McREDMOND v TASSELL

• 17 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

13634/01 John McREDMOND AND ORS v Shaun Garnet TASSELL JUDGMENT 1 HULME J: By Summons filed on 23 November 2001 the Plaintiffs seek the following orders:- 1. A declaration that the Licensing Court of New South Wales erred in law in granting the application by the Defendant for the conditional removal of a Hotelier's Licence from Stephen Street, Urana to premises at 320 Hillsborough Road, Warners Bay. 2. An order that the application for conditional removal be refused. 3. Alternatively, an order that the matter be remitted to the Licensing Court of New South Wales to be heard and determined in accordance with the law. 2 At the hearing before me the Plaintiff's complaints were advanced under 6 headings. It is convenient to deal with them generally seriatim.

A. Amended Plan 3 The first complaint was that at the hearing before the Licensing Court the Defendant was allowed to proceed on the basis of an amended plan of the proposed licensed premises. 4 The application to the Licensing Court was lodged on 18 April 2002. At that time the premises to which removal was sought were of the nature of a large rustic barn and it was proposed that before removal was effected, there be extensive modifications and extensions to that building, the construction of a freestanding bottle shop and storage "shed" and a freestanding 50 suite motel and the provision of substantial car parking. Plans showing what was proposed accompanied the application and those plans had been approved by the Lake Macquarie Shire Council on 30 March 2000. 5 Subsequently, the Defendant sought to amend the plans and on 7 December 2000 the Shire Council approved the amended plans. However, the Council's notation of approval is dated 30 March 2000, an approach taken apparently with the intent of ensuring that the life and period of the original consent was not extended by virtue of the consent to the modified plan. The approach also reflects section 96(4) of the Environmental Planning and Assessment Act 1979 which provides:- "Modification of a development consent in accordance with this Section is not to be construed as the granting of development consent under this Part but a reference in this or any other Act to a development consent is a reference to the development consent so modified." 6 Although it is not, I think, necessary to record all of the changes in detail, they are described in an Affidavit of George Smith which was tendered in the proceedings before me as including an increase in floor area of some 225 square metres in one place, the covering of another 100 square metres by a "pergola with polycarbonate sheeting", the addition of some covered walkways between the motel and the original building, a decrease in the size of one internal room and a corresponding increase in another and the paving of what was originally depicted as a landscaped and treed area. 7 In support of their application the Plaintiffs relied on the terms of s40 of the Liquor Act which, so far as is presently material, provides:- "(1) An application… may be made as a conditional application if the premises to which the licence will relate, or to which the licence is to be removed, are premises proposed to be erected, or premises proposed to be added to or altered, in accordance with an approved plan lodged with the application or are premises already erected in respect of which there is lodged with the application any consent required under another Act for the proposed use, or proposed change of use, of the premises. (3) Upon the prescribed notice being given to any objectors to an application that has been conditionally granted, and upon such terms as the court thinks fit, the court may hear and determine an application: (a) to amend a conditional grant, or (b) … (5) Before granting a conditional application, the court may require to be lodged with the court a further approved plan that shows an amendment required by the court to be made to the approved plan or plans previously lodged in relation to the application. (6) In this section: approved plan , in relation to proposed licensed premises, or a proposed addition to or alteration of licensed premises, means a plan of the proposed premises, or of the proposed addition or alteration, that is accompanied by any development consent required under the Environmental Planning & Assessment Act 1979 for the carrying out of the work represented by the plan, or evidence that such consent is not required." 8 It was submitted firstly, that the terms of the section did not permit the application to proceed on the basis of a plan other than that lodged at the time the application was made; secondly, that as the plan on which the Defendant proceeded was not in existence at the time the application was made, he was not entitled to proceed on the basis of that document; and thirdly, while s40(5) contemplated an amended plan, it was only a plan which the court required to be amended. Inter alia, reliance was placed on the requirement in the Liquor Act for applications to be advertised - an object which, so it was said, was liable to be defeated if amendment by an applicant was permitted. 9 For his part, the Defendant placed reliance on a decision of Smart J in Hill v King (unreported, 10 June 1993) at p 16-17 to the effect that while there must be an approved plan at the time of an application, it is sufficient if it be lodged with the court prior to the court's making of any decision. Jurisdiction having been conferred because there was such a plan at the time the subject application was lodged, it was a matter for the discretion of the Licensing Court whether to permit an amendment. Reference was made to the terms of s15 of the Act and reliance also placed on Haworth v Cook (1976) 1 NSWLR 153 as demonstrating the width of the power of amendment which the Licensing Court has. Section 15 provides:- "On the hearing of an application under this or any other act, the court may, of its own motion or, on such terms as to costs or adjournment as it thinks fit, on the application of a party to the proceedings: (a) Permit the lodging or amendment of any notice or of any document or instrument necessary to the proceedings before the court, and (b) Disregard any omission, error, defect or insufficiency in any such notice, document or instrument…" 10 The width of that section leads to the conclusion that the court had power to permit the Defendant to rely on the amended plan. I acknowledge that there are indications in s40 itself and in the matters to which the Plaintiffs referred which argue against this conclusion. Thus if notice under sub-section (3) is required before an application to amend a conditional grant is heard, why should amendment of the original application by amendment of the plan proposed be permitted without notification to those whose interests might be affected? On the other hand, in the situation envisaged by sub-section 3, the objectors are person who have in effect become parties to the proceedings. It would, I suspect, be a fairly rare case where the alterations were likely to inspire objections by others who were not disposed to become objectors otherwise though that possibility is, no doubt something that the Court would bear in mind before permitting any amendments and in deciding whether terms as to further advertisement should be imposed. 11 In any event the terms of s15 are broad and clear and I find it impossible to regard the indications on which the Plaintiffs rely as displacing the full operation of those terms. This ground fails.

B. Neighbourhood 12 The second basis for challenge was what was said to be an error of law on the part of the Licensing Court in its approach to the topic of neighbourhood. In that Court the Defendant adduced evidence from a Mr Connolly to the effect that the neighbourhood encompassed a relatively wide area. Passages quoted by the Court from Mr Connolly's report included the following:- "12. … in residential aggregation terms Warners Bay is comprised of two localities being "Warners Bay" being the older settled area and "lakelands" a more residential subdivision northward of the main town centre. I note that the subject premises will be the closest hotel to residential land in South Cardiff and Hillsborough. However, in terms of local community I think the neighbourhood of the subject premises is "Warners Bay.

Warners Bay has its own vibrant business district… and a wide range of community facilities indicative of a neighbourhood." 13 The Court went on:- "13. Mr George Smith, a town planner called by the objectors, said that, on one view, the neighbourhood could be considered to be confined to the non-residential area which lies along Hillsborough Road because, on a territorial investigation, that area is clearly defined by the ridge to the north and north-east, Macquarie Road and the perimeter bushland of Lakelands on the west and by the absence of any access to the residential area to the east with the creek and Warners Bay High School filling the rest of the gap in its encirclement. He says that standing at the cite's gateway all that is visible is the non-residential development. 14. He went on to say that the only link between the site and the residential areas of Warner's Bay is provided by Hillsborough Road. To reach any of the balance of Warners Bay or Lakelands, one must traverse the intersection of Hillsborough and Macquarie Roads in Medcalf and Kings Streets. He said if that concept of neighbourhood is discarded the next would be that of the suburb of Warners Bay, that is the area postulated by Mr Connelly. However he remained of the view that the smaller neighbourhood was preferable since the cite is effectively divorced from the rest of Warners Bay. 15. The smaller area postulated by Mr Smith contains very few community facilities. It includes the Warners Bay High School and if the privately owned and operated sporting facilities are included the bowling alley, swimming complex and indoor cricket facilities. But beyond that there is only the Germania Club, a reception centre and the industrial/commercial uses. There is no residential aggregation within the smaller area. For these reasons we do not accept Mr Smith's approach, despite the cogency of the arguments on territorial features. 16. We are of the opinion for the reasons expressed by Mr Connelly that the larger area postulated by him and depicted on his plan 4.1 correctly identifies the extent of the neighbourhood." 14 Counsel for the Plaintiffs before me submitted that the Court had erred "in holding that because there were few community facilities and no residential aggregation Mr Smith's approach was unacceptable". It was submitted that there may be cases where there is no community - a proposition for which Armstrong v Edgecock (1984) 2NSWLR 536 at 541, 542 stands as authority. This interpretation of what the Licensing Court meant by the reference "these reasons" was contested by the Defendant, but is in my view correct. Until one goes back to paragraph 12 of the judgment, there is nothing else which could be encompassed by the expression and the context argues against any suggestion that the Court had matters referred to in that paragraph in mind. 15 But there remains the question whether the Court was wrong to hold as it did. In Morgan v Godall (1985) 2 NSWLR 655 at 657 Samuels J said that it was clear from what was said by Hutley J in Armstrong v Edgecock that it means "a territorial area displaying certain common topographical and social features and enjoying common facilities which enable it to be regarded as a community". At p659-660, McHugh JA, with whom Glass JA agreed said that in Armstrong v Edgecock the Court had laid down a community test and referred to the statement of Hutley JA that the determination of a neighbourhood is a "territorial investigation" and endorsed what Glass JA had said in Armstrong v Edgecock that in determining the neighbourhood, it would be relevant to consider "topographical and geographical features, transport facilities, communal activities and residential aggravations". 16 If, in the determination of a neighbourhood, it be relevant to consider community facilities and residential aggregations, it is surely also relevant to take into account their absence when considering whether an area said in a particular case to be the neighbourhood is properly chosen. Thus there is no error in the Court's reasons for rejecting Mr Smith's choice of neighbourhood. This ground fails.

C. Permissible use is relevant to Discretion 17 In paragraphs 11-16 of his report Mr Smith dealt with the issue of whether the Defendant had the necessary development consent to make the application. He expressed the view that the Defendant did not have the relevant consent. 18 The Licensing Court rejected this part of Mr Smith's report, observing:- "The remaining material we disallow. It's not an issue which this court will decide upon, the simple reason being that we have a plan upon which the Applicant moves and the Applicant has a consent from the appropriate consent authority in respect of the use which is relevant to the Liquor Act and it is not for us to decide whether that use embraces what is proposed, and we have been quite clearly in my view told by the Supreme Court on several occasions to keep out of that issue…" 19 In an earlier part of his report, Mr Smith had purported to set out the Lake Macquarie City Council's determination of the development application relating to the land and said that the Council had granted consent for the carrying out of development described as:- "Tourist facility - motel, bottle shop and conversion of existing building to a hotel".

subject to a number of conditions. 20 In paragraph 13 Mr Smith said, it would seem and I am prepared to assume, correctly, that the application to the Licensing Court proposed as the licensed premises Lot 52, DP 828390, an area which included:- "The existing Bay Bush Barn Building (to be altered) The proposed motel (to be built) The proposed bottle shop (to be built) The parking area (to be constructed) 21 In paragraph 14 and 15 Mr Smith referred to the definition of a hotel in the Lake Macquarie Local Environmental Plan, viz "the premises to which a hotelier licence granted under the Liquor Act 1982 relates" and opined that development consent should have been obtained for the use of the area encompassing all of the components referred to in the immediately preceding paragraph. He went on to say that in the LEP, "motel" and "shop" are separately defined in terms inappropriate to encompass a hotel. 22 In paragraph 16 he expanded his previous opinion saying that while the Council had granted consent for the conversion of an existing building to a hotel it had not granted consent for the use of the whole area, the motel or the bottle shop as a hotel and thus the motel or the bottle shop could not form part of the application before the court. 23 It was submitted on behalf of the Plaintiffs that the decisions of the Supreme Court to which the Licensing Court referred relate to the status of an approved plan under s40 for the purposes of determining the Licensing Court's jurisdiction but that the ground on which the Plaintiffs before me challenge the Licensing Court's rejection of the evidence is that the evidence is also relevant to the exercise of that Court's discretion. 24 There are two answers to this ground of challenge. The first is that the reasoning of the decisions to which reference has been made - see for example, Kennedy v Emery (1997) 41 NSWLR 413, Hill v King (1993) 31 NSWLR 654, Meagher v Bott (unreported, CA, 15 November 1996) make it clear that "the purpose underlying the amendments to the Liquor Act in 1990 was to reduce the duplication arising from the operation of the earlier Act" and that "it is not the function of the Licensing Court to entertain collateral challenges to the validity of building approvals and development consents" - see Kennedy v Emery at 429. Although those remarks may have been made in the context of s40, they are of more general application. It is rather pointless prohibiting the Licensing Court from such collateral challenges in the context of s40 but permitting the Court to carry out the same enquiry for the purposes of the exercise of its discretion. 25 The second is that all the definition in s40(6) of the Liquor Act requires is that there be development consent to the carrying out of the work represented by the plan. There was such consent. The fact that the Council in granting such consent may have given an inappropriate name to the work, assuming that is so, says nothing about whether terms of the definition are satisfied. This ground fails.

D. Proposed Premises not in conformity with Plan 26 This and the next topic of complaint were dealt with together in the Court's Reasons and it is convenient to set out in the one place what the Court had to say relating to them. In the course of its Reasons for Judgment the Licensing Court observed:- "49. It must be a matter of considerable speculation given the State Government's recently announced initiatives in respect of the future operation of gaming devices whether these premises will ever be entitled to operate gaming devices. However, we note that Mr Tassell said that in the event that the hotel does not acquire gaming entitlements the project will not proceed for financial feasibility reasons. Mr Kildea submitted that in respect of the primary purpose objection it should be sustained because of the size and the locality of the two proposed gaming rooms. 50. The proposed hotel layout provides for a gaming room of 89m2 and a secondary smaller gaming area of 16m2. The proposed plan of the premises showed the smaller gaming area as being an area opening into the corridor adjacent to the lounge area and the west of the fine dining room. In the course of his evidence Mr Tassell gave an undertaking that if the premises are constructed he will build a wall to enclose the smaller gaming area. His proposal is to install 2-3 machines in the smaller and possibly 27 machines in the larger gaming area. 51. The larger gaming area is fully enclosed except for an entrance way leading into the lounge and an entrance leading off the motel reception. The entrance way to the lounge is to have double swing doors on that entrance way and sliding doors into the motel reception area. The total area of the two gaming areas is 8.5% of the total floor area of the hotel. 52. We fail to see how, given the enclosed nature of the 2 enclosed gaming areas, that any gaming which does take place on the premises is going to unduly detract from the ability of patrons to otherwise enjoy the premises. 53. Furthermore given the fact that the proposed hotel will provide every type of facility capable of being provided under an Hotelier's licence that the primary purpose of the business is not the sale of liquor by retail. We find neither ground of objection sustained. 54. The application is granted. The conditions referred to in exhibit 14 are imposed upon the licence." 27 Exhibit 14 included the following:- "The areas marked "bar/gaming" and "gaming security" on the plan No: A02 "revision D Hotel Group Floorplan" shall have doors installed. At the "bar gaming" area between the point of entry and corridor. At the "gaming security" area, security doors at both openings." (sic) 28 The importance of having the gaming areas enclosed arises because of the terms of clause 46B(2)(b) of the Liquor Regulations which provides:- "The gaming room must be physically separated from the general bar area by a permanent floor to ceiling wall with at least the bottom half of such wall being constructed of opaque material and any building approval for any work that is required to be done must be obtained before the additional devices are kept in the hotel." 29 The regulation has been repealed but replaced by one in very similar terms in regulation 9 of the Gaming Machine Regulations 2002. 30 It was submitted that in dealing with the matter as it did rather than by requiring the plan before it to be amended the Court erred because, in the absence of a sufficient plan, the registrar was unable to fulfil his role under s60(2) of the Act. So far as is relevant, s60 provides:- "(1) The Registrar may, on application, make a final grant of an application conditionally granted under s40. (2) The Registrar is not to make a final grant of an application to erect, add to, or alter premises unless the applicant for the final grant produces evidence by which the Registrar is satisfied that the work of erection addition or alteration has been completed substantially in accordance with the approved plan on the basis of which the conditional application was granted." 31 No authority was cited for the proposition that the Licensing Court was not entitled to deal with the matter as it did. Reference was made to the decision in Ex Parte Danks (1918) 18 SR (NSW) 574 but the basis for that decision was that the further work was extensive and largely without definition, not as the Court said, "a mere matter of detail". The use of the word "may" in sub-section 1 indicates that the Registrar has a discretion and the terms of sub-section 2 indicate that an exercise in judgment is required by the Registrar. Both facts provide an indication that the Court is well able to ensure compliance with Mr Tassell's undertaking by refusing to make a final grant unless and until the undertaking is fulfilled. That said, there is a degree of untidiness in the Court, on some issues accepting undertakings, and in the case of other similar issues, imposing conditions on the grant as occurred in this case. The former, mentioned in the course of what at times may be a lengthy judgment, are liable to be overlooked. 32 But those remarks do not go to the merit of the ground. It fails.

E. Wrong Test for Primary Purpose 33 One of the objections taken in the Licensing Court was that provided for by s45(2AA) of the Act, viz. that the primary purpose of the business to be conducted under the authority of the licence sought was not the sale of liquor by retail. By reason of the terms of s45(4)(c1), the Defendant had thus to satisfy the Court that primary purpose of the business was the sale of liquor by retail. The Court dealt with this issue in paragraph 53 which I have quoted. 34 It is apparent this part of the Court's Reasons lacks something to make it accord with ordinary English usage. Counsel for the plaintiff suggested that the words "it cannot be said" should be notionally inserted after "Hotelier's licence". As did counsel for the Defendant, I agree that some such words are appropriate and consistent with the final sentence quoted. Counsel then went on to submit that the Court had not applied the correct test because it did not reflect the correct onus. He also submitted that the acceptance by the Court of the evidence that for financial feasibility reasons the project would not proceed without gaming entitlements indicated that that aspect of the proposed hotel was of predominant significance. 35 That last proposition is as logical as saying that because shopping centres are not built without car-parking, car parking is the predominant purpose of shopping centres. The fact that a matter is regarded as essential, does not mean that it is of predominant significance. What if three matters were all regarded as essential? 36 So far as the question of onus is concerned, it would have been better if the Court had expressly recognised where it lay. Furthermore, the final sentence quoted. "We find neither ground of objection sustained" is suggestive of the Court having thought the onus was on the objectors. However, one would not readily infer that a specialist court like the Licensing Court is unfamiliar with basic and readily understood rules by which it is bound and with which it has to deal on a daily basis. Despite some infelicity of expression, I am not persuaded that the Court did apply an incorrect onus. 37 It was also submitted that the paragraphs I have quoted deal only with the physical attributes of the hotel and the range of facilities to be provided but do not address the issue of whether or not the primary purpose of the hotel was the sale by retail of liquor. Although counsel for the Defendant pointed out that "primary purpose" meant "principle object" - The Returned and Services League of Australia v Liquor Licensing Commission (O'Bryan J, 25 September 1998; BC9805950 at [38]) - and "every type of facility" involved liquor without meals, liquor with meals, liquor for consumption off the premises, liquor in the accommodation rooms and gaming rooms and, by inference, that the sale by liquor would be a substantial aspect of the hotel's operations, it does not seem to me to necessarily follow that the sale of liquor was its primary purpose. One would expect that a determination of the primary purpose would involve a consideration of the relative estimated extent and profitability of the sale of liquor, the gambling, the sale of meals and the sale of accommodation, none of which seem to have been considered in the Reasons - . Of course, I do not suggest that such factors would be determinative - see RSL v Liquor Licensing Commission at [41]. 38 It may be that these matters are within the general experience of the Licensing Court although I would have thought that they were sufficiently variable to require mention. More significant, and in my view determinative, however is that fact that, as the transcript records, during the proceedings before the Licensing Court counsel for the Plaintiffs indicated that what was relied on under the "primary purpose" objection was the size and location of the gaming rooms. The limited terms of the Reasons for Judgment and the terms of the submissions provided confirmation of this. In these circumstances, I am not persuaded that the Court's consideration and Reasons were not appropriate to the issues as raised before them. This ground fails.

F. Suitability of the Premises - Location of Gaming Room 39 Clause 46B(2)(c) of the Liquor Regulations provides that a gaming room must conform to inter alia, the following requirement:- "Patrons must not be compelled to pass through the gaming room in order to enter or leave the hotel or in order to gain access to another part of the hotel." 40 This regulation also has been replaced by part of regulation 9 of the Gaming Machine Regulations, 2002. 41 The ground on which objection was taken by the Plaintiffs to the suitability of the proposed premises included that that location of the gaming room was between the "motel reception" and the other parts of the hotel and thus there would be a breach of the regulation. 42 In dealing with this matter the Court said:- "48. … in respect of the requirement for patrons from the motel to enter the hotel through the gaming area, Mr Smith acknowledges in his report that if persons elected not to do that there is a covered walkway around the edge of the building where patrons could enter through that alternate route. Given the explanations provided by Mr Tassell, which we accept, we do not find that the premises are unsuitable in any likely operational respect." 43 In granting the application the Court imposed a number of conditions but none refer to the area with which I am presently concerned. It is the 89 m2 area referred to in paragraph 50 of the Licensing Court's Reasons. 44 An appreciation of the ground requires some description of the Defendant's proposal. 45 The site was a roughly rectangular one with a street on the northern side. The western and eastern boundaries were approximately 3 times the length or the northern and southern ones. In an "L" shape, with the branches of the "L" running close to most of the southern boundary and some of the western boundary was a 2 storey motel. Slightly to the north of that was the hotel building which also was very close to the western boundary, was approximately square, and occupied about 60-65% of the width of the site. Further to the north but against the eastern boundary was the proposed bottle shop and storage shed, the bottle shop extending somewhat less than a third of the way across the site. 46 Parking was provided along the eastern boundary from the southern end of the site to the storage shed and in the area bounded by the two sides of the motel and the hotel and also in the area bounded by the western alignment of the cite, the hotel, the bottle shop and what seems to be some landscaping along the northern boundary. 47 On the eastern side of the hotel towards the southern end was the "Motel Reception" with a drop-off zone and porte-cochere. To the west of the motel reception area through a doorway was the 89 sq. metre gaming room and to the west of that again and extending to the western side of the hotel was the dining area and outdoor dining area. To the south of the outdoor dining area was the restaurant foyer and on its southern side doors leading to the exterior and covered walkways to the motel. 48 To the north of the eastern half of the gaming room was a gaming security area and bar. To the north of the western half of the gaming room and part of the dining room was the lounge. To the west of that, but not significantly separated from it, there was an area described as a "corridor". To the west of the corridor was a room designated TAB" and the 16 sq. metre bar gaming area. At the northern end of the corridor was an entrance door leading through a covered walkway in the direction of the northern car park. To the west of that walkway was a children's play area and pergola. To the east of that walkway and extending to the eastern side of the building was a beer garden. There were of course other ancillary rooms it is unnecessary to detail. 49 Public entrances to the hotel building were thus three. There was the one near the south-western corner into the restaurant foyer. There was one on the southern end of the eastern side into the Motel Reception area and there was one in the western half of the northern side into the corridor and lounge. through on the and entering through the dining room, going to the Motel Reception entrance on the southern end of the east side of the hotel building or going around to the western half of the northern side. 50 It was submitted on behalf of the Plaintiffs that "compelled" in the regulation should be read in a practical rather than an absolute sense and that in a practical sense persons wishing to go between the Motel Reception area and another part of the hotel were compelled to pass through the gaming area. Having to go outside the building and along an outside, albeit covered, walkway around the edge of the building was not a practical alternative. 51 I agree with the interpretation of the regulation which has been advanced. In the context of Liquor Act and the uses to which licensed premises are put, I do not see the regulation as requiring merely alternative access which is physically possible. Thus if the only alternative to passing though a gaming room for someone wishing to go from one part of an hotel to another were around the block, (in the case of a hotel in the middle of a city or suburb) or, indeed, out into the street, or up one (or six) floors along or across a corridor and down again, I would take the view that that person was being "compelled to pass through the gaming room in order to … gain access to another part of the hotel". 52 On the other hand, it is not possible to say that the regulation is offended merely because an alternative method of passage is not as convenient as through a gaming room. The issue thus becomes one of degree. The Licensing Court addressed it and, although the Court's conclusion was not expressed in terms of the regulation it is an inevitable inference that they addressed it. The Court found in favour of the Defendant. There was evidence on which the Court could find as it did and, accordingly, no basis for this Court to interfere. This ground also fails.

Conclusion 53 All grounds of challenge to the Licensing Court's decision having failed, the summons should be dismissed, with costs. I so order.

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