When the Alcohol Reform Bill was first read in Parliament, its sponsoring minister, Hon Simon Power, said that a consequence would be alcohol licences would become harder to get and easier to lose.  The May 2018 High Court decision in Medical Officer of Health (Wellington Region) v Lion Liquor Retail Ltd seems to confirm that new reality, which applies not just to new licences but to the grant of renewed licences as well.  This article traces the progress of Lion Liquor as it weaved its way from the Wellington District Licensing Committee, to the Alcohol Regulatory and Licensing Authority, and eventually to the High Court.


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The facts

Lion Liquor Ltd (“Lion) is the retail arm of Lion Beer, Spirits & Wines Ltd.  New Zealanders know the company by its generic, all-encompassing name: Lion New Zealand.  In addition to controlling a portfolio that includes many of Australia and New Zealand’s favourite drinks, Lion also operates 39 retail stores throughout New Zealand under the “Liquor King” brand.  The store at the heart of this story – on Kent Terrace – lies only a short distance from Courtney Place, the heart of Wellington’s entertainment precinct.  Of course, that store wasn’t alone; within a 500m radius of it were around 143 licensed premises, including 13 other off-licences.

The store’s licence came up for renewal and was opposed by one public objector as well as the Medical Officer of Health (“MOH”) and Police (collectively “the agencies).  There were concerns regarding the store’s effects on the good order and amenity of the locality around it, specifically as a consequence of its proximity to social housing units and the vulnerable people who lived in them, as well as the large number of young people residing nearby, who were identified by the agencies as a demographic particularly susceptible to experiencing alcohol-related harms.  Interestingly, neither of the agencies sought the licence’s refusal; rather, they wanted the store’s licensed hours restricted and the addition of various discretionary conditions, including limits on sales of single serves of alcohol and RTDs.

Wellington District Licensing Committee

Wellington District Licensing Committee (“DLC”) renewed the store’s licence in a long and comprehensive decision that sets out the background and DLC’s reasoning.  In respect of the agencies good order and amenity concerns, the DLC said that it was not persuaded by Lion’s evidence, which it considered “somewhat unrealistic, and in large measure self-serving”.  Ultimately, the DLC formed the view that there was “significant alcohol related harm around the premises, compared with other Wellington communities generally”.

In response to this harm, the DLC imposed a number of conditions, including one restricting the store’s licensed hours on Friday and Saturday nights and another requiring all carry bags in which alcohol was sold to carry distinctive “Liquor King” branding.  The DLC reduced the licensed hours on the basis “there [was] sufficient evidence to support reducing trading hours” following its analysis of rates of alcohol-related harm that could reasonably be attributed to the conduct of the store within its locality.  Lion appealed both the hours and carry bag conditions to the Alcohol Regulatory and Licensing Authority (“ARLA”).

Alcohol Regulatory and Licensing Authority

In its appeal to ARLA, Lion argued that the DLC had erred in law in a number of ways, including by failing to establish a “causal nexus between [Lion’s] operations and [alcohol-related harm] in the surrounding area that the conditions [were] intended to address”.  This argument was based on Lion’s analysis of earlier case law, which it said articulated the need for “evidence to suggest that granting the application will be contrary to the object of the Act”.

For their part, the agencies accepted that granting Lion’s renewal would not be contrary to the Act’s object per se; rather, their view was that the relative vulnerability of the store’s locality would inevitably contribute to an increase in alcohol-related harm that could only be minimised by the reduction in trading hours.  In other words, without the conditions, harm would not be minimised; but with them, it would be.

ARLA determined that, while the DLC had evidence of excessive or inappropriate consumption of alcohol affecting Wellington’s entertainment precinct generally, that data did not “constitute evidence that excessive or inappropriate consumption of alcohol and increased [harm] will result from the renewal of this particular licence”.  Put another way, ARLA held “there is no ‘causal’ nexus between the grant of this renewal licence and general incidence of [alcohol-related harm] in the locality established by the [agencies] and objector”.

This finding was consistent with a long established requirement for evidence of the impact of a premises – particularly in the context of licence renewals – when evaluating an application against the Act’s statutory criteria.  In other words, there needed to be some reliable evidentiary foundation which linked the store to alcohol-related harm.  In this regard, evidence of only a general nature was unhelpful, although ARLA did accept in its decision that committees were “often limited in [their] ability to address aspects of [harm] due to the lack of evidence showing a link to the premises in question”.

Accordingly, ARLA modified the DLC’s decision by removing the restriction on trading hours entirely, although Lion was left with the condition requiring branded carry bags to be used, as ARLA determined that it would help future efforts to provide the evidential link to specific premises that had been missing in Lion’s application. 

But it didn’t end there…enter the High Court

The Medical Officer of Health successfully appealed to the High Court, which overturned ARLA’s decision, and required the store to revert to the reduced hours first approved by the DLC.  In a part of the decision labelled “Summary”, Justice Clark made the following observations:

  1. The new Act was intended to restrict rather than relax drinking laws and was based on “clear evidence showing a link between the availability of alcohol and alcohol-related harm”.
  2. The new Act reduced national maximum licensed hours, particularly for holders of off-licences.
  3. The DLC “correctly took account of the correlation between reduced hours and reduced alcohol-related harm…”.
  4. The DLC’s decision to reduce trading hours was principled: “The DLC did not need to be sure the condition would, in fact, minimise alcohol-related harm. It was entitled to test that possibility”.

Essentially, the High Court agreed that a nexus (connection) was indeed required, but that nexus was between the application in question and the Act’s object of minimising harm and not between any specific harm and the conduct of a specific premises.  Instead (and by citing an earlier High Court case), the Court found that “requiring proof of a ‘causative link is not only unrealistic but is contrary to the correct legal position”, which it held was more akin to a risk analysis and not anything involving standards of proof. 

From Justice Clark’s perspective, once the nexus as between the renewal application and the Act’s object was identified, “the next step requires an evaluation of the evidence in order to assess the degree and nature of alcohol-related harm that is potentially linked to the licence”.  Hence the need for a risk analysis that considered existing levels of harm against the vulnerability of a particular locality and the potential the operation of a licensed premises (in Lion’s case, its store) might reasonably contribute toward that harm. 

Having undertaken an evaluative analysis of its own, the High Court ultimately determined “it was sufficient to engage the requirement to minimise alcohol-related harm that the evidence implicates the premises”, notwithstanding how general it was.  In so doing, the Court appears to have confirmed that evidence of only a general nature can be attributed to specific premises where the vulnerability of a locality and the nature of a premises could lead a reasonable decision-maker to a finding that the impact of granting a licence (including a renewal) would lead to a real risk of prospective harm.

Lessons for others

Perhaps the key lesson is that licences may now be harder to get and easier to lose, just as Hon Simon Power and Hon Judith Collins both predicted during the Alcohol Reform Bill’s progress through Parliament. 

This must surely be concerning for existing licensees who operate well-run premises, particularly as Justice Clark endorsed the submission that “a licensee may be a model operator but if its products are consumed after sale in a harmful way the operator may bear the consequences by way of restrictions on the licence”.  In other words, even a licensee that takes care to ensure that it has robust systems and well-trained and well-resourced staff may still find its renewal opposed or even refused.   

Another  lesson is that applicants for any type of alcohol licence should not take anything for granted – even when applying to renew an existing licence.  There is no presumptive right that a licence will be renewed; no “foregone conclusion”.  Getting good advice early on to put your best foot forward is now key.  Many of the risks will never be eliminated, but they may at least be managed. 

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