Police v Casino Bar (No 3) Ltd
[2013] NZHC 44
•4 February 2013
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2012-485-1491 [2013] NZHC 44
UNDER the Sale of Liquor Act 1989
IN THE MATTER OF a decision of the Liquor Licensing
Authority [2012] NZLLA 723 dated
27 June 2012
BETWEEN NEW ZEALAND POLICE Appellant
ANDCASINO BAR (NO 3) LTD First Respondent
CGML LIMITED Second Respondent
EARL FORRESTER HILTON Third Respondent
Hearing: 19 November 2012
Counsel: T G H Smith & S Kennedy for appellant
M Bendall and B D Jones for first respondent
A G Sherriff for second respondent
Judgment: 4 February 2013
RESERVED JUDGMENT OF DOBSON J
Contents
Background to the appeal ................................................................................................................. [1] First alleged error of law: incorrectly narrow assessment of “suitability” ................................ [28] Second alleged error of law: failure to acknowledge status of Police reports ............................ [42] Third alleged error of law: LLA wrongly rejected CGML objection ......................................... [57] Consequential error: immediate issue of the licence .................................................................... [70] Outcome ........................................................................................................................................... [78] Costs ................................................................................................................................................. [79]
NEW ZEALAND POLICE v CASINO BAR (NO 3) LTD HC WN CIV-2012-485-1491 [4 February 2013]
Background to the appeal
[1] On 27 June 2012, the Liquor Licensing Authority (LLA) issued a decision in which it granted an application by the first respondent (CBL) for an on-licence under the Sale of Liquor Act 1989 (the Act) in respect of an adult entertainment venue in central Wellington known as “Calendar Girls”.1 Its decision was to have immediate effect.
[2] On the basis of serious concerns about the suitability of the applicant, the Police had opposed the grant of the licence. The second respondent (CGML), a member of the Chow Group of companies, also opposed the application. Its objection acknowledged that it was a competitor of CBL, but sought to pursue grounds of objection unrelated to the adverse effects of competition from CBL on its own operation. The third respondent (Mr Hilton) also lodged an objection to the application. The LLA treated that objection as having no status because it had been received out of time.
[3] Despite the matters raised in opposition to the application, it was granted by the LLA without convening a hearing. The Police then appealed the LLA’s decision. The appeal is brought under s 139 of the Act which confines such appeals to questions of law. The Police have raised a series of questions of law as to the manner in which the LLA dealt with the application and its grounds for granting it. CGML presented argument in support of the appeal. Mr Hilton took no part in the appeal.
[4] CBL had lodged its application with the District Licensing Authority (DLA) on 30 March 2012. The application described a Ms Le Prou as the sole director and shareholder of the applicant company. In accordance with the statutory requirements for the grant of a licence, the application confirmed that there was no reason to believe that the applicant was not a suitable entity to hold a liquor licence. It made
no reference to Ms Le Prou’s husband, Mr James Samson.
1 Re Casino Bar (No 3) Ltd [2012] NZLLA 723.
[5] The statutory process under the Act provides for any person who has a greater interest in the application than the public generally to object to the grant of an on- licence.2 Objection may only be made in relation to matters relevant to the criteria for on-licences.3
[6] To the extent it is relevant to this appeal, the criteria in s 13 provide as follows:
13 Criteria for on-licences
(1) In considering any application for an on-licence, the Licensing Authority or District Licensing Agency, as the case may be, must have regard to the following matters:
(a) The suitability of the applicant:
…
(g) Any matters dealt with in any report made under section 11 of this Act.
(2) The Licensing Authority or District Licensing Agency, as the case may be, must not take into account any prejudicial effect that the grant of the licence may have on the business conducted pursuant to any other licence.
[7] The Act also provides for all applications to be served on the Police and provides, in s 11(3), as follows:
11 Reports
…
(3) The Police and the Medical Officer of Health must each inquire into and, if they have any matters in opposition, file with the District Licensing Agency a report on the application within 15 working days after receiving the application.
[8] In this case, the application was served on the Wellington Police liquor licensing section. The Police lodged a first report with the DLA on 30 April 2012, outlining the Police’s opposition to the application. That report stated that the Wellington Police had made inquiries into the applicant and had serious concerns as
to its suitability. The report also stated that if the applicant was determined to
2 Sale of Liquor Act 1989, s 10(1).
3 Sale of Liquor Act 1989, s 10(3).
proceed with the application, the Police asked that it be determined by the LLA at a public hearing. Subsequently on 9 May 2012, the Police lodged a second report, which stated, inter alia:
Police are satisfied through our inquiries to date that Le Prou’s husband, Mr James Samson, has been significantly involved in the operation of the “Calendar Girls” business;
Samson is viewed by Police as a highly unsuitable individual to be involved in any licensed premise. He has been convicted of serious drug and firearm related offences and his last two convictions resulted in lengthy terms of imprisonment.
[9] That second report attached a copy of Mr Samson’s criminal record and repeated the request that a public hearing be convened if the application was to proceed.
[10] In a third report dated 23 May 2012, the Police raised additional matters on the concern at Mr Samson’s potential connection with the business. The report questioned whether Ms Le Prou had complied with undertakings she had given in the course of applications for off-licences for her “Calendar Girls” businesses in other centres. Such applications had been made in Christchurch in 2010 and in Auckland in 2011.
[11] The third report advised that, on the basis of inquiries the Police had undertaken, the Police view was that Mr Samson had played an integral part in the establishment and management of the Calendar Girls business in Wellington up until that time. The report cited a media report dated 1 December 2011 which had quoted Mr Samson as “the businessman involved in opening Wellington’s newest strip club” and “the spokesman for the Calendar Girls club”. That media report stated that a claim had been made in Court that Mr Samson was behind a “sex industry turf war in which two Christchurch massage parlours were firebombed”.
[12] In addition, the third Police report cited Facebook pages in which Mr Samson listed his contact information via the “Calendar Girls” website, described himself as working at Calendar Girls and being pretty busy building Wellington’s first five star gentlemen’s club. Those Facebook references listed Mr Samson as marketing and events manager of Calendar Girls, both in Auckland and in Christchurch.
[13] The report also referred to references in Mr Samson’s Facebook pages to other Wellington adult entertainment venues in respect of which it appears Mr Samson had stated “it has passed my attention one is made form [sic] very dry sticks? I’ll huff and I’ll puff …”. According to the Police, this was a cause for concern to the operators of those businesses who were entitled to treat it as a threat, particularly in light of the suggestions of Mr Samson’s connection with firebombing of similar businesses in Christchurch.
[14] The report cited further evidence of Mr Samson’s on-going involvement with the Calendar Girls businesses in Wellington and Auckland, including claims attributed to Mr Samson that he was making important business decisions for the business.
[15] Separately from the Police’s own inquiries, the third report cited from a report prepared by a senior gambling inspector from the Department of Internal Affairs dating from October 2011. That report raised concerns about links between a company that Mr Samson had an interest in and the Calendar Girls business in Auckland, and that Mr Samson was a signatory for the Auckland Calendar Girls business bank account, including having conducted significant transactions in relation to that account.
[16] Mr Samson’s participation in the business had apparently been discovered by the Department of Internal Affairs after Ms Le Prou had provided an affidavit in April 2011 in respect of the Auckland Calendar Girls business, in which she undertook that her husband would not be involved in running the business, and that he would only work for a wage and carry out duties required of a paid employee. In the months after that undertaking, it appeared that Mr Samson had become a signatory for the bank account operating the Auckland Calendar Girls business, and during June 2011 Mr Samson had cashed cheques drawn on that account for some
$23,000 and written cheques to other entities for nearly $100,000.
[17] CGML lodged an objection to the application pursuant to s 10 of the Act within the time provided for doing so. CGML’s objection raised the same concern that the applicant was not a suitable person by virtue of Mr Samson’s connection
with the business. A concern about his possible involvement in the firebombing of Christchurch massage parlours as part of a sex industry “turf war” was referred to in terms that raised questions about the legality of competitive conduct and the safety of personnel in the industry.
[18] For its part, CGML cited other aspects of Mr Samson’s Facebook page which contained what it described as “volatile commentary” about existing businesses. The objection stated that Mr Samson had been banned from attending the objector’s business, Mermaids, because management discerned that “his sole purpose for so doing was to make belittling and disparaging remarks against Mermaids’ management to Mermaids’ staff in an effort to discourage them in their current employment and to recruit them for the Calendar Girls business”.
[19] The CGML objection acknowledged its association with the Mermaids business, which was a competitor of Calendar Girls, and on that ground acknowledged that the objection may be deemed to be a “trade objection” unrelated to the criteria in s 13(1) of the Act which would be excluded from the LLA’s consideration under s 13(2). Having made that acknowledgement, the objection explicitly went on and addressed the primary consideration under s 13 of the suitability of the applicant.
[20] On 8 June 2012, the LLA issued a minute of Judge J D Hole. It is sufficiently relevant to the issues on the appeal to warrant setting it out in full:
[1] On 30 March 2012 the applicant applied to the Wellington District Licensing Agency for an on-licence in respect of premises at 13 Dixon Street Wellington to be known as “Calendar Girls”. Neither of the two objections filed comply with s.13 of the Act. The Police opposed the application as the husband of the applicant’s sole director has extensive convictions and, despite undertakings, has been involved in the running of the business and two associated businesses and has been influential in how they have operated. The Police have requested that the issue of suitability be determined at a public hearing.
[2] On 1 June 2012 the applicant and Police met. As a result, the applicant agreed to supply the Police with financial records. The Police consider this will take about two weeks. The Police think they will need at least another four weeks to consider the financial records. This seems excessive.
[3] An analysis of the Police’s letter dated 23 May 1012 [sic] reveals that the Police claim that the applicant’s husband has been involved in the setting up of the businesses and their marketing. When determining the applicant’s suitability, the principal issue is if the applicant is suitable given the statutory object of reducing liquor abuse. The setting up of the businesses and their marketing would seem to have little to do with this object. Rather, it is how the businesses operate or will operate once they are open for business that is the issue.
[4] The undertakings given on behalf of the applicant are capable of more than one interpretation. They do not address the principal issue.
[5] The Police opposition to this application pursuant to s.11 of the Act does not have the status of a public objection filed under s.10 of the Act. If the outstanding issue can be resolved to the satisfaction of the Authority, or if the Authority thinks the opposition is specious, then the application can be granted on the papers. It may be that if the applicant is prepared to undertake that the applicant’s director’s husband will not:
[a] Play any role in the business when it is open for the sale and supply of liquor; and
[b] Enter the licensed premises when they are open for the sale and supply of liquor,
that the Police’s opposition to the application will be satisfied and the
application can be dealt with on the papers.
[6] Unless the Police and applicant advise the Authority within 10 days of the date of this Minute that the issues between them have been resolved, the Authority will set the application down for a public hearing.
[21] On 13 June 2012, the Christchurch solicitors for CBL and Ms Le Prou wrote to the LLA specifying:
… we can state clearly that in terms of the minute, our client undertakes that her husband (who is not a director) will not play a role in the sale of liquor nor enter the premises when open for the sale and supply of liquor.
The letter was not copied to either the Police or CGML.
[22] The following day, solicitors for CBL wrote separately to the Police indicating that Ms Le Prou was prepared to give an undertaking as to the exclusion of her husband on the terms indicated in the minute. On 19 June 2012, the Police advised both the LLA and solicitors for CBL by email that the Police were unwilling to accept another undertaking from Ms Le Prou on behalf of the applicant, that after discussions with solicitors for CBL the applicant and the Police appeared to have reached the point where they “agreed to disagree”, and the Police renewed the
request for a hearing on the basis that that was the only appropriate forum in which to determine the applicant’s suitability. That email also foreshadowed additional evidence in support of the concerns the Police had identified.
[23] Solicitors for CBL wrote again to the LLA on 22 June 2012, addressing the concerns that had been foreshadowed on behalf of the Police, confirming the preparedness of Ms Le Prou to provide the undertaking that had been contemplated in the minute, and submitting that the opposition to the application was “specious and unconvincing”. In support of that proposition, the letter pointed to the fact that, despite Police opposition, the applicant’s existing operations had been granted extended trading hours in Auckland and a grant of renewal of its licence in Christchurch. The letter labelled the Police stance as “heavy handed” and submitted that the fact that Ms Le Prou was an existing licensee meant that she was indeed a suitable applicant.
[24] Again, that communication was not copied to either the Police or CGML. Without further dialogue of any sort, the decision now under appeal was issued on
27 June 2012. The decision acknowledged and rejected Mr Hilton’s objection as being out of time. It treated CGML’s objection as not having any status by virtue of the objector being a competitor. It rationalised that the Police report in opposition did not have the status of a public objection so that the LLA was not required to convene a hearing.
[25] As to the relevance of the involvement of Mr Samson to the LLA’s assessment of the applicant’s suitability, the decision acknowledged Ms Le Prou’s undertaking that Mr Samson would not play any role in the business when it was open for the sale or supply of liquor and would not enter the premises when it was open for the sale or supply of liquor. Although the LLA appears to have relied on the representation by solicitors for CBL of the scope of undertaking available, a licensing consultant working for CBL had, on 8 May 2012, emailed to the LLA a scanned copy of a statutory declaration completed that day by Ms Le Prou. That provided a more limited undertaking that Mr Samson would not be involved in the running of the business or have any influence over anyone involved in the business, and that he would only work for a wage in the business and carry out duties required
of a paid employee. Given that the application was for opening hours between 7am and 3am, the scope of the work he might do without being in a position to influence anyone involved in the business would appear to raise legitimate questions about his complete exclusion from the running of the business.
[26] The LLA decision reasoned that if the undertaking as described by the applicant’s solicitors was complied with, then the Police concerns would “become unmeritorious”. Further, that if the undertaking was not complied with, then the LLA anticipated that the Police would bring an application under s 132 of the Act for cancellation of the licence. Given the conditionality of that reasoning, it did not amount to a finding that the opposition was specious and unconvincing, nor was that point made elsewhere in the decision.
[27] The thorough submissions on the appeal on behalf of the Police listed eight questions of law as arising from the LLA’s process, and the terms of its decision. The submissions for CGML supplemented some of these, and were generally supportive of the criticisms outlined on behalf of the Police. The matters argued can adequately be analysed under the following headings.
First alleged error of law: incorrectly narrow assessment of “suitability”
[28] The Police characterised the LLA as focusing solely on the manner of future operations of the applicant’s business when determining “suitability” as required by s 13(1)(a) of the Act. The argument for the Police treated it as having that narrow focus because the decision did not consider the way the business has been set up and its marketing as relevant to the statutory objective of reducing liquor abuse. The
decision had continued:4
Rather, it is how the licensee operates or will operate the business once the premises are open for the sale and supply of liquor that is the issue. (emphasis added)
[29] In opposing this ground, Mr Bendall argued for CBL that a criticism focusing on the literal reference to “the issue” misrepresents the essence of the analysis that
4 Re Casino Bar (No 3) Ltd [2012] NZLLA 723 at 2.
had been undertaken. Instead, the decision arguably revealed an appropriate focus on the manner in which the business would be operated as the appropriate context in which to assess the suitability of the applicant.
[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.5 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.
[31] In this case, a significant aspect of any assessment of suitability of the applicant involved the applicant distancing itself from an unsuitable person (Mr Samson) whose involvement in running the licensed operation was implicitly treated as adversely affecting the applicant’s ability to make out its suitability to be granted a licence. In that context, it would be unrealistic to ignore the extent to which such a presumptively unsuitable individual had been involved in setting up and marketing the business, when assessing the credibility of a claim on behalf of the applicant that he would be excluded from the operation of its licensed business.
[32] In its decision, the LLA rejected the Police concern at the involvement of Mr Samson, by relying on what it took to be the undertaking provided by Ms Le Prou that he would be entirely excluded from the applicant’s business operations. Having done so, the LLA considered it could be satisfied as to the applicant’s suitability, essentially because Ms Le Prou was associated with other licences that had been granted for some time, and that nothing adverse had been
raised in respect of her, in her own personal capacity.
5 Re Sheard [1996] 1 NZLR 751 at 755.
[33] The LLA supported its reliance on the undertaking with its expectation that if the undertaking was not complied with the Police would immediately bring an application for cancellation of the licence under s 132 of the Act.
[34] In criticising this approach as unduly narrow, submissions for the Police cited a checklist of matters likely to be relevant to an assessment of suitability from the text Dormer & Sheriff Sale of Liquor.6 The list is as follows:
(a) previous convictions, especially those involving liquor or those raising questions as to honesty or propensity for violence;
(b) character, reputation;
(c) matters raised in reports filed under s 11; (d) previous unlawful operation of premises;
(e) any of the above in relation to a person other than the applicant who is involved in the application (as a director, manager, etc) or is intended to be employed by the applicant;
(f) breach of an undertaking; and
(g)misleading information in an application and/or misleading public notice.
[35] Not all of the criteria from Dormer & Sheriff will be relevant in every application where objection is raised to the suitability of an applicant. However, it is an appropriate starting point for the range of matters that the LLA would need to traverse in assessing whether the onus on an applicant to establish suitability, where it is challenged, has been discharged. These matters are significantly wider than the applicant’s proposal as to how the business will operate.
[36] The requisite approach to suitability will inevitably be context-specific. Here, the Police had conveyed a range of grounds for their concerns about the prospect of involvement of Mr Samson, and the unreliability of undertakings by Ms Le Prou that he would not be involved. There were credible grounds for questioning the efficacy of an undertaking previously given by Ms Le Prou, and the LLA implicitly recognised that involvement in the business by Mr Samson, in breach of such an undertaking, would be a ground for the Police to move for cancellation of the licence. Given those live issues, the manner in which the LLA shut down the inquiry and deprived itself of a sufficiently informed basis for a decision as to whether the applicant had discharged the onus, reflects an unsustainably narrow approach to the assessment of “suitability” and constituted an error of law.
[37] An aspect of the Police challenge to the LLA’s approach to considering “suitability” was to criticise the LLA for having wrongly relieved the applicant of the onus of establishing suitability once it had been put in issue. The effect of the LLA reasoning was that if the Police were justified in their concerns that Mr Samson’s involvement was of a type that reflected adversely on the applicant’s suitability, then evidence of his involvement would become available, affording the Police grounds
to move for the cancellation of the licence.7 Leaving the prospect of unsuitability on
account of Mr Samson’s potential involvement to be decided by subsequent events is inconsistent with the applicant having discharged the onus on it to make out its suitability to hold the licence. Instead, the applicant should show suitability upon its application, before the events play out which might ultimately disprove suitability.
[38] I agree that the decision is on terms that does not recognise any onus, but am not persuaded that this specific criticism of the reasoning adds to the error of law that is made out of the decision being premised on an unsustainably narrow approach to the assessment of “suitability”.
[39] A further discrete but related criticism advanced on behalf of the Police was that the LLA erred in relying on the absence of applications by the Police in different licensing districts to revoke the other licences that have been granted to businesses
associated with Ms Le Prou, as a matter in support of the suitability of the applicant in the present case. Mr Smith’s argument on this point was that (particularly in the absence of a hearing) it was an error of law for the LLA to assume that the Police in all parts of the country would have the same level of interest in, and detailed information about, Mr Samson’s association with those licensed businesses. There might be a variety of explanations for the absence of such applications in relation to the licences granted in Auckland and Christchurch, and arguably the absence of such initiatives could not be relied on by the LLA in satisfying itself of the suitability of the applicant, at least when the matter was untested in the evidentiary sense.
[40] I am not satisfied that, as a matter of law, the LLA should not have regard to the status of other licences that the present applicant is associated with. In the course of a contested hearing at which the suitability of the applicant was in issue, it might well be appropriate for the applicant to support its arguments as to suitability by reference to the history of unchallenged operations of licensed premises managed by associated entities in other centres. In that context, it would be open to those opposing the application to test the relevance of, and circumstances in which there had been no opposition to the licence being granted, or applications to revoke other licences.
[41] Again, this criticism is more appropriately seen as an aspect of the unduly narrow approach to the issue of suitability of the applicant, and the LLA’s decision to determine that without a hearing. It cannot be a discrete error of law for the LLA to have regard to the applicant’s experience with associated licensed businesses, provided that consideration arises in the appropriate context.
Second alleged error of law: failure to acknowledge status of Police reports
[42] The Police challenged the lawfulness of the grounds on which the LLA relegated its opposition as not having sufficient standing to require the LLA to conduct a hearing. The decision to deal with the application on the papers followed from the perception that Police reports did not have the status of a public objection in terms of s 10 and that the LLA was consequently not required to convene a hearing to determine the matter.
[43] The Police argued that the reports filed under s 11 of the Act should have been treated as objections for the purposes of triggering the requirement under s 106(2) of the Act for a hearing to be held. Alternatively, if the Police reports did not have that status, then the LLA was nonetheless obliged to turn its mind to whether the matters raised in those reports required it to conduct a hearing, when no such evaluation was undertaken.
[44] Submissions for the Police cited a 1995 appeal before the LLA from a decision of a DLA dealing with an application for a special licence.8 That decision considered whether Police reports in relation to the application ought to have given them the status of an objector for the purposes of s 106(2) so as to trigger the requirement for a public hearing. The LLA in that case reflected on the practical position that the Police had purported to object and observed obiter that if the
decision had been made without a public hearing, the LLA would have been inclined to reverse it because the requirement for a public hearing would not have been properly interpreted. Since then, as was acknowledged by Mr Smith, there is a pattern of the LLA treating reports from the Police under s 11 as not having status of objections under s 10.9
[45] The scope of the responsibilities on the Police and the Medical Officer of Health under s 11 of the Act derive from their mandatory obligation to inquire into the circumstances of every application. In terms of s 11(3), the obligation to file a report within 15 working days after receiving the application applies “if they have any matters in opposition”. That appears to contemplate a range of levels of unease: the relevant concern for the Police might be addressed, for instance by reducing the hours sought in the application, or by altering some other aspect of it falling short of a total objection to the application.
[46] There are reasons why Parliament would intend not to vest the Police with the ability to force the LLA to hold a hearing in all circumstances in which a report
raising matters in opposition could not be dismissed by the LLA as “vexatious or
8 Dance Unlimited LLA2827/95, 4 December 1995.
9 For example, C & G Driessen, LLA914-915/05, 20 December 2005 and The Limousine Bus Ltd
[2011] NZLLA 249.
based on grounds outside the scope of the Act”.10 In the balancing of interests involved in the licensing of the retail liquor industry, it may well have been considered that the scales would tip too far in favour of Police opposition if the Police could automatically force a hearing in relation to an application that they opposed.
[47] One indication consistent with Parliament treating objections under s 10 of the Act differently from reports in opposition filed pursuant to s 11 of the Act is the different way those two forms of opposition are recognised in s 147(1) of the Act. Section 147(1) defers the effect of a decision to grant a licence, where there has been either form of opposition, until the time allowed for filing an appeal from the decision has expired. If Parliament intended a report submitted on behalf of the Police under s 11 to have status as an objection, then the separate recognition of such reports recommending that an application be refused would be unnecessary.
[48] I am therefore not persuaded that, as a matter of law, the filing of a report on behalf of the Police that raises “matters in opposition” necessarily gives the Police report status as “an objection” so as to trigger the obligation to convene a public hearing under s 106(2) of the Act.
[49] However, in appropriate cases the LLA can convene a hearing in the absence of objections. Therefore, the LLA should not ignore the existence of grounds for opposition advanced in a Police report, in deciding whether it can deal adequately with an application without convening a public hearing under s 106(1) of the Act. Particularly when read in light of the nature of the obligation under s 106(2) where an objection has been filed, the existence of notified grounds of opposition on behalf of the Police will generally be a factor that the LLA ought to consider under s 106(1), before deciding whether to determine an application on the papers, or to convene a public hearing.
[50] Had the LLA recognised the scope of factors it ought properly to have considered in assessing the issue of suitability, I am not satisfied that it could
10 The grounds on which the LLA can refuse to convene a hearing where an objection is filed, contained in s 106(2)(b) of the Act.
reasonably have dismissed the need for a public hearing before reaching a lawful decision on the issue of suitability.
[51] In opposing the argument of an error of law in this aspect of the decision, Mr Bendall argued for CBL that the LLA had turned its mind to whether it should hold a public meeting in the terms of its 8 June 2012 minute. Certainly, that minute canvassed the alternatives but the subsequent history of the application does not bear out what was then contemplated. It foreshadowed a public hearing unless the Police and the applicant resolved the issues within 10 days of the issue of the minute. That certainly did not happen, and the Police thereafter repeated their opposition in terms contemplating that a hearing should be convened. The LLA’s decision was subsequently made in reliance on a unilateral communication from the applicant (not copied to the Police) and without affording the Police an opportunity to comment on the strength of the case supporting its request that a public hearing occur.
[52] It is not clear whether the LLA was aware that the applicant’s 22 June 2012 letter reiterating its position on an undertaking had not been sent to the Police. If it was, then it would be a further error on the LLA’s part to issue a decision in reliance on that indication, without affording the Police an opportunity to comment.
[53] Overall, the sequence of events does not constitute an adequate consideration by the LLA of the need to convene a public hearing.
[54] I agree with Mr Smith’s submission that in assessing the criteria in s 13 for granting an on-licence, the LLA is required to establish enough factual conclusions to give meaningful consideration to the relevant matters. He cited the observation of Fisher J:11
… the Authority had a wide scope as to the means by which it would arrive at the factual conclusions but it could not abdicate the exercise altogether.
[55] Here, there is not a complete abdication of factual analysis but rather an unrealistically confined one following from the error of law in defining the issue of suitability too narrowly.
[56] In the context of this case, although the LLA was, as a matter of law, entitled to exclude the Police reports in opposition to the application from the opposing communications that had the status of objections, that did not leave the LLA with an unfettered discretion to determine the application without convening a public hearing. I am satisfied that in the circumstances of this application, and the point that had been reached once the Police conveyed to the LLA their failure to agree issues with the applicant after the issue of the 8 June 2012 minute, the appropriate course was to convene a public hearing. The LLA erred as a matter of law under s 106(1) in deciding that it would determine the application without convening a hearing.
Third alleged error of law: LLA wrongly rejected CGML objection
[57] It was argued for the Police that as a matter of law the LLA was wrong to exclude the objection filed on behalf of CGML in its entirety, solely because there was an acknowledgement in the objection that it was brought on behalf of a competitor. The standing to bring an objection under s 10(1) requires the objector to have a greater interest in the application than the public generally. Objections may
only be made in relation to the criteria for granting licences in s 13(1) of the Act.12
Those provisions do not exclude persons whose interest is greater than that of the public generally by virtue of being a competitor, but under s 13(2), in considering applications, the DLA or LLA:
… must not take into account any prejudicial effect that the grant of the
licence may have on the business conducted pursuant to any other licence.
That precludes a competitor objecting on the grounds that a grant of the licence would impact adversely on the objector’s licensed business. It does not disqualify a competitor from objecting, but merely excludes grounds of objection that amount to a complaint of adverse impact on the objector’s licensed business.
[58] In this case, I accept Mr Smith’s criticism that the LLA wrongly treated the whole of CGML’s objection as reflecting concerns at a prejudicial effect on the licensed businesses with which it was associated. That approach failed to have
regard to the grounds actually raised on behalf of CGML which focused on the unsuitability of the applicant given Mr Samson’s connection with it.
[59] To the extent that CGML’s objection raised a concern at the prospect of Mr Samson being prepared to resort to unlawful means to deter competition for CBL’s proposed venture, that could hardly be fear of a prejudicial effect of competition on CGML’s associated businesses as excluded by s 13(2). If this concern raised on behalf of CGML is characterised as one that, if the CBL business is established, it would give Mr Samson a motive to attempt to disable the competitors by arson or other unlawful initiatives, then it would be open to the LLA to see that as a form of objection to the suitability of the applicant, rather than concern for the prejudicial effect of the legitimate aspects of CBL’s operation on CGML’s businesses.
[60] A part of Mr Bendall’s answer to this criticism was that CGML did not have status as an objector because it could not assert any greater interest in the application than the public generally. The consequence of acceptance of this argument is that CGML would also not have status to appear as a respondent in the appeal. CBL had pursued an application for the strike out of both CGML and Mr Hilton, on the basis
that they could only be respondents if they were valid objectors in the first place.13
[61] CGML is not the licensee of either of the two Wellington premises that CBL’s venture would compete with. The alter egos controlling all of them, the Chow brothers, represent the common link. Organisationally, it appears that CGML undertakes overall management and initiatives such as pursuit of the objection in these proceedings, in the interest of the group of companies overall.
[62] In effect, Mr Bendall argued that the absence of a direct economic interest in the competing businesses meant that CGML could not make out any interest greater
than the public generally. He cited a decision in the resource management context
13 Section 141.
dealing with the requirements for status as an objector, in terms that the interest must
be one of some advantage or disadvantage and which is “not remote”.14
[63] In responding to the strike out application, Mr Sheriff argued that the group structure for the Chow Group meant that CGML did have a sufficient interest. He also cited decisions considering the adequacy of status in the resource management context for the proposition that the Court should be reluctant to deny standing entirely on this ground. Further, he argued that it should not do so in this case where the issue had not been raised at any point until after written submissions in relation to the appeal had been filed on behalf of CGML.
[64] Had the LLA not peremptorily excluded CGML, and the applicant had raised the issue of standing, then it seems likely that the inter-connection between various companies in the Chow Group could have been the subject of evidence which could establish that CGML did indeed have an interest greater than members of the public generally. It is, with respect to Mr Bendall’s argument, raised here very late in the piece. It is not an argument with substantive merit when the establishment of an interest greater than the public generally is an evaluative consideration, and the objector had got to the point in the appeal where it was committed to its submissions in support of the appeal, before this ground of objection to its participation was raised.
[65] The lack of merit in CBL’s technical objection to standing is highlighted by its reliance on the argument that it was appropriate for the LLA to have regard to the other licensed entities of which Ms Le Prou is the alter ego, in support of the suitability of the applicant in the present case. Ms Le Prou runs these other licensed premises through companies which are different to the applicant in the present case. It seems that Ms Le Prou’s status as the alter ego of those entities is comparable to the Chow brothers’ position in respect of the second respondent and other licensed premises that compete with the applicant. (There appears to be another layer of
intermediary companies and different shareholdings in the Chow Group structure,
14 Meadow Three Ltd van Brandenberg [2008] 14 ELRNZ 275 at [32] (adopting Purification
Technologies Ltd v Taupo District Council [1995] NZRMA 197).
but ultimate control lies with them.) The applicant is therefore distanced in a similar way from the companies operating those other licensed premises on which it relies for its “suitability” argument, as CGML is from competing businesses that have the more direct interest in this application.
[66] The essence is that any illegitimate initiatives procured by Mr Samson to harm the Chow Group businesses for whom CGML was concerned would be sufficiently connected to CGML’s interests to give it an interest in the present context greater than the public generally. I am therefore satisfied that CGML did have standing to object to the application.
[67] I am also satisfied that the LLA erred in rejecting the CGML objection in total, merely on the basis that it was advanced on behalf of a competitor. The LLA would be entitled to cynically test the extent to which matters raised as purportedly relevant to the s 13 criteria were in fact a front for seeking to limit legitimate competition. In some cases, after appropriate analysis, the LLA may indeed be able to treat all grounds of objection by a competitor as no more than a pretext for an attempt to prevent legitimate competition. However, in the present case such considerations go to the weight to be given to relevant objections, not the initial status of the objection itself. It follows that the Police have also made out as a distinct error of law the LLA’s wrongful rejection of CGML as a valid objector to the application.
[68] For CGML, Mr Sheriff supported his criticism of the LLA’s rejection of CGML’s objection by claiming it had a right to a hearing by virtue of other, much broader provisions including the Magna Carta, Observance of Due Process of Law Act 1368 and s 27 of the New Zealand Bill of Rights Act 1990. The last of these sources of rights may have some contextual relevance in assessing the nature of expectations for those interested in processes such as applications for licences under the Act. However, none of them can be of direct assistance in determining when the LLA is either obliged as a matter of statutory process to conduct a hearing or, alternatively, the range of matters that the LLA ought to have regard to when exercising its discretion as to whether or not a hearing is appropriate, when it is not mandatory.
[69] No argument was advanced that Mr Hilton indeed had status to object. He should not have been joined as a party to the appeal.
Consequential error: immediate issue of the licence
[70] On the basis of its analysis that there had been no valid objection, the LLA decision directed that “the licence may issue immediately”. It was argued on the appeal that that aspect of the decision breached s 147 in two respects. Section
147(1) provides:
147Effect of appeal against decision by Licensing Authority to grant licence or manager's certificate
(1) No decision of the Licensing Authority to grant an application for a licence or a manager's certificate shall have any effect until the time allowed for filing an appeal has expired if, in respect of the application,—
(a) An objection was duly filed and was not withdrawn; or
(b) A report was submitted by the Police or an inspector or a member of the fire service or a Medical Officer of Health recommending that the application be refused.
[71] Mr Smith argued for the Police that s 147 applied both under subs (1)(a) and (b) in that a valid objection had duly been filed and was not withdrawn, and that the Police report recommended that the application be refused. In those circumstances, the LLA did not have jurisdiction to give effect to its decision until the period for filing an appeal had expired.
[72] In opposing this argument, Mr Bendall argued that the LLA had been correct in rejecting CGML’s objection because it focused solely on the prejudicial effects on it as a competitor, and that the Police reports did not in literal terms “recommend that the application be refused”.
[73] As to the first of these points, I have held that CGML’s objection was a valid one. It follows that recognising its correct status brings s 147 into operation.
[74] As to the second of these points, whilst it may have been preferable for the
Police reports to say in explicit terms that they recommended the application be
refused, no objective reading of the various reports in opposition to the application submitted on behalf of the Police could have left one with the impression that the Police recommended anything other than that the application be refused. In some cases, it may be necessary for the Police to clarify the level of opposition by stipulating that they recommend the application be refused, but, on the facts in this case, the strenuous terms of their opposition and maintenance of it, notwithstanding dialogue with the applicant and urging by the LLA to resolve concerns, could not be treated as anything other than a view that the application should be refused.
[75] For CBL to now submit that the Police reports did not recommend that the application be refused is inconsistent with CBL’s own spirited responses to those reports, which included characterising the Police opposition as “specious and unconvincing”.
[76] In those circumstances, s 147(1) did operate to defer the LLA decision to grant the licence until the time allowed for filing an appeal had expired. This is not a case to which the complementary provisions of s 147A, addressing the position where s 147 itself does not apply, left the LLA with a discretion to give immediate effect to its decision.
[77] Mr Bendall submitted that if I got to this point, it would be appropriate to permit the business to continue operating, subject to the obligation to promptly reapply for a licence. He argued that the business had been operating successfully from shortly after the time the licence issued, and that a cancellation of the licence would cause serious harm to the licence-holder and the large number of employees of the business. I do not consider that any such discretion as I may have ought to be exercised in that way in the present case. The communications on behalf of CBL urged the LLA to confine its consideration of the contentious issue of suitability more narrowly than a reasonable approach to that important criterion requires. Its representatives dealt with the LLA on a unilateral basis when they must have been aware of the keen interest of the Police to have concerns at unsuitability aired at a hearing.
Outcome
[78] Accordingly, the appeal is granted. The decision of the LLA of 27 June 2012 is quashed. The licence purportedly issued in terms of it is revoked. I am mindful that the consequence is, at the very least, the disruption of the business of the first respondent until an application for a licence can be determined lawfully, but that is the consequence of the structure under the Act for lawful applications for licences.
Costs
[79] If necessary, I will receive memoranda as to costs. My provisional view is that the Police are entitled to costs on the appeal from the first respondent. I am unlikely to be persuaded to grant costs in favour of the second respondent.
Dobson J
Solicitors:
Luke Cunningham & Clere, Wellington for appellant
Lane Neave, Christchurch for first respondent
Buddle Findlay, Wellington for second respondent
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