Penplay Pty Ltd v Independent Liquor and Gaming Authority

Background

1. The Parties agree that this case turns on questions of statutory construction rather than disputed factual issues. The following is a summary of the undisputed factual background.
2. Penplay holds a liquor licence with respect to the Premises at the Imperial Hotel in Murwillumbah ("Licence"). Mr Shane Nugent is the approved manager under the Licence for purposes of the Liquor Act. He is also Penplay's sole director.
3. Until the events subject of this review, Penplay had no history of committing demerit offences or receiving prescribed complaints since the demerit scheme in Part 9A of the Liquor Act was introduced in January 2021. The Premises also had no history of incurring 'strikes' under the prior legislative scheme.

Events of 10 April 2021

1. On 10 April 2021 at 10:20pm, police officers attended the Premises and observed a minor sitting at the main bar drinking an alcoholic beverage. The minor said that he had purchased the beverage with cash, and that he had not been asked by staff to show identification upon his entry into the Premises nor when he ordered a drink from the bar. The police officers approached a second minor sitting at the bar. His identification confirmed that he was 17 years of age and he said he had purchased three beers earlier that night without being asked for identification. CCTV footage revealed Mr Lochie Pansaru to be the Penplay employee who had served the beers to the minor earlier in the night. The employee who served the other minor later in the night was Ms Kia Watson.
2. Mr Nugent says that on the night in question he had walked the floor of the Premises and approached the door security guard, Mr Leary, to ask him if he had checked the IDs of the young persons in question. Mr Nugent says Mr Leary told him emphatically that he had checked their IDs on entry. After the police arrived, Mr Nugent told the police that on a prior occasion he had personally checked the IDs of the young persons, and that his security guard told him that he had checked their IDs that night. When the police officers informed Mr Nugent that the security guard said he had not checked the IDs that night, Mr Nugent confronted Mr Leary. Mr Leary admitted he had not checked the IDs, and Mr Nugent terminated his retainer as a security guard.
3. Mr Nugent attends meetings of the local Liquor Accord. At the meeting of the local Liquor Accord on 13 April 2021, there was a discussion about how to deal with the problem of underage people using high quality fake digital IDs.

Issuance of Penalty Notices, Payment of One Notice, Withdrawal of Other Charges

1. On 20 May 2021, Mr Pansaru was issued with a penalty notice for $1,100 in relation to the offence of selling liquor to a minor, contrary to section 117(1) of the Liquor Act. Mr Pansaru paid the penalty notice on 8 November 2021. It is not known why Mr Pansaru, who is no longer an employee of Penplay, decided to pay the penalty rather than go to court to defend the charge. A 2012 NSW Law Reform Commission report tendered by the Applicant without objection by the Respondent, states that "most people simply pay the penalty. Only 1% elect to go to court, so that the guilt or innocence of the recipient is rarely scrutinised." The report explained that there may be various utilitarian benefits to paying a fine, irrespective of whether people believe they are guilty.
2. On 20 May 2021, Ms Watson, the other employee of Penplay who served the minors on 10 April 2021, also received a penalty notice for selling liquor to a minor under section 117(1). Ms Watson elected to go to court and entered a plea of "not guilty". According to Mr Nugent, she defended the charge based on her recollection that she had checked the minors' IDs on prior occasions. The charge against Ms Watson was subsequently withdrawn by the police and was dismissed in the Murwillumbah Local Court on 19 August 2022.
3. In February 2022, Mr Nugent received two penalty notices in respect of his role on 10 April 2021. The penalty notices alleged a breach (by Penplay) of section 124(1)(b) of the Liquor Act for "licensee allow minor enter/remain". Mr Nugent elected to take those matters to Court to defend them. The matters were listed for hearing at Murwillumbah Local Court on 19 August 2022. Police withdrew the charges, and it is understood those charges were thereupon dismissed.
4. At no point did Penplay as the licensee, or Mr Nugent as the approved manager, receive a court attendance notice, penalty notice, or penalty enforcement order alleging that Penplay or Mr Nugent committed offences under section 117 of the Liquor Act for selling, supplying or allowing the sale or supply of liquor to minors on 10 April 2021. Nor have Penplay or Mr Nugent ever received a court attendance notice, penalty notice or penalty enforcement order in respect of an alleged breach of section 117 of the Liquor Act by virtue of section 149 of the Liquor Act. Mr Nugent says that if he or Penplay received such a notice he would "most certainly have elected to take the matter to Court" as he had done with the two section 124(b) charges and as Ms Watson did with the section 117 charge brought against her.
5. Based on Mr Nugent's uncontested evidence, and consistent with his approach to the section 124 charges, the Tribunal accepts that Mr Nugent, on behalf of Penplay as licensee, would have elected to defend any charges against Penplay relating to the sale and supply of liquor to minors on 10 April 2021.

Notification of Demerit Points and Remedial Action

1. On 22 February 2022, Liquor and Gaming NSW ("L&GNSW") notified the Authority that the Applicant had: 1. committed a category 2 demerit offence of "sell liquor to minor on licensed premises" pursuant to sections 4, 117, 144C and 149 of the Liquor Act; 2. incurred 2 demerit points under section 144H of the Liquor Act; and 3. accumulated two demerit points during a three-year period.
2. L&GNSW recommended that the Authority take remedial action. At a board meeting on 13 April 2022, the Authority decided to write to the relevant parties under section 144P of the Liquor Act. Subject to consideration of any submissions, the Authority was minded to impose conditions on the licence.
3. On 10 May 2022, the Authority notified the Applicant per section 144Z of the Liquor Act, of the proposed remedial action and invited submissions.
4. On 24 May 2022, Penplay, through Hatzis Lawyers, made submissions which broadly contended that the Authority did not have power to take remedial action under Part 9A of the Liquor Act because Penplay itself had not been issued with a penalty notice or been convicted of an offence contrary to section 149. Penplay noted that Ms Watson was contesting her charges. Penplay also recalled that while Mr Pansaru had paid his fine, most people statistically do simply pay the penalty rather than electing to go to court. Penplay submitted that it is still necessary for an offence to be charged against the licensee, giving the licensee the opportunity to defend or otherwise seek a non-conviction order, and this had not happened in this case.
5. At a board meeting on 15 June 2022, the Authority decided to impose a condition on the Licence under section 144T, requiring the Applicant to maintain an incident register. The Authority's view was that the legislative intent is clear that demerit points are incurred by the licensee when an employee of the licensee commits a demerit point office. Under section 149, a licensee is "automatically liable" for a demerit offence when an employee commits a demerit offence per section 144C and, in the Authority's view, there is no requirement for a licensee to separately be issued a penalty notice.

The Decision and its Consequences for Penplay

1. On 11 August 2022, the Authority communicated its Decision to the Applicant, with the following key findings: The Licensee's commission of the Offence was a direct breach of the legislative requirement under section 117 of the Act. The Authority notes the submission from L&GNSW regarding the poor practices exhibited at the Premises, noting that the officers of L&GNSW have first hand knowledge of, and experience in managing the adverse community impacts of the Offence. The Authority notes the submission from L&GNSW that it is appropriate in the circumstances to take further remedial action in the form of imposing conditions on the liquor licence. The Authority has considered the relevant factors listed in section 144ZA(1)(a)(ii) of the Act and notes that: the size and patron capacity of The Imperial Hotel would unlikely have hindered the ability of the Licensee's staff to prevent the Offence from being committed the Licensee has no history of committing any demerit offences under the Act the Licensee has no history of commit[ing] prescribed complaints there is no information on any changes to the business practices in respect of the business carried on under the licence of The Imperial Hotel Murwillumbah since the time of the Offence. Having regard to the available material, the Authority finds that the Licensee failed to comply with his obligations under the Act, through proper supervision of staff and adequate monitoring and management of patron behaviour, to: facilitate the responsible service and consumption of liquor at the Premises, including to ensure that liquor is not sold or supplied to persons under the age of 18. The Authority considers the Offence to be serious and warrants an unequivocal and enforceable regulatory response by way of remedial action, to prevent any similar occurrence in the future. The Authority considers it appropriate in the circumstances to impose specific licence conditions to address the deficiencies in the existing RSA and harm minimisation measures of The Imperial Hotel Murwillumbah.
2. The Authority rejected the Applicant's argument that for a demerit offence, the licensee itself needs to be issued with a penalty notice, and either pay for it or be convicted by the Court of an offence under section 149: The legislative intent is clear [from sections 4 and 149 of the Liquor Act] that demerit points (and previously strikes) are incurred by the licensee when an employee of the licensee commits a demerit point offence… per section 144C and there is no requirement for a licensee to separately be issued a penalty notice for an offence against section 149.
3. The Authority recalled that an employee on duty on the night was issued with a penalty notice in relation to the demerit offence of "sell liquor to minor on licensed premises under section 117(1) of the Act", and paid the penalty notice.
4. The Authority decided to impose the following "Incident Register" condition on the licence for the Premises pursuant to section 144T of the Liquor Act: An incident register will be maintained at the premises. The incident register shall be used at all times the premises is trading and be readily available for inspection at any time the premises are trading by NSW Police and Inspectors of Liquor and Gaming NSW. The Incident Register shall record the occurrence, at anytime of the day, of: (a) Any incident involving violence or antisocial behaviour occurring on the licenced premises; (b) any incident of which the licensee is aware that involves violence or antisocial behaviour occurring in the immediate vicinity of the licence premises and involves a person who has recently left, or being refused admission to, the premises; (c) any incident that results in a person being turned out of the licence premises under section 77; (d) any other incident of a kind prescribed by the liquor regulation 2018 with regard to requirements for the maintenance of an incident register; (e) any third party disturbance complaint received by the premises in relation to the premises; and (f) any malfunction of breath analysis equipment, CCTV or noise limitation equipment, and their action taken in relation to all such matters.
5. As a result of the Decision, the public register maintained by L&GNSW (referred to by the Applicant as the 'name and shame' list) now records the name of Penplay. Two demerit points are recorded against Penplay, informing the public, without qualification, that Penplay has committed the offence of 'sell liquor to a minor'. In Mr Nugent's view, this publication reduces his company's standing in the eyes of the broader community. He stated that his company and he have otherwise enjoyed a good reputation within the Murwillumbah community for their operation of the Imperial Hotel.
6. Another consequence of the Decision is that the periodic licence fee charged for the Imperial Hotel for 2022 increased from previous years by virtue of the Liquor Regulation 2018. The 2022 assessment notice shows a compliance loading and patron capacity loading totalling $17,581. Neither loading would have been payable but for the Authority's finding that Penplay had committed a demerit offence. Only the base fee of $287 would have been payable. Penplay has thus effectively been penalised the equivalent of $17,581.
7. Pursuant to section 144ZH(5) of the Liquor Act, the application to this Tribunal on 27 August 2022 suspended the operation of the remedial action.

Relevant Legislation

1. The objects of the Liquor Act balance the needs of the community with the object of industry development, and are set out in section 3 as follows: (1) The Objects of this Act are as follows: (a) to regulate and control the sale, supply and consumption of liquor in a way that is consistent with the expectations, needs and aspirations of the community, (b) to facilitate the balanced development, in the public interest, of the liquor industry, through a flexible and practical regulatory system with minimal formality and technicality, (c) To contribute to the responsible development of related industries such as the live music, entertainment, tourism and hospitality industries. (2) In order to secure the objects of this Act, each person who exercises functions under this Act (including a licensee) is required to have due regard to the following: (a) the need to minimise harm associated with misuse and abuse of liquor (including harm arising from violence and other anti-social behaviour) (b) the need to encourage responsible attitudes and practices towards the promotion, sale, supply, service and consumption of liquor, (c) the need to ensure that the sale, supply and consumption of liquor contributes to, and does not detract from, the amenity of community life.
2. Relevant definitions set out in section 4 include: category 2 demerit offence means an offence against - (a) any of the following provisions of this Act - (i) section 117(1), (2) or (8) (selling or supplying liquor to a minor or allowing such sale or supply), (ii) section 149 (licensees and managers liable for act of employees etc) in respect of a contravention of section 117(1) or (2), or (b) any other provision of this Act or the regulations that is prescribed by the regulations for the purposes of this definition. demerit offence means a category 1 demerit offence or a category 2 demerit offence demerit point, in relation to a licensee, manager of licensed premises or club licence, means a demerit point - (a) incurred against a licensee or manager of licensed premises under section 144H, or… minor means a person who is under the age of 18 years.
3. Part 3 of the Liquor Act sets out different types of licenses. Part 4 deals with licensing procedures and sets out the Authority's powers, such as imposing conditions on licences under section 53.
4. Part 7 of the Act contains special provisions relating to minors. Section 117 sets out the following offences relating to the sale or supply of liquor to minors: (1) Selling liquor to minors. A person must not sell liquor to a minor. Maximum penalty - 100 penalty units or 12 months imprisonment (or both.) (2) Supplying liquor to minors on licensed premises A person must not supply liquor to a minor on licensed premises. Maximum penalty - 100 penalty units or 12 months imprisonment (or both.)… (8) Allowing liquor to be sold or supplied to minors on licensed premises. A licensee must not, on licensed premises, allow liquor to be sold or supplied to a minor. Maximum penalty - 100 penalty units or 12 months imprisonment (or both.)
5. Section 124 also appears in Part 7 and states in section 124(1)(a) that "if a minor - (a) enters a bar area of a hotel …. The licensee is guilty of an offence. Maximum penalty - 50 penalty units." Section 124(3) makes it a defence if it can be shown the minor is over 14 years and produced reasonable ID.
6. Part 9A contains the demerit points scheme that commenced on 1 January 2021. It was introduced through the Liquor Amendment (24-hour Economy) Bill 2020 to establish "an integrated incentives and sanction system for licensed venues". The Second Reading stated that the new Part 9A sought to integrate previous schemes of "Three Strikes", "Violent Venues" and "Minor Sanctions" into a single system based on demerit points. The scheme in Part 9A aims to reward and incentivise well-run venues (by discounting annual liquor licence fees for venues with a clear record). By contrast venues for which demerit points have been incurred are not eligible for discounts, and have to pay additional licence fees as part of annual compliance risk loadings. The Second Reading Speech noted that there is already a "comprehensive range of offences and penalties" under the Liquor Act that enable police and regulators to take action against businesses and individuals who do the wrong thing." The new demerit system would see the most serious offences subject to "higher penalties and carry greater consequences." The Speech explained that demerit points are "automatically incurred for the most serious liquor law breaches" and that "selling or supplying liquor to a minor will attract double demerits", reflecting the "serious nature of this offence." The Second Reading Speech also noted that "demerit points will attach to licensees and managers of licensed premises" directly targeting "the irresponsible operators in breach of the liquor laws."
7. Within Part 9A, section 144C is the key provision on commission of a demerit offence that triggers the application of the demerit regime: 144C Committing demerit offence (1) For the purposes of this Part, a person commits a demerit offence if the act or circumstance giving rise to the offence occurred or existed on or after the commencement of this Part and - (a) a court convicts the person for the offence, whether or not it imposes any penalty, or (b) an amount is paid under a penalty notice in relation to the offence, or (c) a penalty notice enforcement order under the Fines Act 1996 is made against the person in respect of the offence. (2) However, any demerit point under this Part that is based on the conviction, penalty notice or penalty notice enforcement order is revoked and any remedial action taken as the result of the demerit point ceases to have effect if - (a) the conviction is overturned on appeal, or (b) the person elects, after an amount is paid under the penalty notice, to have the offence dealt with by a court, or (c) the penalty notice, or the penalty notice enforcement order to the extent that it applies to the penalty notice, is withdrawn or annulled.
8. Section 144D establishes the demerit points register. Under Section 144E, if demerit points are incurred against a licensee or manager under section 144H, then the number of demerit points incurred must be recorded in the register. Pursuant to section 144F, the register may be published on a website.
9. Section 144H provides: If the licensee or manager of a licensed premises other than a club premises commits a demerit offence, the following number of demerit points are incurred against the licensee or manager - (a) if the demerit offence is a category 2 demerit offence - 2 demerit points, (b) otherwise - 1 demerit point.
10. Section 144J deals with notification of proposed demerit points.
11. Division 4 of Part 9A sets out escalating types of remedial action for demerit points, depending on the number accumulated. Consequences for licensees and managers might include reprimand, undertaking courses, disqualification for a specified period or permanently. Where 2-3 demerit points have been accumulated during a 3-year period (as in this case), section 144T provides that if the Authority is satisfied that it is appropriate, it "may impose any condition on the licence that the Authority considers necessary to address (a) the risk of a demerit offence being committed" or the likelihood of prescribed complaints. The more demerit points accumulated, the more remedial actions are available to the Authority, including in the case of 6 or more demerit points, under section 144U, suspending the licence for a period of up to 14 days.
12. Section 144ZA sets out requirements for deciding to take remedial action. The Authority must take into account any submissions made by the licensee and other interested persons, as well as any other relevant factors like the capacity of the Premises and the history and nature of the commission of demerit offences by the licensee or manager. The Authority must notify the decision as soon as practicable with reasons, rights of review and prescribed guidelines.
13. Section 144ZD provides for licensees and managers to apply to the Authority to remove demerit points in relation to them. Such applications can only be made 12 months after the demerit points were incurred. In deciding whether to remove a demerit point, the Authority will consider the circumstances that were the basis of the demerit offence and measures taken since the offence.
14. Section 144ZH provides for administrative review by this Tribunal of decisions to impose demerit points and remedial action. An application to the Tribunal operates to stay the reviewable decision and the operation of any remedial action taken by the Authority is suspended during the stay.
15. Section 144ZI provides that an appeal against a conviction for a demerit offence does not operate to prevent a demerit point being incurred or the taking of remedial action, but it does operate to suspend the operation of remedial action.
16. Part 10 of the Liquor Act concerns criminal proceedings and related matters. Section 145 states that proceedings for offences under the Liquor Act are to be dealt with summarily before the Local Court.
17. Section 146 sets a time limit, providing that "proceedings for an offence under this Act or the regulations may be commenced within but not later than 12 months after the date on which the offence is alleged to have been committed."
18. Section 149 deals with liability of licensees and managers for employees' acts: 149 Licensees and managers liable for act of employees etc If, in contravention of this Act or the regulations - (a) an employee or agent of a licensee, or (b) an employee or agent of the manager of licensed premises, or (c) a person acting, or purporting to act, on behalf of a licensee or the manager of licensed premises, sells or supplies liquor on the licensed premises, the licensee or manager (as the case requires) is guilty of an offence and liable to the punishment specified for the contravention.
19. Section 150 deals with the issuance of penalty notices under the Liquor Act: (1) An authorised officer may issue a penalty notice to a person if it appears to the officer that the person has committed a penalty notice offence. (2) A penalty notice offence is an offence against this Act or the regulations that is prescribed by the regulations as a penalty notice offence. (3) The Fines Act 1996 applies to a penalty notice issued under this section. Note- The Fines Act 1996 provides that, if a person issued with a penalty notice does not wish to have the matter determined by a court, the person may pay the amount specified in the notice and is not liable to any further proceedings for the alleged offence. (4) However - (a) section 22A(1) of the Fines Act 1996 does not apply in relation to disciplinary action under Part 9 or 9A of this Act, and (b) despite section 22A(2) of the Fines Act 1996, when an amount is paid under this section in respect of a penalty notice issued to a person, the person is, for the purposes of Part 9 of this Act, taken to have been convicted of the offence to which the penalty notice relates.
20. Section 22A(1) of the Fines Act 1996 (NSW) ("Fines Act") states: (1) If the full amount specified in a penalty notice for an alleged offence is paid in accordance with the notice, no person is liable to any further proceedings for the alleged offence. (2) Payment under a penalty notice is not to be regarded as an admission of liability for the purpose of, and does not in any way affect or prejudice, any civil claim, action or proceeding arising out of the same occurrence. (3) This section does not affect any disciplinary or other proceedings, or liability to which a person is expressly subject under another Act in relation to the payment of an amount under a penalty notice.
21. Section 23A of the Fines Act provides that a person in receipt of a penalty notice may elect to have a matter dealt with by court: (1) A person alleged to have committed or to be guilty of the offence to which a penalty notice relates - (a) has the right to elect to have the matter dealt with by a court instead of under the statutory provision providing for the issue of the penalty notice, and… (2) A person may make such an election even if the whole or part of the amount payable under the penalty notice has been paid. (2A) If the whole of the amount payable under the penalty notice has been paid, such an election may not be made later than 90 days after the penalty notice was issued.
22. The Tribunal finally refers to the Liquor Regulation 2018 (NSW). The Regulation provides for licence registration fees to be increased by incorporation of a "compliance history risk loading element" and other risk loading elements in clauses 11-14. This is the basis on which Penplay's licence fee was increased as a result of the Authority's Decision.
23. The Regulation also lists, in Schedule 6, Penalty notice offences for purposes of section 150 of the Liquor Act. Each offence specified in the Schedule is "an offence for which a penalty notice may be issued". The list includes section 117(1), (2) and (8). It does not separately list section 149.

Jurisdiction to Review the Decision

1. According to section 9 of the ADR Act and sections 28 and 30 of the Civil and Administrative Tribunal Act 2013 (NSW) ("CAT Act"), the Tribunal has jurisdiction over a decision of an administrator if enabling legislation provides that applications may be made to the Tribunal for administrative review.
2. Section 144ZH of the Liquor Act gives this Tribunal jurisdiction in this case, as it provides that a "person required to be given notice of a reviewable decision under section 144ZA(2) or 144ZE(5) may apply to the Civil and Administrative Tribunal for an administrative review under the [ADR Act] of the decision."
3. Such an application must be made within 21 days of receiving the notice. Penplay received the notice of the Decision under section 144ZA(2) on 11 August 2022 and applied within time to this Tribunal on 29 August 2022. Under the terms of Section 144ZH(4), the application to this Tribunal operated to stay the Decision and suspended the operation of any remedial action.
4. According to Section 144ZH(6) of the Liquor Act, this Tribunal "must take into account any matter that was required to be taken into account in making the reviewable decision."
5. In determining an application for administrative review, section 63 of the ADR Act provides that this Tribunal is to decide what "the correct and preferable decision" is having regard to "any relevant factual material, and any applicable written or unwritten law".
6. The Tribunal makes its own decision in place of the Respondent's and there is no presumption that the decision of the Respondent is correct. In determining an application for administrative review of a decision, the Tribunal may decide to affirm the decision, to vary the decision, to set aside the decision and make a decision in substitution, or to remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal (ADR Act, section 63(3)).
7. Under section 38(2) of the CAT Act, the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.

Issues for Determination

1. The main issue for determination is one of statutory construction. That is the question of whether a hotel licensee can commit a "category 2 demerit offence" within the meaning of section 144C of the Liquor Act and be subject to the consequences prescribed for committing a demerit offence, even though the licensee has not itself faced proceedings for that offence. In other words, if a licensee has not been convicted of the demerit offence, received any penalty notice in relation to the offence, nor been subject of a penalty enforcement order under the Fines Act in relation to the offence, can the licensee be subject to the demerits regime in Part 9A of the Liquor Act? If the answer is no, as the Applicant contends, then the Decision should be set aside. The Respondent contends that the answer is yes, in the circumstances of this case where an employee has received and paid a penalty notice for the underlying offence. The Respondent submits that the Part 9A regime automatically applies to the licensee and the Decision should be affirmed.
2. The second issue for determination relates to the Respondent's alternative request. The Respondent submits that even if the Tribunal accepts the Applicant's statutory construction above, the Tribunal should still impose conditions on the License in exercise of the Tribunal's power under section 63 of the ADR Act and the Authority's power under section 53 of the Liquor Act.
3. Before addressing these two issues, the Tribunal sets out below the material it had before it in this matter.

Material before the Tribunal

1. The documentary material from the Applicant comprised: 1. NCAT Application dated 29 August 2022, attaching the Respondent's 11 August 2022 Decision and statement of reasons. 2. The Applicant's Submissions of 2 November 2022, attaching the Affidavit sworn on the same date by Mr Nugent, itself attaching: (a) two Court Attendance Notices of 23 February 2022 sent to Mr Nugent; (b) Court Attendance Notice of 22 December 2021 sent to Ms Watson; (c) Tweed Valley Liquor Accord Meeting Minutes of 13 April 2021; (d) extract from demerits points register as at 31 July 2022; and (e) licence fee notice to the Imperial Hotel dated 1 August 2022
2. The materials filed by the Respondent on 5 October 2022 pursuant to section 58 of the ADR Act, comprising: 1. Authority Board paper from 13 April 2022 Meeting of the ILGA L&C Committee Board, attaching (a) L&GNSW Notification of demerit offence of 22 February 2022; (b) L&GNSW submission of 22 February 2022; (c) Licence for The Imperial Hotel Murwillumbah as at 24 March 2022 2. Redacted Minutes of Committee Board Meeting held on 13 April 2022 3. Authority Board Paper from 13 April 2022 Meeting, attaching (a) link to 13 April 2022 Board Paper; (b) invitation to make a submission dated 10 May 2022; (c)15 July 2022\ submission from Hatzis Cusack Lawyers 4. Redacted minutes of the Committee Board Meeting on 15 June 2022 5. Email from Authority attaching Decision of 11 August 2022 6. Decision to take remedial action of 11 August 2022 7. Liquor licence for the Imperial Hotel Murwillumbah as at 11 August 2022 8. Authority's 2021 Guidelines on imposition and removal of demerit points
3. Submissions of the Respondent dated 2 December 2022, accompanied by: 1. 16 extracts of NSW Bureau of Crime Statistics showing trends of alcohol-related assault, homicide, robbery, and sexual offences in the Tweed and Murwillumbah areas from in the last four years; 2. COPS report dated 27 August 2022 showing incidents which according to the Respondent may not have been included in the incident register in accordance with the condition imposed on the licence; 3. documentation relating to takeaway liquor from the Imperial Hotel's website, possibly left over from COVID-19 lockdowns.
4. A hearing was held in person on 6 February 2023. Mr Nugent was not present due to illness but his affidavit (along with all the above documents) was admitted to the record without objection. Submissions were made on behalf of the Applicant by Mr Anthony Hatzis of Hatzis Cusack Lawyers; and on behalf of the Respondent by Mr Robert Pietriche of Banco Chambers.

Main issue for determination: must a licensee face proceedings for a demerit offence before incurring demerit points under Part 9A of the Liquor Act?

The Applicant's Submissions

1. The Applicant recalls the significant consequences of demerit points under the scheme in Part 9A. First, the escalating sanctions imposed administratively by the Authority against against licensees who commit demerit offences are in addition to any penalties prescribed for the particular contravention. Second, demerit offences recorded on the public register bestow public opprobrium on the offending licensees. Third, after two or more demerit points are incurred, the Authority may reprimand the licensee and impose conditions on the licence. Fourth, demerit points also have significant financial consequences for licensees. In the circumstances of the present case, without having had an opportunity to defend any charges of the underlying demerit offence, Penplay has been publicly shamed and faced hefty financial penalties. The Applicant submits that this is a substantial injustice, and these consequences should not be permissible on a proper construction of the statutory provisions.
2. The Applicant points to the terms of section 144C(2), which provide for the revocation of any demerit point if (a) the conviction is overturned on appeal, (b) the person elects after paying the amount in the penalty notice to have the offence dealt with in court, or (c) the penalty notice or enforcement order is withdrawn or annulled. The Applicant says that these provisions show the Parliament intended the ordinary processes would be followed and applied against a licensee before additional sanctions under Part 9A are imposed on the licensee. However, in this case, Penplay has had no opportunity to "appeal" any "conviction", nor to have the alleged offence dealt with by a court. It received no penalty notice enforcement order and so has not had the opportunity to have such an order withdrawn. The absence of any process issued against Penplay has prevented Penplay from taking advantage of the opportunities afforded under section 144C(2) of the Act.
3. The Applicant disagrees with the Respondent's view that Penplay is "automatically" guilty in respect of a section 117(1) offence because its employee Mr Pansaru paid his penalty notice. It disagrees with the Respondent that it was unnecessary for any process to be issued to Penplay separately from Mr Pansaru. Such an interpretation would lead a licensee to be subjected to the significant consequences under Part 9A in circumstances where the licensee has no control over the action that might be taken by an employee in respect of a penalty notice issued.
4. The Applicant observes that the Respondent's approach would deprive Penplay of the options under the Crimes (Sentencing Procedure) Act 1999 (NSW) ("CSP Act") whereby a sentencing Court may decide not to proceed to conviction but have a range of other options, including dismissing the charge without conviction (under section 10(1)(a)) or issuing a conditional release order, or bond (under section 10(1)(b)). The Applicant pointed to Judicial Commission statistics showing that non-conviction discretion was exercised by local courts in 14 out of 15 matters between 2018 and 2022. If such an order had been made in respect of Penplay in this matter, the Applicant says it is clear from the terms of section 144C(2) that no "demerit offence" would have been "committed."
5. Penplay thus says it was deprived of an opportunity to put before any sentencing court mitigating factors like good character, lack of prior record, unlikelihood of reoffence and actions taken by the licensee before and after the commission of this offence. Penplay points to a decision of the NSW Court of Criminal Appeal expressly recognising the availability of judicial discretion on sentencing in respect of regulatory offences under the Liquor Act in Lavorato v Regina [2012] NSWCCA 61 ("Lavorato"). The Court there held the discretion to dismiss any criminal charge is available under the Liquor Act, even for strict liability regulatory offences (at [108]-[109]).
6. The Applicant proffers a scenario whereby an employee might knowingly sell liquor to a minor despite efforts and structures being put in place by the licensee to guard against selling alcohol to minors. In circumstances where that licensee persuades a court to exercise discretion in his favour and record no conviction, the Applicant submits Parliament did not intend for Part 9A consequences to flow to such a licensee. But in this case Penplay has had to suffer the consequences reserved for blameworthy licensees while being denied all opportunity to persuade a court it was not blameworthy.
7. Penplay has also been deprived of the possibility of "withdrawal" of penalty notices following internal review or annulment of penalty enforcement orders under the Fines Act. That is despite section 144C(2) clearly contemplating that such withdrawal or annulment would mean no demerit points are incurred.
8. The Applicant also points to the legislative history of Part 9A and recalls that under the former minors sanction scheme inserted in 2014 with very different wording, it used to be sufficient if any person committed an offence of selling liquor in order to attract escalating sanctions. The Applicant contrasts this with the new Part 9A system, which is targeted at irresponsible and blameworthy operators, with potentially severe consequences. The Applicant submits that it is hard to suppose that Parliament intended such severe consequences to be imposed without any opportunity for a licensee to bring to bear his own prior good management and good standing in an appropriate forum.
9. The Applicant submits that the Respondent has proceeded on an incorrect assumption that section 149 requires an automatic conclusion that a licensee is guilty of an offence without the need for the issue of any process. Such a deprivation of due process under criminal law would, the Applicant says, require very clear statutory language in section 149. The Respondent's construction leads to anomalous consequences, which should be avoided in any statutory interpretation exercise (O'Sullivan v Farrer [1989] HCA 61 at [16]). The anomalous consequence would be not just automatic guilt without process, but also liability to punishment without any forum to determine what that punishment should be. It would likewise be anomalous for someone to be guilty of a serious offence without having had any opportunity to contest or defend any allegation. The consequences for breach of section 117(1) of the Liquor Act include up to one year's imprisonment and $11,000 in fines. Without the licensee going through an appropriate judicial process, the Applicant says there is simply no means of ascertaining what penalty, if any, would be appropriate; and no means to put before a court any mitigating factors. The Respondent's interpretation of section 149 would offend against notions of Australian justice.
10. The Applicant stated at the hearing that section 149 is an enabling provision, it creates vicarious liability, but it is still necessary to have a process. In practice, the Applicant says the police should have issued a penalty infringement notice, alleging Penplay itself had committed an offence (a section 117(1) infringement by way of section 149). This would not have been difficult and would not in any practical way have hindered the operability of the statutory regime. If Penplay had been afforded the opportunity to bring matters before the Court, the Applicant says the matter may well have been dismissed due to defences under section 117(3) (as happened for Ms Watson); or Penplay may have obtained a non-conviction order under section 10 of the CSP Act. In either case, no demerit offence would have been 'committed' pursuant to section 144C.
11. The Applicant agrees with the principles of statutory construction identified by the Respondent. However, the Applicant contends its own common sense interpretation of section 144C is better, and supported by: 1. The plain and ordinary meaning of the language used in section 144C; 2. The legislative history, which shows that Parliament intended that demerit points attach specifically to a licensee, in personam, and arise out of a demerit offence specifically committed by that licensee; 3. The legislative purpose to target licensees who are wrong-doers. 4. The anomalous consequences that otherwise flow from the Respondent's interpretation.
12. The Tribunal asked the Applicant whether due process was sufficiently afforded to the Applicant through the submissions mechanism in section 144ZA, which Penplay utilised on 24 May 2022, or alternatively via the possibility of seeking removal of demerit points under section 144ZD of the Liquor Act. The Applicant replied that those avenues do not sufficiently provide due process because they allow no opportunity to defend the underlying offence. In other words, the 'horse has already bolted' by the time either of those processes can be engaged.
13. The Applicant concludes that on the facts of this case, it has not 'committed' a demerit offence within the meaning of section 144C of the Liquor Act. It follows, that no demerit points have been 'automatically' incurred by Penplay and the Authority's power to impose conditions on the Licence was never enlivened.

The Respondent's Submissions

1. The Respondent accepts that neither Penplay nor its authorised manager had been charged with or convicted of an offence, nor issued with a penalty notice for an offence for sale of liquor to minors under the Liquor Act.
2. The only relevant 'demerit offence' for which a conviction had been entered or a penalty notice issued was Mr Pansaru's contravention of section 117, for which he paid a penalty notice in November 2021. In those circumstances, the Respondent submits that it was within the Authority's power to impose demerit points upon and take remedial action against Penplay. That is because section 149 "operates to deem the offence of an employee to be an offence by the licensee or manager, such that its 'commission' by the employee is deemed to be the 'commission' of an offence by the licensee or manager within the meaning of section 144C." The Respondent points to four factors which support this construction.
3. First, the Respondent says textual features of the Liquor Act support the "deeming" effect of section 149. Unlike other offences under the Act, such as section 117(1), which provides that "a person must not sell liquor to a minor" and identifies a maximum penalty for such conduct, section 149 is framed in different terms; namely by providing that the licensee or manager is "guilty of an offence" if the pre-conditions in the section are satisfied. Where those pre-conditions do not turn upon any conduct of the licensee or manager, liability under section 149 is not a matter attended by the doubt which might surround the underlying contravention or offence. The Respondent says it flows automatically upon the employee being found guilty, whether by conviction, payment of a penalty notice (treated by section 150(4)(b) as a conviction of the offence), or a penalty notice enforcement order under the Fines Act. The guilt of the licensee is an automatic consequence of an employee's contravention.
4. The Respondent however acknowledges some tension between the deeming effect of section 149, and section 144C. It notes that the terms of section 144C "tether the notion of a person 'committing a demerit offence' to that person being convicted by a Court (under s 144C(1)(a)). The Respondent concedes such language "might be construed to suggest that the relevant person who commits the offence under section 144C(1)(a) is the person who is convicted". This may, "speak against a conclusion that a licensee - whether or not they are deemed to be 'guilty of an offence' within the meaning of a section 149 - has committed that offence within the meaning of section 144C(1)".
5. Nonetheless, the Respondent prefers its construction because: 1. The deeming effect of section 149 is not only to attribute liability to the licensee or manager, but operates to deem the licensee or manager to have committed the offence; and 2. Section 144C is not consistent in its requirement of a nexus to the licensee being the person who committed the offence. Section 144C(1)(b) turns only upon the payment of an amount under a penalty notice in relation to the offence, and it does not specify against whom the penalty notice must have been issued, leaving open the possibility that a licensee may have 'committed' an offence under section 144C(1) by virtue of an employee having been issued with, and having paid the penalty due, which is what occurred here. The Respondent submits it would be incongruous for the licensee to be deemed to have committed an offence which may be prosecuted by way of penalty notice, but not to have committed an offence where the offence is to be dealt with by way of the laying of charges and a conviction being entered in Court. It says this speaks against any construction other than one which notionally attributed the 'conviction' to the licensee or manager (under section 149) and which therefore triggered the Authority's Part 9A regulatory powers.
6. Second, the Respondent submits the structure of the Liquor Act is consistent with its preferred construction. Section 149 appears in Part 10, under the title "Criminal proceedings and related matters". Part 10 sets out procedures by which offences under the Liquor Act are to be prosecuted and treated. It falls in different Parts to other provisions dealing with offences, like Part 6. The Respondent says this "deliberate structuring" speaks against the conclusion that "section 149 exists as a standalone offence which must be separately prosecuted before a licensee" may be deemed to have 'committed' an offence.
7. Third, the Respondent submits that its construction is consistent with the broader operation of the Part 9A regime, which does not condition the taking of remedial action upon the identity of the person who committed the demerit offence. For example, Division 4 of Part 9A confers power on the Authority to take remedial action where demerit points have been accumulated with respect to hotel licences. The relevant inquiry is not be reference to the person who committed the demerit offence, but the premises on which the offence was committed. Thus relevant demerit points under section 144T are defined to mean "a demerit point incurred under Subdivision 1 of Division 3 for a demerit offence committed on or in relation to the licensed premises". The Respondent therefore disagrees with the Applicant that a relevant demerit point attaches to a licensee or manager. It simply has to have a nexus with the licensed premises for which the licensee or manager is responsible. According to the Respondent, section 144T does not limit the provision's scope of application to circumstances where the licensee or manager was strictly responsible for committing the offence for which the demerit points were imposed.
8. Finally, the Respondent submits that the Applicant's construction renders the Part 9A regime otiose. Were it the case that pursuant to section 144H, the licensee or manager must have been convicted of the demerit offence before demerit points may be incurred, then the Respondent says the only circumstance in which section 144H would have any work to do is where the licensee or manager has been specifically charged and convicted under section 149, for that is the only means by which the misconduct of an employee may be attributed to the licensee or manager. In other words, the ability of the Authority to take appropriate regulatory action would be dependent upon police prosecution, which is unlikely to occur when the obvious contravener is the person who engaged in the conduct impugned. The Respondent submits the Tribunal should not adopt a construction which so narrowed the circumstances in which the Authority may take regulatory action unless an intention to so limit the Authority's power was clear on the face of the Act.
9. The Respondent observes that the Applicant relies heavily upon the purported injustice associated with Penplay being prevented from "taking advantage of the opportunities afforded under section 144C(2) to have the demerit points revoked." The Respondent questions whether Penplay really was exposed to the significant consequences of action under Part 9A without having any control over the action taken by the employee in respect of the penalty notice. The Respondent suggests that it is in fact likely that a licensee or manager would intervene in the conviction of the employee to ensure that the allegations are appropriately managed so as to reduce his or her or its own exposure. That is evident, for example, from Mr Nugent's own engagement of legal representation on behalf of Ms Watson.
10. The Respondent submits then that any perceived unfairness in the regime is misplaced. The system is designed to ensure that licensees and their employees do not compromise the objects of the Liquor Act, which include the sale of liquor being consistent with the expectations, needs and aspirations of the community. It says it is precisely part of the design of the regime that a licensee may face the consequences of the Authority's protective function in circumstances where practices within their premises contravene the Liquor Act. The Respondent argues that the Part 9A regime is predicated upon the broad expectation that all persons who exercise functions under the Liquor Act do so in a manner with due regard to the "need to encourage responsible attitudes and practices towards the promotion, sale, supply, service and consumption of liquor' without detracting from community life." Within that framework, the Respondent submits it is irrelevant that an employed bartender might be entirely blameworthy and the licensee might be entirely blameless. It says that the statutory scheme in fact contemplates that ultimate responsibility even for a blameworthy employee would reside with the licensee or manager who employees them, as they are responsible for supervision of the employee's discharge of duties through proper procedures.
11. The Authority concludes that it appropriately exercised its powers under Part 9A because those powers were triggered by the automatic attribution of the employee's commission of a demerit offence to Penplay.

Consideration of the Tribunal

1. The Tribunal considers the ordinary meaning of the relevant provisions, taking into account their context and the purpose and object underlying the Liquor Act.
2. The Tribunal begins with section 144C(1) which is the gateway provision for the application of the demerit regime. It states that (emphasis added): (1) For the purposes of this Part, a person commits a demerit offence if the act or circumstance giving rise to the offence occurred or existed on or after the commencement of this Part and - (a) a court convicts the person for the offence, whether or not it imposes any penalty, or (b) an amount is paid under a penalty notice in relation to the offence, or (c) a penalty notice enforcement order under the Fines Act 1996 is made against the person in respect of the offence.
3. In this case, the "person" who is said to have committed the demerit offence and thus incurred demerit points, is Penplay itself, as the licensee. By the terms of section 144C(1), Penplay only commits a demerit offence if one of the three preconditions in paragraphs (1)(a) to (c) is met. By the Applicant's interpretation, those preconditions can only be met if the licensee said to have committed a demerit offence has itself been the subject of a conviction, a paid penalty notice or a penalty notice enforcement order for the offence. By the Respondent's interpretation, those preconditions can be met if an employee of the licensee has been subject of a conviction, a paid penalty notice or received a penalty notice enforcement order. The Tribunal prefers the Applicant's interpretation, having considered the following factors.
4. First, the Applicant's interpretation is supported by the plain and ordinary meaning of the text of section 144C(1)(a) and (1)(c). The first precondition in subsection (1)(a) uses the definite article to refer to "the person" being convicted by a court of "the offence". It is clear from the use of the definite article that a conviction has to have been made against the same person as the person who is said to have committed the demerit offence. A conviction can only follow from a court process being initiated against that person. Even the Respondent acknowledges that the terms of section 144C "tether the notion of a person 'committing a demerit offence' to that person being convicted by a Court (under section 144C(1)(a)). According to the Respondent, the statutory language "might be construed to suggest that the relevant person who commits the offence under section 144C(1)(a) is the person who is convicted".
5. Likewise, subsection 144(1)(c) uses the definite article "the person" in the context of a person committing a demerit offence "if a penalty notice enforcement order under the Fines Act is made against the person". The provisions in section 144C(1)(a) and (c) both logically entail some process to have been undertaken against "the person", Penplay, (either a conviction of Penplay or a penalty notice enforcement order against Penplay). The plain language of these provisions is inconsistent with the Respondent's position that a licensee does not need to be subjected to a court process leading to a conviction or a penalty notice leading to a penalty enforcement order. In any event, it is common ground that no conviction was ever recorded against Penplay and no penalty notice enforcement order was ever made against Penplay, and thus the application of the Part 9A regime in this case hangs on a finding that section 144(C)(1)(b) applied to Penplay.
6. The Tribunal must therefore decide whether section 144C(1)(b) can apply to Penplay when there was no penalty notice issued to Penplay, in relation to "the offence" said to have been committed by Penplay. Section 144(C)(1)(b) uses the passive "is paid" in respect of the amount paid under a penalty notice. This indicates that a fine may be paid by anyone, and not necessarily the person who commits the offence that attracted the fine. For example, a business partner, a parent, or a spouse could pay a fine, with the same effect. But must the penalty notice have been issued to a particular person? The drafting of section 144C(1)(b) on this point is more obscure than (1)(a) and (1)(c) due to the lack of reference to "the person" being the recipient of any penalty notice. The following further factors lead the Tribunal to find that section 144C(1)(b) does indeed require the penalty notice to have been issued to the same person as alleged to have committed the demerit offence, i.e. Penplay.
7. The second factor in support of the Applicant's interpretation is that it is supported by the immediate context of section 144C(1)(b) within other provisions of section 144C(1). It would be incongruous for the precondition in (b) to dispense with the need for a legal process against the same person, when paragraphs (1)(a) and (c) envisage either a court proceeding or penalty notice enforcement order being made against the person. A penalty notice enforcement order could logically only be made against the person if that same person had first received a penalty notice. (see Fines Act, section 40).
8. The third factor in support of the Applicant's interpretation is the immediate context of section 144C(1) when read with section 144C(2), which provides for any demerit points based on "the conviction, penalty notice or penalty notice enforcement order" to be revoked and the effect of remedial action to cease if: (a) the conviction is overturned on appeal, or (b) the person elects, after an amount is paid under the penalty notice, to have the offence dealt with by a court, or (c) the penalty notice, or the penalty notice enforcement order to the extent that it applies to the penalty notice, is withdrawn or annulled.
9. The Tribunal should construe a term so that "it is consistent with the language and purpose of all the provisions of the statute" (Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [24]; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]; McIntosh v Independent Liquor and Gaming Authority [2019] NSWCATAD 101 at [44]). The words "the person" should thus be given the same meaning throughout section 144C. This would mean the person who commits the demerit offence, i.e., Penplay. Section 144C(2)(b) makes no logical sense if "the person" was never issued with a penalty notice for which an amount was paid. It would be impossible for a person to elect to have an offence under a penalty notice dealt with by a court if it had never received the penalty notice in the first place. Section 144C(2)(b) only makes sense if the "person" accused of committing the demerit offence is the same person who has been issued with the penalty notice mentioned in section 144C(1)(b). Indeed, all of section 144C(2) would be meaningless if the Respondent's interpretation were preferred and the Tribunal should avoid interpretations that render provisions otiose. In the Tribunal's view, the references in section 144C(2) to appealing convictions, electing to take penalty notices to court, or pursuing the withdrawal of penalty notice enforcement orders clearly indicate that Parliament intended that the ordinary processes of criminal procedure would be followed and applied against a licensee before sanctions under the Part 9A demerit scheme were imposed.
10. The fourth factor in favour of the Applicant's interpretation of section 144C is that it is supported by the context of other provisions in Part 9A. Several provisions, including section 144H and the definitions in section 4 of "demerit point" and "category 2 demerit offence" make clear that demerit points were intended to apply when the licensee or manager commits an offence. This is supported also with the statement in the Second Reading Speech that "demerit points will attach to licensees and managers of licensed premises" to "directly target[] the irresponsible operators in breach of the liquor laws." Similarly, a guideline published by the L&GNSW, referenced in the Respondent's section 58 materials, states that under the Part 9A system "a demerit point is automatically incurred where a licensee or approved manager commits one of the most serious offences." Under the heading "Who incurs demerits points under the system?" the Guideline states that that in most cases "demerit points are incurred by the individual licensee or approved manager that has committed the offence…". The Tribunal also disagrees with the Respondent's argument that the Applicant's interpretation would leave section 144H with "no work to do". Section 144H ascribes the number of demerit points for each category of demerit offence. A further provision within Part 9A that supports the Applicant's interpretation is section 144ZI, which foresees that licensees have the right to appeal their convictions. A right to appeal a conviction logically would not be available if the Respondent is correct and it is not necessary for a licensee to have been convicted in the first place.
11. A fifth factor in support of the Applicant's interpretation is that it is consistent with the object and purpose of Part 9A of the Act (See, e.g. Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012} 250 CLR 503 at [39], Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]; Interpretation Act 1987 (NSW), section 34). Part 9A introduces an incentives and sanctions regime that is meant to be administratively applied separately from and in addition to the criminal offence regime set out in other parts of the Act. The demerit point system is not intended to displace the ordinary criminal processes. Rather, once those criminal offences are established following the usual actions, the demerit regime can carry further consequences. As noted in the Second Reading Speech noted: there is already a comprehensive range of offences and penalties under the Liquor Act that enable the police and regulators to take action against business and individuals who do the wrong thing. The new system will see the most serious offences subject to higher penalties and carry greater consequences.
12. It is consistent with the design of this system that only after serious offences are established through police or regulators taking action, should the demerit points be "automatically incurred" and the sanctions regime be activated. If the serious offences are made out, then demerit points automatically follow, with the licensees then facing the "greater consequences", such as increased licence fees, remedial actions or even suspension. The Tribunal accepts that selling liquor to a minor is a serious offence and the Parliament intended to treat it as particularly serious by classifying it as a 'category 2' demerit offence' with the graver consequences that may then follow. The seriousness of the offence and the consequences, however, make it less likely that Parliament would have intended to dispense with proper processes available to licensees for defending against the offences altogether (e.g., the availability of defences under section 117(3) of the Liquor Act, or the discretion under section 10 of the CSP Act). Those processes help establish whether a licensee is worthy of incentives or deserves sanctions under the Part 9A regime. There would be no scope under the Respondent's interpretation to distinguish between licensees who genuinely have due regard to responsible practices in the sale of liquor but nonetheless might need to deal with a blameworthy employee; and venue operators who have disregard for the objects and purposes of the Act. The Tribunal is not convinced by the Respondent, either on the evidence available in this case, or as a matter of general practice, that licensees can always be expected to intervene in the conviction or penalty of an employee to ensure that the allegations are appropriately managed to reduce their own exposure. That course may not be available if an employee has been fired, moved on, or has their own reasons for having the fine paid.
13. The Tribunal next considers whether the preferred interpretation is nevertheless displaced due to the operation of section 149, which provides: 149 Licensees and managers liable for act of employees etc If, in contravention of this Act or the regulations - (a) an employee or agent of a licensee, or (b) an employee or agent of the manager of licensed premises, or (c) a person acting, or purporting to act, on behalf of a licensee or the manager of licensed premises, sells or supplies liquor on the licensed premises, the licensee or manager (as the case requires) is guilty of an offence and liable to the punishment specified for the contravention.
14. Section 149 is an enabling provision that creates liability for employers for the acts of the employees who have violated one or more provisions relating to sale and supply of alcohol under the Liquor Act. The fact that it establishes a vicarious or strict liability offence does not mean that a court cannot consider discretionary factors in section 10 of the CSP Act (Lavoratos).
15. Section 149 of the Act should not be read as dispensing with the need to issue a process against the licensee. The approach would be difficult to reconcile with the text of section 144C. It would also lead to an anomalous result deprives licensees like Penplay of due process and the opportunity to be heard on the underlying offence and appropriate consequence. As noted above, it is no answer to say, as the Respondent does, that sometimes the licensee may be in a position to influence or assist an employee with a charge. That course may not always available to an employer, for example if it fired the employee or the employee left for unknown reasons, or there were utilitarian reasons for paying the penalty unrelated to guilt or innocence.
16. The Tribunal also disagrees with the Respondent that the words "is guilty of an offence" in section 149 entail an automatic finding of guilt without the ordinary processes being followed to establish that guilt. The phrase "is guilty of an offence" is used in 16 other places in the Liquor Act. The Tribunal considers that the words should not be given a different meaning in different parts of the Act. Rather, the same words should be read consistently across all provisions in the Act (See also McKintosh v Independent Liquor and Gaming Authority [2019] NSWCATAD 101 at [44]). For example, the words "is guilty of an offence" appear in section 124 of the Liquor Act for a licensee allowing a minor to enter licensed premises. Those words in section 124 do not entail an automatic finding of guilt. In relation to the events on 10 April 2021, the police in fact issued a penalty notice to Penplay in connection with an alleged contravention of section 124, which Penplay ultimately contested and had withdrawn. It would not have been difficult for the police to issue a penalty notice to Penplay also in respect of the section 117(1) contravention, with reference to section 149. The Tribunal does not accept the Respondent's contention that requiring such a step would "severely narrow the scope of the Authority's regulatory power and undermine its ability to exercise its functions in furtherance of the objects and purposes of the liquor licensing regime."
17. Finally, the Respondent observed that breach of section 149 is not listed as a separate offence that may be the subject of a penalty notice under the Liquor Regulation, Schedule 6. However, the definition of 'category 2 demerit offence' indicates that an offence against section 149 is properly framed as an offence against section 149 "in respect of a contravention of section 117(1)". The Tribunal finds that a penalty notice could accordingly have been issued to Penplay in respect of the alleged contravention of section 117(1) and with reference to section 149. No such notice was issued.
18. Due to the 12-month time limit in section 146, the time for issuing a penalty notice or court attendance notice to Penplay with respect to section 117 has now passed.
19. Based on the considerations outlined above, in the absence of any conviction against or penalty notice issued to Penplay itself, the Tribunal finds that Penplay could not have committed a demerit offence within the meaning of section 144C of the Liquor Act. Accordingly the Decision finding that Penplay incurred demerit points and was subject to remedial action should be set aside.

Secondary Issue for Determination: Should the Tribunal in any event impose a Condition on the Licence pursuant to section 53 of the Liquor Act

The Applicant's Submissions

1. The Applicant does not consider it is available to the Tribunal to impose the incident register condition in circumstances where there is no finding that the licensee has committed a demerit offence, or any offence.
2. While it remains open to the Authority at any time to take impose conditions on the licence under section 53 of the Liquor Act, the Applicant submitted that there are no circumstances presently before the Tribunal that would justify the Tribunal imposing a condition on the Licence.

Position of the Respondent

1. In the event that the Tribunal does not accept the Authority's construction Part 9A of the Liquor Act, the Authority submits that it remains open to the Tribunal to vary the Decision by imposing the same conditions imposed by the Authority in its Decision, but to do so in exercise of the Authority's powers to impose conditions on liquor licences pursuant to section 53 of the Liquor Act.
2. Section 53(1)(b) of the Liquor Act provides that the Authority may on its own initiative "at any time" and "without limiting any other provision of this Act" … "impose conditions on a licence". Such conditions are stated to include, but are not limited to, restricting trading hours. Under section 53(4), the Authority must not impose a condition on a licence unless the Authority has given the licensee a "reasonable opportunity to make submissions in relation to the proposed decision" and taken such submissions into consideration.
3. The Respondent observed that, by virtue of section 63(2) of the ADR Act, the Tribunal is vested with "all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision" and thus has all the decision-making power of the Authority, including that under Article 53 of the Liquor Act. The Respondent noted that the Tribunal has suggested that the power under section 63(2) is not "at large" but rather permits the Tribunal to make decisions which were available to the administrator to make in the context of the circumstances that were before it at the time that it made the decision under review (citing Commissioner of Police, NSW Police Force v Cseszko [2016] NSWCATAP 194 at [13]).
4. The Respondent pointed out at the hearing that the section 53 power sits outside of Part 9A, and thus an exercise of section 53 power is not dependent upon Part 9A being "enlivened". The fact that the original Decision was pursued through the lens of Part 9A does not, according to the Respondent, foreclose the Authority (and therefore does not foreclose the Tribunal) from relying upon section 53 to support the Decision.
5. The Respondent submits that on the evidence available, there is an adequate factual basis for the Tribunal to conclude that it is appropriate to exercise the power under section 53 to impose the incident register condition on the Licence. The Respondent considers the imposition of the incident register condition to be appropriate having regard to the Crime Maps - BOSCAR statistics which demonstrate that the Tweed Local Government Area (in which the Premises are located) recorded higher than state average rates for alcohol-related assaults, homicides, robberies and sexual offences in recent years. Where the incidence of alcohol-related offending is higher in the local area in which the Premises is located than across the State, the Authority considers there to be a greater need to take regulatory action. The sale of liquor to a minor is one of just a few category 2 demerit offences, and is plainly treated by the legislature as especially serious as to warrant more severe punishment or quicker regulatory intervention. The Respondent submits this speaks in favour of licence conditions being imposed, notwithstanding that Penplay does not otherwise have a record of historical contraventions of the Liquor Act.
6. Other considerations the Respondent says favour imposition of a condition include that the Premises advertise the availability of takeaway from the Premises (which it admits could be a relic of Covid lockdowns); and that Mr Nugent's own evidence indicates that the use of fake IDs is pervasive and Mr Nugent's staff failed to check IDs on the night in question. An incident register would permit incidents involving minors attempting to enter, remain in and consume alcohol on the Premises to be recorded, and may facilitate regulatory oversight of Penplay's strategies directed towards redressing and minimising the recurrence of such incidents. In the Respondent's view, therefore, the imposition of such a condition is a reasonable and appropriate response in exercise of the Authority's power under section 53.

Consideration of the Tribunal

1. Having found that the Applicant did not commit a demerit offence within the meaning of section 144C(1) of the Liquor Act, the demerit regime in Part 9A of the Act is not enlivened. The alternative relief sought by the Respondent would require the Tribunal to exercise a general power of the Authority that lies outside of Part 9A.
2. The Tribunal notes that its power under section 63(2) of the ADR Act is not "at large" (Commissioner of Police, NSW Police Force v Cseszko [2016] NSWCATAP 194 at [13]). Rather, the Tribunal is "confined to making decisions which were available to the administrator to make in the context of the circumstances that were before it at the time it made the decision under review". While the Tribunal accepts that generally, the Authority has discretion to impose conditions on a licence under section 53 of the Liquor Act, the context of the Decision which was rendered in this case was that of recommending "potential remedial action" against a licence under Part 9A of the Liquor Act. The Decision followed from a meeting of the ILGA L&G Committee on 13 April 2022, which in turn considered a 22 February 2022 notification and submission from L&GNSW which were explicitly framed as being for "remedial action for the accumulation of demerit points under Part 9A of the Liquor Act 2007".
3. Against this background, the Tribunal considers the Respondent's request to go beyond a review of the "decisions which were available to the administrator to make in the context of the circumstances that were before it at the time it made the decision under review".
4. The Tribunal therefore declines to substitute or vary the Decision with one based on broader discretion of the Authority under section 53. This in no way reflects any finding by the Tribunal about the alcohol-related crime statistics presented from the Tweed Region or the measures that might be taken by the licensee and community more broadly to strengthen their response to such issues. The Tribunal's decision in this respect does not prevent the Authority from exercising its powers under section 53.

Conclusion

1. Based on the considerations outlined above, the Tribunal finds that the correct and preferable decision to be made on the facts and circumstances of this case is that the licensee, Penplay, has not committed a demerit offence within the meaning of section 144C of the Liquor Act.
2. Accordingly, the powers available to the Respondent (and to this Tribunal on merits review) under the demerits regime in Part 9A of the Liquor Act are not enlivened. Pursuant to section 63(3)(c) of the ADR Act, the appropriate order is to set aside the Respondent's decision. The Tribunal decides to take no action in substitution for that decision. Time has now passed under section 146 of the Liquor Act for any penalty or court attendance notices to be issued against Penplay for the April 2021 events.
3. In the circumstances outlined above, the Tribunal also declines to make an order imposing a condition on the licence under section 63(2) of the ADR Act and section 53 of the Liquor Act.

Orders

1. The Tribunal makes the following orders: 1. The Respondent's Decision under review is set aside. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 March 2023