Triveni Puri Ltd v Commissioner of Police

[2012] NZHC 2913

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV 2012-483-157 [2012] NZHC 2913

BETWEEN  TRIVENI PURI LIMITED First Appellant

ANDSANJEEV NAUHRIA Second Appellant

ANDTHE COMMISSIONER OF POLICE First Respondent

ANDTHE WANGANUI DISTRICT LICENSING AGENCY

Second Respondent

Hearing:         5 November 2012

Counsel:         J H A Wiles for Appellants

J M Woodcock for Respondent

Judgment:      6 November 2012

JUDGMENT OF THE HON JUSTICE KÓS

[1]      Triveni  Puri  Limited  (TPL)  appeals  against  a  decision  of  the  Liquor Licensing  Authority  (the  Authority)  refusing  renewal  of  its  off-licence.    And Mr Sanjeev  Nauhria,  a  director  and  shareholder  of TPL,  appeals  its  decision  to cancel his general manager’s certificate.

Background

[2]      TPL runs a branch of the “Thirsty Liquor” chain from premises in Moana

Street, Wanganui.

[3]      Its 2011 application for an off-licence was met with a number of objections. There were three main concerns.  First, the perceived proliferation of liquor outlets

TRIVENI PURI LIMITED v THE COMMISSIONER OF POLICE HC WANG CIV 2012-483-157 [6 November

2012]

in  Wanganui.    Secondly,  the  proximity of  the  premises  to  a  secondary school, Wangaui Girls College.1     Thirdly, the fact that although Mr Nauhria had held a general manager’s certificate since March 2003, it had been suspended in 2008 following three sales of liquor to minors while he was duty manager of premises in Napier (one being processed by him; the other two processed by others but on his watch).  Neither the police nor the district licensing agency opposed the grant of a

licence to TPL, however.

[4]      On 5 April 2011 TPL was granted an off-licence for 12 months.  The licence permitted TPL to sell liquor each day from 9 am to 11 pm from its Moana Street premises.   However, because of the proximity of the premises to the secondary school, special conditions were imposed.   The shop was required to be closed (1) from 11:00 am to 11:50 am each Monday, Tuesday, Wednesday and Friday; (2) from

10:30 am to 11 am each Thursday; and (3) from 3:00 pm to 3:30 pm every weekday, on days pupils attended the school.  By virtue of s 40 of the Sale of Liquor Act 1989 (Act), the licence in effect runs for an initial and probationary one year term. Thereafter it may be renewed for periods of up to three years.2

[5]      In September 2011 TPL was found to have sold liquor (four Woodstock bourbon  and  cola  RTD  cans)  to  a  16-year  old  boy  in  a  “controlled  purchase operation” supervised by a police officer.  The boy was not asked his age.  Nor was he asked for identification.  The sale was made by Mr Nauhria’s wife.  She was the only staff member present at the time.  She does not hold a manager’s certificate. Police officers interviewed Mr and Mrs Nauhria that afternoon following the sale.

[6]      No prosecution was initiated.  However in October 2011 the police applied for cancellation of the off-licence and Mr Nauhria’s general manager’s certificate. The applications alleged a number of other sales to minors:  two (both of 18-packs of beer) to M (aged 17 years) in July 2011, and a further sale of a “Purple Goanna” vodka RTD drink to a S (aged 15 years) in August 2011.  These two incidents were

first notified to the appellants at the time of the cancellation applications.

1      It is 250 metres from the premises.

2      Section 46(3).

[7]      In  March  2012  TPL  applied  for  renewal  of  the  off-licence.  The  police opposed that application.

[8]      Section  132(3)(a)  and  (b)  of  the  Act  provide  the  grounds  on  which  an application for suspension or cancellation of a licence can be made.  Either that the licensed premises have been conducted in breach of any of the provisions of the Act or of any conditions of the licence or otherwise in an improper manner or that the conduct of the licensee is such as to show that he or she is not a suitable person to hold the licence.   Similar considerations apply in the case of suspension or cancellation of a manager’s certificate under s 135(a) and (b).

[9]      Section 41 provides for an application for renewal to be made.  Section 45 governs the criteria for renewal that must be considered by the Authority.  They are the suitability of the licensee; the conditions attaching to the licence; the manner in which the licensee has conducted the sale and delivery of liquor pursuant to the licence; and any matters dealt with in any police or licensing inspector’s report made under s 43.

Decision appealed

[10]     The  Authority  noted  that  the  police  was  required  to  prove  the  various allegations in relation to the enforcement applications.  On the other hand, it was for the licensee to prove its suitability for renewal.  The standard in each case was on the balance of probabilities.

Off-licence cancellation application

[11]     The Authority first considered the s 132 off-licence cancellation application. The Authority found three of the four unlawful sales to minors were proved.  The fourth – the 9 July 2011 event alleged by M – was recanted by M.  The Authority found that this “lapse of memory taints his evidence of the 22 July transaction”.  The Authority noted there was no till record either for that transaction (unlike the others). But it said that “it is possible (according to Mr Nauhria) to override the till and effect a cash transaction without it being recorded”.  The Authority considered M “to be a

good witness with a good recall of what he said occurred”.   It said that if the

standard had been beyond reasonable doubt, the lapse of memory in relation to the

9 July transaction “would have been sufficient to cast doubt upon the evidence [as to the 22 July transaction]”.  However, it noted, the standard was instead the balance of probabilities and on that basis the 22 July transaction was satisfactorily proven.

[12]     The other  two  transactions  –  the Purple  Goanna sale  in August  and  the Woodstock cans in September (the latter in a controlled purchase operation) were in effect proven to either standard.  No real challenge was mounted to that evidence on appeal.

[13]     On that basis the grounds under s 132(3)(a) were made out. As to s 132(3)(b)

– licensee unsuitability – the Authority relied on the 2008 breaches which resulted in Mr Nauhria’s certificate being suspended for three months.   At the time of the controlled purchase operation, only Mrs Nauhria was present.   She did not hold a manager’s certificate.  There was also “some evidence” that indicated the premises were known as ones where sales to under-aged persons could occur.  The source of that evidence was M. All this established TPL’s unsuitability.

[14]     Although the grounds for cancellation were made out, the Authority preferred to deal with the matter simply by not renewing the licence.

Manager’s certificate cancellation application

[15]     As to the cancellation of the certificate application it was found of the three proven sales to minors Mr Nauhria only effected one of those sales.  However, the application also relied upon incidents which occurred and were recorded in 2008. The Authority accepted he “has tried hard” in terms of preventing sales to pupils from the nearby school.  The Authority concluded:

There is only one proven transgression in respect of the enforcement application  pertaining  to  the  General  Manager’s  Certificate.    However, Mr Nauhria’s record as a director of the licensee is not a good one and that is a factor that needs to be taken into account along with his previous poor history of managing premises.  The allegations both under s 135(3)(a) and (b) were established to the Authority’s satisfaction. In the circumstances Mr Nauhria’s General Manager’s Certificate is cancelled.

Off-licence renewal application

[16]     As to the application for renewal the Authority noted the premises were vulnerable to being visited by young persons due to its proximity to the secondary school.   As has already been noted, the Authority accepted Mr Nauhria had tried hard to take steps to ensure the premises were protected from such visitations. The Authority said:

However, whether or not the licensee has done its best is not the point. It is obliged to establish its suitability in terms of s 45 of the Act. The manner in which it has conducted the sale and delivery of liquor pursuant to the licence is also a relevant consideration.

The three proven sales to minors within the probationary year together with the fact that the premises at least on two occasions have operated without a duty manager being present plus the unsavoury reputation of the premises make it impossible for the licensee to establish on any basis its unsuitability to hold a licence. Had there been but one transgression in the probationary year the Authority might have been prepared to ignore it. It cannot ignore the three separate sales to minors plus the other evidence of unsuitability.

In those circumstances, the application for renewal was refused.

[17]     On that basis the Authority considered it need not make an order under s 132(6) cancelling the licence.  However, it noted the evidence clearly established it should have been cancelled in terms of s 132(6).

Approach on Appeal

[18]     Section 138 of the Act provides for an appeal to the High Court where the Authority refuses an application for renewal on the grounds of suitability or cancels any manager’s certificate on the grounds of suitability.  Section 138(7) provides that the appeal is to be by way of rehearing.  Section 138(11) provides the High Court may confirm, modify or reverse the decision appealed against.  The section does not provide specifically for the matter to be remitted back to the Authority.

[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.3   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.4    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.5

Issues

[20]     There are two issues for determination in this appeal:

(a)       Issue 1:   Should the Authority have relied on the evidence of M in relation to the alleged 22 July 2011 transaction?

(b)Issue 2:    Was the ultimate determination of the Authority, on the evidence, unduly severe?

Issue 1:  the evidence of M

Submissions

[21]     For the appellants Mr Wiles submitted that the evidence of M about the alleged 22 July 2011 transaction was not reliable, given especially M’s recantation of his statement to the police that he had bought beer there on 9 July also.  It should have been  discounted by the Authority.    It  is  submitted that  as  this  was  not  a controlled purchase operation, it could not be satisfactorily identified who the person was who effected the sale.  That submission seems to have little relevance save as to the s 135 application, however.  There was in fact no evidence of a till sale of the product  M  alleged  he  had  bought  around  the  time  he  said  he  had  bought  it.

Mr Nauhria  did  not  say  it  was  possible  to  override  the  till  and  effect  a  cash

3    Austin, Nichols & Co Inc v Stichting Lodestar [2008] 2 NZLR 141 (NZSC); Henwood v

Dalziell-Kernohan HC Hamilton CIV-2010-419-983, 17 December 2010 at [36].

4      Te Awamutu Wines & Spirits (1988) Ltd v Greenwood [2009] NZAR 394 (HC).

5      Cats Niteclub (1991) Limited v Police [1997] NZAR 83 (HC).

transaction without it being recorded.  He said that if a product is not scanned it is not recorded as a sale, but that “never happens”.

[22]     For the respondents Ms Woodcock submitted that the Authority had carefully weighed the evidence and addressed issues of credibility in respect of each witness. It found M to be a good witness with good recall and placed weight on the cash transaction being consistent with his evidence.   The till receipt process could by bypassed; Mr Nauhria acknowledged that, although he said it did not happen.  The Authority was entitled to reject that evidence.  The Authority had the advantage of hearing the witnesses.  The Court should not on appeal substitute its view. Although the first two sales were not controlled purchases this does not diminish the value of the evidence of each witness, and the second (to S) was not seriously challenged. These sales are in fact more serious as the purchase resulted in actual harm from the consumption of alcohol.

Discussion

[23]     I am satisfied that the Authority was wrong to rely on the evidence of M.  I reach that view with all due deference to the advantage the Authority had in seeing M.  But it is clear that the Authority proceeded on an incorrect basis in weighing the evidence of that witness.

[24]     It  was  once  thought  that  there  was  a  simple  binary  choice  in  assessing evidence  between  the  balance  of  probabilities  on  the  one  hand  and  beyond reasonable doubt on the other.   Such views could be found in this jurisdiction in cases such as Goldsmith v Liquor Licensing Authority.6    It is now clear, since the decision of the Supreme Court in Z v Dental Complaints Assessment Committee7 that analysis of the balance of probabilities standard in cases where the consequence

involves some penal sanction, rather than merely a civil redistribution of resources –

cases “in respect of whom the risk of error in outcome can be regarded with relative

6      Goldsmith v Liquor Licensing Authority HC Wellington AP 234/92, 19 October 1993.

7      Z v Dental Complaints Assessment Committee [2009] 1 NZLR 1 (SC)

equanimity” as Elias CJ put it in Z8  – is more nuanced.   Particular allegations productive of such sanction requires “stronger evidence”. As McGrath J put it in Z:9

The civil standard has been flexibly applied in civil proceedings no matter how serious the conduct that is alleged. In New Zealand it has been emphasised that no intermediate standard of proof exists, between the criminal and civil standards, for application in certain types of civil case. Balance of probabilities still simply means more probable than not. Allowing the civil standard to be applied flexibly has not meant that the degree of probability required to meet this standard changes in serious cases. Rather, the civil standard is flexibly applied because it accommodates serious allegations through the natural tendency to require stronger evidence before being satisfied to the balance of probabilities standard.

[25]      Indeed, it is conceivable that a civil case involving reputational sanction – e.g. involving an allegation of arson10 – may also demand “stronger evidence” than the norm.  And it is clear also such an approach – requiring “stronger evidence” – applies in this jurisdiction when considering the cancellation of a licence or certificate. A decision of the Authority itself anticipated the rule in Z by some years. In Spring v King11 the Authority said:

When assessing the evidence on a police application for cancellation or suspension of a manager’s certificate the Act does not require that the Authority be satisfied beyond a reasonable doubt as to the alleged wrongdoing. However, when the result of the Authority being satisfied that someone is not suitable to hold a manager’s certificate can be a loss of employment, then the seriousness of the consequences of the police succeeding on such an application means the standard of proof must be very close to that of a criminal prosecution. In this instance there is a very real doubt in our minds as to whether [K] knew that liquor was going to be sold from the premises in his absence. He is entitled to be given the benefit of that doubt and accordingly the police application for cancellation is refused.

[26]     It follows from this that the Authority in the present case needed to approach the evidence of M with reserve.  First, as the Authority noted, he had recanted his evidence altogether as to the first, alleged 9 July 2011 transaction.  He said that this was due to “fuzziness” of memory.  But as Mr Wiles elicited in cross-examination, he  had  made  a  statement  to  the  police  on  4  September  2011,  recounting  two

incidents.   He was not, as the Authority seemed to suggest, confused in reaching

8 At [50].

9 At [102].

10     See e.g. AMI Insurance Limited v Devcich [2011] NZCA 266 at [14] and [105]. Leave to appeal refused in the Supreme Court: Devcich v AMI Insurance Limited [2011] NZSC 98.

11     Spring v King NZLLA Decision 1414/93.

back ten months from the hearing in May 2012 to July 2011.  Rather he was reaching back less than two months. Secondly, in those circumstances the lapse of memory was  significant.    More  significant  than  the Authority  allowed.    In  light  of  his recantation on the first transaction, his evidence as to the second called for corroboration.  None came from the till records, unlike in the case of the August sale to S or the September controlled purchase operation.  There was no scanned sale for the products M said he had bought that evening.  The Authority’s reasons met that by noting “it is possible (according to Mr Nauhria) to override the till and effect a cash transaction  without  it  being  recorded”.    However,  that  is  not  an  entirely  fair reflection of the evidence.  Till records existed for the other transactions.  There does not seem to have been any deliberate bypass operation going on.  Mr Nauhria said that they “never” bypassed the till.   He offered an explanation for gaps in the till tallies which seems cogent (transactions not proceeded with – e.g. because credit cards are rejected).  Even more to the point (and not referred to by the Authority in its decision), witness M was vague about whether there had been a bypass at all. Initially at least he was “pretty sure” that his purchase was scanned.  Then less sure. This evidence confirms the very difficulties which led to the institution of controlled purchase operations in the first place.  Finally, unlike the sale to S which could be date-linked to a school ball (and which then meant the till record could be found), no such satisfactory date corroboration exists for M’s evidence as to the alleged 22 July transaction.

[27]     All this means four things.  First, the evidential test applied by the Authority was insufficiently demanding.  Secondly, the evidence of M should not have been treated as sufficiently strong enough to base a decision to cancel the licence or manager’s certificate.  It should either have been discounted heavily or (more likely) disregarded altogether.   Thirdly, for the purpose of the applications before the Authority  only  the  two  satisfactorily  proven  sales  to  minors  in  August  and September could be taken into account.  Fourthly, M was the only source of evidence

as to what the Authority called TPL’s “unsavoury reputation”12 – i.e. of being a place

where minors could buy alcohol without identification.   So that element of the evidence also requires to be put to one side.

12 See [16] above.

Issue 2:  sanctions unduly severe?

Submissions

[28]     Mr Wiles submitted that the sanctions imposed were inconsistent with the Authority’s findings on the efforts Mr Nauhria had made to comply with the unusual conditions imposed in the licence.  Moreover, it failed to take account of the fact in evidence that TPL had thereafter passed three other controlled purchase operations. The penalties were inconsistent with other Authority decisions as summarised in

Dormer & Sherriff Sale of Liquor at 1093 – 1100.13     Further, there were strong

mitigating circumstances on the September offence:  Mrs Nauhria had been left in charge for a very short time while he left the premises to go fetch an asthma inhaler as she was suffering a bad asthma attack. She was not functioning well when the controlled purchase operation occurred.   Cancellation was a harsh penalty.   It was submitted the appropriate penalty would have been suspension of licence and certificate.

[29]     For the respondents Ms Woodcock submitted that the licence issued to TPL could not be divorced from Mr Nauhria (whose company it was, his wife being the other shareholder), and his poor compliance record.   Given that background, he needed to be hypervigilant.  In his new licensed premises he had absented himself on both occasions, had not notified the district licensing agency about the appointment

of an acting manager14  and had failed to undertake training of other staff members.

Requiring the production of identification for persons who appeared 25 years old or younger was not a difficult burden.  The photographs of the customers in this case left little doubt as to their age ranges.  Indeed Mrs Nauhria, when interviewed by the police immediately after the failed controlled purchase operation rather frankly put the customer’s age at “15 – 16 years”.  Probably not the answer the constable was expecting.   Ms Woodcock relied on two prior decisions relating to cancellation,

although she acknowledged they involved more serious infringement than in TPL’s

13     Dormer & Sherriff Sale of Liquor (Brookers, looseleaf edition) at 1093 – 1100.

14     Sections 129 and 130.

case:   Re Onehunga Wines and Spirits Co Ltd15  and Te Awamutu Wines & Spirits

(1988) Ltd v Greenwood.16

Discussion

[30]     I do not accept that there is any mitigating consequence from the fact that the September sale occurred while Mrs Nauhria was suffering a bad asthma attack.  To the contrary, it is astonishing that Mr Nauhria left the store open and under her sole control at that point, while he rushed off to get her inhaler.  The next time something like that happens, the proper course would be to close the store.

[31]     Nor, however, do I accept that the two decisions cited by Ms Woodcock are truly apposite here.  In Re Onehunga Wines and Spirits Co Ltd17  an off-licence and certificate were cancelled where there were at least 10 unauthorised sales over a year period. It was held that while suspension may be appropiate for a one-off breach, where there was consistent failure to control the sale of liquor cancellation was appropriate.   In Te Awamutu Wines & Spirits (1988) Ltd v Greenwood18   an off- licence was cancelled and an application for renewal of a certificate declined.  In that case there were two failed controlled purchases (the second of which was failed while on notice of enforcement regarding the first).  Relevant also were two earlier instances  in  which  alcohol  had  been  sold  to  minors.   The  first  earlier  incident resulted in a suspension and the licensee indicating new procedures would be implemented.  Three and half months later a second controlled purchase was failed and the off-licence was again suspended and the owner’s certificate cancelled.  The Authority regarded this as a bad case. In neither instance was any identification asked for.  Allan J noted the decision in Onehunga as establishing that where there were systematic failures by a licensee, leading to multiple supplies to minors, it would be likely to lead to cancellation.   The Court considered there was ample justification to cancel the licence and there was no justification for renewal of the

certificate.

15     Re Onehunga Wines and Spirits Co Ltd [2002] NZAR 218 (HC).

16     Te Awamutu Wines & Spirits (1988) Ltd v Greenwood [2009] NZAR 394 (HC).

17     Re Onehunga Wines and Spirits Co Ltd [2002] NZAR 218

18     Te Awamutu Wines & Spirits (1988) Ltd v Greenwood [2009] NZAR 394 (HC).

[32]     These really are cases at a different degree of seriousness.   They involved persistent infringing despite apprehension.   In the present case the August Purple Goanna transaction only came to the attention of the Nauhrias after the September failed controlled purchase operation, and even then only when application was made for cancellation.

[33]     Nor did the Authority in my view take sufficient regard of the evidence before it  of the three subsequent  passed controlled  purchase operations.    If the evidence of M is put to one side (both as to sale and reputation), this is a case involving two breaches.  They are close together, and the licensee may have been inadvertent to the first.  The Authority accepted Mr Nauhria had tried hard to prevent sales to school pupils.  Subsequent evidence suggests the licensee had responded to the identified problems with sales to minors.

[34]     Nor am I prepared to attribute past licence breaches in the case of the Napier business to TPL.  Mr Nauhria worked there, but did he did not own that business.  It is not, therefore, a case of a common owner using separate corporate entities to avoid attribution. And, in contrast, I will have regard to those events when considering the status of Mr Nauhria’s manager’s certificate. There is nothing unjust in doing that.

[35]     Dormer  &  Sherriff  Sale  of  Liquor19   refer  to  research  undertaken  by the Authority into penalties for first20  and second21  breaches involving sales to minors. In  the  case  of  the  former  a  suspension  penalty  of  24  hours  is  typical  (absent particular aggravating factors) and in the latter 7 days suspension is typical.  Even a

third breach may not attract cancellation.  The Authority has not been attracted to a “three strikes and you’re out” approach.  And rightly so.  Dormer & Sherriff refer to a  series  of  three-breach  decisions,  and  two  involving  four  breaches,  where  the penalty imposed has remained suspension.22

[36]     Against this background to cancel the licence (as the Authority said it would do but for the fact that non-renewal took care of things) is an excessive sanction.

19     Dormer & Sherriff Sale of Liquor (Brookers, looseleaf edition) at 1093.

20     See at 821.

21     See at 1093.

22     See at 1099.

[37]     I therefore set aside the decision of the Authority.  The off-licence continues in effect until the application for renewal is determined.23     On the application to cancel the off-licence, I substitute a period of suspension of 28 days.  That period will include the 26 days during which the licence was in effect suspended before Collins J granted a stay of the Authority’s decision, under s 147A of the Act, on

19 June 2012.

[38]     I also set aside the decision of the Authority refusing renewal of the off- licence.  The conditions on which the licence is to be renewed were not the subject of submission. Although there is no express power in s 138(11) to remit proceedings back to the Authority, I am satisfied that such power exists as a matter of necessary implication in the provision.  If the parties are able to agree conditions for renewal, I will impose those by consent and not remit the matter.  If they cannot I will consider whether to impose conditions myself, or to remit.

[39]     I  also  set  aside  the  cancellation  of  Mr  Nauhria’s  manager’s  certificate. Despite his history, that is just too grave a sanction.  The decision of the Authority in this respect has also been influenced by the evidence of M which should not have been relied on.  In my view, however, too much has been made of two of the 2008 breaches which occurred while he was duty manager.  The third was a failed control purchase  operation  in  which  he  processed  the  sale. At  that  time  the Authority concluded the conduct deserved a stern response.  But it also concluded cancellation of his certificate would be unreasonable given his co-operation and good record.  His certificate was suspended for three months.  Now, despite that warning, another two purchases have occurred while he was duty manager.   More troublingly, while he was absent from the premises.  He also failed to implement and undertake necessary staff training, and failed to inform the district licensing agency of the appointment of an  acting  manager.     Against  that,  however,  is  the  fact  that  the  Authority acknowledged that he had tried to put controls in place to prevent sales to school pupils. And, too, the successful compliance record since September 2011, with three

passed controlled purchase operations.

23     Section 40(1)(b).

[40]     In these circumstances, Mr Nauhria’s certificate will be suspended for four months.  The period of suspension again is to include the period 24 May to 19 June

2012 when the premises were forced to close.

Result

[41]     Appeal allowed.

[42] Cancellation of off-licence set aside and suspension for 28 days substituted in accordance with [37].

[43] Application for renewal of off-licence granted, subject to determination of conditions in accordance with [38].

[44]     Cancellation of second appellant’s general manager’s certificate set aside and

suspension for four months substituted in accordance with [40]. [45] If costs are in issue, I will receive memoranda.

Stephen Kós J

Solicitors:

Jack Riddet Tripe, Wanganui

Crown Solicitor, Wanganui