After six years of legal challenges, the Supreme Court last week dismissed judicial review proceedings by Woolworths and Foodstuffs challenging a 2017 decision of the Alcohol Regulatory and Licensing Authority (ARLA) that largely upheld Auckland Council’s Provisional Local Alcohol Policy (LAP).

The landmark decision clears the way for Auckland’s LAP to finally become operative, and has far-reaching implications for how councils can regulate the sale of alcohol throughout Aotearoa New Zealand. These include making it much easier for councils to adopt LAPs which reflect their communities’ preferences, without being at risk of merits-based legal challenges to their policies.

In this article, Padraig McNamara and Tim Fischer, who represented Auckland Council from the first appeals to ARLA in 2015 through to the Supreme Court, discuss the Court’s key findings and what the decision means for all councils and communities across NZ.

Background to the Supreme Court decision

Following a public consultation process, Auckland Council adopted its Provisional LAP in 2015.

Woolworths and Foodstuffs objected to two particular aspects of that LAP, on the ground that they were unreasonable in light of the object of the Sale and Supply of Alcohol Act 2012 (Act):

1. 9am to 9pm maximum trading hours for all off-licences; and
2. Restrictions on new off-licences in certain parts of the city (either a temporary freeze and/or a rebuttable presumption against new licences).

The supermarkets exercised their right of appeal to ARLA, but when ARLA dismissed most aspects of their appeal, and without a further right of appeal to the High Court, the supermarkets brought judicial review proceedings challenging ARLA’s decision.

The supermarkets had some initial success in the High Court, but the Court of Appeal, and now the Supreme Court, has rejected the supermarkets’ claims and restored ARLA’s original decision (which in turn had upheld the relevant aspects of the Provisional LAP).

Why is the Supreme Court’s decision important?

The decision is important for Auckland because its Provisional LAP has been on hold for six years while the appeals made their way through ARLA, and then judicial review proceedings challenging ARLA’s decision made their way from the High Court to the Supreme Court.

Now that the Supreme Court has upheld ARLA’s decision, the Provisional LAP can finally come into force once the few remaining appeals have been determined. But the Supreme Court decision has much wider implications for councils and their communities in the area of alcohol licensing and regulation, because it gives much needed clarity about the nature and content of LAPs, and the limited scope for challenges against a Provisional LAP.

The Supreme Court’s key findings

• LAPs reflect the policy choices of an elected territorial authority. They can be based on or influenced by community preferences. To that extent, they do not have to be evidence-based;
• The Act contains default maximum trading hours, but local communities are free to choose trading hours which differ from the status quo. Trading hours that are shorter (or longer) than the maximum default hours in the Act do not have to be justified in terms of departure from a norm. Further, although any LAP should be tailored to the council’s district, there does not have to be anything particular about that district to warrant deviation from the status quo;
• Under the Act, the sole ground of appeal against an element in a LAP is that it is unreasonable in light of the object of the Act. That object incorporates two complementary aspects: the safe and responsible sale, supply and consumption of alcohol, and the minimisation of alcohol-related harm. Unreasonableness is therefore likely to come down to whether a restriction is a disproportionate limit on the sale and supply of alcohol, having regard to the likely impact of the restriction on ensuring the sale, supply and consumption of alcohol is safe and responsible, and on harm minimisation;
• This will be an evaluative, perhaps impressionistic, assessment. LAPs address issues on which there is scope for a wide range of opinions. Analysis of their reasonableness must reflect that, and it should not be assumed there can be only one right (ie reasonable) answer to any disputed question;
• It is open to a council when adopting a LAP to take a precautionary approach ie a restriction may be justified on the basis of there being a reasonable likelihood (rather than proof) that it will reduce alcohol-related harm;
• An appeal to ARLA against a provisional LAP is not a merits-based appeal but simply a ‘check’ that the contested element is not unreasonable in light of the object of the Act. The Supreme Court was critical of the length of the hearing and the detail of factual analysis before ARLA in the appeals against Auckland’s Provisional LAP, which “may suggest a misunderstanding of the role of” ARLA;
• As a “matter of common-sense”, it might be thought clear that a system that incorporates off-licence trading hours of 7am to 9pm is not unreasonable in light of the object of the Act.

What are the implications for other councils?

The judgment should give territorial authorities greater confidence that they can adopt LAPs which reflect their communities’ preferences, without being at risk of merits-based legal challenges to their policies. These community preferences can include off-licence trading hours that are shorter than those that have typically been adopted in the first round of LAPs under the Act.

It should also mean that prospective appellants think twice before appealing unless an element is clearly disproportionate or arbitrary in its effect. The Court has also helpfully clarified the appeal test under the Act, and the nature of appeal proceedings before ARLA. This should enable ARLA to take a more robust approach to the conduct and resolution of appeals which come before it.

Together, these clarifications should result in greater respect being given to council policy choices, and significantly less scope for successfully challenging those choices on appeal. Hopefully this will produce the more streamlined process for LAP adoption which Parliament no doubt had in mind when passing the Act. Never again should a council have to wait six years before its LAP becomes operative.

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