Neutral Citation no. (1999) 1884

Ref:

PRIE2753

 

 

 

Judgment: approved by the Court for handing down

Delivered:

04/02/99

(subject to editorial corrections)

 

 

 

IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

 

QUEEN'S BENCH DIVISION

 

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BETWEEN

 

CRAZY PRICES trading as TESCO -

an unlimited company

(Applicant) Respondent

 

and

 

WINE INNS LIMITED

 

(Objector) Appellant

 

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PRINGLE J

 

This is an appeal by Wine Inns Limited from the grant by the Recorder of Belfast, His Honour Judge Hart QC, to Crazy Prices trading as Tesco an unlimited company, to which I will refer as Tesco, of a provisional grant under Article 5(1)(b) of the Licensing (Northern Ireland) Order 1996 of a licence for an off sales section to be incorporated into its existing supermarket in the Abbey Centre in Newtownabbey, County Antrim. The appellant as Winemark carries on an off sales trade in Unit 17 in the Centre; I will refer to the appellant as Winemark in which name it trades in 72 off sales shops in Northern Ireland.

Before me the only issue was the question of inadequacy and I am satisfied as to the formal proofs in relation to title, service, publication of notices, fitness of Tesco which already holds off sales licences in other premises, the fitness of the proposed premises and the production of a proper subsisting licence to be surrendered. Planning approval is not required.

The relevant provisions of the 1996 Order are:

"5(1) ...... the premises in which the sale of intoxicating liquor is authorised by a licence shall be premises of one of the following kinds-

 

(b) premises in which the business carried on under the licence is the business of selling intoxicating liquor by retail for consumption off the premises.

 

7(4) A court shall refuse an application for the grant of a licence unless it is satisfied-

 

(e) where the premises are of a kind mentioned in Article 5(1)(a) or (b)-

 

(i) ...that the number of licensed premises of the kind specified in the application which are in the vicinity of the premises is.......inadequate."

 

The need for an applicant to prove inadequacy is of very long standing and so also was the statutory prohibition of carrying on any other business in premises licensed for off sales until it was repealed by the 1996 Order which by Article 5(2) gave to the Department of Health and Social Services power, subject to affirmative resolution, by Regulations to prescribe the conditions under which any business authorised by the licence may be carried on in premises of a kind mentioned in paragraph (1)(a) or (b). Under this power the Licensing (Conditions for Mixed Trading) Regulations (Northern Ireland) 1997 which came into operation on 25 July 1997 were made; these Regulations allow an off sales section to be integrated into a superstore, as is proposed by Tesco in the present application and already exists in various other premises on foot of licences granted since 1997. The Schedule to the Regulations provides by paragraph 2 that an integrated off sales section has to be separated from all other parts of the premises by a physical barrier made of solid material and any means of passage between that section and any other parts of the premises shall be controlled by a gate, turnstile or other similar device. In the premises which I have visited for the purposes of this appeal what I found were two spring loaded half gates or barriers meeting in the middle of the passage; this allowed very easy access and egress for customers whether with or without a trolley.

On the evidence I am satisfied that there is a public demand for such integrated off sales as people have seen these in England and found them convenient. Experience in England, and more recently here, has shown that an integrated off sales section will produce about 10% of the total turnover of the store; for the area of floor space the return on an off sales section is high.

Article 7(4)(e)(i) clearly places on Tesco, for which Mr Comerton QC and Mr Montague appeared,the burden of proving that the number of off sales premises in the vicinity is inadequate. Mr Lavery QC, who with Mr McCollum appeared for Winemark, accepted that the vicinity was as indicated on Map 1 produced by Mr Ian Foster on behalf of Tesco. The boundaries of this rather restricted vicinity are fixed on three sides by the M5 motorway to the east, the M2 motorway to the south and the Valley Park to the west; the northern boundary is an open area which is the line of a stream and there is no other possible boundary which would not extend the vicinity too far to the north. The situation is that Winemark's shop in the Abbey Centre is the only off sales shop in the vicinity; its position is shown on Mr Foster's Map 2. The position of the proposed off sales section in the Tesco store and the check outs available for the purchase of alcohol are accurately shown on the Plan produced by Mr Bryson for Tesco.

The attitude of the courts to the question of adequacy has evolved over the years; it is now not sufficient to look merely to the number of existing off-licences in the vicinity. The question of adequacy will depend on the actual or expected demand for off sales facilities in the vicinity; see Crazy Prices (Northern Ireland) Limited v Royal Ulster Constabulary [1977] NI 123 Lowry LCJ at 127D in which case the Court of Appeal held that in assessing the adequacy of the premises in the vicinity one must have regard not just to the residents in the vicinity, but also to those who work in it or resort to it for the purpose of recreation or shopping. It is in relation to the issue of demand that the decisions of the courts have led to the development of the law. It is not necessary for me to refer to all the decisions in the course of this development, but I have to refer to some of them.

In Woods v Mayne [1982] 16 NIJB Kelly J at page 9 stated:

"In this jurisdiction the legal curb is adequacy. Adequacy remains the paramount consideration and selection and competition are subordinate matters to be taken into account. This is why I think, Mr Justice MacDermott necessarily limited his dicta [in Belfast Co-operative Society Ltd v Tohill 1975 2 NIJB] by the word `reasonable' so that it reads:

 

`For the number of premises to be adequate the public must have reasonable opportunities of selection and purchase at competitive prices.'"

 

In Stewarts Supermarkets Limited v Sterrit [1985] NI 159 Hutton J at page 165H stated:

 

"In the survey conducted by Ulster Marketing Surveys none of the shoppers were asked whether they considered that an off-licence was needed in the Centre. All that they were asked was how likely or unlikely they would be to use an off-licence at the centre if one were available. I consider that all the appellant has proved is that it would be convenient for shoppers using the Centre to have an off-licence in the Centre and that such an off-licence would be commercially successful and do a very considerable business. But this falls far short of proving that the number of existing off-licences in the vicinity is inadequate; as Gibson LJ stated in Hunt v Magill:

 

`The statutory test is inadequacy of numbers, not suitability or convenience, though the two are not always entirely separate.'"

 

That case was in relation to the Connswater Centre in the vicinity of which there were three existing off-licences in which there was no evidence of overcrowding and the population in the surrounding Bloomfield Ward was decreasing.

In Stewart Supermarkets Limited v Winemark The Wine Merchants Limited (unreported) MacDermott LJ at page 9 of his judgment delivered on 30 October 1992 referred to the "explosion" in the varieties of drinks, especially wines and beers,on the market and stated:

"It seems to me that this development is something which should be borne in mind when considering "adequacy" though as I have already said selection and competition are not all determining matters."

 

In F A Wellworth & Co Ltd v Philip Russell Ltd [1997] NI 175 Girvan J stated at page 188d:

"For my own part, when approaching the question whether the existing number of licensed premises are adequate in any given vicinity, the court must take into account whether they are adequate: (a) to meet the reasonable requirements, shopping patterns, expectations and trends of the purchasing public resorting to the relevant area; and (b) to ensure a proper competitive supply to those coming into the area, bearing in mind the disfavour shown by the law to restraints in the normal development of trade."

 

and at page 189a:

 

"While mere convenience has been held not to be a justification in itself for the granting of a new off-licence, convenience is, as the cases show, a factor to be taken into account. The inconveniences involved in resorting to existing premises must be a factor in considering whether the existing premises are adequately serving the demand in the vicinity. The increased competition with its effects on pricing and range of choice must also be a factor taken into consideration."

 

 

 

 

and at page 189c:

 

"The incoming population of shoppers coming from outside the area to the new magnet or focal point formed by Wellworth focuses upon Wellworth's site. I am satisfied that relatively few of them would shop in the alternative off-licences in the vicinity. Many of them would not even know where the alternative premises are to be found."

 

In that case each of the two existing premises in the vicinity had one or more shortcomings in relation to location, appearance, range of goods and car parking. The last quotation from the judgment must be read in the context of the circumstances of the case or it would mean that unless there were existing premises close by, a supermarket would in most cases be entitled to the grant of an off-licence. I agree with Girvan J that if existing premises are inconvenient for shoppers to reach this a factor, it could be a potent one, to be taken into account.

However I am not persuaded that the convenience of and therefore the demand for an integrated off-sales facility is a factor to be taken into account by me. The statutory test requires the court to look at the existing off-sales premises and how they meet the demand in the vicinity, but if those premises are beyond criticism in relation to size, range of goods, prices, presentation and staffing then there is no inadequacy and demand for what an off-sales shop cannot provide cannot turn an adequacy into an inadequacy. When the 1996 Order paved the way for integrated off-sales facilities the Legislature chose to retain the test of inadequacy which was still appropriate when dealing with an application for a free standing off-sales shop in a new shopping centre, as in Stewarts Supermarkets Ltd v Sterrit, although it must have been realised that an integrated off-sales would not be fully comparable with an off-sales shop. Where there is an integrated off-sales the purchase of alcohol takes place when it is presented at one of the tills in the store which has been designated for the purchase of the sale of alcohol as well as other goods; the courts have accepted that as a general rule 75% of the tills should be so designated. By retaining the test of inadequacy the Legislature has, in my opinion, indicated that the advantage of integration is not to be a factor in dealing with an application for the grant of an integrated off sales facility.

 

The evidence

The Abbey Centre opened in 1978 with Crazy Prices as the anchor store and 37 small units. In 1980 an extension was added and provided a large store for Dunnes Stores (clothing) and a further 20 units. After refurbishing in the 1980's a further 17 units were added in 1994. There is now a total lettable floor space of about 173,000 sq.ft. with 1970 car parking spaces.

In November 1997 Tesco took over Stewarts Supermarkets of which Crazy Prices was part. Tesco's sales area is about 42,000 sq.ft. of which the proposed off-sales area would be about 1600sq.ft. Winemark's shop has an area between 1,000 and 1,100 sq.ft. and there was no evidence of overcrowding in it; although there was discussion as to the free passage of customers being affected by anyone bringing in a trolley, the layout of the floor display has been improved since the time of the hearing before the Recorder and I consider that this is not a relevant factor. After the hearing before me I visited the Centre on the afternoon of Friday 22 January 1999. The Centre was thronged with people; Tesco's store was busy and its appearance was a distinct improvement on my recollection of the store when operated by Crazy Prices. Winemark's shop was attractively laid out with oak shelving which displayed the bottles to advantage; Mr McCormack, a director and one of the two owners of Winemark, said that this was the standard layout for most of their shops and would be introduced into all their shops. During my short visit I saw two separate customers in the shop and one of the staff offered his assistance to me.

Mr Ian Foster, a planning consultant, gave evidence for Tesco and produced a weekly record of the weekly pedestrian flow in the Centre in 1998 which he had obtained from the letting agents, Lambert Smith Hampton. This record had no count in 14 weeks. The average flow over the recorded weeks was 95,740, but this figure may be slightly on the high side as 9 of the unrecorded weeks were in periods of less than normal flow. The flow in 1998 was appreciably greater than the flow of 83,830 in 1994. Tesco operate a clubcard and 80% of purchases are made using a clubcard; due to computerisation this gives a huge amount of information and a map showing the percentage of clubcard purchases from each postal district was put in evidence, but it merely confirmed that, as one would expect, the greatest concentration of purchasers was in the area surrounding the Centre. Mr Foster's proof of evidence included photographs and details in relation to the Abbott's Cross shopping centre which is 1.27 miles to the north of the Abbey Centre and contains 16 units including an off-sales shop still operated under the name of Stewarts. I visited this on the same afternoon. The shop appeared to be at least twice the size of Winemark's shop and had 3 or 4 customers in it. The wines were well displayed and described, but the shelving and general appearance was not to the same standard as in Winemark; I got the impression that beer sales might be an important part of its trade. Its average weekly sales are 65,776 with an average customer spend of 10.82. The Abbott's Cross shopping centre appeared to be very busy and there was a congestion of traffic.

The annual sales in Winemark's shop have been static for the last 6 years at about 1,000,000, or 19,230 per week, with the average spend per customer at about 7 including cigarettes and snacks, whereas the average spend in Tesco off-licences is 8.42. However these figures for average spend have to be treated with caution; in a list of average weekly sales and spend in some Tesco off-licences the shops in Boucher Crescent and Ormeau Road have almost identical sales, but the former shop has with less than half the customers more than twice the spend of the latter shop. Mr McCormack said that the Abbey Centre shop was one of his better shops, but its turnover compares unfavourably with those in the list of Tesco shops. However the turnover in Winemark's shop in Ballyhackamore in 1998 was 558,752 and had averaged about 624,000 over the four preceding years, but this shop has been in competition with an off-licence granted to Stewarts in 1992 for a shop some 220 metres away. Mr George Beattie who,having been with Stewarts, is now in charge of Tesco's off-licences said that he would have expected Winemark's shop in its location to have a weekly turnover of about 40,000; this estimate may be too high, but the turnover does seem low so as to suggest that either there is a lack of demand or Winemark is meeting only part of the existing demand.

Mr Beattie said that a comparison of Tesco and Winemark prices for spirits and beers showed no appreciable difference. He criticised Winemark's range of wines which has been almost doubled since the time of the hearing before the Recorder and now contains over 700 items nearly all of which are on display and are to be found in Winemark's "Winery Collection" published in November 1998. I accept that this list was in the process of preparation at the time of the hearing before the Recorder and I accept Mr McCormack's explanation for why its preparation was not disclosed at that hearing. The most popular price range for wines is up to 5 and Tesco has more wines in this range than does Winemark, but, in my opinion, Winemark's range in this category is fully adequate. Winemark does not carry some popular lines such as Jacob's Creek and Penfolds from Australia, but all off-licencees are not going to sell the same lines and I consider that this point is not significant. Winemark has a comparatively small number of own brand wines the labels on which would to a knowledgeable person disclose the place of origin; I consider that this is a point of no importance, especially as Tesco has a higher proportion of own brand wines. James E McCabe Ltd are wholesale wine and spirit merchants with a bonded warehouse and are owned by Winemark; of its turnover 38% is sold to Winemark and of this 14% is wine and the rest is beer and spirits. Winemark purchases wine directly from producers in the wine producing countries and this wine goes to McCabe's warehouse and is distributed by McCabe to Winemark's on-licences and off-licences in return for a handling charge. McCabe is the fourth biggest wholesaler in Northern Ireland with a very big range of wines, spirits and beers, but the position is that, with the exception of one New Zealand wine purchased from Hollywood and Donnelly, Winemark's wines, spirits and beers are restricted to its own purchases from wine producers and McCabe's list. This might have been a significant matter, but in fact not many omissions in Winemark's list were pointed out and I consider that this matter is not important.

Weekly computer print-outs for 1998 from 2 March were put in evidence and I accept their accuracy. These show that the weekly number of transactions in the Tesco store in the Abbey Centre varies between about 23,000 and 25,000 with an average spend of about 20, excluding purchases at the tobacco counters; on the evidence of Mr Kenneth Megaw, the manager of the store, this weekly turnover of close on 500,000 indicates a turnover of about 50,000 in an integrated Tesco off-sales if it were granted and a turnover of about 25,000 in a free standing Tesco off-sales if it were situated in the Centre. This is appreciably higher than Winemark's weekly turnover, but I would expect a free standing Tesco off-sales beside or close to a Tesco store to do better than an independent off-sales in the same position, especially having regard to the extensive use of the Tesco clubcard which, although there was no evidence as to this, I assume can be used in premises still under the name of Stewarts as in Abbott's Cross. Tesco has well advanced plans to move to a larger store in a development planned on a nearby site, but there are grave doubts as to planning permission being obtainable in the near future and I consider that this proposal has no relevance to this appeal.

Dr Caroline Gilbey, an independent wine consultant and writer who has had wide experience working for Bass and Augustus Barnett, said that she had visited premises in Northern Ireland and in her opinion Winemark had a more than adequate range covering a good range of prices and its premises in the Abbey Centre were well laid out and attractive. I accept her opinion as a generality, but it was not related to what might be the nature of the demand in the Centre.

I keep coming back to the very large turnover in the Abbott's Cross off-sales which is situated outside the "vicinity" but is in the heartland of the area from which come the purchasers in Tesco's store in the Abbey Centre; the Abbott's Cross shop is larger than Winemark's shop, but there was no greater space for movement. There is not a significant difference between what is offered in range or price by Stewarts or Winemark and I personally would prefer Winemark's premises, as I suspect would Dr Gilbey, but the purchasing public clearly does not agree with me, although my impression was that access and parking for cars was more of a problem at Abbott's Cross than at the Abbey Centre. Winemark's shop is highly convenient for anyone coming to this busy Centre whether or not he or she goes to the Tesco store. In the area in the centre of Map 1 the only significant off-licences are Winemark and Stewarts as the Fern Lodge, which is on the Doagh Road a short distance to the south of Stewarts, is very small and unattractive. No acceptable explanation was suggested by Winemark for the difference in turnover between its shop and Stewarts at Abbott's Cross even allowing for the difference in size and the clubcard. I am driven to the conclusion that a significant part of this difference must be due to a considerable proportion of persons coming to the Centre preferring to make their purchases of alcohol in Stewarts at Abbott's Cross rather than in Winemark. The reason for this was not established on the evidence, but it may be that the high standard of Winemark's premises wrongly gives to a considerable number of people the impression of higher prices or that its range is not entirely suitable for this particular vicinity and therefore purchasers prefer Stewarts.

Whatever may be the reason I am driven to find that Winemark is not meeting the demand of a significant section of the purchasing public in the vicinity and therefore Tesco has succeeded in proving there is an inadequacy. Accordingly I dismiss the appeal and confirm the grant of a provisional integrated off-licence to Tesco.


IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

 

QUEEN'S BENCH DIVISION

 

 

------------

 

 

BETWEEN

 

CRAZY PRICES trading as TESCO -

an unlimited company

(Applicant) Respondent

 

and

 

 

WINE INNS LIMITED

 

(Objector) Appellant

 

 

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JUDGMENT

 

 

 

OF

 

 

 

PRINGLE J

 

 

 

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