Two supermarkets appealed to the Supreme Court challenging the legality of a decision to uphold Auckland Council’s provisional local alcohol policy.
Under the Sale and Supply of Alcohol Act 2012, councils (excluding regional councils) may adopt local alcohol policies. An alcohol licence cannot be granted or granted on particular terms if it would be inconsistent with the policy.
Before a council can adopt a local alcohol policy, they must adopt a provisional local alcohol policy which includes consultation with the community. The Local Government Act 2002 sets out a ‘special consultative process’ that must be used.
Auckland Council produced a provisional local alcohol policy in 2015. Woolworths and Foodstuffs challenged two elements of this policy in the Alcohol Regulatory and Licensing Authority (“ARLA”):
• Restricting the trading hours of off-licences to 9am to 9pm Auckland-wide (as compared to the Act’s default off-licence hours of 7am – 11pm)
• Restricting the grant of new off-licences by creating a presumption against granting new off-licences in certain areas and a 24 month freeze for new off-licence applications in others
The supermarkets’ challenged the policy under s 81 of the Act, arguing that the trading hours and licence restrictions were unreasonable when considered against complementary statutory objectives harm reduction and promotion of responsible consumption. ARLA ruled that the policy (other than the morning opening hours restriction) was lawful and reasonable.
The supermarkets successfully challenged ARLA’s decision in judicial proceedings brought in the High Court, however the Court of Appeal subsequently quashed the High Court’s decision on all points.
The supermarkets appealed the Court of Appeal decision to the Supreme Court.
Restatement of the law
The Supreme Court took care to clarify what had been left open in prior decisions of ARLA and the courts – namely that the ‘reasonable system of control of the sale and supply of alcohol’ contemplated by the Act did not recognise any standalone ‘right to trade’ existing independently of the Act. Instead, the court held that the starting point was the complementary objectives of that system of control – reducing alcohol-related harm and promoting responsible consumption of alcohol. In this sense, the ability to sell alcohol was a privilege rather than a right, and one which was subject to broader public policy concerns.
Accordingly, when assessing the reasonableness of a provisional local alcohol policy, ARLA was required to assess the impact of the policy on responsible consumption and harm reduction. In doing so, ARLA was not bound to observe a strict approach to proof of harm reduction of the kind that would be expected of a court. Ordinarily, a reasonable possibility of such an effect would be sufficient, however the standard of evidence required would depend on the extent of restriction on the convenience of users seeking to consume alcohol responsibly. A minimal restriction on consumer convenience would require correspondingly minimal evidence of harm reduction, while a significant restriction might require a council to meet a more formal standard of proof.
Contrary to the supermarkets’ submission, this standard was not capable of precise definition. The standard of proof required would be a matter for ARLA’s discretion, which would be subject to judicial review on the same principles that governed other exercises of discretion conferred under statute.
Role of community input
Importantly, the court also noted that it was legitimate for ARLA to adopt a deferential approach to councils when assessing reasonableness. The significant emphasis on consultation while preparing a provision local alcohol policy suggested a strong Parliamentary intent that reasonableness was to incorporate community viewpoints in addition to more objective evidence. This supported Auckland Council’s case that an assessment of reasonableness under s 81 was not a purely evidence-based process.
Was the policy unreasonable?
The court held that ARLA was entitled to conclude that both policy elements were reasonable.
Regarding the restriction of trading hours, the court noted that the impact on consumers was minimal. Off-licence trading hours were 7am – 9pm, only a small change from the statutory default of 7am – 11pm. Given the low impact of the restriction, it was reasonable for the Council to adopt the policy notwithstanding that the evidence of likely harm reduction was not especially strong. A deferential approach to the Council was justified in the circumstances.
The same reasoning applied to the restrictions on new off-licences. Consumer impact was minimised, as the restrictions were confined in their geographic effect, with the targeted areas already sufficiently supplied by existing off-licences. Again, the evidence showed a reasonable possibility of resulting harm reduction even if the evidence was not sufficiently strong. In particular, the council had engaged in careful research to identify and target areas where alcohol-related harm was a particular problem.
The supermarkets’ appeal was dismissed. ARLA was entitled to conclude that both elements of the policy were reasonable, and accordingly the policy remained in force.
The decision is significant in that it restates the pre-existing law and makes it clear that any ‘right’ to sell alcohol is totally subordinate to the policy objectives of the Act. This finding, along with the strong emphasis placed on community views when assessing reasonableness, might be seen as an unwelcome step by business community. In particular, local authorities will be more confident in responding to the wishes of neighbourhood groups and trade competitors in restricting the supply of on and off-licences in their district, restrictions that will ultimately will impact the wallets of responsible alcohol consumers.
For further information on this case or similar issues, please contact Director Brigitte Morten
