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Carousel Bar is facing a three-day closure because of repeated breaches of its alcohol licence including overcrowding, a lack of sufficient food options and serving intoxicated patrons.
Police have applied to the Alcohol Regulatory and Licensing Authority (Arla) to have the bar's on-licence suspended for 78 hours.
Owner John Devereux and duty manager Tessa Cooper also face a 28-day suspension of their managers' certificates.
The matter was heard by Arla chairman Judge Kevin Kelly and Arla member Judith Moorehead in the Dunedin District Court yesterday.
Dunedin police alcohol harm prevention officer Sergeant Ian Paulin said Mr Devereux had ignored repeated warnings about overcrowding at his bar, which has a total capacity of 50.
The repeated breaches had exasperated police and put people's safety at risk, he said.
Two occasions last year, one on the night of the Pink concert and the other on the night of ''tradies day'', showed Mr Devereux continued to turn ''a blind eye'' to the issue which had been ongoing since 2014.
During an inspection on the night of the concert, police counted 81 people, including staff, inside the nightclub.
Duty manger Michael Campbell told police no-one had counted the number of people inside because a security guard was late to work.
On tradies day police found a man who appeared to have wet himself because he was so intoxicated. They also counted 58 people inside.
Constable Tamsyn McSkimming said the man told her he should have gone home hours ago and had been at the bar for between 20 and 40 minutes.
Another officer took a drink off the man as he was leaving the building. Mr Devereux argued the man could have spilled a drink on his pants and just because he had a drink did not mean it was alcoholic or that he had been served at the bar.
Tradies day was always a notoriously difficult night for the city's bars and extra staff had been rostered on to make sure any issues could be dealt with quickly, he said.
Ms Cooper said the building was over capacity because a security guard had left the entrance to assist other security during a nearby fight meaning more people were able to enter the nightclub.
On both occasions, the duty manager instigated a one-way policy to reduce the number of people inside.
The authority reserved its decision.