Part 6: Legislative compliance
6.1
The Act is a prescriptive piece of legislation. In particular, it sets out in detail the process a DLA has to follow in issuing a liquor licence or manager’s certificate. The Regulations prescribe the format of application forms and the format of licences and manager’s certificates.
6.2
Ultimately, the licence or certificate issued is an important legal document that imposes a number of responsibilities on holders as well as conferring a number of rights. The Act prescribes a process for licensing that determines who may enter and work in the industry, how and when the sale or supply of liquor in licensed premises can occur, and what liquor can be sold or supplied.
6.3
The alcohol industry, and in particular those businesses that operate licensed premises in more than one DLA jurisdiction, can reasonably expect a certain level of consistency in the application of the Act. In recognition of the significant legislative powers that DLAs exercise, their decisions are subject to appeal.
6.4
To assess DLAs’ compliance with the Act we looked at a sample of their files; checked the format of application forms, licences, and certificates; and examined the way they processed licence and certificate applications. We also looked at how inspectors and the Secretary of each DLA exercised their powers. We assessed whether these functions and officers operated in keeping with the Act, to assess whether the procedures followed in reaching decisions met the statutory requirements.
6.5
To inform our interpretation of the requirements of the Act we consulted the Legal Compliance Module published by the Society of Local Government Managers,1 commentary on the Act, and decisions by the Authority. We also met with the Authority.
6.6
We did not test staff knowledge or interpretation of the Act.
6.7
This Part focuses on those approaches to processing applications and issuing licences that we identified as raising concerns about DLAs’ administration of, or compliance with, the Act and the Regulations. These practices related to:
- the format of standard forms and licences;
- considering applications for 24-hour licences;
- documenting processes;
- DLA decision-making;
- vetting applicants for manager’s certificates;
- public notification of applications;
- inspector’s reports; and
- special licences for days during which liquor is not meant to be sold or supplied to the public.
Main findings
6.8
Consistently applying legislative requirements is important for fairness, certainty, and proper adherence to the law. There was little variation in the way that DLAs applied the key provisions of the Act and the Regulations. We found much consistency and substantive compliance with the detailed statutory requirements of the Act and Regulations. The sample of application-related documentation that we examined showed that DLAs followed the necessary statutory steps, and collected the required supporting documents. Because of this, the statutory processes that applicants were required to follow did not diff er much between DLAs.
6.9
However, in some respects the application of the legislation, or individual procedures, did diff er, as did arrangements for reaching and documenting decisions. DLAs were not always using documentation or following procedures that clearly demonstrated compliance with the Act and the Regulations. Such practices expose DLAs to a risk that the processes they use could be challenged, as could the DLAs’ decisions.
Format of standard forms and licences
6.10
The Act and the Regulations require DLAs to use application forms, licences, and certificates in a prescribed format, while allowing for variations as circumstances require.
6.11
Under the Sale of Liquor Amendment Act 1999, DLAs inherited significant licensing functions and powers from the Authority. The DLAs also inherited operational procedures and standard documents, such as application forms and licence and certificate templates.
6.12
Some DLAs have added useful explanatory commentary to the standard application forms, making them easier to follow and complete. However, in some cases the standard application forms and licence and certificate templates no longer complied with legislation. Not all DLAs had updated the documentation in keeping with changes to legislation. Some DLAs had made changes to the forms they were using, but the changes were not in keeping with legislation.
6.13
We found cases where DLAs had not updated the standard documentation since 2000, when DLAs took over licensing responsibilities from the Authority. For example, a manager’s certificate application form did not include the statutory requirement that applicants hold the Licence Controller Qualification.
6.14
Legislative amendments have changed the format in which liquor licences must be issued. The use of out-of-date licence and certificate templates means that some licences and certificates do not comply with the legislation.
6.15
We also found application forms that referred to the wrong sections of the Act, and one that referred to a section of the Act that had been repealed. In one DLA, the application form for a manager’s certificate did not include questions required by the Regulations about whether the applicant had any experience in managing licensed premises, and whether they had any relevant training.
6.16
Aware of similar concerns about non-compliant application forms and templates, the Authority issued all DLAs with new template licences and certificates in May 2007, noting the importance of strict compliance. We endorse the Authority’s initiative.
6.17
In our view, all DLAs should check that the format of their licence and certificate templates follows the format of the current templates issued by the Authority. Application forms should be checked against the latest format in the Regulations to ensure that the application forms comply.
6.18
The requirements in the Act leave little room for error. However, we found many minor errors in the sample of licence and certificate files that we reviewed. These included, for example, public notices in an incorrect format, or in the name of an individual rather than the company applicant.
6.19
In our view, DLAs could set up arrangements for a sample of licence documents to be reviewed by staff well versed in the Act and its requirements. At one DLA we visited, a person in a supervisory role reviewed licence documents for every application. In another DLA, an administrative staff member carried out the reviews.
24-hour licences
6.20
The hours during which licensed premises may sell or supply liquor are a matter for each DLA to determine, having regard to the purpose of the Act. Licensees are required to meet the conditions of their licences at all times when they are open.
6.21
Some DLAs issue 24-hour licences even though, in practice, the licensed premises will seldom be open for that full period. One argument put to us for this practice was that it avoided the need to issue a special licence for events or occasions that might take place outside normal opening hours. In our view, the practice of issuing 24-hour licences that may not be sought or required by the applicant creates risks that the licensed premises will not be adequately controlled and supervised.
6.22
In issuing any liquor licence, the DLA is responsible for ensuring that licence conditions and the necessary requirements of the Act will be met at any time a licensee chooses to sell liquor within their permitted hours of trading.
6.23
For example, a premises must arrange duty manager rosters to ensure that at least one certificated manager is on duty at all times, ensure that food is always available, and provide transport alternatives so patrons can avoid driving after consuming alcohol. The applicant must satisfy the DLA of their ability to meet these statutory requirements and manage the premises responsibly. For applications to sell liquor 24 hours a day, we found no evidence that such assurance had been provided by the applicant, or sought by the DLA.
6.24
The practice of issuing 24-hour licences also provides no opportunity for the DLA and the Police to scrutinise arrangements for selling liquor on special occasions or for special events. These events or occasions would normally come to the attention of the regulatory agencies through an application for a special licence, and be subject to particular scrutiny by the DLA and the Police.
6.25
To host events for which a special licence would normally be sought, a licensed premises might need to meet specific requirements concerned with control and supervision (such as security to restrict access), with its licence endorsed accordingly. Inspections might be carried out, depending on the risks of alcohol abuse associated with the event or occasion.
6.26
We found no evidence that DLAs issuing 24-hour licences had sought assurance that, in the various circumstances when the licensed premises might be open, all requirements for the safe and responsible sale of liquor would be met.
6.27
Our concern is supported by comments from the Authority. The Authority has noted that 24-hour operations require great experience, expertise, and maturity. It has also noted that the liberal hours approved by some DLAs have not been universally respected, and that limiting the hours of operation has become established as an important tool in addressing the social and economic cost of alcohol-related crime, disorder, and anti-social behaviour.
Documenting District Licensing Agency processes
6.28
The Act contains requirements for the DLA to distribute documents to other parties as part of the application process. For example, it requires the DLA to distribute copies of applications and supporting documents to the Police and, in some cases, the Medical Officer of Health. This provision ensures that those other two agencies have the opportunity to inquire into, comment on, and where necessary object to, the granting of the application. Not all DLAs kept complete records of distributing documents to the Police and public health services.
6.29
The Act also requires the DLA to distribute to the applicant copies of reports from the Police and the Medical Officer of Health. This is an important process of natural justice that allows an applicant to see what has been said about them by the agencies involved in considering their application. Some DLAs were not sending the other agencies’ reports to applicants.
6.30
We recognise that the Act is demanding in this regard. However, DLAs need to be able to show that they have completed these tasks, and they need to keep their evidence. Doing so provides a source of internal assurance that procedures have been followed and statutory requirements met, and satisfies any possible inquiries or challenges by interested parties.
Decision-making within District Licensing Agencies
Recording decisions
6.31
The Act requires a DLA to consider each application against specified criteria, before deciding whether a licence or certificate should be issued. Taking the example of an off -licence application, these criteria include the suitability of the applicant, any matters dealt with in any report received by the DLA on the application, and the days and hours on which the applicant proposes to sell liquor.
6.32
The DLA is a statutory decision-making body created by the Act, and its decisions should be formally recorded. Section 113 of the Act requires that every DLA and the Authority record in writing every decision and the reasons for that decision. Some DLAs had no evidence on their files of a formal decision by the Secretary that a liquor licence should be issued. In May 2007 the Authority issued to all DLAs template decisions for each type of licence. We urge DLAs to use these templates to record their decisions.
Consideration of statutory criteria
6.33
We looked for evidence that all relevant statutory criteria had been considered before a DLA issued a licence or certificate. Few DLAs were able to show that they had considered all the statutory criteria before they issued a licence or certificate. A failure to demonstrate that it has followed the statutory process may leave a DLA’s decision open to challenge.
6.34
One approach followed was to use a template that contained an assertion that the relevant statutory criteria had been considered. In our view, this practice does not, without any supporting evidence, show that the DLA has considered all the statutory requirements before issuing a licence. Taken together, the application form, supporting documentation, and inspector’s report should enable the DLA to consider the application against all relevant statutory criteria and to make its decision accordingly.
6.35
DLAs can meet this requirement by ensuring that all statutory requirements are covered in the inspector’s report. If the format of the inspector’s report closely matches the applicable statutory criteria, then the requirement can be achieved. While some inspector’s reports were very thorough, few of the inspector’s reports we examined directly matched all the statutory criteria in the Act. The Authority has also noted that an inspector’s report should include the criteria set out in the Act.
6.36
For some types of application, one DLA had created a checklist for the delegated decision-maker to use in checking that they had considered all the necessary statutory requirements. This was a useful approach.
The decision-making function of the District Licensing Agency
6.37
The Act makes a clear distinction between the inquiry and reporting role of the inspector, and the decision-making role of the DLA. The role of the inspector is an independent one, and involves inquiring into an application and submitting a report to the DLA. The inspector’s function is one of carrying out the necessary investigations and making a recommendation.
6.38
It is then a matter for the DLA, where a licence application is unopposed, or the Authority, where an application is opposed, to consider and decide whether to grant the application, based on the criteria in the Act. The separation provides a check on the powerful discretion that exists in issuing liquor licences.
6.39
The separation of roles is important in recognising the independence of the inspector on the one hand, and the decision-making discretion of the DLA on the other. Arrangements for reporting and decision-making should enable these functions to be performed at arm’s length, as envisaged by the Act.
6.40
Arrangements varied. At one DLA, some licences and certificates were being issued without the delegated individual personally reviewing the documentation. In our view, this arrangement does not meet the expectation of the Act that the decision-making process will involve some degree of careful deliberation by a committee or officer with delegated decision-making authority.
6.41
In other DLAs, the delegated person was exercising some (albeit limited) consideration before approving the licence. We were not always satisfied that this approval process involved the exercise of careful deliberation necessary for a decision. As noted above, reporting that demonstrates close consideration of the statutory criteria would make the deliberations easier.
6.42
A territorial authority manager with no involvement in the day-to-day running of the DLA was often performing the function of the DLA in issuing licences and certificates. This arrangement created the separation necessary for independent decision-making.
6.43
However, limited time was made available for this DLA decision-making function, particularly given the large number of applications processed by some territorial authorities. These factors could, together, create practical obstacles to the considered and informed review and decision-making process envisaged by the Act.
6.44
We have considered how DLAs could most practically meet this requirement. One possible approach would be to assign delegated decision-making authority on the basis of risk, with selected complex and controversial applications considered and approved at one supervisory level, and routine applications at another.
6.45
In other DLAs, a supervisor would routinely review the quality and completeness of applications, along with the inspector’s report - effectively carrying out the review and deliberation role of the DLA. Delegating the decision-making function for defined types of application to this person may better meet the requirements of the Act, provide for more careful scrutiny of applications, and represent a practical way to handle a large workload. Decisions about complex or controversial applications could be made by another delegated manager, as could decisions where the supervisor had been involved in considering a particular application.
Vetting applicants for a manager’s certificate
6.46
The Act imposes significant responsibilities on managers of licensed premises. Section 115 of the Act, which sets out the responsibilities of a manager, was strengthened by the Sale of Liquor Amendment Act 1999 to emphasise and widen a manager’s responsibilities. Managers are responsible for compliance with the Act and conditions of the licence, and for the conduct of the premises with the aim of contributing to the reduction of alcohol abuse.
6.47
Authority decisions note the obligations on managers. In a recent judgment, the Authority stated:
As far as the Authority is concerned the holders of General Managers’ certificates carry greater responsibilities than licensees. The expectation is that the holders will be people who will have personal integrity, as well as a good sound knowledge of the Act, and the maturity to be able to operate licensed premises without supervision. It is by upskilling the standards of the holders of General Managers’ certificates that the object of the Act (which in the long term is the reduction of liquor abuse), can be achieved.2
6.48
Inspectors are obliged to inquire into, and file a report with the DLA on, any application for a manager’s certificate. We examined how DLAs assessed the suitability of applicants for manager’s certificates.
6.49
The process of vetting applicants commonly involves checks of reputation, experience in the industry, and knowledge of the Act. The main differences in the approach of DLAs were in their interviewing of applicants for manager’s certificates.
6.50
The Authority has noted the importance of DLAs interviewing applicants to assess their suitability. It has noted:
It is difficult to comprehend how an Agency can assess an applicant’s character, reputation, experience and training without an applicant ever having been interviewed.3
6.51
The Authority has noted further that an interview enabled the DLA to establish an accurate picture of the applicant’s employment history and test that, in the role of manager, an applicant would be able to communicate effectively with patrons, the Police, and inspectors.
6.52
Our assessment of DLA practices indicated that few were using interviews most effectively to assess the suitability of all applicants.
6.53
Not all applicants were interviewed, and interviewing practices varied. In some DLAs, several applicants were interviewed together. The DLAs that did conduct individual interviews often followed a standard list of questions to test general knowledge of the Act. Others included questions that tested the applicant’s ability to apply their knowledge to the premises in which they were, or would be, working, or asked how an applicant would deal with a particular situation. These interviewing approaches gave a more realistic assessment of how the applicant would be able to deal with issues in their workplace.
6.54
Before issuing the manager’s certificate, some DLAs sought an undertaking from the applicant that they would work only in specified premises. This was done to ensure that young and relatively inexperienced applicants gained confidence and became familiar with the role in a low-risk working environment before taking a job at busy and more demanding licensed premises. In our view, such undertakings are a useful tool, and we note their endorsement by the Authority.
6.55
Most of the applications received by any DLA are applications for new manager’s certificates or renewals. Interviewing applicants for manager’s certificates can take up large amounts of staff time. One view put to us was that, given this workload, a DLA faces the need to choose between interviewing all new applicants and putting that staff time into compliance monitoring. Practical considerations for applicants include the need for some to travel large distances to attend an interview.
6.56
In our view, interviewing applicants for manager’s certificates and monitoring premises for compliance with the Act are both indispensable activities for the effective discharge of a DLA’s statutory responsibilities. This may require DLAs to consider other options, such as conducting interviews by telephone where face-to- face interviews may not be practicable. It may also require DLAs to increase staff time assigned to liquor licensing work.
Public notification of applications
6.57
For on-licence, off -licence, and club licence applications, the Act requires public notification by advertising in local newspapers, and by the placing of a public notice in a conspicuous place on or adjacent to the site subject to the application, unless the Secretary of the DLA agrees that this is impracticable or unreasonable.
6.58
In relation to the public notice on site, the Regulations also prescribe the form such a notice should take. This public notice serves the purpose of alerting the local community to the applicant’s intention of obtaining or renewing a liquor licence for a premise, and allows the opportunities for objections to be lodged. It is an important requirement under the Act.
6.59
Several DLAs were not enforcing this requirement. For two DLAs this was a deliberate decision, while another’s published liquor policy expressly exempted all applications from the requirement. In our view, such an exemption is inconsistent with the Act, which provides for exemptions only if impractical or unreasonable in the circumstances of a particular application.
6.60
DLAs need to ensure that applicants display a public notice as the Act requires. DLAs were using different ways to check compliance. At one DLA, the inspector checked that the liquor licence was displayed when making site visits. Another DLA required the applicant to submit a declaration of having displayed the notice, and describe where and how that had been done. All DLAs should ensure the requirement is met, seeking whatever assurance they consider appropriate.
Inspectors’ reports
6.61
Inspectors are required to inquire, and report on, all applications for licences or certificates. Some DLAs were issuing liquor licences - such as special licences - without an inspector’s report.
6.62
Inspectors’ reports also varied in the amount of detail they contained and their format. Some were very thorough, setting out the results of extensive inquiry into the applicant’s background − for example, through discussions with referees or former employers. In one DLA, however, the inspector’s reports contained no discussion, assessment, or evidence of inquiry, consisting simply of a recommendation that the application be granted. In our view, this practice does not meet the requirements of the Act, and provides no supporting evidence that the applicant has met the statutory suitability criteria.
Special licences for certain days
6.63
The Act makes it a condition of every licence for a hotel or tavern that no liquor be sold or supplied on Good Friday, Easter Sunday, Christmas Day, or before 1pm on ANZAC Day, except in limited circumstances. However, the Act also provides for an exemption from this prohibition if a special licence has been obtained for those premises.
6.64
Special licences are valid only for a particular occasion or event, or series of occasions or events, specified in the licence. A special licence is intended for an event or occasion that is outside the usual or regular activities of the applicant.
6.65
The Authority has considered the relationship between these two provisions, and has reached the view that special licences should be available for Good Friday, Easter Sunday, Christmas Day, or ANZAC Day only where a genuine special event is planned. It has expressed the view that, of itself, a public holiday does not constitute a special event or occasion in the sense of meeting the criteria for a special licence.4 The Authority has stated:
If all taverns (and off licences) had the right to trade through Easter then in our view the law restraining trading during that time would inevitably be brought into disrepute. Having a law that has no effect may not physically lead to liquor abuse, but could certainly encourage the public to treat the Act with contempt and disrespect. This in turn would in our view, undermine any serious attempts to reduce the abuse of liquor.5
6.66
Some DLA practices were consistent with the Authority’s view, with no evidence that special licences had been issued for these specified days unless there was a genuine special event occurring. However, two DLAs had issued special licences for the days for events described as, for example, "the celebration of Easter". One DLA’s liquor policy makes it clear that it will grant special licences on application for the Easter period. We encourage territorial authorities and DLAs to review their policies and practices to make sure that they are in keeping with the intent and substance of the Act, and the views of the Authority.
1: The module is designed to help territorial authorities to meet their legal obligations in liquor licensing activities, and to achieve good practice in these areas. It was developed in September 2002 and reviewed in October 2004. A revised edition was published in August 2007.
2: Liquor Licensing Authority Decision PH 339/2006: Timothy Hendikus Verheul.
3: Liquor Licensing Authority Decision PH 300/2006: Jason Peter Loye.
4: Liquor Licensing Authority Decision PH728/2006: Geoffrey Alan McCrostie.
5: Liqour Licensing Authority Decision PH806/2003, PH 807/2003: Universal Liquor.