Introduction

Legal challenges to a local authority alcohol policy, made under legislation controlling the sale and supply of alcohol, provided a useful basis to analyse of the concept of reasonableness. In particular, the decisions distinguished between a right of statutory appeal against a restriction in a local authority policy on the grounds that the restriction is unreasonable and unreasonableness as a ground of judicial review. The initial challenge was an appeal to a specialist appellate authority, followed by a judicial review proceeding in the High Court and two subsequent appeals (to the Court of Appeal and Supreme Court). The final appeal decision provides an example of contextual factors guiding the principles for application in an assessment of unreasonableness.

Facts

In 2015, Auckland Council created a provisional local alcohol policy (PLAP) under section 75 of the Sale and Supply of Alcohol Act 2012 (the 2012 Act) which provides for controlling policies relating to the sale and supply of alcohol within a council's territory. The PLAP contained rules relating to off-licences (ie, places licensed to sell alcohol, but not licensed for the consumption of alcohol on the premises) which included:

• restrictions on the opening and closing hours of all off-licences;
• a rebuttable presumption against the grant of new off-licences in certain areas; and
• a temporary freeze on the grant of new off-licenses in certain other areas, which would be followed by a rebuttable presumption.

Woolworths and Foodstuffs, the owners of New Zealand's two major supermarket chains, appealed the Auckland PLAP rules to the Alcohol Regulatory and Licensing Authority (the Licensing Authority) on the ground that they were unreasonable in the light of the 2012 Act's object, the sole ground of appeal against a PLAP provided by s 81 of the 2012 Act.

After a series of appeals, the Supreme Court held that the correct standard of reasonableness which a decision by the Licensing Authority must reach is "not relevantly unreasonable". This standard is highly contextual. The Supreme Court took into account the process by which PLAPs are created. As a result, the standard applied contained high policy content and a high degree of deference to the original decision maker.⁽¹⁾

Licensing Authority

On appeal, the Licensing Authority held that the opening hour restriction was unreasonable but upheld the closing time restrictions and the new off-licence restrictions.⁽²⁾

In particular, the Licensing Authority held that its role was to balance safe and responsible alcohol use and harm minimisation as required by the 2012 Act. Unreasonableness was to be assessed by what an informed objective bystander would consider unreasonable. The Licensing Authority undertook a proportionality assessment, taking into account factors such as the magnitude of the issue sought to be addressed by the element and any interference with relevant rights. Proof of these was required "on the balance of probabilities".

High Court

Woolworths and Foodstuffs applied for judicial review of the Licensing Authority's decision. The High Court, having reassessed the merits of the PLAP, and in light of the evidence and arguments before the Licensing Authority, upheld the challenge by Woolworths and Foodstuffs and remitted the matter back to the Licensing Authority.

In particular, the High Court held that the standard of unreasonableness which the Licensing Authority was required to apply was Wednesbury unreasonableness. This means an element of a PLAP would only be unreasonable if it were one that "no reasonable territorial authority acting in light of the object of the [2012 Act] would adopt". The High Court also held that the Licensing Authority had failed to give sufficient reasons for disregarding alternate explanations for alcohol-related harm than the presence of off-licence premises and their trading hours and that the council had failed to justify its departure from the default statutory trading hours.⁽³⁾

Court of Appeal

The Council appealed. The Court of Appeal subsequently reinstated the Licensing Authority's decision.⁽⁴⁾

The Court of Appeal maintained that restrictions imposed by a PLAP must be both reasonable and achieve the object of the 2012 Act. They disagreed with the High Court and held that Wednesbury unreasonableness was not the correct standard for review. Rather, what is reasonable should be assessed in light of the 2012 Act's object. Community preference could be material to assessing what is reasonable and, therefore, whether a local policy is evidence based is not critical to whether it is reasonable if it remains the preference of the community by which it is made and to which it applies. The Licensing Authority was the avenue only for appealing "objectively unreasonable" local preferences.

In the Court of Appeal's view, the High Court was wrong to focus on the extent of the reasoning given. It was sufficient that the Licensing Authority had concluded on the evidence before it that there was a real and appreciable possibility that an earlier closing time would reduce alcohol related harm. It was also sufficient that evidence justified the inference that there was a relationship between off-licence density and alcohol-related harm in certain areas.

Supreme Court

The Supreme Court held that an appeal to the Licensing Authority required consideration of whether the challenged element is unreasonable in the light of the object of the 2012 Act.⁽⁵⁾ In doing so, it held that the applicable standard was neither Wednesbury unreasonableness nor objective unreasonableness, but whether the challenged restriction was "relevantly unreasonable". As a result, all aspects of a PLAP which are relevant to a challenged element must be considered when determining its reasonableness.

The Supreme Court canvassed the process which precedes the creation of a PLAP. Sections 78 and 79 of the 2012 Act require a survey of the licensing status quo within the territorial authority's district, followed by public consultation. Section 83 of the Local Government Act requires further extensive and meaningful engagement. The Supreme Court considered, based on this process, that PLAPs are necessarily based on, or influenced by, community preference. The Supreme Court agreed with the Court of Appeal that elements of a policy do not need to be evidence-based.

Consistent with this view, the Supreme Court commented that it would be wrong for the Licensing Authority to assume that there is only one acceptable answer to a disputed policy question. Analysis of the reasonableness or unreasonableness of a policy must reflect the fact that there will likely be a wide range of opinions and a degree of agreement and disagreement over the elements of a policy.

Comment

In concluding that the standard to be applied on an appeal against restrictions imposed by a PLAP was whether they were "relevantly unreasonable" and that community preference and the precautionary principle were relevant to that assessment, the Supreme Court focused on the object of the 2012 Act, which is, in part, to reduce alcohol-related harm and the broader legislative context, including the process by which PLAPs came into being.

The outcome of the initial challenge, by way of a statutory right of appeal on the ground of unreasonableness, was the subject of a further challenge by way of judicial review, a remedy concerned with the lawfulness of decision making. The judicial review decision, and the appeals therefrom, accordingly, concerned the correct legal test on appeal and the requirements of a lawful appeal decision.

Ultimately, the answers to those questions were guided by the statutory context in which the appeal arose, rather than the broad concept of unreasonableness as a general ground of judicial review. In that regard, the statutory object of the minimisation of alcoholrelated harm and the statutory provision for extensive consultation of community views in the formulation of a PLAP were critical.

Endnotes

⁽¹⁾ Woolworths New Zealand Ltd v Auckland Council [2023] NZSC 45 at [1]-[47].
⁽²⁾ Redwood Corporation Ltd v Auckland City Council [2017] NZARLA PH 247.
⁽³⁾ Woolworths New Zealand Ltd v Alcohol Regulatory and Licensing Authority [2020] NZHC 293; Woolworths New Zealand Ltd v Auckland Council above No. 1 at [48]-[62].
⁽⁴⁾ Auckland Council v Woolworths New Zealand Ltd [2021] NZCA 484; Woolworths New Zealand Ltd v Auckland Council above No. 1 at [63]-[77].
⁽⁵⁾ Woolworths New Zealand Ltd v Auckland Council above No. 1 at [78]-[104].