Solicitors for the second Appellant: Westgarth Baldick

Solicitors for the first Respondent: Abbott Tout Creer & Wilkinson

Solicitor for the second Respondent: H. K. Roberts, Crown Solicitor for the State of New South Wales

MASON, WILSON, BRENNAN, DEANE, DAWSON JJ: The firstnamed respondent, as nominee for G.J. Coles Ltd., made a conditional application under s.27 of the Liquor Act 1912 (N.S.W.) ("the 1912 Act") for the grant of a spirit merchant's licence in respect of premises in the New South Wales country town of Moree. It is convenient to refer to her as "the applicant". The present appellants, to whom it is convenient to refer as "the objectors", were objectors to the application and were licensees under the Act of other premises selling liquor to the public in Moree. The premises in respect of which the application was made were in a large supermarket operated by Coles in a new shopping complex in Moree. One of the objectors was the holder of a spirit merchant's licence on behalf of Permewans Limited which operated a supermarket, with a liquor section, in the town.

2. The long trail of subsequent proceedings in various New South Wales courts is a complicated and, we would venture to hope, an unusual one stretching from 1980 when the application first came before a Licensing Court. It is necessary that it be followed in a little detail. Unless otherwise indicated, legislative provisions referred to are those of the 1912 Act prior to the amendments effected in May 1981.

3. At first instance, the application was heard by the Chairman of Licensing Magistrates at Moree. The only ground upon which objections were made to the grant of a licence was that contained in s.29(1)(e) of the 1912 Act, namely, "that the reasonable requirements of the neighbourhood do not justify the granting of" the licence. The learned Chairman pointed out that, where an objection was taken on that ground, the onus lay "upon the applicant of proving that the reasonable requirements of the neighbourhood do justify the grant of the application" (s.29(1)). After consideration of the evidence before him, he concluded that the reasonable requirements of the neighbourhood did not justify the grant of the application. The application was accordingly refused.

4. The applicant appealed from the decision refusing the grant of a licence to a Full Bench of the Licensing Court. The Full Bench upheld the appeal and granted the licence. The reasons for the Full Bench's decision were given by his Worship, Mr. J.G. Reidy L.M. The Full Bench found that the grant of the licence would be of "considerable convenience" to the customers of Coles who represented, numerically, a "very large part of the neighbourhood population" and, in the context of a mistaken assumption that Permewans Limited's supermarket was temporarily closed while building work was carried out, that there was "uncertainty concerning the manner in which Permewans will trade when it re-opens as a supermarket". Their Worships' conclusion was "that the reasonable requirements of the neighbourhood have been proved to justify the application succeeding".

5. Following the decision of the Full Bench, the objectors took two contemporaneous litigious steps. They applied to the Full Bench to state a case pursuant to s.170(1) of the 1912 Act and Division 1 of Part V of the Justices Act 1902 (N.S.W.) for the opinion of the Supreme Court of New South Wales and they filed, in that Court, a summons seeking orders said to be by way of statutory prohibition. Both proceedings were listed before Cross J. who, by consent, heard them together. In the meantime, the 1912 Act had been repealed by the Liquor (Repeals and Savings) Act 1982 (N.S.W.) and replaced by the Liquor Act 1982 (N.S.W.). Under the transitional provisions of the Liquor (Repeals and Savings) Act (Schedule 3, cl.13(1)) however, an objection to an application taken under the repealed Act before the appointed date of commencement of the new provisions which had not been finally heard and determined before that date "shall be heard and determined as if the repealed Act had continued in force". The question raised by the stated case was whether the "determination (by the Full Bench) was erroneous in point of law". Cross J. answered that question in the affirmative and referred the matter back to the Full Bench of the Licensing Court. His Honour found it unnecessary to make orders on the application for statutory prohibition.

6. Examination of the reasons for judgment of Cross J. discloses two distinct grounds for his conclusion that the decision of the Full Bench was erroneous in point of law. The first was that the Full Bench's finding that the reasonable requirements of the neighbourhood justified the grant of the licence was vitiated for the reason that it was based on a false view of the significance of "the convenience of Coles's customers to the requirements of the neighbourhood". In his discussion of that ground, his Honour made a number of assertions of what he described as the "obvious" economic consequences of "granting a licence solely on the convenience of Coles's customers". Those perceived economic consequences (to others) had not been litigated or even raised on the hearing before the Full Bench where it appears to have been common ground that they would be irrelevant in the circumstances of the case. More detailed reference will subsequently be made to them. The second ground was that the Full Bench's decision was affected by a number of errors of fact which his Honour, presumably by reference to extrinsic material, detected in the stated case, namely, that Permewans' supermarket had actually closed, that the B.C.C. Supermarket in Moree was not a large one and that the Moree Hotel had no separate bottle department. His Honour appears to have overlooked the fact that, in so far as the stated case was concerned, he was bound to act on the basis of the facts stated and that a judicial view that some of the facts stated were inaccurate did not, without amendment of the case, warrant the question asked being answered on the basis that the postulated facts were wrong or raise the general question whether the Full Bench's decision was vitiated by errors of fact in the stated case which could, without such amendment, only be identified by reference to extrinsic material. What is more important is that, in a strongly worded judgment, his Honour went far beyond dealing with the question of law which the stated case raised for determination. He expressed the conclusion that "the correct application of principle would indicate that the applicant fell hopelessly short of discharging the onus of disproving the objection based on (the old) s.29(1)(e) of the Liquor Act". Since there was plainly some evidence before the Licensing Court supporting a conclusion that the grant of the application was justified by the reasonable requirements of the neighbourhood, his Honour's conclusion involved the expression of a view upon the ultimate question of fact involved in the application. That was not a matter which the stated case raised for his Honour's determination. It was a matter for the determination of the Licensing Court.

7. When the application came on for re-hearing by a Full Bench of the Licensing Court, further evidence was received. It is however apparent and understandable that the members of the Full Bench felt constrained by the strong views expressed by Cross J. to refuse the application. The learned magistrates quoted his Honour's statement of the "obvious" economic consequences of granting a licence which, as they pointed out, had never been raised as an issue. They plainly saw those comments as a key to his Honour's unsolicited conclusion that the applicant had "hopelessly" failed to dispose of the objection. They quoted that conclusion and, in accordance with it, dismissed the appeal and refused the application.

8. The applicant appealed from the decision of the Full Bench to the Supreme Court of New South Wales pursuant to s.146 of the Liquor Act 1982. She also belatedly and unsuccessfully sought leave to appeal to the Court of Appeal from the decision of Cross J. on the stated case. The appeal came before Begg J. who referred it to the Court of Appeal. The Court of Appeal (Moffitt P., Hutley and Mahoney JJ.A.) upheld the appeal. Their Honours ordered that the decision of the Full Bench be set aside and that the application be referred back to be re-determined as the Full Bench of the Licensing Court may direct. Stated shortly, the main basis upon which the appeal was upheld was that Cross J. had been in error in his view that the economic consequences to others were, in the circumstances of the case, a relevant consideration on the issue of the reasonable requirements of the neighbourhood and that the decision of the Full Bench necessarily reflected his Honour's error in that regard. In so holding, Moffitt P. and Hutley J.A. relied upon the Court of Appeal's previous decision in McLean v. Bellingham (1980) 1 NSWLR 77 which they accepted as establishing that economic considerations were not to be taken into account in the determination of the issue arising under a s.29(1)(e) objection. Mahoney J.A. was of the view that it was not proper to take such considerations into account in the circumstances of the instant case. The Court of Appeal rejected a submission on the part of the objectors to the effect that the applicant was estopped, under the doctrine of issue estoppel, from contending that Cross J. had erred in law in relation to the views expressed about the relevance of economic consequences.

9. On the appeal to this Court, Mr. Bannon Q.C., who appeared for the objectors, did not seek to support the comments of Cross J. about the importance or relevance of possible economic consequences to others. He confined his submissions to the propositions: (i) that, regardless of the correctness or otherwise of his Honour's views about the legal relevance of possible economic consequences, the learned magistrates had been bound to accept and apply those views on the rehearing by the Full Bench; and (ii) that his Honour's views in that regard were res judicata between the parties or, alternatively, that there was an issue estoppel between the parties on the question of the correctness of those views.

10. The simple answer to these submissions on behalf of the objectors is to be found in an analysis of the judgment of Cross J. and of the effect of his answer to the question raised by the stated case. Nothing in the case raised, for his Honour's determination as a matter of law, the question whether economic consequences to others were relevant on the issue of the reasonable requirements of the neighbourhood or on the application in the present case. Nor did his Honour examine or expressly deal with that question as a question of law. He simply asserted that a list of economic consequences would obviously follow if a licence were granted "solely on the convenience of Coles's customers". The relevant passage in his Honour's judgment reads as follows:

11. All of the assertions in the above passage from his Honour's judgment are assertions of fact or statements of opinion about matters of fact. There is nothing in the stated case which raised them for his Honour's consideration as matters of fact and one searches in vain in the stated case for factual material to support most of them. The assertion that other "existing smaller competitors can be forced to the wall" is a matter of conjecture. The statement that "Permewans' main asset is their liquor licence" is unsupported by anything in the stated case. There is nothing in the stated case about Permewans having "sought to respond ... to the arrival of Coles". There is nothing about a possibility, let alone a "likelihood", that Permewans would "suffer seriously, perhaps go out of business" if the application were granted. Nor is there anything about the significance of that consequence in terms of lost jobs in Moree in the present economic climate and in the reduction of desirable competition. While those matters would not appear to have been raised even on the application for orders said to be in the nature of statutory prohibition which Cross J. dismissed, any material about them which happened to be before his Honour must have been filed in relation to that application. It certainly constituted no part of the material upon which the question in the case stated by the Licensing Court fell to be determined.

12. In this context, it is important to identify with some precision the legal ingredients of the affirmative answer which Cross J. gave to the question whether the first decision of the Full Bench of the Licensing Court was erroneous in point of law. In our view, Moffitt P. did this in the Court of Appeal in words with which we respectfully agree. His Honour said:

" The error of law on the part of the Licensing

Court in its earlier decision in favour of the

appellant as applicant for a licence found (by)

Cross, J. in his answer 'Yes' to the statement of

claim can be distilled from his Honour's reasons

for judgment and the terms of the stated case and

shortly was that the earlier decision of the

Licensing Court confused the term 'reasonable

requirements' in the ground of objection provided

by s.29(1)(e) of the Liquor Act as it was then with

the convenience of people and, in particular, that

of the applicant's customers. I interpose that

matters of convenience of persons in particular

cases may, of course, be factually relevant to the

ultimate decision as to reasonable requirements,

but cannot be substituted for the latter".

That being so, the members of the Full Bench of the Licensing Court were obliged, when the matter came before them for re-hearing, to accept and act on the basis that their previous decision was erroneous for the reason stated by Moffitt P., namely, that they had on the first hearing unduly confused the requirements of the neighbourhood with the interests of Coles' customers. They were not, however, either constrained to accept or act on the basis of the facts and opinions asserted by Cross J. as "obvious" economic consequences of the grant of a licence or on the basis of his Honour's conclusion of ultimate fact that the applicant had fallen "hopelessly short of discharging the onus of disproving the objection". These matters formed no part of the binding answer given by the learned judge to the question of law posed by the stated case.

13. Nor did those matters provide any adequate foundation for a plea of either res judicata or issue estoppel. The distinction between those two pleas was explained by Fullagar J. in Jackson v. Goldsmith [1950] HCA 22; (1950) 81 CLR 446, at pp 466-467. In so far as res judicata is concerned, the overall factual merits of the application and the relevance, importance and content of economic consequences to others were all matters which did not properly belong to the subject of the stated case and upon which his Honour was not required by the case or the parties to "form an opinion" or "pronounce a judgment" (cf. Hoysted v. Federal Commissioner of Taxation [1925] UKPCHCA 3; (1925) 37 CLR 290, at p 303). That being so, his Honour's affirmative answer to the question whether the Full Bench's original decision was erroneous (i.e. as a matter of law) is incapable of being construed as having the effect that the views which he expressed about those matters had "passed into" or "merged" in a binding judgment between the parties (cf. Blair v. Curran [1939] HCA 23; (1939) 62 CLR 464, at p 532). In so far as issue estoppel is concerned, the general merits of the application and the relevance and importance of the economic consequences to others were simply not in "issue" on the stated case. They were, at best, collateral matters in respect of which his Honour's unsolicited views, however strongly and deliberately they may have been expressed, are not covered by any estoppel (see, generally, Blair v. Curran, at pp 532-533; Brewer v. Brewer [1953] HCA 19; (1953) 88 CLR 1, at pp 14-16).

14. It was submitted on behalf of the objectors that the reasons for decision of the Full Bench of the Licensing Court on the re-hearing disclose, when properly understood, that their Worships had not acted on the basis that they were constrained to dismiss the application by reason of the views on factual matters expressed by Cross J. The reasons for decision of the Full Bench demonstrate, however, that there is no substance in that submission. As has been said, their Worships set out in full the assertion by Cross J. of the obvious consequences of granting the application. They also set out his Honour's statement that the applicant had fallen hopelessly short of discharging the onus of disproving the objection. They made it plain that they saw themselves as constrained to accept the "opinion" of Cross J. and that the dismissal of the application necessarily followed from that acceptance. In seeing themselves as so constrained, the members of the Full Bench of the Licensing Court fell into understandable error. The decision of the Full Bench was based upon, and vitiated by, that error and was correctly set aside by the Court of Appeal.