Increased risk of officers liability

Officers Can Be Held Personally Liable

Recent changes to the Liquor Control Reform Act 2003 (Act) have increased the risk of a licensee’s “officers” being held personally responsible for offences committed by the licensee.

The “officers” of a licensee include not only the directors and secretary but any person concerned in, or who takes part in, the management of the licensee.Always Have a Nominee!

Crucially, the new provisions do NOT apply to offences which occur when a licensee has appointed a Nominee.

It is therefore crucial that your company ensures it has an approved Nominee on its licence at all times.

If there is a Nominee in place at the time an offence is committed, only the licensee and the Nominee are likely to be penalised. The officers of the licensee would only be penalised if they were personally involved in committing the offence.

If there is no Nominee, then all officers, as well as the Licensee can be penalised: If the company has – say – four directors, then instead of one fine being imposed, there may be four separate fines.

Should you become aware that your company’s Nominee is about to leave your business, you should immediately seek to have a new Nominee approved by the VCGLR, noting that it can take four to five weeks to have a new Nominee approved.

Due Diligence (and Evidence of Due Diligence)

Apart from ensuring there is a Nominee in place at all times, an officer’s best defence against being held personally liable for offences committed by your company is to ensure that you exercise due diligence in seeking to prevent the commission of offences, and by keeping evidence of your exercise of that due diligence.
For example, the board of your company should be keeping minutes of its board meetings addressing compliance issues and keeping records of instructions given to staff about preventing offences (such as venue handbooks, staff induction manuals, internal training sessions).

Certain Serious Offences

Unless a Nominee is in place, if a licensee commits certain of the most serious offences under the Act, then each officer of the licensee will initially be deemed to have also committed the offence. Those offences are:

  • supplying an intoxicated person;
  • permitting a drunk or disorderly person on premises;
  • supplying liquor or permitting liquor to be supplied to a minor;
  • allowing a minor on premises (unless accompanied by a responsible adult or is on premises to eat a meal or is a resident of the premises);
  • permitting another person to carry on a business of supplying liquor from the licensee’s premises;permitting any person who is not employed by the licensee to carry on such a business;
  • failing to comply with a VCGLR notice banning an advertisement or promotion;
  • contravening a closure and evacuation notice.

However, there are provisions an officer can rely upon to reverse deemed liability. Because of the serious nature of these offences, the amendments set a high burden of proof on the prosecution to establish an officer is liable.

An officer will not have committed such an offence if:
(a) the officer can present evidence that suggests a reasonable possibility that the officer exercised due diligence to prevent the commission of the offence by the licensee; and
(b) the contrary is not proved (beyond reasonable doubt) by the prosecution.

This is why it is important for the directors of a licensee to exercise due diligence to prevent the commission of these serious offences – and to keep evidence showing the exercise of that due diligence.
If the officers can produce evidence that suggests a reasonable possibility that the officers exercised due diligence, then it may be difficult for the prosecution to prove otherwise beyond reasonable doubt.

Certain Other Offences
Unless a Nominee is in place, if a licensee commits certain other offences, its officers will also be liable for the offence if they did not exercise due diligence to prevent the offence. These offences relate chiefly to failing to ensure that management and staff have up-to-date RSA training.

In order to successfully defend a prosecution for any of these offences, an officer must do more than simply present evidence that suggested a “reasonable possibility” that the officer had exercised due diligence.
Presumably, this is because these offences are relatively easy to prevent as long as due diligence is exercised – and an officer should be able to ensure that they are prevented.

“Accessorial” Offences
Unless a Nominee is in place, if a licensee commits any of a long list of other less serious offences under the Act (such as failing to display your liquor licence, failure to have a copy of your red line plan or failure to advise of any change in directors or associates), then an officer may also liable for the offence – if the officer was an “accessory” to the offence.

If the officer authorised or permitted the commission of the offence or was knowingly concerned (whether by act or omission) in the commission of the offence, then the officer will be liable.
For the most part, the officer will have to be actively involved in the business to be caught under this section of the Act.

A full list of all offences and their relevant level of liability can be downloaded here:

DOWNLOAD A FULL LIST OF OFFENCES

Conclusion

You should ensure that you have a Nominee in place at all times and that you exercise due diligence to prevent any offences under the Act (and keep evidence of the exercise of that due diligence).

If you have any queries regarding your obligations under the Act, or steps a Licensee should take to best ensure due diligence is exercised please contact Michael Scully or Elizabeth Priddle.

Bazzani Scully Priddle Lawyers have significant experience in defending Licensees against breaches of the Act.