Harband v Prior

Stephen Noel Harband (First Plaintiff) David Charles Martin (Second Plaintiff) PARTIES : Anthony Stephen Prior (First Defendant) Liquor Administration Board (Second Defendant) Licensing Court of New South Wales (Third Defendant)

JB Costigan (First Plaintiff) COUNSEL : JB Costigan (Second Plaintiff) MJ Leeming SC/A Hatzis (First Defendant)

Lands Legal (First Plaintiff) Lands Legal (Second Plaintiff) SOLICITORS : JDK Legal (First Defendant) IV Knight, Crown Solicitor (Second Defendant) IV Knight, Crown Solicitor (Third Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2007/15569 Stephen Noel HARBAND & Anor. v Anthony Stephen PRIOR & Ors.

JUDGMENT 1 The plaintiffs operate two hotels in Kings Cross. The first defendant has applied to the Licensing Court (the third defendant) for the removal of a hotel licence and to the Liquor Administration Board (the second defendant - the Board) for the transfer of 15 poker machine entitlements from premises in Rushcutters Bay, which formerly traded as a hotel, to premises in Potts Point, in direct competition with the plaintiffs. The Rushcutters Bay premises were re-developed into apartments after the hotel ceased trading in 2002. The licence has been dormant since that time. The new premises are to be renovated and the first defendant has spent a considerable sum of money towards that end. 2 The Liquor Act 1982 and the Gaming Machines Act 2001 provide for the approval of Social Impact Assessments (SIA) by the Board as a pre-condition to the removal of a licence and as a pre-condition to the grant of an authorisation by the Board to keep poker machines. Where the removal is to premises within a kilometre of the former site of the hotel and the trading hours are the same or less, a simplified form of the SIA (Category A), with respect to the licence, may be provided. Similarly, where the new premises are within a kilometre of the former site of the hotel and the number of poker machines to be kept is not more than were kept at the former hotel, or the application relates to the transfer of poker machine entitlements from one hotel to another hotel, a simplified form of the SIA (Class 1), with respect to the poker machines, may be provided. 3 In January and June 2007, the first defendant lodged a Category A and a Class 1 SIA respectively with the Board, both of which were approved, over the objections of the plaintiffs. The Licensing Court is to hear the first defendant's application for the removal of the licence on 30 and 31 January 2008.

4 The plaintiffs challenge the decisions made by the second defendant (the Board) and seek to have them set aside, on the basis that the second defendant acted beyond power. The substance of the plaintiffs' argument is that the Category A and Class 1 SIAs did not apply in the circumstances of this case. Firstly, with respect to the licence, it is contended that the proposed trading hours are in excess of those that applied to the former premises. Secondly, with respect to the poker machines, it is contended that the first defendant was not transferring poker machine entitlements from one hotel to another existing hotel, as contemplated by that part of the regulation under which the application was considered. There is no dispute that the proposed premises are within a kilometre of the former premises. 5 In the event that the Court is of the view that it was open to the Board to approve the application with respect to the poker machines on the alternative basis, that is, that the number of poker machines to be kept at the new premises does not exceed the number kept at the previous premises, the plaintiffs submit that there were no poker machines "kept" at the previous premises as at the date of the application, the hotel having ceased to trade in 2002.

The Proposed Trading Hours 6 The determination of this issue is largely a factual one. The plaintiffs maintain that the first defendant's submissions to the second defendant contained many references to trading hours that exceeded those that applied at the Rushcutters Bay premises. The plaintiffs particularly rely upon the proposal to trade 24 hours per day, seven days per week in the accommodation section of the Potts Point hotel, whereas the former premises ceased trading at 1 am, according to the plaintiffs. 7 The first defendant disputes that there was, in fact, a cessation of trade in the Rushcutters Bay hotel at 1 am in the accommodation section. It is submitted that, despite the licence being endorsed with nominated trading hours, s 24(1) of the Liquor Act allows the sale of alcohol 24 hours per day, seven days per week to lodgers, that is, those guests of the hotel who avail themselves of room service and/or the contents of the bar fridge within the hotel rooms. Moreover, the first defendant relies upon the correspondence between the parties, wherein it was accepted that its trading hours in Potts Point could not exceed those that applied at Rushcutters Bay. 8 The starting point is Clause 18B of the Liquor Act Regulations 1996 under the Liquor Act. It sets out the circumstances under which a Category A or Category B SIA is required. The relevant parts of that regulation are :- 18B Categories of SIA (1) A social impact assessment (" SIA ") required to be provided in connection with a relevant application is to be a " "category A" SIA " or a " "category B" SIA " (as determined in accordance with this clause). (2) A "category A" SIA is required to be provided if: (a) the relevant application is for: (i) ……………………………………………………………………. (ii) the removal of a hotelier's licence to premises that, in the case of a metropolitan area, are or will be situated within 1 kilometre of the previous premises, or (iii) …………………………………………………………… and (b) the trading hours of the relevant premises are to be the same as, or more restricted than, the trading hours of the previous premises, and (c) ………………………………………………………………….. (d) …………………………………………………………………. (3) A "category B" SIA is required to be provided in connection with any other relevant application. 9 For the purposes of the Regulations, "trading hours" has the meaning provided for in s 4 of the Liquor Act, namely, "the times at which, subject to this Act and the conditions of the licence, the sale of liquor on the premises pursuant to the licence is authorised." The Liquor Act gives the term "sale" an extended definition. To sell includes to barter, exchange, offer, agree or attempt to sell, to expose, send, forward or deliver for sale, to cause or permit to be sold or offered for sale. 10 Section 24 of the Liquor Act appears in Division 3, headed Trading Hours. Under s 24 "Hotelier's licence - trading hours", the following appears :- (1) Except where liquor is sold or supplied to, or consumed by, a lodger, an inmate or an employee of the licensee, liquor shall not, on premises to which a hotelier's licence relates, be sold, supplied or consumed, and the licensed premises shall not be kept open for the sale, supply or consumption of liquor, except ……. by variation of trading hours …. 11 The plaintiffs' argument in respect of this issue seeks to confine the ambit of the term "trading hours" to those hours stipulated by the conditions of the licence as the opening and closing times of the hotel for the purposes of the sale of liquor to its patrons, as distinct from its lodgers. This construction ignores the qualification in the definition of the term in s 4, namely "subject to this Act", and also ignores the express reference to the sale or supply of liquor to lodgers in s 24. The combination of these provisions clearly contemplates that a hotel may be authorised to sell or supply liquor during those times stipulated by the conditions of the licence and at other times to persons staying in the accommodation section of the hotel. Those periods together make up the trading hours of the hotel. Any other construction deprives the opening words of s 24(1) of any purpose. 12 The evidence in the present matter establishes that the trading hours imposed as a condition of the licence in relation to the Rushcutters Bay premises were Monday to Friday 5 am to 1 am the next day, Saturday 5 am to midnight and Sunday 10 am to 10 pm. In addition, there were 99 guest rooms, to which liquor was offered for sale, or available for sale, 24 hours per day, 7 days per week. 13 On 2 January 2007, a statutory declaration sworn in support of the first defendant's Category A application relied upon a letter of the same date to the Board, wherein the proposed trading hours were set out as Monday and Tuesday 10 am to 3 am the following day, Wednesday to Saturday 10 am to 5 am the following day and Sunday 12 noon to 5am the following day. Whilst the total weekly trading hours disclosed by this proposal amount to less than the total weekly trading hours imposed as a condition of the licence in the former premises, the first defendant acknowledged by way of a letter to the Board on 2 April 2007 that cl. 18B(2)(ii)(b) was not satisfied if the daily opening or closing times on any given day were earlier or later (respectively) than that permitted at the former premises. It is apparent that the proposal to trade 24 hours per day, 7 days per week in 18 accommodation rooms did not fall foul of this interpretation of cl. 18B, in my view, correctly so. 14 The letter of 2 April also disavowed any reliance upon the proposed trading hours set out in the statutory declaration of 2 January 2007 and asked the Board to treat the letter as a variation of the Category A application, to the extent that the proposed trading hours would be the same as those stipulated by the licence conditions attaching to the Rushcutters Bay premises. The Board obviously accepted that variation to the application and approved it on those terms. 15 In these circumstances, it is not correct to assert that the proposed trading hours exceed the trading hours of the former premises. They are identical. Whatever proposal was initially placed before the Board, it was withdrawn in recognition of the limitations placed upon the daily hours of operation by the regulations. The Board did not exceed its jurisdiction in determining the Category A SIA in the circumstances as they stood at the time of its approval. The plaintiffs' argument on this aspect of the matter must fail.

The Authorisation to Keep Poker Machines 16 The allocation and transfer of poker machine entitlements is governed by Part 3 (ss 14 - 31C) of the Gaming Machines Act 2001. Part 4 (ss 32 - 55) of the Act deals with the lodgement and approval of SIAs as a means of regulating the availability of gaming machines in a given area. The authorisation of the keeping of poker machines on licensed premises is governed by Part 5 (ss 56 - 67) of the Act. As has been observed by Basten JA (with whom Santow JA and Bryson JA agreed) in Rooty Hill RSL Club Ltd v Liquor Administration Board of NSW [2006] NSWCA 297, the Act envisages that poker machine entitlements may exist independently of an authorisation to keep poker machines, although there can be no authorisation without the existence of poker machine entitlements. An authorisation may be cancelled or withdrawn, without affecting the existence of an entitlement, consistent with the fact that poker machine entitlements are a species of property, with all the usual incidents of property, subject to the requirements of the Act : Boreland v Docker [2007] NSWCA 94. 17 The relationship between Parts 3, 4 and 5 of the Act has been considered in an almost identical context by Brereton J in Winners Circle Pty Ltd v Liquor Administration Board [2007] NSWSC 442. The plaintiffs in the instant matter sought to distinguish Winners Circle on the basis that the case was concerned with the removal of a licence from an existing hotel. Be that as it may, that fact had no relevance to Brereton J's construction of the same provisions of the Act and Regulations as are in issue here. Alternatively, the plaintiffs maintained that Brereton J's analysis ought not be adopted, but without articulating in what way Brereton J has fallen into error. Judicial comity demands that Winners Circle ought be followed, unless I am convinced that the decision is clearly wrong : La Macchia v Minister for Primary Industries and Energy (1992) 110 CLR 201 ; Attorney-General for NSW v Quinn [2007] NSWSC 873. 18 The challenge to an approval of a Class 1 SIA in Winners Circle was identical to the plaintiffs' challenge in the present matter. It was said that the Board had acted beyond power in approving that SIA, in circumstances where a Class 2 SIA was required. Clause 33(2) of the Gaming Machines Regulation provides two bases, either of which will be sufficient to allow a Class 1 SIA. Otherwise, a Class 2 SIA is required. 19 Cl 33(2) of the Gaming Machines Regulation 2002 relevantly provides :- A class 1 social impact assessment is required to be provided if: (a) the application for authorisation to keep approved gaming machines is made in connection with: (i) the removal of a hotelier's licence to other premises situated within 1 kilometre of the previous premises, … (ii) ……………………………………………………………….. and the number of approved gaming machines that are proposed to be kept in the other premises is no more than the number kept in the previous premises, or (b) the application is made in connection with the transfer of poker machines entitlements from another hotel, ………. , and the other hotel is, ……….. , situated within 1 kilometre of the hotel …… to which the application relates. 20 After a detailed consideration of the legislative scheme provided for by the Act, Brereton J said in Winners Circle at [21] :- Paragraph (a) is concerned with an actual or prospective application under s 57 for authorisation to keep approved gaming machines, where that application is made in connection with the removal of an hotelier's licence to "other premises" within one kilometre of the previous premises and the number proposed to be kept on the new premises is no more than those which had been kept on the previous premises. Paragraph (b) is concerned with an actual or prospective application under s 57 for authorisation to keep approved gaming machines, where that application is made in connection with the transfer of poker machine entitlements from another hotel situated within one kilometre of the hotel to which the application relates; it appears in that respect seems (sic) to contemplate an existing hotel to which the application relates.

21 Brereton J went on to examine the validity of the proposition that cl 33(2)(b) required the transferee hotel, that is, the hotel to which the entitlements were to be transferred, to be an existing licensed hotel :- 26 It is important to bear in mind that the application referred to in both paragraphs (a) and (b) of cl 33(2) is not an application for approval of the SIA, but an application under s 57, either concurrent or prospective, for authorisation to keep approved gaming machines. When that application is made, it must then be an application in respect of an hotel, if paragraph (b) is relied upon, but it is the s 57 application that must have the connection with the transfer of poker machine entitlements from another hotel to "the hotel ... to which the application relates", and that judgment has to be made in respect of the actual or prospective s 57 application, not the SIA. It does not follow that the contemplated s 57 application must have already satisfied that requirement at the time that the SIA is provided, since it is clear that the SIA can be provided before the s 57 application is made. All that is necessary is that, when the s 57 application is made, the SIA which has previously been provided can then be said to have been provided in connection with the s 57 application. That requirement is imposed not by clause 33 (2) (b) but by s 33 (1) of the Act.

27 Accordingly, although I accept that the transferee hotel must be licensed at the time when an s 57 application for authorisation to keep approved gaming machines is made, if cl 33(2)(b) is to be relied upon, I do not accept that that condition must apply when the SIA is provided, which may be before the s 57 application is made. 28……………………………………………………………………..When that application is made in due course, a Class 1 SIA approval will suffice if that application is one made in connection with the transfer of poker machine entitlements from an hotel within one kilometre of the new premises. On the face of the SIA, that is what is presently contemplated. Accordingly, I do not accept that cl 33(2)(b) requires an actual existing application to transfer poker machine entitlements at the time of provision of the SIA. Similarly, the circumstance that poker machine entitlements cannot be transferred to the new premises until after the removal of the hotelier's licence to those premises does not mean that an SIA provided prospectively cannot be one provided in connection with a later s 57 application. 22 Accepting Brereton J's analysis, as I do, the following propositions emerge. Firstly, the legislative scheme allows for the lodgement and approval of a Class 1 SIA before an application under s 57 of the Act for an authorisation to keep poker machines has been made, and before an application to the Board to transfer existing poker machine entitlements has been made. Secondly, it is not necessary for the purposes of cl 33(2)(b) that the new premises, that is, those in respect of which the application under s 57 will ultimately be made, be an existing licensed hotel.

23 Returning to the facts in the present matter, the first defendant's hotelier's licence holds 15 poker machine entitlements, the same number of entitlements held by that licence when the Rushcutters Bay hotel last traded in 2002. There was no evidence before the Court of the fate of the 15 poker machines that were operating shortly prior to the cessation of trade in 2002, although the plaintiffs rely upon the inference that the machines themselves have been disposed of. It appears that, whatever happened to the machines, the authorisation to keep 15 poker machines at the former premises will effectively be cancelled by the removal of the licence to the Potts Point premises, whenever that removal occurs : s.58(2). In any event, the Potts Point premises come within the definition of "new hotel" in s 4 of the Gaming Machines Act, namely, a hotel that becomes licensed for the first time under the Liquor Act 1982 after 26 July 2001. Accordingly, the first defendant must apply to the Board for authorisation to keep 15 poker machines at the Potts Point premises and the approval of an SIA is a pre-condition to such an application. 24 The first defendant's application for approval of the Class 1 SIA he had submitted to the Board was pressed on the basis that cl 33(2)(b) applied. The prospective application under s 57 of the Act for authorisation to keep approved gaming machines at the Potts Point premises was clearly to be made in connection with the transfer of poker machine entitlements from the Rushcutters Bay premises to the Potts Point premises. As I have already noted, the transfer of the entitlements is essential to the grant of an authorisation. That is what is meant, in this context, by the words "in connection with". The transfer of the entitlements cannot occur until the removal of the licence is approved : Winners Circle at [2]. Hence, it was not necessary for the Potts Point premises to be a licensed hotel before the first defendant could avail himself of a Class 1 SIA. The plaintiffs' submissions to the contrary must be rejected. 25 In the course of the plaintiffs' oral submissions, it was put at one stage that the first defendant's poker machine entitlements had in effect been forfeited to the Board under the terms of s 23 of the Act. I understood this submission as an attempt to circumvent the application of cl 33(2)(b). Section 23 of the Act allows for the transfer of poker machine entitlements where a hotelier's authorisation to keep poker machines is cancelled. It also provides for the forfeiture of those entitlements to the Board at the end of 12 months immediately following the cancellation of authorisation, if the entitlements have not been transferred. Significantly, s 23 does not apply merely because a hotel has temporarily ceased to trade, or because the hotelier's licence or an authorisation is suspended (s 23(3)). 26 It was submitted that the Board must have authorised the disposal of the poker machines at the former hotel (s 56) and that, therefore, the authorisation ceased to have effect pursuant to s 58(1A) or it was cancelled. There is no evidence to suggest it was cancelled ; indeed, the Board's letter of 11 August 2006 to the first defendant's solicitors provides evidence to the contrary. In so far as the plaintiffs' argument seeks to equate "ceasing to have effect" with cancellation of an authorisation under Part 5 of the Act, the construction of s 58 does not support that contention.

27 The fundamental proposition underlying Part 5 is that authorisation attaches to a specific number of approved gaming machines that are acquired or possessed (see the definition of "keep" in s 4). That stands in contrast to entitlements, which remain the property of the hotelier, notwithstanding that he/she may not actually possess any gaming machines. Plainly enough, an authorisation does not operate, that is, it ceases to have effect, when there are no longer any gaming machines on the premises, or where the authorisation is cancelled by the Board or Licensing Court, or cancelled by the operation of a provision of the Act or where a machine ceases to be an approved gaming machine (s 58). Section 58 thereby distinguishes between a cancellation and the result of a cancellation. It is not correct to assert that, because an authorisation ceases to operate, it has necessarily been cancelled. 28 Section 23 is only enlivened where an authorisation under Part 5 is cancelled. The qualification to the application of s 23 expressed in s 23(3) re-enforces the distinction between cancellation and other circumstances under which an authorisation might cease to operate. The consequence of a failure to transfer poker machine entitlements during the 12 months following the cancellation of an authorisation, namely, the forfeiture of those entitlements to the Board, is yet another indication of the confined operation of s 23. The forfeiture of a valuable asset could not have been intended in circumstances where, as here, the redevelopment of licensed premises has prompted the application for removal of the licence to other premises, themselves requiring renovation, and the licence has remained dormant for a period in excess of 12 months. The hotelier has done nothing to trigger cancellation of an authorisation under Part 5 of the Act. Section 23 has no application in the circumstances of this case, as was recognised by the Board when the plaintiffs put the same argument in the course of their submissions of 20 April 2007. 29 Whilst it is not necessary to deal with the second limb of the plaintiffs' argument on cl 33(2), it is convenient to briefly outline my reasons for rejecting the proposition that cl 33(2)(a) assumes that 15 poker machines must have been physically kept at the Rushcutters Bay premises when the first defendant submitted the Class 1 SIA on 25 June 2007, assuming that the first defendant could bring himself within cl 33(2)(a). 30 There is nothing in the terms of cl 33, or in any other part of the Regulations or the Act, that suggests that such a temporal restriction should be placed upon the words "the number kept in the previous premises". The purpose underlying Division 3, Part 3 of the Regulations and Part 4 of the Act, namely "harm minimisation", is achieved by ensuring that, where an increase in the number of gaming machines in a given area is proposed by an applicant for authorisation, that applicant is required to submit a detailed SIA. Such an increase would occur where the applicant sought authorisation for a greater number of machines than were kept at the previous premises, prior to the removal of the licence. Conversely, if there is no increase in the number of machines to be kept at the new premises, compared with the number of machines that were kept at the previous premises prior to the removal of the licence, the corresponding insignificant social impact does not require a detailed assessment. The date of the submission of the SIA has no relevance for the purposes of harm minimisation. 31 It follows that the Board acted within jurisdiction in granting the approvals to the first defendant and the plaintiffs are not entitled to the claimed relief. The summons is dismissed with costs.

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