Hemmes Trading Pty Ltd & Ors v State of NSW & Ors

Annetts and Anor v McCann and Ors (1990) 170 CLR 596 Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1 Commissioner of Police New South Wales v Gray [2009] NSWCA 49 Country Energy v Williams (2005) 141 LGERA 426; [2005] NSWCA 318 Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 FAI Insurances Limited v Winneke (1981-82) 151 CLR 342 Haoucher v Minister of State for Immigration and Ethnic Affairs (1990) 169 CLR 648 CASES CITED : International Finance Trust Co Limited v NSW Crime Commission [2009] HCA 49 Kioa v West (1985) 159 CLR 550 Lesnewski v Mosman Municipal Council [2005] NSWCA 99; (2005) 138 LGER 207 McGuinness v State of New South Wales [2009] NSWSC 40, (2009) 73 NSWLR 104 Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10 NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 Re Minister for Immigration and Multicultural Affairs; ex parte Lam (2000) 214 CLR 1 Stewart v Ronalds [2009] NSWCA 277 Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; (1999) 46 NSWLR 78 X v Minister for Immigration and Multicultural Affairs (2002) 116 FCR 319

Hemmes Trading Pty Ltd - First Plaintiff Jonathan Michael Slingo - Second Plaintiff Justin Anthony Tynan - Third Plaintiff PARTIES : The State of New South Wales - First Defendant Minister for Gaming and Racing - Second Defendant Director General Communities New South Wales - Third Defendant Commissioner of Police - Fourth Defendant

COUNSEL : Mr MJ Leeming SC/Ms JK Taylor - Plaintiffs Mr BW Walker SC/Mr MA Izzo - Defendants

SOLICITORS : Mallesons Stephen Jaques - Plaintiffs IV Knight, Crown Solicitor - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

15278/09 - HEMMES TRADING PTY LIMITED & Ors v STATE OF NEW SOUTH WALES & Ors

JUDGMENT 1 HIS HONOUR: Nature of Proceedings The plaintiffs move by way of summons for the following relief: "(3) A declaration that the plaintiffs were entitled to be afforded procedural fairness before Ivy and Establishment were included in the list of licensed premises categorised as "Level 2" in the Regulation.

(4) A declaration that the plaintiffs were not afforded procedural fairness before Ivy and Establishment were included in the list of licensed premises categorised as "Level 2" in the Regulation.

(5) A declaration that by taking into account the assessments of Alcohol and Licensing Enforcement Command dated 30 October 2009 and 2 November 2009 the third defendant took into account an irrelevant consideration.

(6) A declaration that the decision to include Ivy and Establishment in the list of licensed premises categorised as "Level 2" in the Regulation was irrational, illogical and lacking a basis in finding or inferences of fact supported on logical grounds.

(7) A declaration that the Regulation is not authorised by s 11(1A) of the Liquor Act 2007 (NSW) insofar as it includes Ivy and Establishment in the list of licensed premises categorised as "Level 2" in the Regulation.

(8) An order that the decision to include Ivy and Establishment in the list of licensed premises categorised as "Level 2" in the Regulation be set aside.

(9) A declaration that the special licence conditions in Schedule 4 to the Liquor Act 2007 do not apply to Ivy and Establishment." 2 The summons was filed on 23 November 2009 and the matter was heard on 26 November 2009 as an urgent matter. The urgency arose from the fact that the Regulation would come into effect on 1 December 2009. For the same reasons, this judgment has been prepared on an urgent basis.

Factual Background 3 On 8 July 2009 the following news release was made by the Premier of New South Wales. This news release became Exhibit 1 in the proceedings. "ALCOHOL RESTRICTIONS CONTINUE FOR VIOLENT VENUES UNDER NEW SYSTEM "Premier Nathan Rees today released the NSW Government's safety regime to curb alcohol related violence in NSW pubs and clubs.

The announcement is the final set of rules that will govern restrictions placed on declared venues. "The community is sick and tired of being subjected to violence and these new arrangements will continue to target pubs and clubs that have rising alcohol-related assault rates," said Mr Rees. "We will work with venues to reduce incidents by imposing strict rules on their operations but will also reward them for their success. "Strict requirements will continue to be placed on venues based on the number of assaults on premises. "Special conditions will be imposed on licenses to reduce intoxication and violence, while lower risk premises will be given extra help to improve compliance and safety standards. "Three new categories based on assaults will replace the current system and reclassification of venues will be possible twice a year based on a review of assault data. "The highest risk venues with 19 or more assaults a year will be subject to similar special conditions already in force at 48 of the State's most violent pubs and clubs. "The scheme will also allow venues with reduced incidents of violence to be removed from the list or have the number of special conditions reduced. "Any decision to remove a venue from the list will not be taken lightly. It will primarily be based on the level of assaults and the provision of an appropriate venue safety management plan. "The data is published by Bureau of Crime Statistics and a revised list will be compiled on December 1 and June 1 each year using 12 months of rolling data. "Venues added to the list will be subject to the special conditions for a minimum of 6 months," said Mr Rees. The three bands and their restrictions are: Level 1 (19 or more assaults) 10 minute time out or the provision of free water and food for 10 minutes every hour after midnight Cease service 30 minutes prior to closure No glass after 12am 2am lockout No shots, no doubles, no RTDs over 5% Four alcoholic drinks per customer per order Extra security measures Level 2 (12-18 assaults) 10 minute time out or the provision of free water and food for 10 minutes every hour after midnight Cease service 30 minutes prior to closure No glass after 12am Level 3 (8 to 11 assaults) Lower risk premises will be given help by the NSW Office of Liquor, Gaming and Racing (OLGR) to strengthen alcohol and security management. Gaming Minister Kevin Greene said that wide spread consultation has occurred following the introduction of the Government's initial measures to ensure the system was fair and transparent. "Before any conditions are imposed, licensees will have the opportunity to provide their venue safety plan and show cause as to why they should not be added to the list of premises subject to special conditions," said Mr Greene. "The names of the venues subject to the new legal requirements will be published online to allow patrons to make informed choices when deciding where to go out. "We will also impose a new condition on all Level 1 and Level 2 licensed venues requiring all assaults to be recorded during operating hours in a specific register kept on the premises. "OLGR has also carried out a review of 24-hour venues to ensure adequate liquor licence conditions are in place. The review found that only 14 licensed venues in NSW actually trade 24 hours and they are already subject to stringent conditions," said Mr Greene." 4 Ivy and Establishment are licensed premises in the Sydney Central Business District which are controlled by the first plaintiff. The second plaintiff is the licensee for Ivy. The third plaintiff is the licensee for Establishment. 5 At each of Ivy and Establishment there are a number of bars and restaurants operated under a single licence. In the case of Ivy, there are 20 bars and 9 restaurants spread over approximately 20,000 square metres. Ivy has capacity for 4,900 patrons at any one time. In the case of Establishment, there are 12 bars and 4 restaurants, spread over approximately 10,000 square metres and the premises have a capacity of 3,200 patrons at any one time. The premises include a variety of different styles and spaces ranging from a main bar environment to high end restaurants and members' lounges. By way of illustration, the restaurants at Establishment include the restaurant Est, which has been awarded three hats in the Sydney Morning Herald Good Food Awards for the last 6 years running. 6 On 28 September 2009 the second and third plaintiffs received a letter from the Director General, Communities NSW (Director General) stating that on the basis of Bureau of Crime Statistics and Research Data (BOCSAR) the number of incidents of violence attributable to Ivy and Establishment was 20 in each case. The letter advised each licensee of the potential consequences under the new system for licensed premises. 7 Accompanying those letters was a document entitled "Fact Sheet" with a heading "Scheme to regulate licensed premises with high levels of assault incidents" and with a further subheading "Details of the new scheme". 8 The following parts of the Fact Sheet were relied upon in argument and are relevant to the matters under consideration. "The new scheme will primarily be implemented through a regulation which will amend Schedule 4 of the Liquor Act 2007. The next regulation will commence on 1 December 2009. Under this scheme, licensed premises with high levels of assault incidents will be categorised as Level 1, 2 or 3 venues, depending generally on the number of incidents over a twelve-month period. Additional special licence conditions will apply to Level 1 and 2 venues by amendment to Schedule 4. These conditions are in addition to any other conditions to which a licence is subject. Level 3 venues have no additional conditions. All venues subject to the scheme will be given education and support to strengthen their alcohol and security management and, consistent with standard practices, may be included in the routine risk based inspection program. Attachment 1 outlines the number of assault incidents that will generally correspond with each Level and the associated conditions, if any. The Government will generally categorise the licensed premises every 6 months on 1 June and 1 December, commencing 1 December 2009. However, the Government retains the discretion to amend Schedule 4 at any time without following the procedure outlined in this Fact Sheet. Categorisation of a venue will depend primarily on assault incident data released twice yearly by the NSW Bureau of Crime Statistics and Research (BOCSAR). This data is based on assault incidents recorded by the NSW Police Force as having occurred on licensed premises. It should be noted that some premises have more than one entry on the BOCSAR list and where this occurs these entries have been aggregated. However, in categorising a Level 1 or Level 2 venue by amendment of Schedule 4, the Government will also take into consideration any venue safety plan, any advice from Police that a particular assault incident should not have been attributed to a licensed premises and any advice from the Director-General, Communities NSW regarding submissions received from licensed premises disputing data, in accordance with the procedure outlined below. Once a venue is categorised as a Level 1 or 2 venue, it will remain in Schedule 4 for a minimum of 6 months. The Government will generally only consider omitting a venue from Schedule 4 following the BOCSAR notification (see below) and on submission of an appropriate venue safety plan, in accordance with the procedure outlined below. To be considered for omission from Schedule 4, a venue should have fewer than 12 assault incidents and should have an effective venue safety plan. Following release of the BOCSAR data, Communities NSW will provide written notification (the BOCSAR notification) to the following: (a) each licensee whose licensed premises (whether or not listed in Schedule 4) has 8 or more assault incidents attributed to it; and (b) each licensee whose licensed premises is listed in Schedule 4 and has less than 8 assault incidents attributed to it. The procedure for categorising venues, including removing venues from Schedule 4, is outlined below. Procedure for categorising Level 1 and level 2 venues Your licensed premises will generally be categorised as a Level 1 venue if it has 19 or more assault incidents recorded against it in the data released by BOCSAR on 8 September 2009. It will generally be categorised as a Level 2 venue if it has between 12 and 18 assaults recorded against it. You should comply with the procedure below if your venue has 12 or more assault incidents recorded against in the BOCSAR data (regardless of whether it is currently in Schedule 4) and you wish to meet with Police to discuss the assault incident data, prior to categorisation. … Assault incident data If your licensed premises has 12 or more assault incidents attributed to it in the BOCSAR data, the BOCSAR notification will annexe further information about each assault incident (event number, time and date of incident and incident type). You have an opportunity to discuss the assault incidents attributed to your venue with your Local Area Command. If you wish to do this, you should complete and forward the Request for Review form (attached to the BOCSAR notification) to your Local Area Command as soon as possible after the BOCSAR notification to arrange a meeting ("the review meeting"). You are urged to take any material you believe would be useful to that meeting. At the review meeting you will have the opportunity to see the relevant records on-screen, discuss them with the Licensing Officer and decide if you still consider an incident should not be attributed to your venue. A report of the review meeting will be completed with you and provided to the Local Area Commander. This process must be completed within 14 days of the date of the BOCSAR notification. Within 72 hours of the review meeting, the Local Area Commander will assess if the specified incidents should be attributed to your venue and you will be provided with a copy of the Commander's assessment ("the assessment notification"). Attached to the assessment will be copies of the relevant records from the COPS database (with any third party personal information and health information deleted) for each incident you have disputed but which the Commander has assessed as being attributable to your premises. There is no need for you to submit an FOI application to obtain this information. A copy of the Commander's report will also be provided to the Director-General, Communities NSW to inform the advice to the Minister for the purposes of this scheme. Where a meeting is held and matters are resolved, the Commander will also advise Communities NSW if there is a change to any data which is attributable to the premises. You will also receive a copy of that advice. In the event that you do not agree with the Local Area Commander's assessment, you may make a submission to the Director General, Communities NSW, setting out the reasons why you disagree. Your submission, if any, should be provided to the Office of Liquor, Gaming and Racing, Communities NSW … within 14 days of date of the assessment notification. The Director General will have regard to your submission in providing advice to the Minister for the purpose of this scheme. …" 9 Clause 8 of Schedule 4 of the Liquor Act 2007 (NSW) (the Act) provided that the Director General, may exempt a listed venue or a specified part of a listed venue from any of the special licence conditions if certain conditions were fulfilled. 10 The new scheme outlined in the Fact Sheet, including the process for querying the BOCSAR data, was set out in a PowerPoint presentation published by the Director General to the industry. The PowerPoint presentation was also published on the websites of the Director General and the Office of Liquor Gaming and Racing (OLGR), where the plaintiffs reviewed it. 11 In accordance with the procedure set out in the Fact Sheet, the plaintiffs completed a request for review form and on 8 October 2009 attended a lengthy meeting with representatives from the Local Area Command (the review meeting). 12 During the review meeting, the plaintiffs made oral submissions in respect of the incidents recorded in the COPS reports (on which the BOCSAR data was based). Following the meeting, the plaintiffs were invited to and did supply material to support their opinion that several incidents recorded against Establishment and Ivy should not have been included. The plaintiffs sent that material to Superintendent Houlahan (The Rocks Local Area Commander). That material included detailed written responses to each of the COPS reports, as well as CCTV footage for three incidents at Establishment and seven incidents at Ivy. 13 Following the review meeting, by letter dated 15 October 2009 Superintendent Houlahan provided a response (the assessment notification). The letter stated that he had reviewed the events which were in dispute, the reasons put forward by Ivy and Establishment for their disagreement, the Reviewing Officers' advice and supporting documentation/evidence. He advised that he was satisfied that the grievances of Ivy and Establishment in respect of several alleged incidents of violence had merit and recommended the removal of such events from the BOCSAR data. He advised that appropriate amendments would be made to the COPS system and stated that he would advise Communities NSW. His decision was:

(a) In respect of Ivy, 11 alleged incidents of violence should be removed leaving 11 (i.e. just under the threshold for "Level 2" special licence conditions); and

(b) In respect of Establishment, 8 alleged incidents of violence should be removed leaving 12 (the threshold for "Level 2"). 14 In relation to Establishment, one of the submissions which had been made to Superintendent Houlahan was that a particular event involving three rugby league players had been counted as three separate incidents, whereas it should only have been recorded as one. The submission by Establishment was to the effect that the incident had lasted a matter of seconds only and comprised a single episode of misbehaviour by all three players. Superintendent Houlahan had rejected this submission. It was Establishment's position that when that incident was properly considered, only ten incidents of violence would be left on its record, placing it below the "Level 2" threshold. 15 The Fact Sheet provided for further submissions to be made to the Director General within 14 days. That 14 day period expired without Ivy or Establishment making further submissions. 16 By letter dated 30 October 2009 (in respect of Ivy) and by letter dated 2 November 2009 (in respect of Establishment) Commander Cook (Alcohol and Licensing Enforcement Command (ALEC)) advised the plaintiffs that officers from ALEC had conducted "samples" of the Local Area Command's assessments. Commander Cook stated that he had "reviewed the assessment provided by the Local Area Commander for The Rocks" and that in his view, there were several events that had been assessed as not being relevant for the purposes of Schedule 4, which in fact should be. 17 In respect of Ivy, he concluded that three incidents should be put back onto the list of incidents to be assessed as relevant and five incidents in respect of Establishment. I infer from the content of those letters and their annexures that Commander Cook based those conclusions on the COPS records. There is no indication that he considered anything else. 18 In the Ivy letter, ALEC concluded: "I have forwarded correspondence to the Director General, NSW Communities, informing the Commander's Assessment in relation to the premises is now as follows".

In the Establishment letter, ALEC concluded: "This assessment supersedes the assessment provided to you by the Commander, The Rocks Local Area Command."

This re-assessment meant that 14 incidents of violence were recorded against Ivy and 17 against Establishment. 19 Following receipt of the first letter from ALEC, an email was sent to the Director General seeking a meeting with her to discuss the letter. The Director General responded on 30 October 2009 by email as follows: "Thank you for your email. I have heard through the AHA that you have concerns about the process as it affects Ivy. I have not yet examined any material relating to either Ivy or the Establishment. I am committed to a fair and transparent process. I would be prepared to receive written advice and any related material specifying your concerns so that I could include it in my consideration if it could be provided by COB Monday. If following my examination of all material I believe there would be additional value in meeting face to face I would be pleased to do that. Could you let me know whether you would like the opportunity to submit additional material as if you do, I will not look at the information relating to your premises until after COB Monday." 20 The plaintiffs wrote to the Director General on 2 November 2009 drawing attention to what they considered to be the departure from the procedure laid down in the Fact Sheet. Further correspondence then passed between the Director General and the plaintiffs. By email dated 3 November 2009, sent to the Director General on behalf of Ivy, complaint was once again made about the intervention of ALEC "outside the guidelines" and the request for a meeting was renewed. By email sent the same day, the Director General responded: "Thanks for your response. The letter sent yesterday was provided to ensure that any venue which has received correspondence from ALEC regarding their incidents have an opportunity to respond in a detailed manner for my consideration. As stated in the letter, I am happy to consider detailed written submissions from you on any incidents that you wish to contest by 10 November. I will contact you for a meeting if issues remain outstanding after that. I note your response to date related to the inclusion of ALEC in the process. This is a matter that has also been raised with me by the AHA and I will continue a dialogue with them as the peak industry representative rather than meeting with individual venues at this time." 21 On 10 November 2009 the plaintiffs directed detailed written submissions to the Director General. Those submissions again complained about the intervention of ALEC and the apparent failure to comply with the procedure set out in the Fact Sheet. They also dealt with each of the incidents which had been re-attributed to Ivy and Establishment by the ALEC letters. The process followed was to set out the narrative from the COPS report and then set out the submissions by the plaintiffs as to why the COPS report was inaccurate and why the particular incidents should not be attributed to the venue. 22 The next correspondence were two letters addressed to Ivy and Establishment from the Acting Director General, Communities NSW, dated 19 November 2009. Those letters advised that:

(i) The regulation amending Schedule 4 of the Liquor Act had been made and would take effect on 1 December 2009.

(ii) Fourteen incidents had been attributed to Ivy.

(iii) Seventeen incidents had been attributed to Establishment. 23 In accordance with the regulation that was passed, Ivy and Establishment were included in Table 2 of Schedule 4 as "Level 2 Licences" with corresponding special conditions. 24 I accept that the making of that regulation will have the effect of altering the conditions pursuant to which trade at those premises will occur and will inevitably impact on the mode and profitability of trade. The plaintiffs estimated their loss for six months at $2.5 million. I also accept that the publication of their classification as Level 2 venues will adversely affect the reputation of the premises in that they have been classified as amongst the most violent in the State. 25 The legislative regime under the Act, applicable to the making of the regulation, is as follows:

Section 11(1A) "Schedule 4 (Special licence conditions for declared premises) has effect. The regulations may amend that Schedule (including, without limitation, by adding or removing any relevant licence under that Schedule)." 26 Section 159(1): "159(1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act." 27 The regulation was apparently made in exercise of the power conferred by s 159 so as to engage s 11(1A). As indicated, the regulation was to commence on 1 December 2009.

Submissions Need for Procedural Fairness 28 The parties were at issue as to whether the decision effected by the regulation to categorise Ivy and Establishment as "Level 2" venues within Schedule 4 attracted a duty to afford procedural fairness. 29 The plaintiffs submitted that the duty to afford procedural fairness attached to any decision which might "destroy defeat or prejudice a person's rights, interests or legitimate expectation" (Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; (1999) 46 NSWLR 78 at [53] where Spigelman CJ said that this was "the authoritative test" for the application of the common law requirement of procedural fairness). They submitted that the detailed and elaborate procedures put in place by the defendants to provide licensees with a hearing before the decision was made, were consistent with the existence of such a duty. 30 They accepted that the operative decision or conduct was that of the Director General or Acting Director General in recommending to the Minister that he accept the findings of ALEC. The plaintiffs accepted that this was a preliminary decision in the sense that it did not of itself affect their rights and interests. Nevertheless, they submitted that the inevitable consequence of making that recommendation was that Ivy would become, or would at least be exposed to the risk of being classified as a "Level 2" premises, with all that such a classification entailed. Just like the decision of the Council in Vanmeld, the Director General's decision was an important part of the process. 31 The plaintiffs submitted that although there was no direct legislative basis for the elaborate procedures contained in the Fact Sheet, it was well established that the source of the duty to afford procedural fairness was in the common law. 32 The plaintiffs relied upon the conclusion of Allsop P in Stewart v Ronalds [2009] NSWCA 277: "68 There have, however, been persuasive and binding statements in the High Court to the effect that the source of the duty to afford procedural fairness is the common law: Kioa v West at 576 and 582 (per Mason J); Haoucher v Minister of State for Immigration and Ethnic Affairs [1990] HCA 22; 169 CLR 648 at 653 (per Deane J); Annetts v McCann at 598 (per Mason CJ, Deane and McHugh JJ); Ainsworth at 571-572 and 574-576 (per Mason CJ, Dawson, Toohey and Gaudron JJ).

69 In 1994, the then Appeal Division of the Supreme Court of Victoria expressed the view, having considered High Court authorities, that the source of the principles of procedural fairness was the common law: Victoria v The Master Builders' Association of Victoria [1995] 2 VR 121 at 138-139 (per Tadgell J), 148 (per Ormiston J) and 157-160 (per Eames J). This Court has come to the same view: Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; 46 NSWLR 78 at 91-92 (per Spigelman CJ); Warringah Council v Edmonson [2001] NSWCA 1 at [20], approving Vanmeld at 91-92 (per Fitzgerald JA, with whom Meagher JA and Powell JA agreed); and Minister for Local Government v South Sydney City Council [2002] NSWCA 288; 55 NSWLR 381 at 384-386 [6]-[15] per Spigelman CJ with whom Ipp AJA agreed at 445 [296]. 70 I therefore proceed on the basis that the common law is the source of the duty to afford procedural fairness. …"

See also Hodgson JA at [113] and Handley AJA at [133]. 33 The plaintiffs submitted that the fact that the mechanism prescribed by s 11(1A) of the Act was used to give legislative effect to the regulation, did not alter the proposition that the making of the regulation involved the exercise of executive power and as such, it was subject to the obligation to afford procedural fairness. The plaintiffs submitted that clear words would be required to achieve a different result. The plaintiffs relied upon Commissioner of Police New South Wales v Gray [2009] NSWCA 49 at [75] - [76] McColl JA (Giles and Tobias JJA agreeing): "75 Both the Judicial Member (at [33]) and Malpass AsJ (at [30], [32]) were acutely conscious of the fact that s 29(3) impinges upon ordinary principles of natural justice. The respondent submits that s 29(3) does not operate to exclude entirely the rules of procedural fairness, or modify them to the extent the appellant contends. This submission finds support in the proposition that "it is … improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness": Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277 (at 304); Bropho v State of Western Australia [1990] HCA 24; (1990) 171 CLR 1 (at 18), Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 (at [11], [43]). 76 In Commissioner of Police v Tanos [1958] HCA 6; (1958) 98 CLR 383 (at 396), Dixon CJ and Webb J said that an intention on the part of the legislature to exclude the application of the rules of natural justice was not to be assumed nor spelled out from "indirect references, uncertain inferences or equivocal considerations". In Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; (2008) 234 CLR 532 (at [182]), Crennan J (with whom Gleeson CJ agreed) said "Parliament can validly legislate to exclude or modify the rules of procedural fairness provided there is 'sufficient indication' that 'they are excluded by plain words of necessary intendment'" …"

See also International Finance Trust Co Limited v NSW Crime Commission [2009] HCA 49 at [41]. 34 Finally, the plaintiff submitted that the decision was not "legislative". They submitted that it plainly singled out the plaintiffs' premises and a small number of other premises for detrimental treatment. They submitted that the decision applied to the plaintiffs "as individuals" (Kioa v West at 584, 619-22 and 632). 35 The defendants' oral submissions differed somewhat from their written submissions. They submitted that one had to understand s 11 in the context of the preceding sections of the Act which prohibited the sale of alcohol except on specified conditions. They submitted that the procedural fairness cases had no application to a regime which concerned the sale of liquor by licence holders. One cannot, it was submitted, equate such a scheme with fundamental rights such as liberty and property to which the procedural fairness cases relate. They submitted that it was an error of law in this case to invoke the common law source of power and apply it to a regulation of this kind made under the Act. 36 In support of that proposition the defendants relied upon the decision of Hall J in McGuinness v State of New South Wales [2009] NSWSC 40; (2009) 73 NSWLR 104. In particular they relied upon what his Honour said at [130] - [136]. While accepting that these observations were obiter, they relied upon the following statements of principle at [136]: "136 On the above analysis, the following propositions relevant to the present case may be formulated: … (3) The Act, however, also provides that existing licences may be made subject to conditions imposed by legislative means, namely, by statutory provisions in the Act or by delegated legislation (namely, by regulation).

(4) The power to impose conditions on an existing licence or licenses referred to in (3) is an exceptional power and is free of the injunctions in s 53 and s 54 that apply to the imposition of conditions by administrative processes.

(6) The fact that the legislature has imposed procedural requirements upon the power of the Authority and the Director to impose conditions under, respectively, s 53 and s 54, but not upon the power to do so by legislation or delegated legislation, in my opinion, reflects, and is consistent with, the proposition that, in general terms, procedural fairness constraints do not restrict the power of government to make statutes." 37 The defendants submitted that his Honour's reference to "delegated legislation" was a reference to the enactment of regulations of this kind by use of the mechanism prescribed by s 11(1A). They submitted that the power described by Hall J as exceptional in proposition (4), was exactly the same power as was being exercised in this case. It was, they submitted, correctly characterized by Hall J as an exceptional power and as delegated legislation. 38 They submitted that an analysis of s 11(1A) supported that proposition. They submitted that the second sentence of s 11(1A) was not a general regulation making power, but a highly specific regulation making power. They submitted that Schedule 4 had a list of named premises. Subsection 11(1A) provided that this schedule could be amended by adding or deleting a licence. They submitted that it would be absurd to suggest that where no right to procedural fairness existed when the original list of licences was set out, such a right arose a year later when, on the basis of similar kinds of data and in pursuit of exactly the same policy announced by the Government, additional licences were added. 39 The defendants submitted that the plaintiffs had not put before the Court any authorities to support the proposition that the making of a regulation which might affect an individual, such as being put in a list of named premises as in Schedule 4, would attract a duty of procedural fairness because of that focused specific effect, although if the same premises were described generically there would be no duty of procedural fairness. 40 The defendants contrasted the provisions of s 11 with s 53 and s 54 of the Act. In those latter sections, specific provision was made for the Authority to provide a reasonable opportunity for the making of submissions. In s 11 there was no stipulation for a process to be followed. The defendants submitted that the inference to be drawn from that contrast was that no requirement for procedural fairness was imposed by the common law on the application of s 11. 41 Put another way, the defendants submitted that under s 11(1A), Parliament had clearly said that the making of such regulations as were here under consideration, was permitted. The regulation clearly answered the description set out in s 11(1A) and the challenge to it should be dismissed. It was not for the common law, they submitted, to impose restrictions on power that Parliament had not seen fit to impose.

Consideration 42 I have some concerns with the defendants' reliance upon McGuinness. The circumstances are different. In McGuinness the inclusion of licences in a schedule was effected by legislation, not by regulation. It was for that reason that the plaintiffs in that case abandoned their challenge to their premises being included on the schedule. It is clear that Hall J in McGuinness was not directing his mind to the same question as was agitated before me. His Honour was of course correct to say that the imposition of conditions by way of statutory provision in the Act itself, being a decision of Cabinet and the Parliament, was not subject to procedural fairness constraints. 43 This also answers the defendants' submission as to the apparent absurdity of there being no right to procedural fairness when the first list of licensees was set out in Schedule 4, but there being such a right when that list was amended a year later. As McGuinness makes clear, the inclusion of licences in Schedule 4 was effected by legislation. The amendment of that Schedule is to be effected by regulation. They are products of entirely different processes. 44 In the submissions by the defendants, reference was made on occasions to the regulation reflecting a decision by Cabinet. There is no evidence before me to that effect. I have approached this matter on the basis that after recommendations, which I infer were made by the Director General or the Acting Director General to him, the Minister made the regulation. 45 While I accept that the provision of liquor in New South Wales is in a special category, that it is heavily regulated and is the subject of detailed legislation, I do not accept that because of its subject matter regulations which affect the sale of liquor cannot be subject to an obligation to provide procedural fairness where individual rights relating to the sale of liquor are involved. In FAI Insurances Limited v Winneke (1981-82) 151 CLR 342 the High Court accepted that the refusal to renew a workers compensation insurance licence could involve obligations to provide procedural fairness. This was despite the fact that the conduct of an insurance business was not one of the fundamental rights to which the defendants referred such as liberty and property. 46 In that regard, Mason J said at 360:

"The fundamental rule is that a statutory authority having power to affect the rights of a person is bound to hear him before exercising the power ( Twist v Randwick Municipal Council (1976) 136 CLR 106 at 109; Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 499). The application of the rules is not limited to cases where the exercise of the power affects rights in the strict sense. It extends to the exercise of a power which affects an interest or a privilege ( Banks v Transport Regulation Board (Vic.) (1968) 119 CLR 222) or which deprives a person of a "legitimate expectation", to borrow the expression of Lord Denning MR in Schmidt v Secretary of State for Home Affairs (1969) 2 Ch. 149 at 170, in circumstances where it would not be fair to deprive him of that expectation without a hearing ( Salemi v MacKellar [No. 2] (1977) 137 CLR 396 at 419). " 47 I agree with the submission of the plaintiffs that the defendants' basic submission impermissibly blurs the distinction between the exercise of legislative power and the exercise of executive power. The difference is clear. There is, as already indicated, no right to procedural fairness before the legislature exercises its power, i.e. something which is the outcome of a process involving the decision of the two chambers and the assent by the Governor. In this case, it is the Governor's regulation but the procedure by which the regulation came into effect was fundamentally different. 48 It seems to me that the correct characterisation of the enactment of this regulation is that it involved an exercise of non-legislative executive power by the Minister. The common law says that such circumstances, except in well-recognised exceptions, attract an obligation to observe procedural fairness where the decision under consideration may "destroy defeat or prejudice a person's rights, interests or legitimate expectations". The regulation here under consideration will have that effect on the plaintiffs' businesses. 49 If there were any doubt on that issue, the statement of principle in Annetts and Anor v McCann and Ors (1990) 170 CLR 596 at 598 resolves it. There the majority said: "It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person's rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment: Commissioner of Police v Tanos; Twist v Randwick Municipal Council ; Heatley v Tasmanian Racing and Gaming Commission; J v Lieschke; Haoucher v Minister for Immigration and Ethnic Affairs . In Tanos , Dixon CJ and Webb J said that an intention on the part of the legislature to exclude the rules of natural justice was not to be assumed nor spelled out from "indirect references, uncertain inferences or equivocal considerations". Nor is such an intention to be inferred from the presence in the statute of rights which are commensurate with some of the rules of natural justice: Baba v Parole Board of New South Wales . In Kioa v West , Mason J said that the law in relation to administrative decisions "has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention."…" 50 The majority in Annetts were clearly talking about the exercise of executive power, namely when a statute confers power upon a public official, just as the Liquor Act confers power upon a member of the executive, the Minister, to advise the Governor to make a regulation. That exercise of executive power is accompanied by the rules of natural justice if it affects personal rights and if those rules are not plainly excluded. 51 In determining whether the principles of procedural fairness apply to this regulation, the procedures set out in the Fact Sheet and the comments by the Director General in correspondence cannot be ignored. While the Fact Sheet does not have legislative authority, it sets out a process which the Director General said she would follow before providing advice to the Minister. Even if there were no obligation for procedural fairness accompanying the making of the regulation, the executive by the promulgation and implementation of the Fact Sheet seems to have accepted such an obligation. 52 I have concluded that the Director General was obliged to provide procedural fairness in relation to the making of this regulation.

Content of the Obligation to Provide Procedural Fairness 53 The plaintiffs submitted that they were deprived of procedural fairness in two respects. The first was the failure by the Director General to follow the process which she had undertaken to follow in the Fact Sheet by allowing the intervention of ALEC. In the alternative, they submitted that if the Director General chose to depart from the Fact Sheet procedure, she was obliged to permit a further oral hearing in relation to those incidents which had been excluded by the Local Area Commander but which had been re-instated by ALEC. As part of that alternative submission, the plaintiffs submitted that properly understood the emails from the Director General contained an undertaking to provide such an oral hearing. Implicit in the alternative submission is the assumption that the Director General, or Acting Direction General, rejected the written submissions of the plaintiffs and accepted the recommendations of ALEC. 54 By way of background, the plaintiffs submitted that they do not know because they were not told, what took place between the apparent recommendation by the Director General, or Acting Director General, and the decision by the Minister to make the regulation including Ivy and Establishment as "Level 2" venues. Despite that lack of knowledge, they submitted that it was apparent from the Fact Sheet that the recommendation or advice of the Director General was of such significance that it could properly be regarded as a decision or conduct which would prejudice the plaintiffs' rights, interests or legitimate expectations and accordingly was subject to the requirement of procedural fairness. This was so, they submitted, either because of the importance of the recommendation itself or because the recommendation and the decision of the Minister to make the regulation, were so intertwined that they were part of a single process. To the extent that they required authority for that proposition, the plaintiffs relied upon the observations of Spigelman CJ in Vanmeld at [53]. 55 The plaintiffs developed their first argument as follows. They submitted that the despite the qualification in the Fact Sheet to the effect that the Government retained the discretion to amend Schedule 4 at any time without following the procedure therein set out, there was a clear undertaking by the Government in the Fact Sheet that it "will" take into consideration the advice of police concerning whether a particular assault incident should have been attributed to a licensed premises. 56 They submitted that they had followed to the letter the procedure in the Fact Sheet up to and including "the assessment notification" received from Superintendent Houlahan, The Rocks Local Area Commander. They submitted that the subsequent intervention by ALEC was not something envisaged by the procedure set out in the Fact Sheet. In particular, the Fact Sheet said nothing about the assessment by ALEC superseding that of the Local Area Commander. The plaintiffs submitted that the apparent willingness by the Director General to take into account the revised assessment by ALEC was contrary to the procedure which she had undertaken to follow and for that reason, the plaintiffs had been denied procedural fairness. 57 The plaintiffs submitted that there was a certain internal consistency in the process set out in the Fact Sheet. The consultation would take place between the venue operators and the police from the Local Area Command, who would have been familiar with the venues. After all relevant information had been provided to him or her, including the recommendations of the police who had attended the preliminary meeting, the Local Area Commander would make his or her assessment. The intervention of ALEC, which had not had the benefit of such a meeting or recommendations by police officers familiar with the venues, and who in this case appears to have not had the advantage of the additional information provided by the plaintiffs to those police officers, but to have relied entirely upon the COPS reports, rendered the earlier meetings and assessments a waste of time. 58 The plaintiffs submitted that not only was this a failure to follow the process laid out in the Fact Sheet, it was quite contrary to the spirit and content of the process which emphasised transparency and consultation. 59 In support of that submission, the plaintiffs relied upon that line of cases which required decision makers to follow the procedures which they themselves had laid down. The plaintiffs relied upon Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 609 where the majority said: "If the power must be exercised in conformity with the rules of natural justice, a failure by the repository to adhere to a declared procedure may constitute or result in a failure to accord natural justice to a person whose interests are liable to affection by the exercise of the power. In such a case, an exercise of the power adversely to the interests of the person denied natural justice is liable to be set aside." 60 Similarly, the plaintiffs relied upon Lesnewski v Mosman Municipal Council [2005] NSWCA 99; (2005) 138 LGER 207 at [61] - [65], a case involving a failure by a council to follow "a declared procedure" with respect to the notification to neighbouring landowners of the making of a development application. 61 They relied upon Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1, where the High Court held that a tribunal member who said at the conclusion of an oral hearing that she would write to the applicant about inconsistencies in his evidence and provide a time to respond to the tribunal's questions and to put any more information before the tribunal that the applicant wished, had deprived the applicant of procedural fairness when she failed to do so. 62 The plaintiffs relied upon the following statement of principle in NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 at [534]: "Procedural fairness may apply when a legitimate or reasonable expectation of its application is based upon a statement or undertaking by the decision-maker - Kioa v West at [582] - [583] (Mason J). Examples of cases involving undertakings giving rise to legitimate expectations of procedural fairness are: R v Liverpool Corporation ; Ex Parte Liverpool Tax Fleet Operators Association (1972) 2 QB 299 (promise not to increase the number of licensed taxis in the city); Salemi v Mackellar (No 2) (amnesty to prohibited immigrants); Attorney-General (Hong Kong) v Ng Yuen Shiu [1983] 2 AC 629 (promised to accord a hearing before deportation); Haoucher (implied promise not to depart policy relating to criminal deportations where AAT recommendation against deportation). In Attorney-General (NSW) v Quin (1990) 170 CLR 1 Mason CJ said: "A legitimate expectation may be created by the giving of assurances … the existence of a regular practice … the consequences of denial of the benefit to which the expectation relates or the satisfaction of statutory conditions. The list is not exhaustive, but provides indications of the kinds of factors which a court will take into account in deciding whether or not an expectation is legitimate" (French J)"" 63 In Haoucher v Minister of State for Immigration and Ethnic Affairs (1990) 169 CLR 648 at 659-660 Dawson J said: "A hearing may be required because of the past practice of consultation or a promise or assurance previously given that a hearing would occur: Council of Civil Service Unions v Minister for the Civil Service (1985) AC 374; Attorney-General (Hong Kong) v Ng Yuen Shiu [1983] 2 AC 629. But that is because, in all the circumstances, the promise to follow a certain procedure having been made, or the practice of consultation having been established, fairness may require that the public authority should be held to its promise or previous practice." 64 The plaintiffs relied upon the following statement by Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; ex parte Lam (2000) 214 CLR 1 at [25]: "There are undoubtedly circumstances in which the failure of an administrative decision-maker to adhere to the statement of intention as to the procedure to be followed will result in unfairness and will justify judicial intervention to quash the decision …"

The plaintiffs accepted that his Honour had qualified that statement by saying that it was not true in every case. 65 The plaintiffs also relied upon those statements of principle to support their alternative argument as to the content of the obligation to provide procedural fairness. They submitted that a fair reading of the two emails sent by the Director General made it clear that she was offering a meeting with the plaintiffs' representatives if outstanding issues remained after they had provided their submissions. Her failure to provide such a meeting before she or the Acting Director General made a recommendation to the Minister, constituted the sort of failure to follow a specific procedure, referred to in the cases upon which they relied. 66 The plaintiffs submitted that if the Court were not satisfied that such a meaning should be given to the emails there was still an obligation on the Director General to have a meeting with the plaintiffs' representatives before making a recommendation to the Minister. They submitted that this obligation arose because of her abandonment of the procedure set out in the Fact Sheet. 67 They submitted that an important feature of the procedure in the Fact Sheet was the face-to-face meeting with police representatives from the Local Area Command. This was the best opportunity for deficiencies in the COPS and BOCSAR data to be identified. The plaintiffs submitted that when the Director General allowed the intervention of ALEC, she had effectively deprived them of the benefits of such a meeting. Accordingly, the minimum requirement for procedural fairness was that she provide them with a further opportunity of a face-to-face meeting during which those matters could be discussed before she made her recommendation to the Minister. Her failure to do so constituted a breach of procedural fairness. 68 The final submission by the plaintiffs was but a variant of their first submission. They submitted that because of the procedure laid down in the Fact Sheet, it was not open to the Director General to have regard to the opinion of ALEC and that in doing so, she had taken into account an irrelevant consideration. They submitted that that would be the case at least until she had a meeting with the plaintiff's representatives to allow them to answer the comments and recommendations of ALEC. The plaintiffs relied upon X v Minister for Immigration and Multicultural Affairs (2002) 116 FCR 319 at [37]. 69 The defendants accepted that matters such as guidelines, representations and dealings could from time to time and from case to case affect the content of a duty to provide procedural fairness. They submitted that this was not such a case. This was made clear by the express reservation in the Fact Sheet of a discretion to amend Schedule 4 at any time without following the procedure therein outlined. The defendants submitted that because of that reservation, no-one reading the Fact Sheet could have treated it as a statement of the only way in which a venue might find itself in or out of Schedule 4. That was supported by the use of such words as "generally" in the Fact Sheet when describing the procedure. 70 The defendants submitted that there was nothing in the Fact Sheet which restricted the matters which the Director General could take into account before making her recommendation to the Minister. Specifically, there was nothing in that document to prevent the input from a specialist police squad such as ALEC. 71 The defendants submitted that what the Court was being asked to do was to judicially review advice which had been proffered by the Director General, or Acting Director General, to the Minister. The Court was not being asked to review a decision per se, because the decision was to be made by the Minister. It was open to the Minister to ignore the advice or recommendation received from the Director General when making his decision. The defendants submitted there was no judicial precedent for a review of the kind which the plaintiffs were seeking. 72 However, the primary submission by the defendants on the issue was that even if the Director General had departed from the procedure set out in the Fact Sheet, that did not give rise to a denial of procedural fairness. The real question was whether an opportunity to be heard had been given. 73 The defendants relied upon Lam where the members of the High Court, while taking a different approach to whether or not there had been a departure from the process previously advised, stressed the need for practical injustice to be shown before there was a denial of procedural fairness. In this case the defendants submitted that after the revised assessments were issued, the Director General wrote to the plaintiffs and gave them until 10 November 2009 to make a submission in respect of those revised assessments. The plaintiffs had availed themselves of that opportunity by providing submissions in respect of both Ivy and Establishment. Each submission included detailed descriptions of the incidents which the plaintiffs challenged and was accompanied by some CCTV footage. The defendants submitted that procedural fairness could require nothing more. 74 The defendants submitted that procedural fairness did not require the Director General to give the plaintiffs the same quality of hearing as they obtained from the Local Area Command before taking into account the ALEC revised assessment. They submitted that such a submission could only be correct if the content of an obligation to afford procedural fairness required individuals to be given the best opportunity possible to present their case. They submitted that there was no authority for such an approach. They submitted that the requirements for procedural fairness depended upon the circumstances of the case including, inter alia, the nature of the inquiry, the subject matter and the statutory framework within which the decision-maker acts (Kioa v West at 584-585 and Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at [10], [25]). 75 The defendants submitted that the facts of this case suggested that the content of any duty to afford procedural fairness must have been low. The recommendation and the decision of the Minister were made in the exercise of a broad statutory discretion. The advice which led to the exercise of the discretion was formulated at the highest level of Government, passing from the Director General through to the Minister. The defendants submitted that the persons interested in and affected by its exercise were not just the particular licensees, but included the community at large and persons attending at or residing near licensed premises. 76 The defendants did not accept that the emails from the Director General contained an undertaking to provide a face-to-face meeting as submitted by the plaintiffs. They submitted that what was said by the Director General was that the plaintiffs would be contacted for a meeting following consideration of their submissions "if issues remain outstanding". They submitted that this clearly referred to issues outstanding from the Director General's point of view. Seen in that context, there was no undertaking to give the plaintiffs a further hearing before an adverse recommendation was made against them.

Consideration 77 There is an initial problem for the plaintiffs in that even before the intervention of ALEC, Establishment had recorded against it 12 assault incidents in "the assessment notification" by Superintendent Houlahan. No representations were made to the Director General within the 14 days allowed by the Fact Sheet. Accordingly, even without the intervention of ALEC, Establishment was liable to be given a "Level 2" classification in schedule 4. Accordingly, the plaintiffs' submissions on this issue primarily relate to Ivy. 78 I have concluded that the Director General did depart from the procedure which was set out in considerable detail in the Fact Sheet. I accept that the Government had a discretion to amend the Schedule at any time without following the procedure outlined in the Fact Sheet. Nevertheless, given the detailed requirements in the Fact Sheet and its underlying purpose, if the Government or Director General proposed to change the procedure, some notice of that change should have been given. In that regard, the observations of Basten JA in Country Energy v Williams (2005) 141 LGERA 426 at [96] - [99] are applicable. His Honour concluded his analysis at [98] by saying: "It follows that the Director General can abandon a policy or procedure which she has adopted, so long as the new procedure or policy is itself lawful and not in contravention of some statutory or general law obligation, and gives notice as necessary, to those who have a legitimate expectation that the policy will be followed." 79 The intervention by ALEC and its power to provide revised assessments was something not only not contemplated by the procedure set out in the Fact Sheet, but was contrary to its consultative provisions. The change in the procedure brought about by the intervention of ALEC and its power to amend assessments was so fundamental that the Director General should have provided some notice to affected parties of this change to the procedure. That, of course, does not end the matter. 80 As the defendants correctly submitted, the fact that the intervention of ALEC constituted a departure from the process previously advised by the Director General did not of itself give rise to a denial of procedural fairness. That proposition expressed as follows "If an administrative decision-maker states to a person affected an intention to take a certain procedural step, and fails to do so without warning the person affected of the change of intention, then the result is procedural unfairness warranting certiorari and prohibition."

was considered by the High Court in Lam. 81 At [24] Gleeson CJ criticised the proposition for being "far too broad" and for overlooking the discretionary nature of the remedies. He rejected it because it required the concept of legitimate expectation to carry more weight than it would bear and because it approached an attempt to convert a procedural expectation into something substantive so that an expectation became a right. 82 At [34] his Honour said: "So, for example, if a decision-maker informs a person affected that he or she will hear further argument upon a certain point and then delivers a decision without doing so, it may be easy to demonstrate that unfairness is involved. But what must be demonstrated is unfairness, not merely departure from a representation. Not every departure from a stated intention necessarily involves unfairness, even if it defeats an expectation. …" 83 His Honour concluded his judgment with the following: "36 The more fundamental problem facing the applicant, however, relates to the matter of unfairness. A statement of intention, made in the course of decision-making, as to a procedural step to be taken, is said to give rise to an expectation of such a kind that the decision-maker, in fairness, must either take that step or give notice of a change of intention. Yet no attempt is made to show that the applicant held any subjective expectation in consequence of which he did, or omitted to do anything, nor is it shown that he lost an opportunity to put any information or argument to the decision-maker, or otherwise suffered any detriment. 37 A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations. Attorney-General (Hong Kong) v Ng Yuen Shiu was such a case. So, according to the majority, was Haoucher v Minister of State for Immigration and Ethnic Affairs. A particular example of such detriment is a case where the statement of intention has been relied upon and, acting on the faith of it, a person has refrained from putting material before a decision-maker. In a case of that particular kind, it is the existence of a subjective expectation, and reliance, that results in unfairness. Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice." 84 Similarly McHugh and Gummow JJ concluded: "104 …The better view is that this was a case of an expectation arising from the conduct of the person proposing to make recommendations to the Minister. It is a case stronger than Haoucher in this respect. 105 But the failure to meet that expectation does not reasonably found a case of denial of natural justice. The notion of legitimate expectation serves only to focus attention on the content of the requirement of natural justice in this particular case. The ends sought to be attained by the requirement of natural justice may be variously identified. But at least in a case such as this the concern is with the fairness of the procedure adopted rather than the fairness of the outcome. It is with the decision-making process not the decision, as Lord Brightman put it. What is delivered by the requirement of natural justice is the right to a hearing, a technical expression in law, before action is taken." 85 In this case the Director General changed the procedure by allowing and having regard to the intervention of ALEC. Having done so, however, she gave the opportunity to the plaintiffs to make submissions specifically concerning the intervention by ALEC and the re-instatement by ALEC of assault incidents which had been removed by the Local Area Commander. The plaintiffs availed themselves of this opportunity and provided to the Director General detailed submissions on each of those matters. 86 Assuming that a face-to-face meeting, with its opportunity to make oral submissions to supplement the written submissions, was a superior mode of dealing with the ALEC assessment (a proposition which is not necessarily correct), was its absence a denial of procedural fairness? In my opinion it was not. The "practical fairness" described in Lam does not require that every mode of submission be made available to those seeking procedural fairness, nor that the best mode be made available. The minimum requirement is that the person be given an opportunity of answering the allegations or matters which have been raised. The plaintiffs were provided with such an opportunity by the Director General and they availed themselves of it. As the defendants submitted, procedural fairness required no more. 87 That conclusion is sufficient to answer both ways in which the plaintiffs' primary submission on this issue was put. 88 The plaintiffs' submission that by having regard to the ALEC re-assessment the Director General took into account an irrelevant consideration is misconceived. There was nothing in the Fact Sheet to suggest that the only matters the Director General could have regard to were those which arose as part of the procedure therein set out. This is particularly so when ALEC comprised a senior police squad with an overall responsibility for liquor trading in the State. Given the emphasis in the Fact Sheet procedure on police recommendations, the taking into account by the Director General of the advice of ALEC could not be regarded as taking into account an irrelevant consideration. 89 Finally, the emails of 30 October and 3 November 2009 from the Director General do not have the meaning sought to be given to them by the plaintiffs. A proper reading of those emails in their context makes it clear that no representation, conditional or otherwise, was being made to the plaintiffs that they would have the opportunity of a face-to-face meeting with the Director General before she provided her advice to the Minister. On the contrary, the emails particularly that of 3 November, made it clear that such a meeting would only be contemplated by the Director General if in her opinion "issues remain outstanding". 90 Accordingly, while I have concluded that the Director General did depart from the procedure set out in the Fact Sheet, the requirement for procedural fairness was met when the plaintiffs were given, and availed themselves of, the opportunity to make submissions concerning the re-assessments by ALEC.

Irrationality 91 The plaintiffs stated as a proposition of law that "where a decision is irrational, illogical and not based on findings or inferences of fact supported by logical grounds", it may be set aside. They relied upon Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10 at [129] where Spigelman CJ said: "129 … Both parties accepted that judicial review on such a basis was permissible. Nothing appeared to turn on the particular formulation of the test in the case law. Perhaps the most appropriate formulation is whether the decision is "illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds": Minister for Immigration and Multicultural Affairs Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at [52] and [37], [173]; see also Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; (2004) 78 ALJR 992 at [38]." 92 I have to say that I find that proposition somewhat novel if by it the plaintiffs were submitting that this is a separate and discrete basis for challenging an administrative decision. The concept of irrationality is well known in this area of law and is usually applied in the context of Wednesbury unreasonableness, i.e. that a decision was so unreasonable that no reasonable administrator could have made it. I propose to approach this issue on that basis. In that regard, I am fortified by the earlier comments of Spigelman CJ in Murrumbidgee where his Honour said: "127 A challenge to the exercise of a statutory power on the basis of irrationality or unreasonableness requires the Court to be conscious of the permissible scope of judicial review. The legality/merits dichotomy is at the heart of Australian administrative law and the boundary between the two is policed more rigorously in this country than appears to have become the case in recent years in other common law jurisdictions. The most frequently cited statement of principle is that of Brennan J in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36: "The duty and jurisdiction of the Court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the Court avoids administrative injustice or error, so be it; but the Court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." 128 There are circumstances in which the outcome of a decision-making process will of itself indicate legal error. However, the courts must be slow to so find, because of the blurring of the distinction between legality and merits that can often arise when determining such a ground of judicial review." 93 The plaintiffs submitted that no rational or reasonable decision-maker could have failed to have regard to the particular characteristics of the premises. They submitted that it was plain that there were substantially more patrons at Ivy and Establishment than at many of the other "Level 2" premises. By way of illustration, they pointed out that Ivy had a capacity of 4,900 with not only 20 bars but also 9 restaurants. The plaintiffs submitted that it was absurd to compare premises such as Ivy with other "Level 2" premises located in regional and rural New South Wales where the capacity was less than 250. They submitted that it was irrational to compare such premises and regard them as comparably "dangerous" or "violent". 94 They submitted that it was irrational to compare premises where there had been 12 incidents involving violence when those premises had a patronage of approximately one and a half million over 12 months, with a conventional hotel with a much smaller patronage. The plaintiffs submitted that no rational decision-maker could think otherwise. Plainly the latter premises would be more "dangerous" than the former. 95 The second aspect of the plaintiffs' submissions involved the Court being taken in considerable detail to the COPS reports. The Court was then taken to the submissions made by the plaintiffs in respect of those COPS reports, in particular to where the submissions indicated that the investigating police had expressed some skepticism as to the events which had occurred and where CCTV footage was alleged to have established that the incidents did not occur in the way described in the COPS reports. 96 The plaintiffs submitted that ALEC had offered no explanation in its reasons for why it had decided to overrule "the assessment notification" of the Local Area Commander with its own assessment, when it apparently had made no examination itself of the accuracy of the submissions made by the plaintiffs to the Local Area Command representatives at their face-to-face meeting. 97 The plaintiffs submitted that the apparent acceptance by the Director General of the ALEC recommendations in the face of the above considerations demonstrated that her decision was irrational and so unreasonable that no reasonable decision-maker could have reached that conclusion. 98 The defendants submitted that in relation to the nature of the plaintiffs' premises the submission challenged not the logicality of the decision-maker's advice, but rather the criteria chosen by the Government. They submitted that such unfairness as there was resulted not from an irrational application of the given criteria to the circumstances of the plaintiffs, but from the adoption of criteria which the plaintiffs regarded as unfair. Such a complaint, the defendants submitted, was not justiciable since a decision to adopt a particular policy was a matter for the executive alone. 99 The defendants' primary submission was that the plaintiffs were seeking a merits review under this heading. The Court was invited to look at the reasons provided by ALEC in its correspondence to the plaintiffs and the submissions in relation to those matters by the plaintiffs to the Director General. The defendants submitted that while one might disagree with the Director General's advice or recommendation to the Minister (if, as was assumed, the advice was to reject the plaintiffs' submissions), it could not be said that the decision reached such a level of irrationality and illogicality as would justify the intervention of the Court. Consideration 100 Despite protestations to the contrary, the plaintiffs' submissions on this issue involve matters of merit, rather than matters of law. This was inevitable from the way in which the submissions were put. 101 The comments and conclusions in the COPS reports on which the BOCSAR data was based were compared with the submissions by the plaintiffs which were said to answer them. The Court was invited to conclude that the plaintiffs' submissions to the Director General so discredited the COPS reports that it was irrational on the part of the Director General not to reject the reports. 102 The problem with such an approach is that the issue of irrationality or illogicality is not concerned with a determination of the level of accuracy of the data that has been reported. It is concerned with determining whether such reports provided a basis or an analysis upon which it was open for ALEC and therefore the Director General to rely for the purpose of providing advice to the Minister. Clearly the COPS reports provided such a basis. 103 The plaintiffs' submissions themselves comprised a series of assertions and conclusions which may or may not have had a basis in fact. References were made to CCTV footage, again in a conclusive form which may or may not have been accurate. By contrast the COPS database was a record of criminal incidents recorded by the NSW Police, together with a list of locations at which each incident took place, the type of offence involved, the premises type and the date and time of each incident. It was not irrational or illogical for the Director General to reject the plaintiffs' assertions in favour of the recommendations of ALEC based as they were on the COPS database. 104 I agree with the defendants' submission that while the plaintiffs did not in terms say so, the effect of their submission concerning the irrationality of applying the same criteria to premises such as Ivy and small regional hotels raised a matter of Government policy and did not give rise to a proper basis for challenging the advice of the Director General to the Minister. 105 I have concluded that on the evidence before me the plaintiffs have failed to establish that ALEC or the Director General acted on an irrational or illogical basis in making recommendations based upon COPS data even though in the case of the Director General there was material before her which challenged the accuracy of the COPS material. The COPS data provided a basis for establishing a distribution in trend and hence an assessment of risk and as such provided a factual basis for the Director General's advice. The plaintiffs' submissions on this issue have not been made out.

A general observation 106 One can only applaud the intention of the Government to take steps to reduce the incidents of alcohol related violence in New South Wales hotels and clubs. One can understand why, in the absence of other data, the Government would take as its criterion the BOCSAR data, based as it was on COPS reports. Nevertheless, there is a risk that if an inflexible approach is followed in the application of the new rules, unfairness in the moral (as distinct from legal) sense could result. 107 It was not surprising during the conduct of this case that some laughter occurred when restrictions such as plastic glasses were raised in the context of expensive restaurants, such as exist in Ivy and Establishment. The prospect of episodes of violence occurring in such restaurants is remote. The danger with such restrictions, which are valid and appropriate for bars, being applied to such restaurants is that it injects an element of capriciousness and arbitrariness into the operation of the regulation. This could well detract from the beneficial purpose of the regulation. 108 I am sure that, now that the Government is aware of such anomalies in the application of the regulation, it will use the power which it has to exempt some of the restaurants in these premises from requirements which will play no beneficial role in achieving its objects but may well bring the regulation into disrepute because of their clear inappropriateness to such restaurants.

(ii) The plaintiffs are to pay the defendants' costs of these proceedings. **********

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