Sunset Investments Pty Ltd v Casino Liquor and Gaming Control Authority

Supreme Court of NSW|2010-12-03|Before: Davies J

CITATION : Sunset Investments Pty Ltd v Casino Liquor and Gaming Control Authority [2010] NSWSC 1411 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION : (1) A declaration that Nightclub Licence Serial Number 24006572 issued pursuant to the provisions of the Liquor Act 1982 in respect of premises known as Adrenalin Sports Bar situated at 76 Grafton Street, Coffs Harbour was in force at 30 June 2008. (2) A declaration that the purported decision of the delegate of the Liquor Administration Board on 2 April 2005 to accept the surrender of the Licence was arrived at without according procedural fairness to the Plaintiff and is consequently invalid. (3) An order quashing the decision or the purported decision of the delegate of the Liquor Administration Board of 2 April 2005 to accept the surrender of the Licence.

LEGISLATION CITED : Liquor Act 1982 Liquor Act 2007

Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 Forbes v New South Wales Trotting Club Ltd (1999) 143 CLR 242 CASES CITED : Jabetim Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602 Kioa v West (1985) 159 CLR 550 Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 Tooheys Ltd v Housing Commission of New South Wales (1953) 53 SR (NSW) 407

PARTIES : Sunset Investments Pty Ltd (Plaintiff) Casino Liquor and Gaming Control Authority (Defendant)

COUNSEL : A Hatzis (Plaintiff) Submitting appearance

SOLICITORS : JDK Legal (Plaintiff) Crown Solicitor's Office (Defendant)

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

2010/341019 SUNSET INVESTMENTS PTY LTD V CASINO LIQUOR & GAMING CONTROL AUTHORITY

JUDGMENT 1 The Plaintiff is the owner of premises at 76 Grafton Street, Coffs Harbour. In late 1997 the Plaintiff's Chief Executive Officer, Mr Trevor Smith, obtained a nightclub licence in respect of what was known the "Adrenalin Sports Bar" at the property. 2 In 2003 the Plaintiff entered into a lease of the premises being the Sports Bar to a company called Toldalto Pty Ltd. Pursuant to the arrangements in that lease the nightclub licence was transferred to a Mr Zoran Stojcevski on 7 July 2003. 3 Ultimately, Toldalto experienced trading difficulties and in 2004 it ceased to trade at the premises. Its lease was terminated by the Plaintiff. 4 Thereafter the Plaintiff endeavoured to find a new tenant for the premises but was not able to do so until early 2010 when it entered into a Heads of Agreement with Bird Investments Pty Limited to take a tenancy of the premises. 5 When Bird Investments Pty Limited was doing a due diligence in relation to the premises it discovered, and informed the Plaintiff, that the nightclub licence that had been transferred to Mr Stojcevski had been surrendered in 2005. This had been done without notice to the Plaintiff. 6 Subsequent investigations ascertained that the reason this happened was that the last known address for the Plaintiff was 28 Donegal Crescent, Bundall, Queensland, the address of the Plaintiff at the time the licence was transferred to Mr Stojcevski. However, on 26 October 2004 the Plaintiff changed the address of its registered office and its principal place of business. The Liquor Administration Board had sent correspondence to the Plaintiff at the Bundall address and it had been returned saying that the Plaintiff was no longer at that address. Despite that happening, the Liquor Administration Board accepted the surrender of the licence on 12 April 2005. 7 The Plaintiff now seeks declarations that the decision of the Board to accept the surrender of the licence was invalid because it was arrived at without according procedural fairness to the Plaintiff, and a declaration that the nightclub was in force as at 30 June 2008. The significance of that date is that it was the date when the Liquor Act 1982 was repealed and the Liquor Act 2007 came into force. Transitional provisions in the new Act have the effect that a licence held as of 30 June 2008 under the old Act was held under the new Act. 8 Although the Defendant initially filed an ordinary appearance in the proceedings, it subsequently filed, with the agreement of the Plaintiff, a submitting appearance. 9 When the matter came on for hearing before me a Mr Dalla-Pozza from the Crown Solicitor's Office appeared. He informed the Court that a submitting appearance had been filed because the Authority took the view that there was no defence to the relief that was sought. He also offered to provide any assistance to the Court as amicus if that was needed. I was, in any event, very considerably assisted by Mr Hatzis of counsel for the Plaintiff who had prepared detailed written submissions and also carefully took me through the legislation and written evidence. The surrender of the licence 10 On 5 January 2005 Mr Stojcevski lodged his Application to Surrender the Licence. The form on which this was done does not appear to be a form prescribed by the Act or any regulations. It asks the details of the licence number, the name and address of the licensee, the address of the licensed premises, the reason for the application and contact details. It then says: The following documents are attached:

Freehold Owners consent to the surrender (annexure "A";

If any of the documents cannot be lodged, please explain why. 11 Mr Stojcevski wrote: Have not got a copy of the licencee, leasor (sic) has it. Freehold owner I don't know how to contact. 12 The second page of the document which is headed TO BE COMPLETED BY THE BUSINESS & LICENCED OWNERS. Although the copy of Mr Stojcevski's application was cut off on the left-hand side what is made clear is that persons who "are directly or indirectly interested in the business or the profits of the business carried on pursuant to the licence" are to be listed with their addresses. The document provides that those persons mentioned must consent to the surrender of the licence and that each such person is to answer the question "Do you consent to the surrender of the licence?" and then sign their name. 13 There was then a section as follows:

Until such time the above documents and signatures are lodged with the Board, or an adequate written explanation provided as to why they cannot be lodged, the surrender cannot proceed. All questions and signatures on both pages MUST BE COMPLETED before lodgement. Underneath that Mr Stojcevski has written: I can not get into contact with the above partys (sic). 14 The Liquor Act 1982 only mentions surrender of a licence in s 19A which provides that a licence remains in force until its surrender in writing is accepted by the Board, defined as meaning the Liquor Administration Board. There do not appear to be any provisions in the Act or Regulations which deal with surrender whether in procedural terms or otherwise. However, when considering who are persons that are interested in the business or the profits of the business carried on pursuant to the licence (as the Application to Surrender identifies), it seems apt to refer to s 38 of the Act. Section 38 deals with an affidavit that must accompany an application to transfer a licence under s 41. 15 Section 38 relevantly provides: (3) The affidavit specified in this subsection is an affidavit by a person having knowledge of the facts stating: (a) that the person has made all reasonable inquiries to ascertain the information required to complete the affidavit, and (b) whether there are any persons (other than financial institutions) who will be interested in the business, or the profits of the business, carried on under the licence , and (c) if there are any such persons, their names and dates of birth and, in the case of a proprietary company, the names of the directors and shareholders. (4) For the purposes of subsection (3), a person is interested in the business, or the profits of the business, carried on under the licence if the person is entitled to receive: (a) any income derived from the business, or any other financial benefit or financial advantage from the carrying on of the business (whether the entitlement arises at law or in equity or otherwise), or (b) any rent, profit or other income in connection with the use or occupation of premises on which the business is to be carried on. (emphasis added) 16 It is to be noted that a person in the position of the Plaintiff, who is entitled to receive rent in connection with the use or occupation of the premises in which the business is to be carried on, is a person interested in the business or the profits of the business. It seems likely that Mr Stojcevski understood that because he said that he was not able to get into contact with the people who ought to have been included on page 2 of his application. 17 In any event, on 1st February 2005 the Liquor Administration Board sent a letter to the Plaintiff care of 28 Donegal Crescent, Bundall, QLD, 4217 noting that the Plaintiff was the owner of the licensed premises being the Adrenalin Sports Bar at 76 Grafton Street, Coffs Harbour. It noted the application of Mr Stojcevski and went on to say: If you consent to the surrender of the licence, please complete the enclosed form and return it to this office before close of business, within 14 days from the date of this letter. 18 It subsequently transpired that this letter was returned to the Board on 9 February 2005 marked "Return to Sender - left address/unknown". 19 Amongst the Board's documents there was found a further letter addressed to the Plaintiff at the same address headed "Second and Final Notice" but also dated 1st February 2005. That letter was also returned to the Board "Not known at this address" and that appears to have taken place on 3 March 2005. 20 If it is assumed that the first letter to the Plaintiff and the letter headed "Second and Final Notice" were not sent on the same day, although that same date appears on them, it is difficult to understand why when the first letter was returned "Not known at this address" the second letter was sent to the same address. 21 The decision to surrender was made by a person at the Board whose name cannot be discerned. The decision is dated 12 April 2005 and it says: Surrender accepted with effect from 12/4/04 (sic) under delegation from the Board.

It is then signed and dated as I have said. It seems likely that the date of 12/4/04 is an error. 22 That decision is written on what is called a Surrender Application Cheque List which noted that "final notice forwarded to owners on 1st February 2005, letters were either returned unopened or no response has been received".

Was the Plaintiff denied procedural fairness? 23 It is not necessary to detail what a nightclub licence enabled at the premises to which it was attached. It is sufficient to note that a fee of $10,000 was payable for the grant of such a licence, and the fact of its existence has been accepted as having a value to the owner's reversionary interest when that licence has been transferred to a lessee or a lessee's nominee: Jabetim Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602 at [3]-[6]; Tooheys Ltd v Housing Commission of New South Wales (1953) 53 SR (NSW) 407 at 414. 24 Quite apart from the value of an owner's reversionary interest in the licence, discussed in Jabetin, it is clear that the Liquor Act 1982 recognised the interest that a person in the Plaintiff's position has in the licence and what might happen to it - see for example s 41(4) and, by reference ss 38(3)(b) and 38(4)(b), 44(1)(a), 67(5) and 090(1)(a). Accordingly, the Plaintiff had rights, interests and legitimate expectations which required protection, and which resulted in the Plaintiff having a right to be accorded procedural fairness: Kioa v West (1985) 159 CLR 550 at 584. If the power given to a decision-maker must be exercised in conformity with the rules of natural justice, the exercise of the power adversely to the interests of the person denied natural justice is liable to set aside: Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 at 609. 25 In my opinion, the Plaintiff had a significant interest in any application for the surrender of the licence. It had paid $10,000 for the licence. The value of its reversionary interest in the premises was obviously enhanced by the existence of the licence, particularly where the premises had been operated as a nightclub and it was still intended to do so as evidenced by the deed entered into between the Plaintiff and Bird Investments. 26 The Board's own forms required to be completed by an applicant for surrender of a licence, mandated that a person in the position of the Plaintiff needed not only be informed of the application but also consent to the surrender. Moreover, the letters sent to the Plaintiff, ultimately returned to the Board, envisaged what a non-consenting owner might do including applying to transfer the licence elsewhere. 27 Nothing in the documents makes it apparent why there was any urgency in dealing with the surrender application, nor why when the letters to the Plaintiff were returned, further efforts were not made to locate the owner. As the documents make clear, the Plaintiff at all times acted in accordance with its responsibilities to notify changes of registered office and principal place of business. A simple search with ASIC would have disclosed to where the registered office of the Plaintiff had been transferred and where the principal place of business was after it moved from the Bundall address where the letters from the Board were addressed. 28 When a decision is made in breach of the principle of natural justice entitling an interested party the right to be heard, the better view is that the decision is voidable with the consequence that it is deemed to have been void ab initio: Forbes v New South Wales Trotting Club Ltd (1999) 143 CLR 242 at 277. There was, in fact, no decision at all: Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [33], [51] and [53]. 29 The Plaintiff sought only declarations that the licence remained in force as of 30 June 2008 and that the decision was invalid on the basis that procedural fairness was not accorded to the Plaintiff. It is appropriate that those declarations should be made. However, I raised with counsel for the Plaintiff whether, given that a decision had purportedly been made and recorded, an order in the nature of certiorari should not go to quash that decision. Counsel agreed that that was the appropriate course. In the light of what was said in both Forbes and Bhardwaj, it may be that only a declaration is necessary, but the joint judgment of Brennan CJ, Dawson & Toohey JJ in Darling Casino at 609 suggests that an order would be made to set aside a decision made in breach of a principle of natural justice. That order would be an order in the nature of certiorari. For more abundant caution, I consider it appropriate also to make an order quashing the decision. 30 The Plaintiff does not seek any order for costs.

Conclusion 31 I make the following declarations and orders: (1) A declaration that Nightclub Licence Serial Number 24006572 issued pursuant to the provisions of the Liquor Act 1982 in respect of premises known as Adrenalin Sports Bar situated at 76 Grafton Street, Coffs Harbour was in force at 30 June 2008.

(2) A declaration that the purported decision of the delegate of the Liquor Administration Board on 2 April 2005 to accept the surrender of the Licence was arrived at without according procedural fairness to the Plaintiff and is consequently invalid.

(3) An order quashing the decision or the purported decision of the delegate of the Liquor Administration Board of 2 April 2005 to accept the surrender of the Licence.

09/12/2010 - Typographical error - Paragraph(s) coversheet

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