Having elected to promulgate a Local Alcohol Policy (LAP), the Wellington City Council adopted the unusual approach of drafting it well before the commencement of the Sale and Supply of Alcohol Act 2012 (Act). In a recently released decision, which will no doubt guide other councils in the development of their LAPs, the Alcohol Regulatory and Licensing Authority (ARLA) found that Wellington City Council’s approach had some “unfortunate consequences”. Not least of those consequences was that the provisional LAP covered many matters outside of the ambit of the Act, was surplus to what is required of an LAP, and in some instances directly contravened the Act.
The provisional LAP was appealed by 8 parties, who had the task of convincing the Authority that its provisions were unreasonable in light of the object of the Act (the sole permissible ground of appeal). The principal issues in contention related to licence hours for the central area (and off-licences generally), and what were described as “compulsory licence conditions” relating to on-licences which authorised trading hours beyond 3.00am.
General Guidance by the Authority
The Authority has usefully canvassed the circumstances as to when a policy of a provisional LAP will be found by it to be unreasonable in light of the object of the Act. These include situations where a policy:
- constitutes a disproportionate or excessive response to the perceived problems;
- is partial or unequal in its operation between licence holders;
- is manifestly unjust or discloses bad faith;
- is an oppressive or gratuitous interference with the rights of those affected; or
- is ultra vires the council’s powers.
A council is not required to be sure a particular element will minimise alcohol-related harm. Instead, provided there is an evidential basis supporting it, a precautionary approach may be adopted so as to enable the council to see if an LAP will achieve the statutory object. The ‘precautionary approach’ is a concept borrowed from environmental legislation and case law. The Authority considered that a precautionary approach is authorised by the Act, although unfortunately it did not state where in the Act this approach is provided for.
The Authority found that the Act is prescriptive as to the contents for an LAP, and it does not permit exclusions. LAPs should be relatively short, and contain clearly expressed policies, such that any regulator or member of the hospitality industry, upon picking it up, could immediately discover the policy applicable to a particular situation. The Authority affirmed that an LAP should include the reasons for its various policies, which the Authority noted would assist it to determine if the policy was unreasonable.
The Authority strongly confirmed its earlier position taken in the Tasman LAP decision: namely that LAPs are local documents and not national policies, and that national or international research or experiences will seldom be of value. Indeed, as the Authority put it, “it is the local issues that are relevant” and national and international research is of little assistance in that regard.
The provisional LAP included conditions that “will” appear on all licences authorising trading beyond 3am. The Authority was (rightly, in our view) highly critical of such an approach. The conditions included:
- A requirement to maintain a register of incidents that is to be available for inspection;
- A requirement to notify the Police of any violent incidents;
- A requirement for and compliance with a Noise Management Plan;
- Designation for an observation zone for patrons for whom service of alcohol has ceased;
- A ‘wind-down’ protocol; and
- Outdoor trading conditions requiring litter removal, high visibility clothing and queue management.
A number of those conditions have been similarly included in other LAPs throughout the country, including the Auckland Draft LAP.
The Act sets out the mandatory conditions for all licences (being the provision of free drinking water, and the relevant risk rating of the licensed premises). The Act is clear that only the matters it sets out can be covered by an LAP – and as for conditions, this extends to discretionary conditions only. The Council argued that as a process for exemption from the conditions was included in the provisional LAP, then the conditions could be considered as discretionary in nature, and therefore not unreasonable. However, the Authority was not attracted to that argument, and found instead that the compulsory conditions are intended to be compulsory, notwithstanding semantics and possible exceptions. As LAPs can only relate to discretionary conditions, Wellington City Council’s provisional LAP was unreasonable, and ultra vires the powers contained within the Act.
This will have some important consequences for other councils – for example Auckland, where its draft LAP also purported to include a large number of conditions that “will” be imposed on licences.
Introduction of a Risk Assessment Tool
For premises seeking to trade under extended hours, it was intended under the provisional LAP that additional criteria would apply through the use of a ‘risk assessment tool’ (RAT). The RAT was not originally intended to form part of the LAP. However, following representations by the supermarkets to increase certainty, the RAT was included as an appendix to the provisional LAP.
The Authority did not agree that the RAT can or should form part of the provisional LAP because it was included after public notification of the provisional LAP. This meant persons who may have been uneasy with its content did not have an opportunity to appeal the RAT. Beyond that rather fundamental problem, the Authority expressed concern that the RAT purported to incorporate new criteria in addition to the criteria that DLCs and the Authority apply to applications. This, the Authority concluded, could result in the RAT assessment criteria assuming greater importance than the statutory criteria. That is because the RAT employed a weighting criteria which the Authority found was contrary to established legal principles. For example, it proposed a 25% weighting as to the suitability of an applicant. The Authority rightly noted that an applicant is either suitable or not, and there is no halfway measure (or quarterway, for that matter).
As the RAT was not part of the provisional LAP, it could not be included as such by way of an appeal. Importantly, in rejecting the RAT, the Authority confirmed that inspectors and DLC are independent of the council. Just because the council wished a risk weighting to be applied, it did not mean it should be so employed by the inspector or DLC. Further, the Authority confirmed that a council has no authority or power to influence a DLC in reaching a decision on a licensing application. Again, councils like Auckland’s will need to recast their draft LAP as a result of this, given many of its policies were directed at doing precisely that.
The Authority approached the issue of the extended 5:00am trading hours by first noting that the national default hours of 8:00am - 4:00 am provided a useful starting point where there are licensed premises in the city trading up to those national default hours. Where premises generally close earlier than that, then those existing trading hours will be applied as the relevant starting point.
Police and health authorities sought the reduction of trading hours to 3:00am. Wellington City Council argued that the 5:00am closing time provided for a ‘late night economy’, while ensuring a break in the service of alcohol compared to the pre-2012 situation of 24/7 licensing.
The Authority found the evidence of the Police and health authorities to be compelling. The Authority noted it had the benefit of hearing evidence on the situation, since the national 4:00am default hours had been in place for some time (which was not the case when the Wellington City Council promulgated the policy). The Authority found serious injuries had reduced, and the previous trend of intoxicated persons remaining in the central area had “disappeared”.
The Authority was particularly critical of policies that it considered went beyond matters of alcohol licensing, such as those aimed at creating a “dynamic city centre” and a “people centred city”. Such policies evidenced (in the Authority’s view) that the 5:00am trading hour was imposed for the wrong reason. The policies had little to do with furthering the object of the Act, and were accordingly unreasonable.
For its part, Wellington City Council argued that the RAT, conditions and policies on providing a dynamic central area supported a 5:00am trading time. Unfortunately, it did not produce any evidence that the object of the Act would be realised by its policy. As a consequence, the Authority found it had a misconception of its role, and had “put the cart before the horse”, thereby failing to provide a policy that would pass the statutory test. It was of little surprise then that those circumstances the Authority found the 5:00am closing time to be unreasonable.
Interestingly, the Authority concluded that it was not its function to suggest to the Council what the appropriate hours should be, as this was solely for the Council to determine. Given the highly critical nature of many aspects of the decision, the Council should be left in no doubt what route it should take.
The decision has been eagerly awaited by many of the councils throughout New Zealand. Unfortunately, a number of those councils have already held hearings on the draft LAPs which contained similarly problematic policies. It is hoped that the councils will now take the opportunity to recast such policies.