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K3 Legal recently defended six applications by the Police, before the Alcohol Regulatory and Licensing Authority, Police v Milky Way Entertainment Ltd [2017] NZARLA 469-475, to suspend or cancel the on-licence of Face Club, a popular night club in central Auckland. Face Club is a multimillion dollar operation and its survival was vital to the interests of its owner, Milky Way Entertainment Limited, the 65 staff it employs every night and its thousands of customers.

The Police produced extensive evidence over a three day trial through 17 police witnesses, the majority of them being police and intelligence officers.

The main charge against Face Club related to a minor gaining entrance to the premises. On 8 April 2017 Police identified an underage female leaving Face Club. When asked for identification, she showed Police a photo of a Chinese passport on her phone showing her age as 19. The duty constable accepted that the photo on the phone was a good fake. It was later discovered by Police that the female was 17 years old.

Police argued that the photograph on the female’s phone was not evidence of proof of age and that none of the defences under section 245 of the Act were available to Milky Way.

S245(4) In any proceedings for an offence against subsection (1) in respect of allowing a person (the customer) to enter or remain in a restricted area or supervised area, it is a defence if the defendant proves that the defendant, or an agent or employee of the defendant, verified the customer’s age using an approved evidence of age system in the approved manner.

Milky Way argued two points in its defence:

1.  The Police must prove the mens rea element of the offence, being that Milky way or its employees knew that the female was underage and allowed her to remain on the premises. Milky Way submitted it was not known to the duty manager or any of its staff that the female was underage or on the premises. It argued that it was likely that the female had shown the entry guard the faked electronic ID and that her club wrist band and stamp had been forged or taken from another customer.
2. That section 30 of the Electronic Transactions Act 2002 allows ID to be shown in electronic form so long as it is reasonable that the integrity of the information has been retained:

S30 - Legal requirement to provide access to information that is in paper or other non-electronic form.

A legal requirement to provide access to information that is in paper or other non-electronic form is met by providing access to the information in electronic form if—

(a) the form and means of access to the information reliably assures the maintenance of the integrity of the information, given the purpose for which, and the circumstances in which, access to the information is required to be provided; and

(b) the person to whom access is required to be provided consents to accessing the information in that electronic form.

Milky Way argued that section 30 mandated the acceptance of electronic copies of ID. It was submitted that it was reasonable for Face Club security to rely on the integrity of the passport on the phone if the face of the patron matched the photo on the passport.

Milky Way’s expert gave these responses when cross-examined by the Police:

Q. Do you believe that photographs of identification on phones are appropriate to be presented at the entrance of a licensed premises?

A. That’s a good question constable. Everything’s done on a phone these days and when I do my training we require copies of passports as ID and all of my students pick up their phone, go into their phone, show me their passport and then email me a copy off their phone. It seems to be the modern way, yes.

Q. Yes but do you not breach the Sale of Alcohol Act by accepting photographs of these passports as identification?

A. The only acceptable forms of ID as you’re aware constable, are a current passport, a current New Zealand driver’s license and an 18+ card. Does it have to be the original? I would expect to see the original but with today’s technology, I would maybe, accept a copy on a phone, maybe. It’s a judgement call you have to make.

Decision of the Authority

In respect of the standard of proof required by the Police the Authority stated at para 33:

[33] As we said in Rapira-Davies v Gogo Bar Ltd [2016] NZARLA ph 283, in enforcement applications, the applicant [Police] has the burden of proving the grounds of the applications. The standard of proof is that described in Triveni Puri [2012] NZHC 2913, namely ‘on the balance of probabilities’. In accordance with decisions such as Spring v King NZLLA 1414/93, and Z v Dental Complaints Assessment Committee [2009] 1 NZLR 1, however, the standard of proof is at the higher end of that standard.

The Authority found that the Police had not proven mens rea:

[56] The evidence of the Police does not establish that the licensee or manger knew the minor was in the premises. Against this, the evidence of the Duty Manager is that he did not know the female was on the premises until he was asked to join Police outside the premises, and that his enquiries of staff says that other staff had not seen the female on the premises. This evidence was not challenged by the Police. Nor does the evidence show that, armed with the knowledge of the minor being on the premises, she was allowed to stay. This evidence was also not challenged by the Police.

[57] The evidence of the Police is that the female minor said that the security guard did not check her identification. However, the Authority had not had the benefit of hearing from either the minor or the guard. The minor had a red stamp on her hand and wore a green wristband. The wrist band is a ‘pass out’ band allowing the patron to return to the premises throughout the night. There is nothing before the Authority to show either were forged although this is possible. In all other respects the evidence establishes that the licensee has good systems in place for checking identification in the form of security, hand stamps, and wristbands. This is not a case where there was a dereliction of duty in the provision of systems by the licensee.

In respect of the electronic ID and the defence under section 245(4) the Authority stated:

[59] Given the requisite mens rea has not been established, there is no need for the Authority to determine whether one of the defences in s245 has been made out.

In dismissing all six applications by the Police, the Authority summarized [65]: “As the grounds for these applications have not been established, the Authority has nothing before it to show that the applicant [Milky Way] is unsuitable to hold a license.”

It went on to say [65]: “The evidence of Milky Way’s expert is that the procedures of the premises are overwhelmingly positive” and in particular, the first respondent [Milky Way] takes compliance with the Act seriously. Wherever the Police have bought up issues with the premises, the first respondent [Milky Way] has resolved these issue by making changes to its systems, or has otherwise dealt with these situations appropriately. This was acknowledged by Police.”

What does this mean for licensees?

Licensed venues should take heart from the Authority’s findings. In the past, bars and nightclubs charged with breach of licence have tended to pay the fines or accept the punishment. But as this case demonstrates, these cases no longer need to be viewed as open and shut. If a venue can show it is proactively doing everything to meet its obligations, there is certainly merit in challenging those charges – and in engaging K3 Legal to help them do so.

Furthermore, section 30 of the Electronic Transactions Act 2002 mandates the acceptance of electronically held information and may allow ID to be shown and accepted in electronic form so long as it is reasonable that the integrity of the information has been retained. Given that the future is paperless there is little doubt that the Authority and/or the Courts will need to rule on the effect of section 30 in the near future.