unwisely trying to appease Ms Ren, by telling her there was alcohol in the drink. Ms Calzadilla thought Ms Ren was merely a customer and her presence was not related to the police officers’ visit.
[82] Counsel pointed out that Ms Ren and Ms Calzadilla speak English as a second language so it is possible there was some confusion as to what was said. In the circumstances in the absence of cross-examination of Ms Ren, I accept Ms Calzadilla’s
explanation as to the discussion with Ms Ren and why she misled Ms Ren about the alcohol in the sangria.
[83] I admit the new evidence excluding that relating to the online reviews and what the licensing inspector told Senior Sergeant Benge. The remaining evidence of the Police officers and Ms Ren is relevant as it relates to issues concerning consumption of alcohol on the premises. The appellant has had a chance to respond to the evidence and to cross-examine the two officers involved and Senior Sergeant Benge. The evidence of the two police officers indicate there was no alcohol on the premises at least on their search. As I have indicated Ms Ren’s hearsay statement is also admitted as she is unavailable to give evidence and I consider the evidence is reliable.
[84] Senior Sergeant Benge refers in his affidavit to a further report from a Lower Hutt licensing inspector about alcohol consumption at Olé and recounts his conversation with the licensing inspector. The inspector says he had been told by friends that they had got quite tipsy from drinking sangria at the restaurant, and the sangrias were “definitely boozy”. The evidence is therefore double hearsay in that it was what the inspector was told by friends which he passed on to Senior Sergeant Benge. Mr Smith objected to the evidence. I do not consider it is reliable for obvious reasons. The “friends” were not available for cross-examination. That evidence is excluded.
[85] However, I do not consider that the new evidence adds any weight to respondent’s case for cancellation of the licence and certificate. I accept, in the absence of Ms Ren being available for cross-examination, Ms Calzadilla’s explanation for her behaviour.
Other evidence ACC decisions
[86] Ms Leslie for the respondent also sought to cross-examine Ms Calzadilla on two Accident Compensation Corporation (ACC) appeal decisions which she had chanced upon when searching for copies of decisions to be included in the Bundle of
Authorities for this appeal, last week.62 Ms Leslie indicated that the matters raised in those decisions indicated that Ms Calzadilla had misled ACC about her employment in order to obtain a benefit through accident compensation. Mr Smith objected to that evidence and to those matters being put to Ms Calzadilla on the basis that it was a breach of natural justice.
[87] I ruled that those matters could not be pursued in the hearing on appeal. First because the matters were only raised late last week, leaving Ms Calzadilla little time to provide any evidence on the point.63 Secondly, the issues relate to allegations of fraud which should be specifically detailed given their serious nature. Finally, the cases were only put in Ms Calzadilla in general terms, therefore opening a whole new area of inquiry which might raise collateral issues not directly related to the issues concerning alcohol use which are the subject of the Authority’s decision and the appeal.
[88] The respondent also sought to adduce evidence of online Internet Google and Trip Advisor reviews in relation to the restaurant alerting the Police to the possibility of alcohol been sold at the premises, and that sangria, an alcoholic drink, was being advertised as for sale at the premises. This material was not available until after the decision of the Authority. These matters were put to Ms Calzadilla and she denied that she was selling alcohol. She acknowledges that sangria is made with red wine but said that following the loss of her licence she was using non-alcoholic red wine and telling the patrons that this was the case. In the circumstances I exclude the evidence relating to the advertisements or the reviews. The people writing the reviews were not available for cross-examination and I am not satisfied that the sangria offered at the restaurant contained alcohol.
[89] In summary, that ACC material and the internet reviews if admitted would breach Ms Calzadilla’s rights to natural justice, given the short notice given to her of the allegations and serious nature of the ACC allegations in particular. In addition, it would raise issues not specifically alleged in the appeal at a very late stage, unduly
62 Calzadilla v Accident Compensation Corporation [2022] NZACC 7; and Calzadilla v Accident Compensation Corporation [2022] NZACC 17.
63 In addition, the Waitangi day holiday was the day before the hearing.
lengthening the appeal hearing which had already been extended to hear the new evidence. Allowing those topics to be pursued on appeal was not in the interests of justice.
Conclusion
[90]In conclusion, the appeal is dismissed.
[91] The primary ground of appeal, namely that the Authority did not give appropriate weight to the appellant’s factual circumstances, is not made out.
[92]As outlined:
(a)The financial impact of cancelling Ms Calzadilla’s licence has minimal relevance under the current Act.
(b)The argument that there were no concerns about the operation of the business and no incidents in the premises to date was squarely addressed by the Authority. It did not err in its conclusion that this did not outweigh the risk posed by Ms Calzadilla’s problematic alcohol consumption.
(c)Similarly, the fact that focus of the business is said to be on specialty Spanish food does not outweigh the risk posed by Ms Calzadilla’s problematic alcohol consumption.
(d)The cancellation of the licence does not impose any “double jeopardy” on Ms Calzadilla, but rather is a natural consequence of a failure to meet the statutory requirements to hold a licence and manager’s certificate. This argument was not a focus of oral argument but for the reason given could not succeed.
[93] Leave was granted on an application to extend time for appeal in a Minute of Radich J dated 23 May 2023. An application for adjournment was refused in a Minute of Palmer J dated 2 February with a direction that the application for leave to adduce
further evidence on appeal to be dealt with at the appeal hearing. The application for leave to adduce fresh evidence on appeal is granted with respect to the affidavits of the respondent (dated 18 January 2024), Constables Almaz Bengk (dated 30 January 2024) and Thomas Anderson (dated 1 February 2024), and Ms Kun Ren (dated 18 January and 2 February 2024). However, the application to adduce the evidence of online reviews and leave to cross-examine Ms Calzadilla on previous decisions of ACC in relation to her was declined.
Costs
[94] Ms Leslie indicated she would seek costs if the appeal was dismissed on the usual basis. It appears to me a 2B basis would be appropriate for this appeal.
[95] Mr Smith sought leave to file submissions on costs if the appeal was dismissed. The respondent should file a memorandum as to costs on or before five days from the date of this judgment. Any response should be made within a further five days and any reply within a further three days.
Grice J
Solicitors:
Luke Cunningham & Clere, Wellington
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