Director of Public Prosecutions v Stephen Grant O'Sullivan

Facts

1. The parties presented an agreed statement of facts that can be summarised as follows.
2. On 12 September 2015 the respondent was the licensee of the Steyne Hotel at Manly, a position that he had held since 23 October 2014. The hotel licence authorised minors to be in prescribed areas of the hotel as long as they were in the company of a responsible adult. "Responsible adult" is defined in section 4 of the Act to mean the young person's parent or a person acting in that capacity.
3. At about 6.54pm on 12 September 2015 3 female young persons entered the hotel through the front doors on the Corso. They walked through the Seaside Lounge area of the hotel and sat down in the Seaside Bistro, opposite the bistro counter.
4. At about 7.25pm another female young person joined the group in the bistro. For the following 2 hours the 4 young persons stayed in the bistro consuming food. They were not in the company of a responsible adult.
5. At about 9pm the group was joined by an adult friend, Ben. Ben and young person 1 approached the bar. Ben purchased a bottle of champagne and then returned to the table. Ben and young person 1 drank the champagne at the table.
6. At 9.07pm the young persons were approached by a couple, Alex and Gemma. Young persons 2 ,3 and 4 gave money to Gemma. Gemma approached the bar and purchased liquor. She returned to the table and gave the drinks to the 3 young persons.
7. After consuming the champagne, young person 1 approached the barand purchased an Alize and lemonade. She was not asked for identification. Later, young person 1 returned to the bar on a number of occasions and was supplied with Vodka Sunrises. On each of those occasions young person 1 was not asked for identification.
8. At about 9.50pm young persons 2 and 4 approached the bar. Young person 4 ordered and was served a Vodka, Lime and Soda by an employee of the hotel, Ms Purvey. Young person 2 paid for the drink with a debit card. She was not asked for identification by Ms Purvey. Young person 4 ordered and was served a Vodka Raspberry by an employee of the hotel, Ms Eggleston. Young person 4 paid cash for the drink. She was not asked for identification by Ms Eggleston.
9. The young persons then went upstairs to the Moonshine Bar at the hotel. They sat near the stage area.
10. Young person 1 approached the bar and ordered and was served with 2 Vodka and lemonades. She gave one of the drinks to young person 2. She was not asked for identification.
11. Young persons 3 and 4 approached the bar. Young person 4 ordered and was served a Vodka and Redbull and another Vodka based drink. Young person 4 paid for the drinks with young person 3's eftpos card. Young person 4 was not asked for identification.
12. Young persons 1 and 2 then sat with Ben on a balcony in a restaurant area of the hotel known as "Harry Phats". Ben bought drinks at the Moonshine Bar and supplied them to young persons 1 and 2. A short time later all of the young persons sat in the same area on the balcony.
13. At about 11.30pm Senior Constable Millar and Constable Male entered the hotel to conduct a convert audit of the hotel's operations. The police went to the Harry Phat's area and observed the young persons. The police formed the opinion that the young persons appeared to be under 25 years of age and asked them for identification. None of the young persons could produce identification and subsequently admitted to police that they were 17 years of age.
14. Police requested the CCTV footage of the night of the incident. On the night the respondent could not provide an explanation for the presence of the young persons in the hotel.
15. On 8 December 2015, the respondent participated in an electronically recorded interview in which he stated that the hotel had focussed too much on intoxication levels that night and that had the hotel had "dropped the ball".

Affidavit of the Respondent tendered in the Local Court

1. The respondent relied on an unsworn affidavit tendered in the Local Court.The content of that affidavit can be summarised as follows.
2. The respondent commenced as Licensee/General Manager at the hotel on 26 October 2014. For the preceding 25 years the respondent had worked in various managerial positions in the hospitality industry including in licensed premises. He had also been the owner of 3 small bars. The respondent has not been charged with any licensing offence previoulsy.
3. The hotel has a large staff. The hotel's liquor licence allows for 24 hour trade between Monday and Saturday and to midnight on Sunday, however the hotel has a self-imposed lock out at 12.30am and closed at 2.00am on Friday and Saturday nights. Around 15,000 people enter the hotel each week.
4. In December 2009 the hotel was listed in Schedule 4 of the Act as a Level 1 premises. Level 1 premises have a high level of anti-social and aggressive behaviour. It was downgraded to Level 2 in July 2010 and by December 2010, the hotel was not listed in Schedule 4 of the Act.
5. The hotel has demonstrated its commitment to mitigating the risk of anti-social and aggressive behaviour by taking steps such as the self-imposed 12.30am lock out on weekends, the refusal to sell shots and ready to drink classified beverages, and by not hosting or promoting dance parties or ticketed events.
6. At the time of the incident there were procedures in place at the hotel to ensure compliance with all relevant legislation. The hotel operated in accordance with a Plan of Management that had been agreed upon by Manly Council and the licensing police at Manly.
7. All staff involved in the sale of alcohol were required to hold a current RSA certificate or a Competency Card. Staff qualifications were audited weekly.
8. All staff were given a copy of the hotel's House Policy documentation when they commenced employment. This documentation included the Office of Liquor Gaming and Racing Guidelines for the Prevention of Intoxication, and Evidence of Age Guidelines. Staff were required to sign to acknowledge that they had received the documentation.
9. The hotel has regular training sessions for staff and that RSA and proof of age requirements are always discussed at these sessions. Prior to the incident in 2015 the Hotel staff attended training sessions on 15 April, 17 June and 22 July, two of which were run by external training companies.
10. The hotel engages, and did engage at the time of the incident, security services and RSA staff from Eagle Security. Around 20 security and RSA staff work at the hotel.
11. Prior to the incident, security staff worked on the doors from 8.00pm asking all patrons entering who are not clearly over the age of 40 for identification. The Hotel only permitted the entry of minors if they are in the company of their parents and are asked to leave once the bistro has closed. On Saturday evenings the bistro closed at 10.00pm.
12. Security staff were assigned to areas of the hotel for their shift. At the time of the incident security numbers had been increased in comparison to the previous year. On Saturday nights, 12 security staff and 4 RSA staff were rostered to work.
13. The hotel worked closely with police and the respondent regularly met with the licensing police at Manly throughout 2014 and 2015. The appellant stated that the hotel was frequently audited by local police and there was usually at least one inspection per night.
14. The hotel participated in the local liquor accord and the community radio system. The community radio system allowed the hotel to have contact with other large venues and local police to reduce aggressive and anti-social behaviour.
15. On the night of the incident the respondent was working at the hotel along with three duty managers, a security manager, 12 security staff, and 4 RSA staff. The first security guard commenced at 4pm with the remainder of security staff commencing their shifts between 6pm and 10pm.
16. There was a rugby prize giving function in the Moonshine Bar (on level 2) that commenced at 2.00pm. A 21st birthday was booked into Blackets Bar (also on level 2) and another 2 events were scheduled to commence at the Moonshine Bar at 6.00pm.
17. The latter 2 events were discovered to be buck's parties which was against the hotel's policies. The hotel had, and continues to have, a policy of not hosting buck's parties. Upon discovering that the events at Moonshine were buck's parties extra security were moved to this area of the hotel and directions were given to organisers of the events to vacate the Hotel.
18. The 21st birthday party also required extra security when concerns arose over drug use and responsible service of alcohol. Consequently a guard was stationed near the toilets at Blackets bar until the party ended at 10pm to ensure that there was no drug use.
19. The appellant deposed that by 7.30pm on the night of the incident, approximately 117 people had been removed from the Hotel. At the time that the young people entered the Hotel there were no security guards on the door and fewer were patrolling the downstairs area due to the need for them on level 2.
20. The appellant stated that as staff were aware that the doors were manned by guards from 8.00pm, they were more confident that no underage people would be in the premises.
21. Following the incident the number of security staff engaged by the hotel was significantly increased and guards began to man the doors from 5.00pm between Thursday and Sunday. At this time, the manager and security manager conducted a full audit of the hotel and record in the incident register any minors on the premises, including any that may be in the bistro or restaurant with their parents.
22. The cost of security services increased from about $10,000 per to about $15,000 per week.
23. There was a compulsory staff meeting on 17 September 2015 at which staff were reminded of their obligations not to serve minors or intoxicated individuals and they were re-issued with the House Policy, RSA Guidelines and Proof of Age Guidelines.
24. In September 2015, GJ Consulting a specialist security and licensing consultancy firm was engaged to run quarterly training sessions for security staff and to perform covert audits. The first of these training sessions was held on 7 October 2015.In November 2015, an internal Compliance Manager was employed.
25. The employment of Ms Purvey and Ms Eggleston was terminated for breach of the hotel's House Policy by serving the young persons without requiring them to produce identification.
26. The hotel contributes financially to a number of community sporting groups, charities and community events. In the 2015 financial year those contributions exceeded $150,000.

Evidence of Arthur Harold Laundy

1. Arthur Harold Laundy gave evidence before the magistrate and was cross-examined.
2. Mr Laundy is one of the current owners of the hotel and a licensee of 54 years. Mr Laundy has not been convicted of any licensing offence in that time. Mr Laundy has also been involved in the sale of over 80 hotels.
3. The current owners purchased the hotel on 1 July 2010. At that time the hotel was listed as having a number of violent incidents related to its operation. Before the sale of the hotel Mr Laundy was asked to meet with representatives of the Office of Liquor Gaming and Racing (OLGR) about the operation of the hotel. This was a request that unprecedented in Mr Laundy's experience.
4. As a result of the concerns raised by the OLGR and Mr Laundy's observations, the owners decided to cancel the provision of music, close early on New Year's Eve, hire a private security consultant, introduce a voluntary lock out time of 12.30am on Friday and Saturday nights and to close at 2.00am on those nights.
5. Mr Laundy gave evidence that the hotel has worked very closely with the licensing police at Manly to effect positive change at the hotel.
6. In cross-examination, Mr Laundy gave evidence that Ms Purvey and Ms Eggleston had been dismissed and that the performance of the respondent and the security firm had been discussed by the owners.

Affidavit of the Respondent sworn 14 November 2016

1. The respondent relied on an affidavit sworn by him on 14 November 2016.
2. The respondent's employment as licensee was terminated by the owners of the hotel in early April 2016.
3. The respondent has worked in the hospitality industry for 27 years. He presently has an interest in 2 small bars and works as a hotel manager. He has no prior licensing convictions.
4. The respondent intends to remain in the hotel industry and hopes to be a licensee again, or own a hotel in his own right. He is concerned as to the effect that a conviction will have on his future prospects as a licensee or a hotel owner. The respondent attached the relevant prescribed forms of the (OLGR) that require the provision of a current National Police Certificate.
5. The respondent's family live in the United States and he is also concerned about the impact of any conviction on his ability to travel to visit them.
6. The respondent attached documents relating to admission to the United States by a person with criminal convictions. The effect of those documents is that a person is inadmissible if convicted of a crime involving 'moral turpitude' or a controlled substance. An offence is exempted if the maximum penalty did not exceed 12 months imprisonment and the person was sentenced to less than 6 months. A person is further inadmissible if they commit 2 or more offences (including those arising from a single scheme of misconduct) for which the aggregate term of imprisonment is 5 years or more. If a person seeking entry has committed an offence referred to, they can apply to the US Consulate for a waiver of that ineligibility.

Statutory Declaration of David Andrew Cody-Ward

1. David Andrew Cody-Ward is the present licensee of the hotel. Mr Cody-Ward stated that there have been no further licensing offences at the hotel since he took over as licensee on 8 April 2016. The hotel continues to be closely monitored by the police.
2. On 3 June 2016 the Secretary of the Department of Justice imposed a 7 day suspension of the hotel's licence by reason of the non-payment of a penalty notice issued to a staff member of the hotel for supplying one of the young persons with liquor on 12 September 2015.
3. Mr Cody-Ward stated that in his experience that owners of hotels preferred to employ licensees who do not have prior convictions.

Consideration

1. Both before the magistrate and on appeal the prosecution did not submit that the higher penalty was warranted pursuant to section 147(2) of the Act or that an additional order pursuant to section 148(1) of the Act should be made.

Objective Seriousness

1. The objective seriousness of the section 124 offences should be assessed by reference to the length of time for which the young persons were present on the licensed premises and the extent to which the systems put in place by the licensee failed to detect them.
2. The objective seriousness of the section 117 offences should be assessed by reference to the number of times that liquor was supplied to the young persons and the amounts supplied. It is also relevant to have regard to the extent to which the systems put in place by the licensee failed to prevent the supply of liquor to them.
3. Three of the young persons were on the licensed premises for about 4.5 hours. One of the young persons was on the licensed premises for about 4 hours. The young persons accessed areas that they would have been permitted to be in if they were in the company of a responsible adult as well as areas from which they were prohibited even if they were accompanied.
4. The young persons appeared to be under the age of 25 years. The standard responsible service of alcohol (RSA) training contained the advisory requirement that such persons be asked for identification on licensed premises. The evidence was that the security staff at the hotel applied best practice of asking persons who appeared to be under the age of 40 for identification when they sought entry.
5. The young persons entered the hotel before security staff manned the entrances at 8.00pm. From that time on, persons who appeared to be under the age of 40 were required to produce identification before they were allowed to enter.
6. At the time when they entered the hotel and whilst seated in the bistro the young persons were not asked for identification.
7. Young person 1 was supplied with a bottle of champagne and 4 mixed drinks. Young person 2 was supplied with 4 mixed drinks. Young person 3 was supplied with 2 mixed drinks. Young person 4 was supplied with 3 mixed drinks. Some of those drinks were purchased for them by adults at the hotel, but the respondent was still required to take steps to prevent that from occurring.
8. Each of the young persons were at some point in time served at a bar in the hotel. On those occasions the employees of the hotel did not ask them to produce identification.
9. The system in place to prevent minors from being in the hotel and to prevent them being supplied with liquor fell short of the standard required in the following respects.
10. The system could have and should have provided for one or more of the employees of the hotel to conduct mobile patrols to identify persons who appeared to be under the age of 25 years and to ask them for identification. As a control measure on that system, the licensee himself or an employee of supervisory rank should have been one of the employees to undertake this task. There were RSA staff and security guards patrolling the hotel on the night of the offences. The evidence is that they had been instructed to concentrate on monitoring the intoxication levels of the patrons. It is apparent that the RSA staff and the security guards did not actively require patrons to produce identification once they were inside the premises. This is demonstrated by the ease by which the young persons were detected by the police.
11. The employees of the hotel were complacent about requesting identification. It was contended on behalf of the respondent that the bar staff were entitled to assume that from about 9.00pm that anyone in the hotel had been assessed as to their age or asked for identification. The assumption made was not a reasonable one. The complacency arose by reason of a lack of adequate supervision to ensure that persons approaching the bar and ordering liquor, who appeared to be under the age of 25 years were asked for identification.
12. It was submitted that the young persons exploited the system by entering the hotel before 8.00pm when the security guards manned the entrances and actively checked the identification of the persons entering who appeared to be under the age of 40. I do not find the alleged exploitation of the system be a mitigating circumstance. The system put in place had to provide for the methods that young persons would employ to avoid it.
13. The hotel had a patronage of 15,000 per week. The offences involved the activities of 4 young persons on the premises on one night.
14. The need to turn out 117 patrons from the hotel by about 7.30pm should be properly considered as an exceptional circumstance. It explains why the attention of the security staff was diverted, and perhaps to some extent the respondent. It does not however provide much mitigation for the failures in the system that I have identified.
15. The offences should be assessed in mid-range of objective seriousness.

Deterrence

1. The penalties imposed for these offences must provide for general deterrence. Licensees must take the obligations imposed by the Act very seriously. The community is entitled to expect that both large and small operators will comply with licensing requirements that are intended to provide for harm minimisation.
2. There is also a need for specific deterrence. The respondent intends to continue to be involved in the hotel industry. A number of failures in the system that resulted in the offences being committed were of a supervisory nature that were in the respondent's control, notwithstanding that he was vicariously responsible for the actions of the staff that actually supplied the young persons with liquor.

Aggravating factors

1. There are no relevant aggravating factors.

Mitigating factors

1. The injury, emotional harm, loss or damage caused by the offence was not substantial: section 21A(3)(a) Crimes (Sentencing Procedure) Act 1999.
2. The offences were not part of planned or organised criminal activity: section 21A(3)(b) Crimes (Sentencing Procedure) Act 1999.
3. The respondent does not have a significant record of previous convictions: section 21A(3)(e) Crimes (Sentencing Procedure) Act 1999. The respondent has been involved in the hospitality industry for 27 years. The respondent had been a licensee since 2012 and in management positions of licensed premises from 2007. He has one conviction for a drink driving offence, which is not relevant to the sentence imposed for these offences.
4. The respondent was a person of good character: section 21A(3)(f) Crimes (Sentencing Procedure) Act 1999. I cannot place much weight on this mitigating factor because licensees are required to be of good character and accordingly theses offences will ordinarily be committed by persons of good character.
5. The respondent has good prospects of rehabilitation: section 21A(3)(h) Crimes (Sentencing Procedure) Act 1999. The respondent was responsible for undertaking changes to the system after the offences were committed. I am satisfied on the balance of probabilities that he understands the shortcomings of the system that was in place at the time of the offences and that accordingly he has good prospects of rehabilitation.
6. The respondent entered an early plea of guilty: sections 21A(3)(k) and 22 Crimes (Sentencing Procedure) Act 1999. The plea demonstrates remorse and can be taken into account in imposing a different type of penalty. The respondent should be given the maximum discount available for the plea of guilty in this case, of 25%.

Other matters

1. I am not satisfied on the evidence that the entry of a conviction or convictions against the respondent will lead to adverse consequences. First, the licensing system is enforced by the application of the criminal law. Licensees are exposed to an increased chance of having criminal conviction against their name by reason of their position. There are many licensees who have been convicted of regulatory offences. It is unlikely that the OLGR would refuse any application made by the respondent on the basis of the offences before the Court.
2. Second, I am not satisfied that the respondent will be inhibited in his travel to the United States. The offences are not offences involving moral turpitude or a controlled substance. The offences would not be considered to be multiple offences because the aggregate maximum penalty for them would only amount to 3 years and a term of imprisonment is not appropriate. Further, if I am wrong in my interpretation of the US law, the respondent is able to apply for a waiver of the exemption from the US Consulate. There is no reason for me to believe that such an application, if it was necessary, would not be dealt with by the appropriate authorities on its merits.
3. The entry of a conviction for the section 117 offence will have a substantial effect on the owners of the hotel and the hotel licence. There is evidence before the Court that they will be adversely affected in the following ways. First, the imposition of a strike against the licence will automatically follow a conviction for the section 117 offence. The strike will remain on the licence for a period of 3 years.
4. Second, by reason of the non-payment of one of the penalty notices issued to the bar staff a penalty notice enforcement order was issued. That invoked the jurisdiction of the Secretary of the Justice Department to suspend the licence. The licence suspension of 7 days in July 2016 led to an estimated loss of revenue of $100,000.
5. Third, a compliance risk loading will be payable on the licence fee of $3,000 per annum while the strike remains current. Fourth, a patron capacity loading of $8,000 per annum will be payable because the compliance risk loading is payable and the patron capacity of the licensed premises exceeds 300. Each of those fees will be first payable on 29 May 2017 for the year commencing 15 March 2017. The annual licence fee for a licence with one strike has increased from $5,000 to $33,000. The increased licence fee is payable for each year that the strike remains in place.
6. Sixth, the hotel's financiers have required a further contribution of equity to increase the loan to value ratio for the secured property. The incurring of a second strike could lead to further action by the hotel's financiers.
7. Seventh, the owners have taken steps contrary to a profit motive to ensure that the hotel has been properly managed with a view to promoting harm minimisation, in particular of violent incidents. The hotel has a track record of being a good corporate citizen. In the 2015 year it contributed $150,000 to community sporting groups. It also supported charities and community events.
8. I must exercise some caution as to the extent that I can consider the impact that any conviction would have on persons other than the respondent. The impact on family members of a person sent to gaol can only be considered in exceptional circumstances: Hoskins v R [2016] NSWCCA 157 at [63]. I am not sure that it is appropriate to draw an analogy. In any event the consequences that are to be inflicted on the owners follow by operation of the law and should not be considered to be exceptional, even if they can be classified as unjust to some extent. The imposition of such results is properly a matter for the legislature as guided by the review of the legislation to be provided by Mr Callinan AC QC in the near future.
9. Section 10 Crimes (Sentencing Procedure) Act 1999 provides that the Court finds an offence proven may conditionally discharge a defendant, without proceeding to a conviction. The Court may consider the person's character, age antecedents, the trivial nature of the offence, any extenuating circumstances and any other appropriate matter. Section 10 and its predecessors reflect the willingness of the legislature and the community to provide offenders with an opportunity in certain circumstances to maintain a reputation of good character and to avoid the otherwise rigid application of the inexorable laws: Cobiac v Liddy (1969) 119 CLR 257 at 269; R v Nguyen [2002] NSWCCA 183 at [50].
10. The factors in favour of dealing with the matter pursuant to section 10 were that the respondent was a first offender, the respondent was to a large extent vicariously liable for the offences by operation of the Act and that he has suffered some extra-curial punishment by the loss of his employment. The imposition of a bond was capable of conveying the need for general deterrence and providing denunciation for the offences: R v Mauger [2012] NSWCCA 51 at [37] per Harrison J (with whom the other members of the Court agreed).
11. It is not appropriate however to dismiss a matter under section 10 merely to avoid some other legislative provision which is otherwise applicable: R v Fing (unrep, 4/10/94, NSWCCA); R v Stephenson [2010] NSWSC 779 at [66]. In Fing, the offender was unsuccessful in arguing that a conviction should not be recorded for a serious fraud offence. It was argued that a non-conviction was necessary to avoid the operation of section 229 Corporations Act 1989 that had the effect of disqualifying the offender from managing a number of corporations that he had established, if he was convicted.
12. The respondent relied on a number of decisions concerning licensing breaches in venues with a large capacity, including the Campbelltown Catholic Club (Lavaroto v R [2012] NSWCCA 61, the Rhododendron Festival in Katoomba (Ray v R unreported District Court of NSW 21/10/13 Judge English) and a country race day (Williams v R unreported District Court of NSW 15/10/10 Judge English). Those decisions can be distinguished on the basis that in each of them the licensee had put in place extensive systems that had not been fully deployed by their staff, but were otherwise diligently enforced by the licensee. In the present case, the system deployed was flawed and it was not diligently enforced by the licensee.

Disposition of the appeal

1. Taking into account all of the circumstances of the offences the appropriate penalty for each was the imposition of a fine.
2. I have considered the principle of totality and have mitigated the penalties to be imposed for some of the offences as well as distinguishing between them based on their relative seriousness.
3. The appeal is allowed.
4. I set aside the order made by the magistrate.
5. In relation to each offence the offender is convicted.
6. In relation to the section 124 offences: 1. for sequence 1 and 2 I impose a fine of $750; 2. for sequences 3 and 4 I impose a fine of $450.
7. In relation to the section 117 offences: 1. for sequence 5 I impose a fine of $1,800; 2. for sequences 6 and 7 I impose a fine of $750.
8. The total of the fines I have imposed is $5,700.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 December 2016