BLACK v. LICENSING COURT OF NEW SOUTH WALES & ORS [2001] NSWSC 1005

LOWER COURT Licensing Court of NSW JURISDICTION : LOWER COURT N/A FILE NUMBER(S) : LOWER COURT D.B. Armati, Chairperson; D.A. Collins, Licensing Magistrate; D.A. Kok, Licensing Magistrate JUDICIAL OFFICER :

Plaintiff: I.A.N. Lawry COUNSEL : First Defendant: Submitting appearance Second to Eighth Defendants: A. Hatzis SOLICITORS : Plaintiff: Surry Partners Defendants: Back Schwartz Vaughan CATCHWORDS : Liquor Act - appeal - errors of fact or law - "needs of the public in the neighbourhood" - necessity to consider present and proposed customers - transient public - decision of Licensing Court erroneous in law - part of consideration of remitter. LEGISLATION CITED : Liquor Act 1982 (as amended) Suitors Fund Act 1951 Toohey & Ors v. Taylor (1983) 1 NSWLR 743 Liquor Stores Association Inc. v. Wine Net Australia Pty. Limited (South Australian Court of Apeal, unreported 16 June 1999) Liquor Stores Association of WA (Inc.) v. Manya Holdings Pty. Limited (Full Court of Court of Western Australia, unreported 17 February 2000) Hunter v. Reyneke (1986) 6 NSWLR 576 Silkman v. Kendall [1982] 1 NSWLR 133 Travis v. Jackson (1987) 10 NSWLR 601 CASES CITED : House v. The King (1936) 55 CLR 499 Australasian Coal & Shale Employees Federation v. The Commonwealth (1953) 94 CLR 621 Hart v. Bell (NSWCA, unreported 6 November 1992) Azzopardi v. Tasman UEB Industries Limited (1985) 4 NSWLR 139 Armstrong v. Edgecock (1984) 2 NSWLR 536 Morgan v. Goodall (1985) 2 NSWLR 65 Martin v. Green [1984] 1 NSWLR 148 DECISION : 1. Orders one and two, as claimed in the summons.; 2. Plaintiff's application be remitted to the Licensing Court for re-determination in accordance with this decision.; 3. Second to eighth defendants to pay the plaintiff's costs of the appeal.

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION No. 10976 of 2001 GREG JAMES, J.

FRIDAY 9 NOVEMBER 2001 JAMES HAMISH BLACK v. LICENSING COURT OF NEW SOUTH WALES & ORS

JUDGMENT 1 GREG JAMES, J: This is an appeal on a question of law arising under s.146 of the Liquor Act 1982 (as amended). 2 The plaintiff is the applicant for the grant of an Off-Licence (Retail) for premises at 20/566 Gardeners Road, Beaconsfield. These premises are located within an industrial estate in South Sydney. They compromise 15 square metres in office space and 117 square metres in warehouse space. 3 At the time of making his application, Mr. Black explained that he was then presently the licensee of a business at Pacific Highway, St. Leonards known as St. Leonards Cellars. This business was owned by B. & S. Fine Wines Pty. Limited and had built up a substantial corporate client base offering a unique service by way of allowing corporate clients to order liquor by telephone, facsimile or e-mail and by delivering liquor to corporate clients at nominated addresses pursuant to these arrangements. 4 In his affidavit of support sworn 31 May 2000, Mr. Black said:- "To avoid affecting any business in or around the vicinity of the proposed licensed premises, B. & S. Fine Wines Pty. Limited proposes to sell to corporate clients by requiring them to order their liquor by telephone, facsimile or e-mail and delivering the liquor to them at their nominated address. It is not proposed to sell liquor to any passing trade, ie., customers who attend the proposed licensed premises. Only clients who have opened an account with B. & S. Fine Wines Pty. Limited would be serviced." 5 The first defendant is the Licensing Court of New South Wales and it has filed a submitting appearance. The second to eighth defendants were objectors to the application. The second defendant was the Chief Executive Officer of the Liquor Stores Association; the remaining defendants were operators of existing liquor businesses. 6 It is important to note that the conditions of development consent relating to the proposed use of the Alexandria premises - no doubt imposed because of the zoning involved - included the following:- "There shall be no direct retailing to members of the public at the site; all retail sales to be via internet, e-mail, phone, mail, facsimile, courier or like means." 7 On 8 March 2001, the second defendant gave its decision in the matter. It refused the application. The Licensing Court noted that in New South Wales stand alone bottle shops (licensed as off licenses) (retail)) had evolved in their present form over a number of years. Further, the court noted that modern methods of marketing such as internet, e-mail and fax had not been addressed by the Licensing Court "in any substantial or exclusive fashion". Although a number of applications that highlighted this method of service to the public had apparently been dealt with by the Licensing Court on an ad hoc basis in unopposed applications, the plaintiff's application presented the court with the first occasion on which, following substantial objections, the court might determine the issues set out in the decision. These issues had been raised not only by other licensees but by the Liquor Stores Association which represented some 750 to 800 members. 8 The Licensing Court's decision is annexed to Mr. English's affidavit as Annexure A. I shall briefly summarise the matter considered by the court in its decision. 9 First, the Licensing Court set out in considerable detail the nature of the applicant's proposal, the facilities that would be available at his premises and the precise details of his intended method of operation. The court observed that in his oral evidence the plaintiff had indicated that he proposed to focus on four main business areas, being Chatswood, North Sydney, Sydney and Parramatta. He conceded that he had no clients in Mascot and that he would aim to meet the needs of his existing client base, that is, corporate customers. 10 Secondly, the court spent considerable time in defining the neighbourhood in which the premises were located. This was ultimately defined as an industrial area with residential premises a considerable distance away. The court expressed its surprise that there was an issue over the boundaries of this neighbourhood. It said the boundaries need only be found "as a formality". It said that "this determination will not have the slightest bearing upon the outcome of the case". So far as I can tell, this surprise was expressed because, although the court acknowledged that it was bound to determine the neighbourhood for the purposes of the objections which had been taken, the neighbourhood was likely to be, whatever its boundaries, an industrial area with little or no residential component. 11 The court also had to determine the "public in the neighbourhood" for the purposes of the objection. In this regard, the court said:- "A determination of a slightly varied neighbourhood makes no difference to the public in the neighbourhood. We note it is not in dispute. There are only one or two residences and therefore only a handful of residents. The balance of the public in the neighbourhood comprises guests at hotels and workers in the industrial area. The precise numbers are not known. We see no reason to find members of the public simply passing through that neighbourhood as being members of the public in the neighbourhood. We accept that we should include in the public in the neighbourhood the small number of proposed visitors to the applicant's premises should this application be granted." 12 Thirdly, the Licensing Court had to consider the needs of the public in the neighbourhood. It did so by reference to well established principles (Toohey & Ors v. Taylor (1983) 1 NSWLR 743 at 745C; 749D). The court also considered the dicta in a decision of the Court of Appeal in the Supreme Court of South Australia (Liquor Stores Association Inc. v. Wine Net Aust. Pty. Limited (unreported 16 June 1999)); and a decision of the Full Court of the Supreme Court of Western Australia (Liquor Stores Association of WA (Inc.) v. Manya Holdings Pty. Limited (unreported 17 February 2000)). 13 Finally, the court addressed the principles stated in a decision of the New South Wales Court of Appeal (Hunter v. Reyneke (1986) 6 NSWLR 576). 14 The Licensing Court concluded that the effect of the decision in Hunter (supra) (similar to the views expressed in Wine Net (supra) and Manya (supra)) was that the public outside the neighbourhood, such as those in the whole of the State or the country, "do not fall within the test". The court said it would disregard the needs of the present and proposed customers of the applicant who were not members of the public in the neighbourhood within the test espoused in Hunter (supra). It said this, notwithstanding the applicant in his affidavit in support deposed to having a substantial client base which he wished to continue serving at the new location. 15 I have difficulty following the reasoning of the court at this point. I do not understand why the court is saying that it will disregard the needs of the present customers of the applicant who are not presently members of the public in the neighbourhood. At this stage, the applicant himself is not in the neighbourhood. That is why he is seeking the licence. Once it is granted, then surely the present customers of the applicant who follow him to the new site will become members of the public in the neighbourhood within the meaning of the test in Hunter v. Reyneke. Surely they should be considered? 16 The Licensing Court then purported to apply the statements of principles in Cross, J.'s decision in Silkman v. Kendall [1982] 1 NSWLR 133. This entailed a consideration of the facilities offered by existing liquor outlets both within and outside the neighbourhood. This decision had been approved by the Court of Appeal as a correct statement of the proper legal test (Travis v. Jackson (1987) 10 NSWLR 601). 17 It should be observed that the statement of the meaning of "needs" enunciated in Silkman (supra) by Cross, J. was not expressed in precisely the manner in which it had been later expressed in the majority decision in Toohey (supra). At 748G-749B, Samuels and Priestley, JJA. said:- "In Silkman v. Kendall the Licensing Court had interpreted s.29(1)(e) in a way similar to that adopted by Mr. Bartley in the present case, that is, as raising the question whether the demands of the public in relation to liquor outlets cannot be met without extreme hardship or difficulty. Cross, J. gave detailed attention to the meaning of the word 'needs ' in s.29(1)(e) and formed the opinion that the legislature had intended to use the word in the sense of 'needs arising from or caused by a want in the sense of lack - in relation to the public, a lack of things or qualities which a reasonable man would regard as usual or desirable to have, or a condition reasonably requiring relief'. While we are in general agreement with the line of reasoning which led his Honour to his conclusion, we think it should be expressed somewhat differently. In our view, in the overall context 'needs' means 'the reasonable demands or expectations of the public'. We recognise that judicial attempts to elucidate the meaning of words in statutes do not replace the words of the statute themselves. There may be more than one formula which can adequately state the meaning of 'needs'. However, of the various ways of construing the words which were canvassed in the thorough submissions before us, the one we have just set out seems to us most appropriate to reflect the intention of the statue." 18 The Licensing Court then set about detailing the facilities made available by the Southern Cross Hotel at St. Peters, the liquor store at Alexandria and liquor stores at Mascot and Botany. There was also evidence of the facilities available at the Lakes Hotel, Mascot. There was further evidence from a Mr. Piasevoli in relation to the facilities offered by the retail division of the Australian Liquor Group. This was an organisation based in Victoria with substantial liquor operations in New South Wales. It provided a full range of services through the web site accompanied by a substantial metropolitan delivery service. There was similar evidence from Liquorland Direct, a division of Coles Myer Limited. This organisation had a direct mail and e-commerce division with its own web site. Evidence was also available of the Vintage Cellars Corporate Customers Services, the majority of which duplicated those which had been proposed by the plaintiff. 19 Fourthly, the court expressed its conclusion at pp.18 and 19 of its decision in relation to the needs grounds of objection. It was the Licensing Court's clear view that the applicant must fail on the needs test. The court said this:- "The applicant does not set out to establish a need for the public in the neighbourhood. For the reasons expressed above, and in accordance with the authorities we have quoted, the applicant therefore must fail on the needs test. We find that the applicant has failed to demonstrate any need for the public in the neighbourhood at all on the basis of the operation he proposes. … To the extent that the applicant may have demonstrated any need by reason of his proposed manner of operation, we find that the existing facilities inside and outside the neighbourhood meet that need. In determining the existence of any need, we have considered the changing community requirements for liquor, the need to address modern marketing techniques and to give careful consideration to needs designed to meet small niche markets. We do not, however, find that this applicant has demonstrated any facts for the public in the neighbourhood or indeed generally which would require us to find a need. To the extent that the applicant has sought to establish by evidence the quality or unique nature of the services he provides, we are prepared to make a finding, based upon the evidence given, that some weight should be given to this evidence. However, this additional level of service does not establish any need. In any event, to the extent that a better service is provided, we are satisfied that generally the level of service provided by the objectors and demonstrated by their evidence is of a high level and that any consideration of needs does not require a level of excellence and nor can that level of excellence demonstrate a need of itself." 20 The Licensing Court indicated that it made this finding based upon New South Wales law. It said that, in relation to the decisions cited from South Australia and Western Australia, they were "highly persuasive and might be applicable in New South Wales in other cases and on other facts". 21 Finally, the Licensing Court considered at length public interests grounds of objection and discretionary matters which had been raised in the proceedings. The Licensing Court was not satisfied that the objectors had made out the public interest grounds nor were they satisfied that there was any aspect of the public interest which warranted the granting of the application on discretionary grounds.

Grounds of appeal 22 Stated briefly, the plaintiff argued that the following errors of law were contained in the Licensing Court's decision:-

The court fell into error in excluding from its consideration those members of the public who are in the neighbourhood. It was said this error arose from an erroneous reading of Hunter (supra).

The court erred in relation to its finding on needs in that it appears the court thought itself bound to follow and apply the judgments of other States in Wine Net (supra) and Manya (supra). Yet these decisions had no application to the plaintiff's application nor to the provisions of the New South Wales legislation.

Alternatively, in relation to the decision on needs, it was said the court has failed adequately to expose its reasoning process and it may have fallen into error in not stating clearly that which it was concluding on the issue in relation to the applicability of these decisions of other States.

Additionally, the Licensing Court fell into error on the needs issue. It did so as a result of its misunderstanding of the decision of Cross, J. in Silkman (supra), especially in the light of the Court of Appeals decision in Travis v. Jackson (supra).

Finally, on the needs issue, the Licensing Court made a further error of law as demonstrated by the last sentence of its finding on the topic at p.19 (see passage extracted above).

The Licensing Court fell into error in relation to the exercise of its discretion.

The course of the appeal 23 The appeal came before me for hearing on 9 August 2001. On that day, I heard argument and directed that all further argument was to be in the form of written submissions. 24 My initial response to the arguments addressed by the plaintiff is that, subject to one matter, it appeared, at least at a prima facie level, that no error of law was involved in the decision of the Licensing Court. The identification of the neighbourhood and the public in the neighbourhood were essentially questions of fact. In relation to the needs finding, this too was a question of fact. Moreover, it seemed to me quite clear from a reading of the Licensing Court's decision that it had not sought to apply the decisions from South Australia and Western Australia. The Licensing Court said quite clearly that it made its findings based upon New South Wales law. Moreover, so far as discretion is concerned, it is clear that this court will only interfere with a finding made in the exercise of a discretion in a situation where there has been a breach of the principles long settled and well established in House v. The King (1936) 55 CLR 499. The very matter that the plaintiff argued had not been taken into account clearly seems to me to have to have been taken precisely into account. In any event, there is a strong presumption that the exercise of a discretion such as the present has been correctly exercised. This is even more so in the case of a specialised tribunal such as the Licensing Court (Australasian Coal & Shale Employees Federation v. The Commonwealth (1953 94 CLR 621 at 627); Hart v. Bell (NSWCA, unreported 6 November 1992). 25 There was one matter, however, that troubled me. This was the possibility that the Licensing Court may have misapprehended the nature of the plaintiff's case and therefore not applied itself appropriately to the matter before it. I expressed these misgivings and directed that the parties specifically address this issue in written arguments. 26 Subsequent written submissions were received from both the plaintiff and the defendants in relation to the question I had raised. There was a final further submission in reply from the plaintiff

Written arguments 27 The plaintiff, in its further written submissions, contended that the case it had sought to make before the Licensing Court was that the "public in the neighbourhood" included these categories of persons:-

1. Those who personally attended the premises including members of the workforce in the neighbourhood; the large number of persons who visited or passed through the neighbourhood; local businesses and the group of persons (no doubt relatively few) who would attend the premises personally. This latter category would include people who went there for tasting or promotional functions or simply to discuss the services available.

2. Those who made contact with the premises by means such as telephone, facsimile, e-mail, etc. Presumably, this group included the plaintiff's existing customers. 28 In the light of this case sought to be made out, it is submitted that the Licensing Court misunderstood the task it had to perform in the present case. It is said this is made clear by the extract from its judgment at p.18:- " Conclusion on needs 42. The applicant does not set out to establish a need for the public in the neighbourhood. For the reasons expressed above, and in accordance with the authorities which we have quoted, the applicant therefore must fail on the needs test." 29 The plaintiff submits that the Licensing Court made no evaluation whatsoever of those persons listed under the first category set out in its submissions above. This misapprehension led it into error when it came to consider the needs ground of objection. 30 In addition, the plaintiff argues that the Licensing Court was in error, in any event, in rejecting the needs of those members of the public in the neighbourhood who were not physically present in the neighbourhood. This submission refers to those who were dealt with in category two set out above. 31 The defendants have addressed these submissions in comprehensive fashion. I understand the defendants' responses to be the following:-

The Licensing Court did take into account those persons who would personally attend the plaintiff's premises (decision, paragraphs 9 and 26).

The Licensing Court also took into account those persons who would seek to do business with the plaintiff by way of "remote means" (decision, paragraph 10, transcript, p.45 ln.30-50)

The plaintiff did not in fact submit before the Licensing Court that the persons making contact with the plaintiff "by remote means" are to be included as the public in the neighbourhood.

Even if it be true that the Licensing Court had misconceived the nature of the applicant's case, no error of law had in fact occurred. Such an error would be an error of fact only and would not give rise to an appeal under s.146 of the Liquor Act ( Azzopardi v. Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155. Further, the Licensing Court's determination of the "need" sought to be addressed by the plaintiff was based on the plaintiff's evidence.

In any event, the nature of the plaintiff's case, as revealed by the evidence it called, was that it did not seek a "walk in trade"; that the intention was primarily to service existing corporate customers not based in Mascot and to focus on corporate clientele located in other suburbs of Sydney. As a consequence, it is clear that the plaintiff sought to supply liquor to persons located within the neighbourhood "only in the most incidental manner" (submissions, p.4).

There was no evidence, or at least insufficient evidence, to establish any present "need" on the part of any person presently working or living in the neighbourhood. This extended as well to persons passing through the neighbourhood. Since there was no evidence of a present need in relation to any of these categories of persons that the plaintiff now says it wished to categorise as being part of the public in the neighbourhood, no error of law had been demonstrated. Alternatively, there would be no point in referring the matter back to the Licensing Court at this stage.

Finally, the defendants argued that in order to be part of the relevant "public in the neighbourhood", persons must be physically present in the neighbourhood. That approach, it was said, is required by Hunter (supra). See also Armstrong v. Edgecock (1984) 2 NSWLR 536; Morgan v. Goodall (1985) 2 NSWLR 65. 32 In this regard, the defendants have argued that any other approach would lead to absurdity and anomaly.

Plaintiff's reply 33 As I have indicated, Mr. Lawry sought leave to have the "last word" in relation to the argument. His submissions in response reinforce his point that the Licensing Court did not consider the workforce, the passers by and local business people in the neighbourhood. 34 Secondly, Mr. Lawry repeated that the error by the Licensing Court was that it misapprehended the nature of the case that was before it for determination. It was, he said, an error at the threshold. It was not an error made in the course of the case but one which led it to misdirect itself regarding the law to be applied.

Resolution 35 I consider that the court fell into error and that the orders claimed in paragraphs one and two of the summons should be made. Further, in my opinion, the matter should be remitted back to the Licensing Court for re-consideration. There are a number of reasons why this is appropriate. 36 The first arises from a consideration of Mr. Lawry's address to the Licensing Court. It seems clear from the brief submissions he made that the court was in fact invited to consider the needs of the workforce, the residents and those passing through the neighbourhood (see pp.46-47 of Annexure A to Mr. Tobin's affidavit, sworn 25 June 2001). Secondly, there is the statement in the Licensing Court's decision itself at paragraph 42. While Mr. Hatzis has insisted that this statement should be read in context, it is difficult to see just what that context is. Thirdly, there appears to me to be a possible misunderstanding of the plaintiff's case in paragraphs 34 and 35 of the decision. It also appears that the Licensing Court may have misunderstood the statement of principle in Hunter (supra) at 580D. 37 I am reluctant to conclude that the Licensing Court has fallen into error in relation to the relevant principles relating to the identification of the public in the neighbourhood. I am conscious of the fact that the Licensing Court is a specialised tribunal and must be taken to be very familiar with the principles enunciated by this court, especially in its appellate division. 38 In my view, however, the public in the neighbourhood would clearly include proposed customers of the applicant who work in, reside in or pass through the neighbourhood. It may be that the Licensing Court is well seized of the relevant distinction but the particular paragraphs have caused me some concern, particularly in light of the ultimate statement at the commencement of paragraph 42. It seems clear that the conditions proposed by the plaintiff (these being set out in paragraph eight of the Licensing Court's decision) would not preclude people who work, live in or regularly pass through the industrial area from becoming a customer of the plaintiff's business. It is clear, of course, that a walk in trade is not contemplated. It was conceded by the plaintiff (judgment, paragraph 16) that he had no clients in Mascot at the present time and that he would be aiming to meet the needs of his existing client base, that is, corporate customers. This case was, however, different from the situation discussed in Hunter (supra). In that case there was an application for a licence in an existing local supermarket. Here, although the plaintiff's existing customers do not work or reside in the neighbourhood, they are part of an existing business structure. The plaintiff is not starting his business from scratch. It is his aim to provide services at the new premises that will be used by his existing customers. It may well be, however, that the Licensing Court has already adequately addressed the needs of those customers. If so, the reasons are at the least unclear and in my view defective. If not, the court failed to take into account an essential matter for the exercise of the statutory functions. It may be that the court has confused the concept of walk in trade with that of public in the neighbourhood. 39 The purpose of this remit is to enable the Licensing Court to consider afresh the totality of the case the plaintiff says that it intended to present at the original hearing. Indeed, the plaintiff has said that he did present this case but that its intent was misapprehended. 40 The Licensing Court has considered the needs of the plaintiff's present customers to acquire liquor at the subject premises but rejected the submission that their needs should be considered as needs of the public in the neighbourhood by applying that view of Hunter (supra) I have referred to. 41 Further, the court has stated that there is no reason, in its view, for considering the needs of members of public simply passing through the neighbourhood as defined. The transient population, in the Licensing Court's opinion, is not to be included in the public in the neighbourhood. This finding, both as to needs and public in the neighbourhood, is essentially one of fact. Without more, unlike the finding as to present customers, I would find it difficult to conceive that any error of law is involved. 42 Nevertheless, the plaintiff's case, so far as it relates to the workforce and small residential population in the neighbourhood, has not been determined by the Licensing Court. That is the submission I have accepted. When the matter is remitted, it will be a matter for the Licensing Court to determine whether the applicant has discharged the onus in relation to s.45(2) so far as these members of the public in the neighbourhood are concerned. Secondly, even if the court is of the view that the plaintiff has failed to discharge the onus on the needs ground, the court will be obliged to consider whether there is any discretionary reason why, notwithstanding the finding, the licence should be granted. 43 There are two further matters for comment. 44 The first is that it will be entirely a matter for the Licensing Court as to whether it considers that any need for an off-licence has been demonstrated for the public in the neighbourhood generally, irrespective of its particular components. There are, no doubt, liquor outlets of various kinds in industrial areas throughout the State. Whether there is a need for this outlet sited in the particular industrial area, is wholly and entirely a matter for the judgment of the Licensing Court. It is not the province of this court to make any expression of opinion one way or the other (Martin v. Green [1984] 1 NSWLR 148. 45 The second thing is this: the defendants have made a forceful submission that the relevant "public in the neighbourhood" ought be confined to those persons who are physically present in the neighbourhood. It was on such a basis, no doubt, that the court excluded present customers as relevant. This is not an issue that this court should resolve on the matters arising in the present appeal. Further, on the case presented by the plaintiff to the Licensing Court, it may not be a matter that arises clearly and precisely on the facts of the present application at all. Be that as it may, I have specifically refrained from resolving that issue and express no opinion on it whatsoever. 46 The orders I make are:-

2. An order that the plaintiff's application be remitted to the Licensing Court for re-determination in accordance with this decision.

3. An order that the second to eighth defendants pay the plaintiff's costs of the appeal. Those defendants are, if suitably qualified, to have a certificate under the Suitors Fund Act 1951.

   ---

Last Modified: 11/12/2001 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.