K-Generation Pty Limited v Liquor Licensing Court [2009] HCA 4

High Court of Australia|2009-02-02|Before: Kiefel JJ

The application was heard by Liquor and Gambling Commissioner Pryor. A police officer tendered information which had been classified by the Commissioner of Police as criminal intelligence pursuant to s 28A of the Act. In reliance upon that section the information was not disclosed to the representative of K-Generation nor to Mr Krasnov. On 17 January 2007, acting upon that information, Commissioner Pryor refused the application on the ground that to grant it would be contrary to the public interest.

K-Generation sought review of Commissioner Pryor's decision in the Licensing Court of South Australia. The Court was invited by the parties to determine whether, on the criminal intelligence information alone, the decision of Commissioner Pryor would be upheld.

K-Generation and Mr Krasnov ("the appellants") instituted proceedings in the Supreme Court of South Australia. They named as defendants the Licensing Court and the Commissioner of Police. They sought a declaration that s 28A of the Act was invalid insofar as it impermissibly interfered with the exercise by the Licensing Court of the judicial power of the Commonwealth. They also sought a declaration that the Court, in affirming the decision of Commissioner Pryor, had failed to observe the requirements of procedural fairness and that the decision of the Court was void and of no effect. They sought orders in the nature of certiorari and mandamus, quashing the decision of the Licensing Court and directing the Court to consider K-Generation's appeal from Commissioner Pryor according to law.

On 8 May 2007 Kelly J made an order, by consent, referring the application to the Full Court of the Supreme Court. On 30 August 2007, the Full Court of the Supreme Court by a majority (Duggan and Vanstone JJ) refused the application for the declarations and dismissed the application for judicial review. Gray J dissented.

On 23 May 2008, the appellants were granted special leave to appeal to this Court from the judgment and orders of the Supreme Court of South Australia.

Section 28A infringes upon the open justice principle that is an essential part of the functioning of courts in Australia. It also infringes upon procedural fairness to the extent that it authorises and effectively requires the Licensing Court and the Supreme Court to consider, without disclosure to the party to whom it relates, criminal intelligence information submitted to the Court by the Commissioner of Police. However, it cannot be said that the section confers upon the Licensing Court or the Supreme Court functions which are incompatible with their institutional integrity as courts of the States or with their constitutional roles as repositories of federal jurisdiction. Properly construed the section leaves it to the courts to determine whether information classified as criminal intelligence answers that description. It also leaves it to the courts to decide what steps may be necessary to preserve the confidentiality of such material. The courts may, consistently with the section, disclose the material to legal representatives of the party affected on conditions of confidentiality enforced by undertaking or order. It leaves it open to the courts to decide whether to accept or reject such material and to decide what if any weight shall be placed upon it.

The constitutional objections to s 28A are not made out and the appeal should be dismissed with costs.

The decision of the Liquor and Gambling Commissioner

The decision of Commissioner Pryor was preceded by a hearing on 20 December 2006 at which K-Generation was represented by Mr Hoban and the Police Commissioner was represented by Sergeant Jakacic. Mr Krasnov gave evidence and was cross-examined. No transcript of that proceeding has been reproduced. Sergeant Jakacic tendered two "Police Commissioner Office files", containing information which had been classified as criminal intelligence pursuant to s 28A of the Act. The files were "admitted into evidence at the hearing". Their contents were not disclosed to K-Generation. Commissioner Pryor did not read the files during the hearing. Counsel representing K-Generation did not ask him to provide a summary of the criminal intelligence at any time.

Sergeant Jakacic also tendered material relating to a known associate of Mr Krasnov. This was received by consent. Statutory declarations testifying to Mr Krasnov's good character were received.

In his reasons for decision dated 17 January 2007, Commissioner Pryor referred to s 56 of the Act. That section imposes the criterion that any person occupying a position of authority in an entity applying for a licence must be a fit and proper person to occupy such a position. Mr Krasnov occupied such a position with respect to K-Generation.

The Commissioner referred to s 28A(1) of the Act and to the definition of "criminal intelligence". He said he had considered the criminal intelligence together with the statutory declarations and submissions made at the hearing. He then set out the terms of s 28A(2) and concluded, without further elaboration, by saying:

"Accordingly, I refuse the application on the ground that to grant the application would be contrary to the public interest."

At the commencement of the hearing in the Licensing Court on 8 February 2007, counsel for K-Generation told the Court that the hearing before Commissioner Pryor had been on a "preliminary point" as to whether Mr Krasnov was fit and proper and that the Commissioner had found against Mr Krasnov on the basis of s 28A of the Act.

Counsel sought review on the preliminary point only and proposed that the most satisfactory way of proceeding would be to place the criminal intelligence material which had been before Commissioner Pryor, before the Licensing Court. He said:

"If you decide there is a foundation in the Commissioner's decision, then you find against Mr Krasnov and that will be, effectively, the end of the matter. However, if after looking at material you take a different view, then it may well be that we put further materials before you in the sense of a hearing or re-hearing as to the merits of the application in order to seek to persuade that notwithstanding the section 28A material, the man ought to be found to be fit and proper."

Counsel said that he was satisfied that procedurally the criminal intelligence material had been "properly before the Commissioner". He conceded that he would have no opportunity to comment on it or to take instructions or put further evidence before the Court in relation to it. He eschewed, on the basis of economy, a suggestion that the Court should read the transcript of proceedings before Commissioner Pryor as well as the criminal intelligence material. His Honour, Rice DCJ, sitting as the Licensing Court, said he would proceed in stages if necessary. He would read the criminal intelligence material but would not read any transcript unless it had already been prepared.

The review hearing resumed before the Licensing Court on 12 February 2007. After hearing further from the parties, his Honour expressed his understanding of their common submission that if he agreed with Commissioner Pryor about his use of the criminal intelligence and came to the same conclusion, then he would indicate that to the parties and they could decide where they went from there. If his review of the intelligence material inclined him to think that he would or may not have come to the same conclusion, he would indicate that and the parties could then decide whether they wanted to go to a full rehearing.

After adjourning for 20 minutes, his Honour came back, having read the intelligence material which also related to Mr Krasnov's associate and said:

"I think, in a nutshell, my view is that I would reach the same view as the Commissioner reached, to put it as simply and as quickly as I could. I have looked at the material the Commissioner looked at and quite frankly I would come to the same view."

On 12 February 2007, the Licensing Court made the following orders:

"1. The decision of the Liquor and Gambling Commissioner is affirmed and, to the extent that it is necessary his Honour confirms that he makes the same decision.

The judgment of the majority dismissing the application was delivered by Duggan J, with whom Vanstone J agreed**[1]. In holding that Kable v Director of Public Prosecutions (NSW)[2]** did not apply to invalidate s 28A, his Honour held inter alia:

(i) The Licensing Court is a "court" of the State of South Australia for the purposes of s 77(iii) of the Constitution

(ii) The Court could have federal jurisdiction conferred upon it.

(iii) Section 28A reflected a legislative intention to make inroads into the requirements of procedural fairness.

(iv) Legislative inroads into procedural fairness do not necessarily impose a role on the Court incompatible with its constitutional function as a repository of federal jurisdiction.

(v) The Court can determine what weight is to be given to criminal intelligence information by reference, inter alia, to the fact that it has not been tested in any way.

(vi) Section 28A does not generate a closer connection between the Court and the executive, nor does it introduce a procedure of a political nature or political bias calculated to influence the discretion of the Court.

His Honour acknowledged that by limiting access to information, s 28A would place the applicant for a licence at a disadvantage and might prevent the Court from giving full reasons for its decision. While such departures from established rules of fairness were of concern, it remained the duty of the Court to assess the matter objectively and subject classified material to scrutiny as part of the process.

"In summary, therefore, I am of the view that the enactment does not impose on the Licensing Court a procedure which is constitutionally incompatible with its status as a court which is a potential repository of federal jurisdiction. Furthermore, the legislation does not require a District Court judge to perform a non-judicial function. Even if the function could be described as non-judicial, it is not of such a nature as to be constitutionally incompatible with the role of a District Court judge."

His Honour held the same reasoning to apply to the situation where the Supreme Court was required to consider an appeal from a decision of a judge of the Licensing Court.

(i) The usual duty to inform applicants of the case against them is excluded by s 28A to the extent that that duty would have required the Licensing Court to disclose the criminal intelligence.

(ii) Even information derived from the criminal intelligence which did not identify either the source or a police operation could not be disclosed.

(iii) Although the appellants accepted in the Licensing Court that they were not entitled to natural justice in respect of the criminal intelligence they did not thereby waive their entitlement.

(iv) If there had been a breach of natural justice the Supreme Court would have the power to grant judicial review and to make an order in the nature of certiorari.

(v) While judicial review of a classification decision in respect of criminal intelligence might be possible, the party seeking review would not be able to gain access to the material or have any information about its content.

(vi) Legislation which requires a court invested with federal jurisdiction to exercise federal judicial power without affording a party an opportunity to respond to adverse claims is inconsistent with the integrated federal judiciary established by Ch III of the Constitution.

(vii) The fact that it is a District Court Judge who holds the position as the Licensing Court and that the Full Court of the Supreme Court has no option under the legislation but to uphold the Licensing Court's breach of natural justice, results in s 28A being constitutionally invalid.

"The Full Court erred in law in finding that s 28A of [the Act] is valid insofar as it requires the Liquor Licensing Court to hear and determine a review pursuant to section 23 of [the Act] without disclosing to the applicant information classified as 'criminal intelligence', relied on by the Liquor Licensing Commissioner in refusing an application for a licence."

Statutory framework - Liquor Licensing Act 1997 (SA) - general provisions

The two principal decision-making bodies under the Act are the Liquor and Gambling Commissioner and the Licensing Court. The term "licensing authority" is defined in s 4 to mean:

"(a) in relation to a matter that is to be decided by the Court under this Act - the Court;

(b) in relation to any other matter - the Commissioner".

The Licensing Court, whose existence pre-dated the Act, is continued in existence**[4]. It is declared to be a court of record[5]. The court comprises "the Licensing Court Judge" or some other serving or former District Court Judge "with authority to exercise the jurisdiction of the Court"[6]**.

The Governor is empowered to designate by proclamation a District Court Judge as the Licensing Court Judge or to confer on other District Court Judges, or former District Court Judges, authority to exercise the jurisdiction of the Court**[7]. The Governor may also vary or revoke such a proclamation under the section. Where a proclamation so provides it lapses at the end of a specified period[8]. The Court has the jurisdiction conferred on it by the Act or any other Act[9]**.

The Act divides responsibilities between the Liquor and Gambling Commissioner and the Licensing Court**[10]. The Commissioner is to determine all non-contested matters except those required under some other provision of the Act to be determined by the Licensing Court. The Commissioner is also required to endeavour to achieve agreement between parties by conciliation in respect of certain classes of contested application and then either to determine the application or to refer the matter for hearing and determination by the Court[11]**.

In proceedings under the Act or any other Act, the Court is required to act without undue formality. It is not bound by the rules of evidence but may inform itself on any matter it thinks fit**[12]. A similar provision applies to the Liquor and Gambling Commissioner[13]**.

The Commissioner may refer questions for hearing and determination by the Court**[14]. The Commissioner's decision may be reviewed by the Court[15]** save for subjects on which the Commissioner has "an absolute discretion"[16]. A review is in the nature of a rehearing**[17]. The Court may affirm, vary or quash the decision, substitute its own decision or refer a matter back to the Commissioner for rehearing or reconsideration[18]**.

There is an appeal from orders and decisions of the Licensing Court to the Supreme Court subject to the permission of the Supreme Court**[19]. Such appeals are to be heard and determined by the Full Court[20]. No appeal lies against an order or decision of the Licensing Court made on a review of a decision of the Commissioner or against an order or decision of the Licensing Court excluded from appeal under a provision of the Act or some other Act[21]**.

The Act prohibits the sale of liquor without a licence**[22]. The various classes of licence are set out in the Act and include an entertainment venue licence[23]. Mandatory conditions apply to every licence. Licensing authorities may also impose conditions that they consider appropriate[24]**.

Every application for a licence, other than categories which are irrelevant for present purposes, is to be given to the Commissioner of Police**[25]. The Commissioner of Police is required thereafter to make available to the Liquor and Gambling Commissioner information about criminal convictions and other information to which the Commissioner of Police has access and which is relevant to whether the application should be granted[26]**.

The powers of a licensing authority to grant or refuse an application for a licence are set out in s 53:

"(1) Subject to this Act, the licensing authority has an unqualified discretion to grant or refuse an application under this Act on any ground, or for any reason, the licensing authority considers sufficient (but is not to take into account an economic effect on other licensees in the locality affected by the application).

(1a) An application must be refused if the licensing authority is satisfied that to grant the application would be contrary to the public interest."

An applicant for a licence must satisfy the licensing authority that the applicant is a fit and proper person to hold the licence. If the applicant is a trust or corporate entity, it must satisfy the licensing authority that each person who occupies a position of authority in the entity is a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application**[27]. In determining whether a person is fit and proper a licensing authority is to take into account the reputation, honesty and integrity (including the creditworthiness) of the person and the reputation, honesty and integrity of people with whom the person associates[28]**.

The Commissioner of Police may intervene in proceedings before a licensing authority on questions before the authority including the question whether a person is a fit and proper person or whether to grant the application would be contrary to the public interest**[29]**.

There is a general right of objection to the grant of a licence**[30]**.

Part 8 of the Act provides for disciplinary action against licensees. The Commissioner may deal with disciplinary matters by consent**[31]. A complaint may be lodged with the Licensing Court by the Liquor and Gambling Commissioner or by the Commissioner of Police[32]. The Court, if satisfied on the balance of probabilities that there is proper cause for taking disciplinary action, may make one of a variety of dispositions including reprimanding the licensee or imposing a fine. It may disqualify a person from being licensed or approved under the Act[33]. An order imposing a fine may be registered in the Magistrates Court or the District Court and enforced as an order of the court in which it is registered[34]**.

The section at the centre of the present appeal is s 28A entitled "Criminal intelligence". It must be read with the definition of "criminal intelligence" in s 4 of the Act. The text of the section and of the definition are set out in the other judgments.

Key propositions to emerge from the written submissions filed on behalf of the appellants were:

The Licensing Court is a court upon which federal jurisdiction may be conferred by laws made under Ch III of the Constitution. The Solicitor-General for South Australia, on behalf of the Commissioner of Police (SA), made the same submission.

Section 28A mandates the acceptance by the Court of evidence tendered by the executive.

Section 28A mandates unfair procedures, ie consideration of such evidence in the absence of a party.

The substance of the argument founded on these propositions was that s 28A conferred a function upon the Licensing Court and upon the Supreme Court incompatible with their status as courts of a State in which federal jurisdiction could be invested under s 77(iii) of the Constitution.

The Solicitor-General, on behalf of the Commissioner of Police, advanced the following propositions, inter alia:

The duty imposed upon the Licensing Court under s 28A(5) does not arise unless the Court is satisfied that the information has been lawfully classified as criminal intelligence.

The Court is free to accept or reject the information as it sees fit and may allow for the fact that it has not been fully tested. It can take steps to ameliorate unfairness that may result.

The duty imposed upon the Licensing Court by s 28A(5) of the Act is not inconsistent with its character as a "court of a State" within the meaning of Ch III of the Constitution and is not otherwise inconsistent with Ch III.

The intervening parties generally supported the South Australian position. The Attorney-General for Queensland submitted that, given the nature of its functions and the absence of security of tenure for its members the Licensing Court could not be regarded as a "court of a State" for the purposes of receiving federal jurisdiction pursuant to s 77(iii) of the Constitution. The Attorney-General for Victoria submitted that the Licensing Court, in carrying out a review under s 22, was discharging an administrative function. There is, it was submitted, no constitutional principle to prevent State parliaments from modifying rules of procedural fairness in relation to such functions when carried out by State judges.

The Attorney-General for Western Australia submitted that if s 28A were found to be inconsistent with the Licensing Court having the character of a court for constitutional purposes, the consequence would be that the Licensing Court would not be a court of a State capable of being invested with federal jurisdiction pursuant to s 77(iii) of the Constitution. Nor would it be one of the "several Courts of the States" invested with federal jurisdiction by s 39(2) of the Judiciary Act 1903 (Cth).

The point of departure for consideration of these submissions must be the interpretation of s 28A.

It is a necessary first step in this appeal to consider what if any limitations s 28A places upon the Licensing Court and the Supreme Court in the exercise of their respective jurisdictions. Before the constitutional validity of a statute is considered its meaning and operation must be ascertained. The point of departure in that exercise is the ordinary and grammatical sense of the words having regard to their context and legislative purpose. Interpretation is also to be informed by the principle that the parliament, whether of the State or the Commonwealth, did not intend its statute to exceed constitutional limits**[35]. It should be interpreted, so far as its words allow, to keep it within constitutional limits[36]. That is a principle of general application. It is also an approach mandated by the Acts Interpretation Act 1915 (SA)[37]**.

There is also a well established and conservative principle of interpretation that statutes are construed, where constructional choices are open, so that they do not encroach upon fundamental rights and freedoms at common law**[38]. That is to say, there is a presumption against a parliamentary intention to infringe upon such rights and freedoms[39]. That presumption has been described in the United Kingdom as an aspect of a "principle of legality" governing the relationship between parliament, the executive and the courts. It was explained by Lord Hoffmann in R v Secretary of State for the Home Department; Ex parte Simms[40]**:

"[T]he principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual."

Gleeson CJ described the presumption as "a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted". He added, "[t]he hypothesis is an aspect of the rule of law"[41].

It is an aspect of the rule of law that courts sit in public and that they accord procedural fairness. The importance of these two principles requires a conservative approach to the interpretation of statutes affecting them.

The open court principle is of long historical standing and well established in all common law jurisdictions. It was enunciated by the House of Lords in Scott v Scott[42] and affirmed by this Court in Dickason v Dickason[43]. It was discussed in Russell v Russell[44] which was concerned with the question whether a provision of the Family Law Act 1975 (Cth), requiring that State courts exercising jurisdiction under that Act sit in private, was valid. The provision was held invalid on grounds not material to this appeal. It was held not to be an exercise of the constitutional power to invest State courts with federal jurisdiction. Relevantly to this case, however, the open court principle in relation to State courts was affirmed as "an essential aspect of their character"[45]. Established exceptions to the general rule were recognised, as was the power of the Parliament to extend the categories of such exceptions**[46]. The exceptional character of departure from the open court principle was emphasised by the observation of Stephen J[47]**:

"To require that a Supreme Court, possessing all the attributes of an English court of justice, should sit as of course in closed court is, I think, in the words of Lord Shaw, to turn that Court into a different kind of tribunal and involves that very intrusion into its constitution and organization which s 77(iii) does not authorize."

A statute which affects the open court principle by requiring a court to hear certain classes of evidence or argument in private is thus to be construed, where constructional choices are open, so as to minimise its impact upon the principle and to maximise the power of the court to implement the statutory command conservatively.

A question also arises in this case about the use which can be made of the Second Reading Speech for the Bill which led to the enactment of s 28A. If the Act were a Commonwealth statute, that Second Reading Speech could be considered pursuant to s 15AB of the Acts Interpretation Act 1901 (Cth). The South Australian Acts Interpretation Act does not contain any equivalent of s 15AB or the similar provisions of other States and Territories. Section 15AB permits consideration of extrinsic materials to determine the meaning of a provision of an Act when the provision is ambiguous or obscure or its ordinary meaning would lead to a result that is manifestly absurd or unreasonable.

The question whether extrinsic materials may be considered in South Australia and in what circumstances they may be considered as an aid to statutory interpretation is to be answered by the common law. The answer at common law is that such materials can be considered to determine, inter alia, the mischief to which an Act is directed. This Court has referred to Hansard in aid of its interpretation of South Australian statutes**[48]. In 1996 the Full Court of the Supreme Court of South Australia referred to a minister's Second Reading Speech in order to identify the purpose of a statutory provision[49]**.
At common law it is not necessary before entering upon a consideration of such material to surmount a threshold of ambiguity, obscurity or possible absurdity. Statutory interpretation requires the court to have regard to the context in which the words to be interpreted arise and also their statutory purpose. Context includes "the existing state of the law and the mischief which, by legitimate means ... one may discern the statute was intended to remedy"[50].

The relevant extrinsic material is the Attorney-General's Second Reading Speech introducing the amendments which led to the enactment of s 28A. This material may be considered to determine the purpose of the section as an aid to its construction. That does not mean that the words of the Attorney-General can be substituted for its text**[51]**. That caution is apposite in the present case.

The purpose of s 28A

Section 28A was introduced into the Act by the Statutes Amendment (Liquor, Gambling and Security Industries) Act 2005 (SA). In his Second Reading Speech the Attorney-General referred to the infiltration by organised crime of the liquor and hospitality industries and, in particular, a significant level of involvement by outlaw motor cycle gangs. He pointed out that the liquor, gambling and security industries are attractive to and susceptible to infiltration by organised crime. Although this is reflected in regulatory regimes using various tests of fitness and propriety, existing licensing regimes had proved not sufficiently robust to combat infiltration.

The Attorney-General referred to the following factors contributing to the ineffectiveness of the existing licensing regime in this respect:

Organised crime typically legitimises involvement in industries through members without criminal convictions or "cleanskin" associates.

Law enforcement agencies possess intelligence that they are reluctant to disclose because it could prejudice current or future investigations or legal proceedings and could put the welfare of persons such as informants at risk.

Liquor licensing legislation as it then stood did not allow for intelligence to be presented without challenge for consideration by the licensing authority.

The Bill was said to address these problems by, inter alia, facilitating the use of police intelligence by protecting the confidentiality of that intelligence.

Significantly, the Attorney-General said:[52]

"It is this last aspect of the Bill that is perhaps the most significant. The Bill amends the SIAA [Security and Investigation Agents Act 1995 (SA)], LLA [Liquor Licensing Act 1997 (SA)] and GMA [Gaming Machines Act 1992 (SA)] to facilitate the use of police intelligence in licensing decisions. The Bill provides that where police intelligence is used in any proceedings under those Acts, including in determinations of applications and disciplinary proceedings that can lead to cancellation of a licence or approval, that information or intelligence must not be disclosed, including to the applicant/licensee/approved person or his or her representatives. Where the licensing authority makes a determination of an application on the basis of this police information classified as criminal intelligence, it will not be required to provide reasons for that determination other than that to grant the application would be contrary to the public interest. A court hearing an appeal against a licence refusal or a disciplinary action against a licensee or approved person must hear the information in a court closed to all, including the applicant/licensee/approved person and that person's representatives."

The provisions concerning confidentiality of criminal intelligence were said to be modelled on those enacted in the Firearms Act 1977 (SA) by the Firearms (COAG Agreement) Amendment Act 2003 (SA)[53].

The Second Reading Speech incorporated an explanatory section covering each of the new provisions being introduced by the Bill. It referred in particular to s 28A but did little more than repeat the substance of the relevant parts of that section.

Section 28A(1) imposes a general prohibition on disclosure of information "provided by the Commissioner of Police" to the Liquor and Gambling Commissioner. The generality of that prohibition is qualified by exceptions permitting disclosure to the Minister or a court or a person to whom the Commissioner of Police authorises its disclosure. It is a necessary condition of the prohibition that the information "is classified by the Commissioner of Police as criminal intelligence".

The function conferred on the Commissioner of Police by use of the word "classify" is subject to the minimum constraint applicable to the exercise of any statutory power namely that it must be exercised in good faith and within the scope and for the purposes of the statute**[54]**.

If the word "classify" were to be read merely as "designate" it is arguable that there would be little more than that minimum constraint upon the Police Commissioner's function. However, its ordinary meaning is**[55]**:

"To arrange or distribute in classes according to a method or system".

The process of classification is therefore to be informed by some selection principle. In this case the selection principle is disclosed by the definition of "criminal intelligence" in s 4 of the Act.

The definition requires that for material to be classified as criminal intelligence it must satisfy a number of conditions. The subject matter of the classification must be "information". It must have the character of information "relating to" actual or suspected criminal activity**[56]**. Criminal activity means, at least, the commission of offences against the criminal law and could include incidental conduct. The activity must be "actual" or "suspected". The latter term does not require formation of a suspicion on the part of the Commissioner about activity. It will suffice that the person providing the information has the relevant belief or suspicion. Whether these conditions are satisfied may be determined upon inspection of the information by reference to its content and sources.

The information must also be such that its disclosure could reasonably be expected to prejudice criminal investigations or enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement. That criterion is objective. It is not satisfied merely by the formation of the Commissioner's opinion to that effect. It is a criterion requiring a non-trivial risk of prejudice or discovery. Given that the Police Commissioner has the non-delegable function of classification, it may be taken that he or she must make the relevant risk assessment. But the objective language of the criterion indicates that the assessment must be reasonably open having regard to the content and sources of the information.

The information on the face of it must satisfy the criteria set out in the definition of "criminal intelligence". There must be a basis for the view that it could reasonably be expected that disclosure would have the effect referred to in the definition. A court presented with information classified as criminal intelligence could decide that the information did not, on its face, satisfy one or other of the criteria in the definition. This does leave a margin of appreciation for the Police Commissioner's assessment of the effect of disclosure subject to there being an objective foundation for that assessment.

The prohibition in s 28A(1) is expressed in the passive sense. It is concerned with "information provided by the Commissioner of Police to the [Liquor and Gambling] Commissioner". It is thus directed to the Liquor and Gambling Commissioner. It does not prohibit disclosure to a court. The question is whether the prohibition applies further to prevent the relevant court from disclosing the information to any other person.

As a general rule, absent clear words, a statute should not be construed so as to confine the way in which a court exercises its jurisdiction, including the way in which it accords procedural fairness. No such words appear from s 28A(1). Indeed it has nothing to say on that matter. The provision affecting the way in which a court may deal with criminal intelligence is s 28A(5).

Section 28A(5) lies at the heart of the appellants' case. It is in terms a direction to the Commissioner, the Licensing Court and to the Supreme Court about how they are to deal, in proceedings under the Act, with information classified as criminal intelligence.

The primary direction is to "take steps to maintain the confidentiality of [the] information". That direction is not absolute because it is conditioned upon "the application of the Commissioner of Police". The existence of that condition reinforces the conclusion that s 28A(1) does not itself prevent a court from making disclosure to the parties of classified criminal intelligence information.

The purpose of the confidentiality, mandated by s 28A(5), can be discerned from the definition of "criminal intelligence". It is to avoid prejudice to criminal investigations and/or the discovery of the existence or identity of a confidential source of information relevant to law enforcement. That purpose was also reflected in the Attorney-General's Second Reading Speech as serving the larger purpose of more effectively preventing infiltration of the liquor industry by organised crime. The level of confidentiality to be maintained is not specified in s 28A. It is not absolute for the information will be known to the representatives of the Commissioner of Police before the Liquor and Gambling Commissioner. It will be known to the Liquor and Gambling Commissioner and to the judge or judges of the Licensing Court or of the Supreme Court before whom the relevant proceedings are brought.

Sub-section (5) requires the Court to take steps to maintain confidentiality "including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives". This raises the question whether the Court is required to take the steps expressly specified or whether they are steps which it is authorised, but not obliged, to take in order to meet the obligation of confidentiality.

The Attorney-General's assertion in the Second Reading Speech that the Court "must hear the information in a court closed to all, including the applicant ... and that person's representatives" was a statement of his intention. It is not a substitute for the actual words of s 28A(5). Nor does it require those words to be interpreted so as to mandate exclusion of legal representatives of an applicant from a hearing in which evidence is received and argument entertained about criminal intelligence.

The submission of the Solicitor-General for South Australia did not support a construction of s 28A(5) which would mandate exclusion of legal representatives. The Solicitor-General was no doubt conscious of the risk of invalidity associated with too prescriptive an interpretation. And it was no doubt for that reason that counsel for the appellants argued for the more draconian view of the provision which accorded with the Attorney-General's own proposed construction.

The risk associated with excessively directive statutes was highlighted by the observations in the joint judgment in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police[57]:

"As a general proposition, it may be accepted that legislation which purported to direct the courts as to the manner and outcome of the exercise of their jurisdiction would be apt impermissibly to impair the character of the courts as independent and impartial tribunals." (footnote omitted)

The better view, which is permitted by the language of the statute, is that the Court is authorised but not required to exclude legal representatives from that part of the proceedings in which it receives evidence or hears argument about the classified information. That constructional choice applies the conservative interpretive approach consistent with the principle of legality referred to earlier. There is here no inevitable undermining of the legislative purpose enunciated in the Attorney-General's Second Reading Speech. For it may be that the Court would be less likely in some cases to feel confident about acting on information classified as criminal intelligence where it has not had the assistance of argument on both sides of the question about its classification, whether it should be received at all and, if so, what weight should be attached to it.

As a practical matter it may be highly unlikely that relevant confidentiality could be assured if information were to be disclosed to an applicant adversely affected by it. The same level of risk may not apply to disclosure of information to a legal representative who is prepared to give a formal undertaking to the Court or submit to a prohibition by way of court order against disclosure of the information to the affected party or anyone else. Breach of such an undertaking to or order by the Supreme Court would be punishable as a contempt of that Court. Breach of an undertaking to or an order made by the Licensing Court would be punishable by the Supreme Court as a contempt committed in relation to an inferior court subject to its supervisory jurisdiction**[58]**. Breach of such an undertaking or order could also expose the legal representative to disciplinary action by the relevant professional regulatory body.

The Court could nevertheless decide that disclosure to legal representatives, even when subject to undertakings or orders as to confidentiality, would carry too high a risk. Still, s 28A(5) contemplates that the Court may hear "argument" about the information in private in the absence of the parties and their legal representatives. It impliedly accepts that the Court may itself inquire into the classification of the information. It may also wish to decide what weight it should give to it. Evidence "about the information" might relate to the reliability of the sources from which the information has been obtained or the risk of prejudice were it to be disclosed.
Properly construed s 28A(5) gives the Licensing Court and the Supreme Court a degree of flexibility in the steps to be taken to maintain the confidentiality of criminal intelligence. It tends to support the conclusion that the Court can decide, no doubt after hearing argument from at least the Police Commissioner, if not the legal representatives of the applicant, whether the information has been correctly classified as criminal intelligence and, if so, what weight should be given to it. There is nothing in the Act to prevent the Court from taking into account the fact that the information has not been able to be tested by or on behalf of the applicant, in assessing its weight.

Contrary to the submission on behalf of the appellants, which was directed to the most draconian construction, there is nothing in s 28A requiring the Licensing Court to accept or act upon information submitted to it by the Commissioner of Police even if the Court is satisfied that the information is properly classified as "criminal intelligence". In deciding whether to accept or reject or simply not to rely upon such information, the Court may have regard to:

(i) its relevance to the question it has to decide;

(ii) its reliability - a judgment which may be made by considering the nature of the sources from which the information has been obtained and the extent to which it is supported from more than one source;

(iii) its weight - if, for example, the information offers little more than suspicion or innuendo relating to an applicant or associated persons, the Court may decide that it should not act upon it. In this context the Court may have regard to the fact that the information has not been able to be tested by cross-examination.

There is nothing to prevent an applicant faced with unseen "criminal intelligence" from tendering comprehensive evidence about his or her own good character and associations. To the extent that the Commissioner of Police seeks to maintain the confidentiality of criminal intelligence provided to the Court, that confidentiality may limit the extent to which such character evidence may be tested by cross-examination.

The Court's capacity to accept or reject or not rely upon criminal intelligence is not affected by the fact that it is not bound by the rules of evidence and may inform itself on any matter as it thinks fit. That provision, which is in familiar terms, does not excuse the Court from the duty to act lawfully, rationally and fairly**[59]**.

There was no dispute between the principal parties to this appeal that the Licensing Court is a court of the State of South Australia, capable of being invested with federal jurisdiction pursuant to s 77(iii) of the Constitution and actually invested with such jurisdiction pursuant to s 39(2) of the Judiciary Act.

The Attorney-General (Qld), intervening, contended that the function of the Licensing Court in the granting or withholding of licences, in reviewing the Liquor and Gambling Commissioner's decisions and even in the exercise of its disciplinary jurisdiction, are administrative in nature. He pointed to the broad policy considerations which it may apply, reflected, inter alia, in the "public interest" criteria under the Act. On that basis the Licensing Court was said not to be a court of a State for the purposes of s 77(iii) of the Constitution. It would follow that no question of the effect of s 28A on its fitness as a repository of federal jurisdiction could arise. Section 28A would therefore be valid.

There is no doubt that various classes of decision which the Licensing Court is authorised to make may be informed by public policy and public interest considerations and to that extent have a polycentric character about them. That is particularly so in relation to the grant or withholding of licences. But the application of public interest criteria has a long history as part of the judicial function**[60]. And the intrusion of policy considerations in its decision making does not necessarily deprive a tribunal of the character of a court[61]**. The Licensing Court is not bound by the rules of evidence and may inform itself as it sees fit. This can be an indicator of an administrative rather than a judicial body, but it is not determinative. It does not negate the requirement that the Court act lawfully, rationally and fairly. Many important rules of evidence will arise as a consequence of the application of those criteria to the decision-making process.

The South Australian Parliament has established the Court as a court of record. It has provided for it to be headed by a serving judge of the District Court and otherwise comprised of serving and former judges. It has conferred upon it powers of the kind that are exercised by a court. While non-contested applications are heard by the Liquor and Gambling Commissioner, save where specifically required to be heard by the Court, contested matters are generally referred for hearing and determination by the Court. It has also conferred upon it a disciplinary function under Pt 8 which involves a judicial process even though it is the kind of chameleon function that could be carried out by an administrative body.

Characterisation of a court as a court of a State for the purposes of s 77(iii) does not require that it possess the attributes necessary for a federal court created under Ch III of the Constitution. As McHugh J observed in Fardon v Attorney-General (Qld)[62]:

"It is a serious constitutional mistake to think that either Kable or the Constitution assimilates State courts or their judges and officers with federal courts and their judges and officers. The Constitution provides for an integrated court system. But that does not mean that what federal courts cannot do, State courts cannot do. Australia is governed by a federal, not a unitary, system of government."

In my opinion and particularly having regard to its designation as a court of record by the State legislature, the Licensing Court of South Australia should be regarded as a "court of a State" for the purposes of receiving federal jurisdiction under s 77(iii) of the Constitution.

I also respectfully agree with and adopt the reasons given in the joint judgment for coming to the same conclusion.

Under the Constitution the courts of the States "are part of an integrated system of State and federal courts and organs for the exercise of federal judicial power as well as State judicial power"[63]. Since the abolition in 1986 of appeals from State courts to the Judicial Committee of the Privy Council that integrated national court system is subject to "final superintendence" by the High Court thus ensuring the unity of the common law throughout Australia**[64]**.

The Parliament of the Commonwealth must, of course, take the courts of the States as it finds them. There is, consistently with the constitutional scheme for the exercise of the judicial power of the Commonwealth, a degree of institutional and procedural flexibility on the part of the parliaments of the States, which may travel beyond the limits permissible in federal courts created by the Parliament. That flexibility does not extend to conferring powers on State courts which are "repugnant to or incompatible with the exercise of the judicial power of the Commonwealth"[65]. Incompatibility with institutional integrity may exist where a power or function conferred upon a court is "apt or likely ... to undermine public confidence in the courts exercising that power or function"[66].

In Forge v Australian Securities and Investments Commission[67] in the joint judgment of Gummow, Hayne and Crennan JJ, their Honours referred back to Kable and identified the "relevant principle" emerging from it and authorities which came after it, in the following terms**[68]**:

"But as is recognised in Kable, Fardon v Attorney-General (Qld)[69] and North Australian Aboriginal Legal Aid Service Inc v Bradley[70], the relevant principle is one which hinges upon maintenance of the defining characteristics of a 'court', or in cases concerning a Supreme Court, the defining characteristics of a State Supreme Court. It is to those characteristics that the reference to 'institutional integrity' alludes. That is, if the institutional integrity of a court is distorted, it is because the body no longer exhibits in some relevant respect those defining characteristics which mark a court apart from other decision-making bodies."

It is important to bear in mind, as Gummow J pointed out in Fardon[71] that the principle derived from Kable is a constitutional doctrine not framed in terms apt to dictate future outcomes:

"Reflection upon the range of human affairs, the scope of executive and legislative activity, and the necessity for close analysis of complex and varied statutory schemes will indicate that this may be a strength rather than a weakness of constitutional doctrine."

The question whether functions, powers or duties cast upon a court are incompatible with its institutional integrity as a court will be answered by an evaluative process which may require consideration of a number of factors. The evaluation process required is not unlike that involved in deciding whether a body can be said to be exercising judicial power.

There are some similarities between this case and Gypsy Jokers[72]. Under the Corruption and Crime Commission Act 2003 (WA) the Supreme Court of Western Australia was empowered to review decisions by the Commissioner of Police to issue fortification removal notices in relation to fortified premises thought to be associated with organised crime. It was a condition of the power to issue such a notice that the Commissioner reasonably believed that the subject premises were heavily fortified and habitually used by people reasonably suspected to be involved in organised crime**[73]. The Commissioner was also authorised to "identify" information provided to the Court upon a review as confidential "if its disclosure might prejudice the operations of the Commissioner of Police". If the information were so identified it was to be "for the court's use only and ... not to be disclosed to any other person, whether or not a party to the proceedings, or publicly disclosed in any way"[74]**.

The joint judgment in Gypsy Jokers cited the requirement that a court capable of exercising the judicial power of the Commonwealth be, and appear to be, an independent and impartial tribunal**[75]. The joint judgment acknowledged "the impossibility of making an exhaustive statement of the minimum characteristics of such an independent and impartial tribunal"[76]. Their Honours observed however that the conditions necessary for courts to administer justice according to law could be inconsistent with some forms of external control of the courts appropriate to the exercise of authority by public officials and administrators[77]**.

Importantly in Gypsy Jokers the power conferred on the Commissioner to "identify" information as "confidential" was not conditioned upon his opinion. It was a matter for the Supreme Court to decide whether the disclosure of the information might have the prejudicial effect underpinning the Police Commissioner's identification of it as confidential.

In the present case, the Licensing Court and the Supreme Court can look behind the Police Commissioner's classification of information as criminal intelligence to determine whether it meets the objective criteria upon which that classification must be based.

The reviewability of the Police Commissioner's classification means that upon the Commissioner making an application to the Court under s 28A(5) the representatives for the affected party may make submissions to the Court about the validity of that classification. It may be that those representatives will be precluded by the Court from having access to the information for the purpose of making their submissions. Even then, they can assist the Court by drawing its attention to the relevant criteria. They could even cross-examine the Commissioner about the way in which he or she arrived at the classification albeit it must be accepted that the scope of the cross-examination would be confined by their lack of access to the information.

The legal representatives of an applicant affected by criminal intelligence may apply to the Court to be given the right to inspect the information under non-disclosure undertakings or orders. Such procedures are not unusual particularly in cases involving claims for the confidentiality of documents produced in commercial proceedings. In some commercial cases a party may issue subpoenas requiring production of documents by non-parties who are competitors with the party issuing the subpoena. Production of such documents may be ordered on the basis that they can only be inspected by the legal representatives of the party issuing the subpoena and then only subject to undertakings not to disclose the contents of the documents to their clients.

Of course the Court may decide that disclosure to legal representatives would carry too high a risk of prejudice to criminal investigations or confidential sources of information. But that decision is a matter in the discretion of the Court. The maintenance of "confidentiality" mandated in s 28A(5) does not require confidentiality to be maintained in a particular way. Under that rubric the Court may, in an appropriate case, be able to provide a summary of the conclusions or inferences offered or arising from the criminal intelligence without disclosing its detailed content or sources.

The terms of s 28A(5) do not subject the Licensing Court or the Supreme Court to the direction of the executive or an administrative authority. The sub-section does not require them to receive or act upon criminal intelligence classified as such by the Commissioner of Police. It does not deprive the Court of discretion as to how confidentiality is to be maintained. Nor does it mandate a general exclusion in all circumstances of legal representatives from access to the information.

Section 28A(5) does not undermine the institutional integrity of either court. It does not render them unfit repositories for the exercise of federal jurisdiction. I should add that I agree with the observations in the joint judgment rejecting the submission by Queensland and Western Australia that if s 28A(5) had the effect on the Licensing Court contended for by the appellants it would have caused that Court to cease to be a "court of a State" which might exercise federal jurisdiction.

For the preceding reasons the appeal should be dismissed with costs.

GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. The second appellant Mr Genargi Krasnov is the sole Director of the first appellant ("K-Generation"). K-Generation is trustee of the K-Generation Unit Trust in which Mr Krasnov has an interest. K-Generation applied for an entertainment venue licence under s 35 of the Liquor Licensing Act 1997 (SA) ("the Act") in respect of premises at 362-366 King William Street, Adelaide. These were to be known as "Sky Lounge KTV". The Act was amended by the Statutes Amendment (Liquor, Gambling and Security Industries) Act 2005 (SA) ("the 2005 Act"). This appeal is concerned with the provisions made in the 2005 Act with respect to "criminal intelligence", particularly by the insertion into the Act of s 28A. That provision will be set out later in these reasons.

Section 56 of the Act requires an applicant for an entertainment venue licence to be "a fit and proper person" to hold it. If the applicant, as in the present case, is a trust or corporate entity, the section requires that each person who occupies a position of authority in the entity be "a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application". Section 51A(2) requires the Liquor and Gambling Commissioner ("the Liquor Commissioner") (an office provided for in s 8 of the Act) to furnish a copy of the application to the Commissioner of Police. The Police Commissioner then must make available to the Liquor Commissioner "information about criminal convictions" and may make available "other information to which the Commissioner of Police has access" being, in either case, information which is "relevant to whether the application should be granted" (s 51A(3)).

The application was advertised, as required by s 52 of the Act. An objection under s 77 of the Act by Wright Street Chambers was settled by conciliation. Section 77 gives a right of objection to applications, on one or more of the grounds laid out in s 77(5). Section 76 gave to Adelaide City Council a right to intervene and it did so but that dispute also was resolved.

The litigation which has reached this Court stems from the exercise by the Commissioner of Police of the right of intervention conferred by s 75A of the Act. This states:

"The Commissioner of Police may intervene in proceedings before a licensing authority for the purpose of introducing evidence, or making submissions, on any question before the authority and, in particular, may, if the proceedings are in connection with an application under this Part, intervene on the question of -

(a) whether a person is a fit and proper person; or

(b) whether, if the application were to be granted, public disorder or disturbance would be likely to result; or

It should be noted immediately that an intervener or an objector becomes a "party" to the relevant proceedings by reason of the definition of "party" in s 4 of the Act. Thus, for example, a Commonwealth statutory authority occupying premises in the vicinity of the proposed entertainment venue might, as an objector, become a party to proceedings under the Act.

The purpose of the intervention by the Commissioner of Police was to introduce evidence and make representations on the question of whether Mr Krasnov and another interested party in K-Generation, Adeline Tay, were fit and proper persons to occupy positions of authority in that proposed licence. On 17 January 2007, the Liquor Commissioner refused the application on the ground that to grant it would be contrary to the public interest. An application must be refused if the licensing authority is satisfied that to grant the application would be contrary to the public interest (s 53(1a)). The Liquor Commissioner refused the application after the Police Commissioner had provided what was classified as "criminal intelligence" within the meaning of s 28A of the Act.

An application for a review of the decision of the Liquor Commissioner was made to the Licensing Court of South Australia ("the Licensing Court"), constituted by Judge Rice of the District Court of South Australia. His Honour affirmed the decision of the Liquor Commissioner on 12 February 2007. K-Generation and Mr Krasnov then sought from the Supreme Court of South Australia a declaration that s 28A of the Act was invalid, together with orders for judicial review in the nature of certiorari quashing the decision of the Licensing Court made on 12 February 2007 and in the nature of mandamus compelling that Court to consider according to law the review sought by K-Generation of the decision of the Liquor Commissioner made on 17 January 2007. The Supreme Court proceedings were referred to the Full Court for hearing. The Full Court (Duggan and Vanstone JJ, Gray J dissenting)[78] dismissed the proceedings.

The appeal is brought to this Court by special leave. The sole ground on which special leave was given is that the Full Court erred in law in finding s 28A of the Act to be valid notwithstanding that it required the Licensing Court to hear and determine the review without disclosing to K-Generation information classified as "criminal intelligence" which had been relied upon by the Liquor Commissioner in refusing the application for an entertainment venue licence.

The respondents to the appeal are the Licensing Court, which has entered a submitting appearance, and the Police Commissioner, for whom the South Australian Solicitor-General was leading counsel. The Attorneys-General for the Commonwealth, New South Wales, Victoria, Queensland and Western Australia intervened in the appeal. As will appear, the Attorneys-General differed between themselves in their submissions and some submissions were not adopted by either the appellants or the Police Commissioner.

Section 39(2) of the Judiciary Act 1903 (Cth) ("the Judiciary Act") is enacted in the exercise of the power of the Parliament to make laws "investing any court of a State with federal jurisdiction": Constitution s 77(iii). The sub-section invests federal jurisdiction in "the several Courts of the States ... within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise ...". The appellants' submissions began with the proposition that the Licensing Court is such a court. The Police Commissioner accepts that this is the case.

However, the appellants rely upon the principle identified with the decision in Kable v Director of Public Prosecutions (NSW)[79]. They contend that the effect of s 28A of the Act is to deprive the Licensing Court of the reality or appearance of independence or impartiality that is essential to its position as the object of an exercise of power by the Parliament manifested in s 39(2) of the Judiciary Act. It was said in the joint judgment of McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ in North Australian Aboriginal Legal Aid Service Inc v Bradley[80] that to be capable of exercising judicial power of the Commonwealth a court must be, and appear to be, an independent and impartial tribunal. The consequence, on the case presented by the appellants, would be that s 28A was invalid and the review by the Licensing Court should be reheard without regard to s 28A.

On that formulation of the issues in this Court, the subject of debate would be the discernment of the relevant minimum characteristics of an independent and impartial Licensing Court. Their Honours in Bradley[81] said that "[n]o exhaustive statement of what constitutes that minimum in all cases is possible".

Queensland took a different position from that of the appellants and the Police Commissioner. It maintained that the Licensing Court did not answer the description of a court of the State of South Australia within the sense of s 39(2) of the Judiciary Act and s 77(iii) of the Constitution. The consequence would be that there is no occasion to apply the proposition in Bradley set out above, and no footing on which s 28A might be considered invalid.

That submission by Queensland should be rejected. For the reasons which follow, the Licensing Court is a court of the State of South Australia within the sense of s 77(iii) of the Constitution and s 39(2) of the Judiciary Act.

Part 2 Div 2 (ss 12-16) of the Act makes provision for the Licensing Court. Section 12 states that the Court "continues in existence". The Act repealed the Liquor Licensing Act 1985 (SA) ("the 1985 Act"). Section 10 of the 1985 Act had stated "[t]here shall be a court entitled the 'Licensing Court of South Australia'". Section 13 of the Act provides that the Licensing Court is a court of record. It is constituted by the Licensing Court judge, being a District Court judge designated by the Governor or by some other District Court judge or former District Court judge on whom the Governor confers authority to exercise jurisdiction of the Court (ss 14-15).

The Governor may vary or revoke a proclamation designating the Licensing Court judge or conferring authority on other District Court judges or former District Court judges (s 15(1)(c)). Further, if it so provides, a proclamation designating the Licensing Court judge or conferring such authority may lapse at the end of a specified period (s 15(2)). However, as the Commonwealth correctly submitted, there is no scope for purely arbitrary removal by the Executive. This is because variation or revocation under s 15(1)(c) would itself be an administrative decision susceptible to challenge in the Supreme Court for bad faith or improper purpose**[82]**.

Section 16 of the Act states "[t]he Court has the jurisdiction conferred on it by this Act or any other Act". Significant jurisdiction is conferred on the Licensing Court by Pt 6 (ss 69-70A) of the Gaming Machines Act 1992 (SA) ("the Gaming Machines Act"). In particular, Pt 2 Div 4 (s 12) deals with the classification of "criminal intelligence" and s 70A is drawn in terms resembling those of s 28A(5) of the Act**[83]**.

The Licensing Court is required by s 17 to determine all matters referred by the Liquor Commissioner for hearing and determination under the obligation imposed by that section where certain disputes are not resolved by conciliation. The Licensing Court is also obliged to determine matters which under some provision of the Act other than s 17 are to be determined by the Licensing Court (s 17(1)(c)).

The Liquor Commissioner also may refer for hearing and determination by the Licensing Court proceedings involving questions of substantial public importance or a question of law or any other matter which should, in the public interest or the interests of a party to the proceedings be determined by the Licensing Court (s 21).

A party (within the sense of the definition to which reference has been made above) to proceedings before the Liquor Commissioner who is dissatisfied with the decision may apply to the Licensing Court for a review in the nature of a rehearing (s 22(1), (4)). However, a decision made in the exercise of "an absolute discretion" conferred upon the Liquor Commissioner "is not reviewable by the [Licensing Court]" (s 22(2)).

A party to proceedings before the Licensing Court may appear personally or by other representatives including counsel (s 25(1)). The Court may require the attendance of the person before it and the production of records and require the taking of an oath or affirmation verifying evidence given, or to be given, and may require any person appearing before it to answer questions (s 24(1)). Failure to comply with these requirements is an offence (s 24(2)), but jurisdiction to try such offences is not given to the Licensing Court.

The Licensing Court may refer a question of law for determination by the Full Court of the Supreme Court (s 28). With the permission of the Supreme Court, a party to proceedings before the Licensing Court may appeal to the Full Court of the Supreme Court, but no appeal lies against an order or decision of the Licensing Court in various instances, including orders or decisions on a review of a decision of the Liquor Commissioner (s 27).

The Supreme Court also has jurisdiction with respect to judicial review of the proceedings of the Licensing Court. This was invoked in the present litigation and its scope was explained by Gray J in his reasons**[84]**.

"In proceedings before the [Licensing Court] (under this Act or any other Act) the Court -

(b) is not bound by the rules of evidence but may inform itself on any matter as it thinks fit."

It was said in Sue v Hill[85] of provisions of this type that they are not inimical to the exercise of judicial power:

"They do not exonerate the Court from the application of substantive rules of law and are consistent with, and indeed require the application of, the rules of procedural fairness**[86]**."

Consequently, s 23 does not assist the case put by Queensland that the Licensing Court is not a "court of a State" within the meaning of s 77(iii) of the Constitution and s 39(2) of the Judiciary Act.

However, something more should be said respecting the provisions as to tenure of the members of the Licensing Court. In Commonwealth v Anti-Discrimination Tribunal (Tasmania)[87], Kenny J remarked that "the long-standing acceptance of the capacity of courts of summary jurisdiction to receive federal jurisdiction emphasises the role of history, and institutional and governmental arrangements, in the assessment of constitutional institutional independence". Her Honour went on to refer to the remarks by Gummow, Hayne and Crennan JJ in Forge v Australian Securities and Investments Commission[88] that both before and long after federation courts of summary jurisdiction, constituted by Justices of the Peace or by stipendiary magistrates, forming part of the colonial or State public service and thus not enjoying Act of Settlement tenure, had been considered fit objects for the investing of federal jurisdiction.

The linking of the membership of the Licensing Court to tenure as a District Court judge is significant in this regard. It serves to answer criticisms made by Queensland. The District Court Act 1991 (SA) ("the District Court Act") provides that judges of that Court cannot be removed from office except on an address from both Houses of Parliament praying for removal (s 15(1)), and that their salary cannot be reduced by subsequent determination of the Remuneration Tribunal (s 13(2)).

The Licensing Court of the present case was constituted by a District Court judge. There was no material before this Court indicating any current conferral of authority on former District Court judges pursuant to s 15(1) of the Act. It would be inappropriate in that setting further to consider the effect the making of such appointments might have on the constitutional character of the Licensing Court and in particular whether any consequent invalidity of the Act might entail severance of provisions respecting former District Court judges.

Queensland also emphasised the apparent absence in the Licensing Court of a contempt power. Section 13 constitutes the Licensing Court as "a court of record"[89]. Subject to any particular provisions which might be found in the Act, that expression, if it stood alone, would carry with it a power to punish by fine or imprisonment any contempt committed in the face of the Licensing Court**[90]**, but would carry no broader contempt power. Further, as remarked above, whilst the powers of the Licensing Court with respect to witnesses and evidence are supported by the offence provision in s 24(2), jurisdiction to try those offences is not conferred on the Licensing Court.

The situation in the Licensing Court may be contrasted with that of the District Court and the Magistrates Court. By force of s 48 of the District Court Act, the District Court has the same power to deal with contempt as does the Supreme Court with respect to contempts of the Supreme Court. The Magistrates Court of South Australia is created as a court of record by s 5 of the Magistrates Court Act 1991 (SA) and ss 45 and 46 make express provision for the punishment by it of contempts in face of the Court. The Act makes no such provision for the Licensing Court. The upshot is that there may be substance in the contention by Queensland that contempts of the Licensing Court would fall within the general supervisory function of the Supreme Court with respect to the administration of justice by the inferior courts of the State**[91]**.

However, if that be the situation of the Licensing Court with respect to contempt, this could not deny to it the character of a court of a State within the meaning of s 77(iii) of the Constitution. Reference has been made to the long history of inferior courts in Australia, extending back to the period before federation. They may well have lacked a power such as that conferred by s 48 of the District Court Act but that must have been within contemplation when s 77(iii) was formulated.

The nature of the jurisdiction of the Licensing Court

Queensland (with qualified support from Victoria) directed attention to the nature of the jurisdiction conferred upon the Licensing Court. This is a matter conceptually distinct from the structure and organisation of the Licensing Court. The submission from Queensland appeared to be that, save for de minimis exceptions, the Licensing Court exercised purely administrative functions under the legislation as it now stands.

In particular, Queensland contended that the authority of the Licensing Court with respect to the review by way of rehearing of decisions of the Liquor Commissioner on licensing applications was of an administrative nature. The Licensing Court was said not to be adjudicating by binding decision disputes as to rights or obligations arising from the operation of the law upon past events or conduct**[92]**; rather, the processes here were concerned with the creation of rights or obligations by grant of a licence.

It is unnecessary to consider further this line of argument. Both the Act and the Gaming Machines Act provide in various instances for the exercise by the Licensing Court of authority which appears plainly judicial in nature. For example, as the Commonwealth emphasised in its submissions, s 121 of the Act confers jurisdiction in disciplinary action matters; an order may be made imposing a fine**[93]**. Further, s 133 provides for the Licensing Court on application by the Liquor Commissioner to assess the amount of financial advantage gained by the contravention of, or non-compliance with, the Act or the condition of a licence; the amount so assessed then becomes a debt due to the Crown in right of South Australia.

It is now convenient to return to the principal ground of dispute between the appellants and the second respondent, namely the alleged invalidity of s 28A of the Act. Section 28A comprises Div 6 of Pt 2. It was inserted by the 2005 Act and is headed "Criminal intelligence". That term is defined in s 4 in a form taken from an amendment made to the Firearms Act 1977 (SA) by the Firearms (COAG Agreement) Amendment Act 2003 (SA). The definition reads:

"criminal intelligence means information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement". (emphasis added)

The Commissioner of Police is not to delegate, "except to a Deputy Commissioner or Assistant Commissioner of Police", the function of classifying information as criminal intelligence (s 28A(6)). These provisions, as a matter of necessary implication, confer the function of making that classification upon these officers**[94]**.

The phrase "could reasonably be expected" is significant. Where the term "criminal intelligence" supplies a factum for the operation of a provision of the Act, then upon judicial review it would be for the Licensing Court to be satisfied that facts existed sufficient to found that expectation**[95]**. The South Australian Solicitor-General readily accepted this construction of the Act. The Commonwealth Solicitor-General put the point somewhat differently, submitting that to be a valid classification, the classification must be "objectively correct", and accepting that this imposed a higher standard.

Section 28A(1) operates upon information made available to the Liquor Commissioner by the Commissioner of Police under s 51A(3) (to which reference has been made), if that information has been classified by the Commissioner of Police as "criminal intelligence". Section 28A(1) states:

"No information provided by the Commissioner of Police to the [Liquor] Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence."

Sub-sections (2) and (3) of s 28A are directed to a "licensing authority" which is defined so as to include both the Liquor Commissioner and the Licensing Court in relation to a matter to be decided by it under the Act. If the Commissioner of Police lodges an objection to an application because of "criminal intelligence", the Commissioner of Police is not obliged to notify the applicant, but the licensing authority must notify the applicant that the Commissioner of Police has objected on the public interest ground (s 28A(3)). If, as in the present case, the licensing authority refuses a licence application because of information classified as "criminal intelligence", the authority is not required to provide any grounds or reasons other than that to grant it would be contrary to the public interest (s 28A(2)).

The relief sought by the appellants includes a declaration of the invalidity of s 28A, but the principal attack by the appellants in oral submissions was directed to the validity of s 28A(5) and it was to this that the opposing arguments responded.

"In any proceedings under this Act, the [Liquor] Commissioner, the Court or the Supreme Court -

(a) must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of information classified by the Commissioner of Police as criminal intelligence, including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives; and

(b) may take evidence consisting of or relating to information classified by the Commissioner of Police as criminal intelligence by way of affidavit of a police officer of or above the rank of superintendent."

At the hearing before the Liquor Commissioner, Mr Krasnov gave evidence and was cross-examined, but not with respect to the "criminal intelligence" material. Five statements or references were tendered in his support. There was no evidence led by the Police Commissioner.

At a glance

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Judgment (603 paragraphs)

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Legislation Cited (50)

Cases Cited (80)

K-Generation Pty Limited v Liquor Licensing Court [2009] HCA 4 (2 February 2009)