Dalgety Wine Estates Pty Ltd v Rizzon

The grounds of objection to a removal application specified in s. 57 are in addition to those mentioned in s. 48 (1) and (2). They are as follows:

(a) That the licensing of the premises to which it is proposed to remove the licence is not required for the accommodation of the public;

(ab) That the needs of the public that are being, or are capable of being, met at the premises to which the licence presently relates would be unduly prejudiced by the removal of the licence;

(b) That the said premises are in the vicinity of a church or other place of public worship, or a hospital or school, and would, if licensed, be the cause of inconvenience or annoyance to persons using or frequenting such church, place of worship, hospital or school;

(c) That the quiet of the locality in which the said premises are situated will be disturbed, if a licence is granted for the sale of liquor in those premises;

(d) That the lease under which the holder of the licence occupies his premises contains a covenant or prohibition against removing the licence to any other premises without the consent of the lessor, and that such consent has not been obtained.

The Licensing Court is directed to hear, inquire into and determine applications and objections (s. 59 (3)). No licence shall be renewed nor shall any application be granted as a matter of course and upon the hearing of an application, whether objection is taken or not, the Court shall hear, inquire into and determine the application and all objections on the merits "and shall grant or refuse the application with or without conditions upon any ground or for any reason whatsoever which, entirely in the exercise of its discretion, it deems sufficient" (s. 61 (1)).

From this brief summary it will be seen that the Act constitutes the Licensing Court with an exclusive jurisdiction, subject to an appeal to the Supreme Court, to grant or refuse applications relating to licences under the Act. In deciding whether to grant or refuse applications the Court is required to consider a wide variety of factors relating to the public and community interest. If the Act did no more than this there might be a case for saying that the exercise of the Licensing Court's jurisdiction is subject to the enforcement by the Supreme Court of a covenant by a licensee with his landlord that he will not apply for removal of a licence relating to the leased premises without the consent of the landlord.

However, it is evident from what I have already said that the Act does more than this. First, it confers a right on a licensee to apply to the Licensing Court for removal of his licence. Next, by making the existence of a covenant of the kind mentioned in s. 57 (d) and the absence of the landlord's consent a ground of objection, it contemplates that the Licensing Court in the course of exercising its jurisdiction on a removal application will decide whether there is a covenant and whether removal will constitute a breach of it.

The question, then, to be decided is whether the ground of objection mentioned in s. 57 (d), if made out, is a bar to the making of an order for removal or whether the Licensing Court has a discretion to make an order for removal, notwithstanding that the ground of objection is established. If there had been no general provision in the Act conferring an overriding discretion on the Licensing Court, the very fact that the matters referred to in s. 57 (d) constitute a ground of objection suggests that, if made out, they would be a bar to the grant of an application for removal. This suggestion gains some support from the character of the other additional grounds of objection set forth in s. 57. Grounds (a) and (ab) are such that, if made out, the application would ordinarily fail. Grounds (b) and (c) are, I think, in much the same category.

However, s. 61 (1) does confer an overriding discretion on the Court. It is cast in the widest of terms - "upon any ground or for any reason whatsoever which, entirely in the exercise of its discretion, it [the Court] deems sufficient". As I read the provision, it gives the Court a discretion to grant an application, notwithstanding that a ground of objection is made out. It is a discretion which will be exercised by the Licensing Court in the public interest.

Consequently, if the respondents' application is heard and determined in the Licensing Court, that Court has a discretion to grant the application, even if it finds that an objection based on s. 57 (d) is made out by the applicant. Now, it is to be expected that in the ordinary course of things the Licensing Court would respect contractual arrangements made by licensee and landlord relating to the removal of a licence. Certainly, there is nothing in the Act to indicate that the making of such arrangements is inconsistent with the statutory policy and purpose or to suggest that great weight should not be given to such arrangements. Nevertheless, in case of collision between private right and public interest the Licensing Court will, in the exercise of its discretion, give paramount weight to the protection and advancement of the public interest.

It was not suggested in argument that the covenant was either invalid or unenforceable by reason of inconsistency with provisions of the Act or the policy which underlies it (Hyman v. Hyman [11] ; Lieberman v. Morris [12] ). Certainly, s. 57 (d) proceeds on the footing that a covenant of the kind referred to is valid. It may be assumed also that the section proceeds on the footing that the covenant is enforceable.

The final questions, then, are whether the Supreme Court had a discretion to refuse an injunction to restrain a breach of the negative covenant and, if so, whether in the circumstances of this case the Court should have exercised its discretion against the applicant.

Lord Cairns L.C. in Doherty v. Allman [13] said that a court of equity has no discretion to exercise when an injunction is sought to enforce a negative covenant in a contract. His Lordship drew a distinction between "a negative covenant" and a covenant which is affirmative only. The distinction so drawn was, I think, not one deriving from the language or form in which a covenant happened to be expressed, but one arising from the substance of the obligation imposed by the covenant (see, e.g., Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co. [14] , per Lord Selborne L.C.).

1. (1878) 3 App. Cas. 709, at pp. 719-720. 2. (1873) 16 Eq. 433, at p. 440.

There has been general agreement that Lord Cairns' statement that a court of equity has no discretion to refuse an injunction restraining a breach of a negative covenant is not accurate. In Doherty v. Allman [15] itself Lord Blackburn, who, like Lord Selborne L.C. in the Wolverhampton Case, was inclined to repudiate the notion that a distinction should be made between negative and affirmative words, considered that there were cases in which a court of equity would refuse to enforce a negative covenant on discretionary grounds.

However, there has been general disagreement as to how Lord Cairns' statement should be reformed if it is to accurately express the true principle. The reason for this is that it is quite impossible to formulate an illuminating statement of principle which is capable of universal application. There is no limit to the number and to the kind of negative stipulations, express or implied, which the courts may be asked to enforce. It is not surprising, therefore, that it has emerged from a long line of judicial decisions that the attitudes of the courts to the enforcement of negative stipulations have varied according to the nature of the stipulation, the nature of the contract in which it is found, the effect which enforcement will have on the relationship of the parties under the contract and the character of the order required to enforce the stipulation.

Thus, the courts have frequently refused injunctions to restrain a breach of a negative stipulation in a contract for the sale of chattels or goods, in a contract for personal service and in a contract the enforcement of which would require the court to supervise the performance of the contract. Although these instances clearly demonstrate that the courts have a general discretion to refuse relief by way of injunction, even in cases where the court's consideration does not extend beyond the private rights of the parties to a contract, they are quite remote from the present case. Here the injunction is sought to restrain a party from maintaining proceedings in a court which has exclusive jurisdiction to entertain the proceedings.

The issue is whether the Supreme Court should have exercised its discretion so as to prevent the respondents in breach of their covenant from invoking the jurisdiction of the Licensing Court in a matter in which jurisdiction was conferred upon it by the Act. I would answer this question in the negative. There are a variety of considerations which persuade me to this conclusion.

First, a superior court should hesitate before granting an injunction restraining a party from commencing or maintaining proceedings in a court or tribunal which has been specially constituted by statute with a jurisdiction to entertain and determine proceedings of that kind, the more so when the proceedings relate to rights or privileges which depend for their existence on the statute (Forster v. Jododex Australia Pty. Ltd. [16] ). The Act creates the licence and regulates what may be done with it by way of transfer or removal. And, as we have seen, the Act has constituted the Licensing Court with an exclusive jurisdiction in licensing matters. Secondly, the Licensing Court is specifically directed to determine the grounds of objection. Accordingly, the Licensing Court in the exercise of its jurisdiction must decide, once the ground of objection mentioned in s. 57 (d) is taken, whether there is a covenant of the kind in question and whether the landlord has failed to give its consent, these being the two issues which the Supreme Court was asked to determine in the proceedings for relief by way of injunction. Thirdly, these issues may not be decisive in the proceedings in the Licensing Court because it has an overriding discretion to grant an application for removal despite the existence of a breach of covenant. Fourthly, the grant of an injunction would effectively deprive the Licensing Court of the opportunity of exercising that overriding discretion, notwithstanding that the discretion had been given to the Licensing Court so as to enable it to determine applications in the public interest. Indeed, the effect of granting an injunction would be to set private rights above the public interest, for an injunction would effectively prevent the Licensing Court from deciding whether, despite the existence of a covenant, considerations of public interest outweigh the desirability of enforcing private rights. Finally, there is an appeal from the Licensing Court to the Supreme Court. The existence of this appeal enables the Supreme Court to correct any mistake which the Licensing Court may make. All these factors indicate that the Supreme Court was correct in exercising its discretion against intervention.

The observations of Jordan C.J. in Ex parte Berry; Re Kessell [17] , give no support to the applicant. There the Chief Justice drew a distinction between the jurisdiction of general courts over questions relating to private rights and the special jurisdiction of the licensing tribunal under the Liquor Act, 1912 N.S.W. over licensing matters, indicating that general courts could not "encroach upon the jurisdiction of the licensing tribunals". In this case, however, the Licensing Court as well as the Supreme Court has jurisdiction to decide whether there has been a breach of covenant. But the Licensing Court alone has jurisdiction to decide whether the licence should be removed. To grant an injunction having the effect of preventing the Licensing Court from exercising its overriding discretion to grant or refuse the application would be to encroach on its jurisdiction, indeed to prevent it from exercising its jurisdiction.

Nor does the decision of this Court in Forster v. Jododex Australia Pty. Ltd. [18] assist the applicant. In that case there was a difficult and important question of statutory interpretation which was susceptible of determination in proceedings for declaratory relief, notwithstanding that it was a question which the mining warden would ordinarily determine in the course of exercising his jurisdiction under the Mining Act, 1906 N.S.W., as amended. There was no appeal from a decision of the mining warden in proceedings of the relevant kind. The effect of the declaration was merely to declare the legal rights of the parties. The making of the declaration did not prevent the mining warden from exercising his jurisdiction under the statute; indeed, it facilitated his exercise of jurisdiction.

I am mindful that the existence of a negative covenant distinguishes this case from Forster v. Jododex Australia Pty. Ltd. and from cases in which the injunction has been sought as a public law remedy. Traditionally it has been thought that the negative covenant constitutes a strong foundation for relief by way of injunction, at least in cases in which the court is concerned only with private rights. Slatter v. Railway Commissioners (N.S.W.) [19] , where an injunction was granted to restrain a lessee from proceeding with an application under the Liquor Act, 1912 N.S.W. for the transfer of a licence to other premises, in breach of covenant, was such a case. The Court took the view that the Act safeguarded the interests of the owner of the licence. On this point Gavan Duffy C.J., Starke and Dixon JJ. said [20] :

The contractual rights given to the landlord to ensure that the licence is not destroyed or removed to other premises, but is kept on foot and transferred to a person chosen by the landlord, do no more than safeguard the interests of the owner which secs. 37 (2), 38, 39 (4), 128 (2) and (3) and 130 of the Liquor Acts recognize. 1. (1931) 45 C.L.R. 68. 2. (1931) 45 C.L.R., at p. 79.

For the reasons which I have already given, the Supreme Court was right to refuse the injunction as a matter of discretion.

In view of the importance of the questions argued, I would grant the application for special leave to appeal and dismiss the appeal.

The appeal should be dismissed for the reasons given by Mason J.

Although not argued, there is, in my opinion, a real question whether the effect of the statutory provisions is to render the covenant unenforceable.