Australian Wine Traveller P/L v Liquor Stores ASS No. Scgrg-99-1094
[2000] SASC 139
•2 June 2000
AUSTRALIAN WINE TRAVELLER PTY LTD v
LIQUOR STORES ASSOCIATION INC
[2000] SASC 139
Full Court: Doyle CJ, Duggan and Lander JJ
DOYLE CJ.The Licensing Court refused an application made to it for a special circumstances licence to be granted pursuant to s 40 of the Liquor Licensing Act 1997 (“the Act”). The applicant appeals to this Court against that decision, the appeal being brought pursuant to leave granted by a Judge of this Court.
The applicant wishes to conduct a business involving the sale of liquor for consumption off the licensed premises. The business is to be conducted in an unusual manner. The applicant asked the Court to impose a condition permitting it to sell wine only, and in quantities of not less than six bottles. The applicant proposes to receive orders and payment electronically by email. The applicant proposes to arrange for wine purchased from it to be despatched to the purchaser from the relevant producer’s premises. No wine will be stored at the applicant’s premises, or sold from those premises. Members of the public will not come to the applicant’s premises to purchase wine or, in the ordinary course of things, for any other purpose.
The Licensing Court held that s 40 of the Act did not permit the grant of a licence for a business involving sales made exclusively in this manner. The applicant challenges that decision.
The appeal raises a difficult issue of principle, an issue which goes to one of the fundamental features of the Act.
Facts
The applicant proposes to conduct what the Acting Judge called “a specialist tourist and travel service focussing on South Australian wine regions”. The applicant proposes to operate a booking service for wine tours, restaurants and accommodation, particularly in the wine producing regions of South Australia. The applicant identifies a strong link between tourism in a wine region and the sale of wine from that region. As part of this business, the applicant wishes to sell wine through the Internet.
The applicant expects to sell wine produced by smaller wine-makers. Larger makers, with established links to the retail market, are not expected to wish to sell their wine through the applicant. Even as to the smaller makers, the applicant will be able to sell wines produced by them only if they are willing to enter into an arrangement with the applicant.
As I have already said, dealings between the applicant and customers will be by email, although I gather that facsimile might be used as well. The applicant will not store or handle the wine sold on its licensed premises or elsewhere. On receipt of an order for wine the applicant will confirm the availability of the wine with the maker. The applicant will then arrange for payment to be made to the applicant by electronic means, and that will be followed by the despatch of the wine by the maker to the customer and, presumably, by a payment from the applicant to the maker.
The applicant wishes to be able to sell wine at any time on any day. In practice, however, sales will be arranged during normal office hours, because the sale process involves contact with the maker and the performance of clerical functions by the applicant’s staff.
That, stripped to its essentials, is the business proposed to be conducted by the applicant were the licence granted.
As I have already said, the licence sought by the applicant is a special circumstances licence provided for by s 40 of the Act. Section 40 provides as follows:
“(1).. A special circumstances licence authorises the licensee to sell liquor for consumption on or off the licensed premises in accordance with the terms and conditions of the licence.
(2)A special circumstances licence cannot be granted unless the applicant satisfies the licensing authority that -
(a).... a licence of no other category (either with or without an extended trading authorisation) could adequately cover the kind of business proposed by the applicant; and
(b) the proposed business would be substantially prejudiced if the applicant’s trading rights were limited to those possible under a licence of some other category.
(3). A special circumstances licence does not authorise extended trade in liquor unless the licence contains an extended trading authorisation.”
The proposed licence is a licence authorising liquor for consumption off the licensed premises. Section 42(2) of the Act provides that it is a condition of such a licence that liquor sold under the licence:
“(b).. if the liquor is not delivered personally to the purchaser at the licensed premises - must, unless the licensing authority gives an authorisation to the contrary, be despatched to the purchaser from the licensed premises:”
The applicant sought an authorisation pursuant to s 42(2)(b) to the effect that all liquor sold under the licence might be despatched to the purchaser from a place other than the licensed premises.
The Licensing Court Decision
The Acting Judge considered the terms of s 40, and the ambit of that provision in light of the general structure of the Act. The Acting Judge concluded:
“The ambit of Section 40 is yet to be authoritatively determined. It appears to me however to be an instrument permitting the Court to grant a licence authorising activities of the general type contemplated by the Act but in respect of which some feature of the proposed activity is forbidden by a statutory provision relating to licences of the class that generally regulate that type of activity. I do not believe that Section 40 permits the Court to construct a licence authorising the sale or consumption of liquor pursuant to a technique totally removed from the Act’s general structure.”
My impression is that the Court concluded that it did not have power to grant a licence under s 40 for the purposes of the proposed business. The decision is not a decision that there was power to grant the licence, but that the application should be refused in the exercise of the very wide discretion conferred upon the Court by s 53(1) of the Act.
Several features of the applicant’s proposal influenced the Acting Judge in reaching his conclusion. First, and most significantly, the applicant did not propose to sell liquor from “licensed premises”. The business to be conducted at the licensed premises, a room in a house occupied by the directors of the applicant company, was not a business in the sale of liquor in the sense in which such a business has generally been understood. The business to be conducted by the applicant has a very limited connection with the licensed premises. The business to be conducted by the applicant would, or could be conducted wherever the relevant computer terminal might be located. The Acting Judge doubted whether s 42(2)(b) contemplated a licensed business conducted wholly under an authorisation under that provision, as distinct from sales under such an authorisation being made as part of a business involving the sale of liquor from licensed premises in the usual way. The applicant’s proposal enabled it to by-pass the requirement to prove need or demand, requirements applicable to the grant of an hotel licence or of a retail liquor merchant’s licence. The Court accurately described these two licences as “the primary vehicles” for the sale of liquor by retail for consumption off licensed premises. The Court noted that the applicant’s proposal could result in undue proliferation of licences. The licence would not be granted in respect of a locality. There would be difficulty enforcing the prohibition in s 110 of the Act against the making of sales to minors.
A number of these matters would be relevant to the exercise of the discretion under s 53, even if the Court had considered that it was within its power to grant the licence.
On appeal the applicant challenges the Court’s reasoning, submitting that the court had power to grant the licence, and that there is no good reason in the exercise of the Court’s discretion to refuse the grant of the licence.
The Act
The structure of the Act is well known. I will not attempt a comprehensive summary.
The Act permits the sale of liquor pursuant to 10 different licences. Each licence confers different entitlements and, by comparison with other licences, imposes different restrictions on what can be done with the licence. Most of the licences are structured to fit a business of a well known type, such as an hotel, a bottle shop or a restaurant. There are two licences that do not fit a business of a well known type. They are the special circumstances licence and the limited licence provided for by s 41of the Act. The limited licence can be put to one side. It is a licence to be granted only for a special occasion, or series of special occasions and it is not intended to be granted frequently for a number of functions organised by the same persons. Hereafter I will confine my attention to the remaining 9 categories of licence.
A survey of the remaining 9 licences indicates that the licences intended as the main vehicle for the sale by retail of liquor for consumption off licensed premises are the hotel licence (s 32) and the retail liquor merchant’s licence (s 37). Sales of liquor for consumption off the premises can be made in certain circumstances under other licences. The manner in which the liquor trade in this State is structured and conducted appears to reflect the structure that flows from the categories of licence provided for by the Act.
Most licences authorise sales of the relevant kind during specified hours and, to some extent, with limitations referable to particular days.
Each section that creates a licence operates with reference to licensed premises. Licensed premises are defined by s 4 as “premises in respect of which a licence is in force”. If a licence is granted, there must be premises licensed under the licence, and subject to the licence.
All but four licences require that the authorised sales of liquor take place on licensed premises, whether the sales be for consumption on or off those premises. One of those four is the limited licence, which I have already indicated can be put to one side. The other three are the retail liquor merchant’s licence, the producers’ licence and the special circumstances licence. The section that constitutes the first two of these licences refers to sales being for consumption off the licensed premises and, in certain specified circumstances, to sale or supply of liquor for consumption on the premises. A special circumstances licence is simply a licence for sales for consumption on or off the licensed premises. None of these three sections specifically requires that sales be made on the licensed premises. However, s 42(2)(b) applies to each of these licences. In light of that it is unlikely that Parliament intended the concept of licensed premises to be of less significance in relation to these licences than it is in relation to other licences.
As a matter of history, and still, licensed premises are a significant aspect of the Act. There are numerous provisions which assume that the business conducted under the relevant licence will be conducted at licensed premises which are accessible to the public, will be identifiable as the licensed premises, and which will have to meet certain standards indicated by the Act.
An hotel licence cannot be granted unless the applicant proves that the grant is necessary to provide for the needs of the public in the locality: s 58(1). A retail liquor merchant’s licence cannot be granted unless the applicant proves that existing premises do not adequately cater for the public demand for liquor: s 58(2). There is no need to prove need or demand to obtain the grant of one of the other licences, including the special circumstances licence.
The Special Circumstances Licence
The terms of s 40 are set out above. The following points can be made about that provision.
Parliament must have envisaged a flexible licence, because the licence can permit the sale of liquor for consumption on or off the licensed premises. Parliament obviously envisaged that there will be licensed premises. If liquor is sold for consumption on the licensed premises, then it must be that the business conducted under the licence will have some similarities to what one might call the typical business of selling liquor for consumption on premises.
The fact, already remarked upon, that s 42(2)(b) applies to this licence, coupled with the point already made, strongly suggests that Parliament envisaged that a licence granted under this section would be in respect of licensed premises to be used to conduct a business in the sale of liquor that bears some resemblance to the sort of business that can be conducted under other licences.
On the other hand, s 42 makes it plain that Parliament envisaged the grant of a licence under s 40 for a business in the sale of liquor that cannot adequately be covered by one of the other licences, and which would be substantially prejudiced (or impeded) if the business had to be conducted under another licence.
So Parliament must have envisaged the grant of a licence under s 40 for a business that involves selling liquor in a manner that is not permissible under another licence. But the question presented by this case is whether there are any, and if so what, limitations upon the manner of selling liquor to be found in the terms of s 40. In particular, does s 40 require as an essential condition that the business be one involving the sale of liquor on the licensed premises, in the manner in which such sales are commonly made, subject to an authorisation under s 42(2)(b) permitting some liquor to be despatched to the purchaser from a place other than the licensed premises? It may be that the relevant question is better expressed negatively. Does s 40 permit the grant of a licence for the sale of liquor for consumption off the licensed premises for the purpose of a business which will not involve the sale of any liquor at all on the licensed premises, all liquor sold pursuant to the licence being despatched to the purchaser from a place other than the licensed premises?
The Act and the Internet
In Liquor Stores Assoc Inc v Wine Net Australia Pty Ltd (1999) 73 SASR 542 the applicant had been granted a retail liquor merchant’s licence for premises from which the applicant proposed to conduct a business of liquor sales, for consumption off the licensed premises, by Internet and mail order only. As in the present case, the applicant proposed to hold no liquor at its premises, and customers would not resort to those premises to purchase liquor. All liquor would be delivered from a producer or wholesaler to the customer. The business to be conducted by the applicant was similar to that proposed in the present case. The Licensing Court had granted an authorisation under s 42(2)(b) of the Act in respect of all sales.
This Court allowed an appeal against the decision, and quashed the grant of the licence. The basis of the decision was that the applicant had not proved that the licensed premises already existing in the locality did not adequately cater for the public demand for liquor. The Court also held that in any event a proper exercise of the wide discretion under s 53 of the Act required the refusal of the application: at 555. Factors apparently regarded by the court as significant were the very narrow range of facilities to be offered to the public under the licence, compared with what is ordinarily to be expected, and the fact that the nature of the applicant’s proposal was such that it did not involve the creation of licensed premises in the usual sense: at 552 - 553. Significantly, Perry J, with whose reasons the other members of the court agreed, doubted the propriety of an authorisation under s 42(2)(b) in respect of all sales to be made pursuant to the licence. He said (at 554):
“It might be argued that to authorise the despatch of all liquor sold from a location other than the licensed premises in circumstances in which no liquor will be stored at the licensed premises, being premises to which the public will not have access, is to create a novel species of licence which does not conform to the essential characteristics of a retail liquor merchant’s licence as contemplated by the Act.”
That case was, of course, an attempt to obtain a retail liquor merchant’s licence to be used only in a very limited fashion. It was a case of attempting to reshape a recognised category of licence into something else. But, as will appear, I consider that these remarks are relevant to the present case as well.
Perry J made it clear that the Act does not prevent the holder of a licence under the Act from selling liquor for consumption off the premises using the Internet. He said (at 555):
“I emphasise that I do not approach the matter on the footing that access by the public to the Internet to place orders for liquor should be denied; rather, the basis for my view is that the grant of a retail liquor merchant’s licence to a proposed business offering no more than such a facility cannot properly be justified ….”
I agree. The holder of a retail liquor merchant’s licence and other categories of licence may, as part of its business, invite customers to place orders with it using the Internet. It can receive payment through the Internet. The holder of a licence authorising the sale of liquor for consumption off the licensed premises can, if an authorisation is granted, arrange for the despatch of liquor directly from a producer or wholesaler, if that is an adjunct to the conduct of a business in the sale of liquor in the ordinary way for consumption off the premises. The issue raised by the present case is not, strictly, whether the Act permits the grant of a special circumstances licence for a business conducted wholly through the Internet. The main issue is whether the Act permits the grant of a special circumstances licence for a business not involving the sale of liquor from licensed premises at all, the licence being for the purpose of the sale of liquor in a manner which has no substantial connection with the licensed premises in question.
The issue raised by the case is in no sense peculiar to the Internet or to email. The same issue would arise if an applicant relied exclusively on facsimile orders, or upon telephone orders, or even upon door-knocking, in each case holding no liquor on the applicant’s licensed premises and making arrangements such that all liquor sold would be despatched directly to the purchaser from a place other than the licensed premises.
Conclusions
The features of the Act to which I have referred lead me to the conclusion that the reference in s 40 of the Act to licensed premises, although a reference only to the place at which liquor sold pursuant to the licence may be consumed (that is, on or off the licensed premises), is to be read as implying that the licence will be granted in respect of licensed premises, and that the licence may be granted only if liquor will be kept at those premises and sold pursuant to the licence by personal delivery to the purchaser at the licensed premises or by despatching the liquor to the purchaser from the licensed premises. It is not necessary for the grant of a licence that all sales of liquor for consumption off the premises be made in those ways. It is probably simpler to express the position negatively. A special circumstances licence may not be granted if the licence is in respect of premises at which liquor will not be kept, and at which liquor will not be sold by personal delivery to the purchaser or by despatch to the purchaser from the licensed premises. For that reason, the Licensing Court was correct to refuse the application. I reach that conclusion in the following manner.
The definition of “licensed premises” indicates that a licence is granted in respect of licensed premises. My reading of the Act is that if a licence is granted, there must be licensed premises. This suggests that the activity authorised by the licence, the sale of liquor, is to have a connection with those premises. That is why the licence is granted in respect of premises. The natural connection one would expect is that the sale of liquor will take place on the licensed premises.
Most of the sections creating a category of licence authorise and require that the sale of liquor take place on the licensed premises. The sections that do not so provide in terms nevertheless refer to licensed premises. They do so in a manner that implies that the intent of each section is to authorise the grant of a licence in respect of licensed premises, on which premises sales of liquor will be made. This conclusion is supported by s 42(2)(b), which provision makes sense only if it is read as implying that ordinarily liquor sold for consumption off the licensed premises will be delivered personally to the purchaser at the licensed premises, or despatched to the purchaser from the licensed premises. This, in turn, implies that liquor will be kept at the licensed premises, and that the sales of liquor will be made at the licensed premises.
Other references in the Act to licensed premises are consistent with an assumption by Parliament that when a licence is granted in respect of premises, they will be premises at which liquor will be kept and at which the business of selling liquor pursuant to the licence, in the usual way involving the handling of liquor at those premises, will be conducted.
I consider that these matters collectively support the conclusion, already expressed by me, that a licence can be granted in respect of licensed premises only if liquor is to be kept at those premises for sale under the licence and sales are to be made at the premises under the licence. By this I mean sales involving personal delivery to the purchaser or despatch of liquor from the premises to the purchaser.
In my opinion this fundamental principle applies as much to the special circumstances licence as it does to other categories of licence.
Section 40(2) envisages the grant of a licence when a licence of no other category is appropriate (I use this term as a convenient shorthand to encompass sub-par (a) and sub-par (b) of the provision) for the kind of business proposed. But this flexibility does not permit the Court to issue a licence in respect of premises for the purposes of a business that does not have a link to or relationship with the licensed premises of the kind that the Act requires. Section 40 is a kind of fall back licence for a business that does not fit any other licensed category. But s 40 does not permit a departure from what I consider to be a fundamental aspect of the Act - the grant of a licence in respect of premises at which liquor will be kept and from which liquor will be sold.
The doubt expressed by Perry J in Wine Net about the propriety of an authorisation under s 42(2)(b) in respect of all sales to be made pursuant to a retail liquor merchant’s licence was well founded. In my opinion the Act does not permit such an authorisation, because to grant such an authorisation is to permit the use of a licence in a manner not permitted by the Act. I repeat, so there is no misunderstanding, that it is open to the Licensing Court to exercise the power under s 42(2)(b) of the Act to authorise the despatch of liquor to a purchaser from a place other than licensed premises when that is done as an adjunct to or as an aspect of a business conducted at licensed premises in the manner contemplated by the Act.
If an application is made to the Licensing Court to exercise the power conferred on it by s 42(2)(b), the Court must consider all relevant facts. Obviously enough, there may be borderline cases, and in particular cases in which the Court is unsure whether the making of sales pursuant to the authorisation is merely an adjunct to an existing business or the real or substantial business to be conducted under the licence. Such cases will have to be dealt with as they arise.
For all those reasons the Licensing Court rightly concluded that it did not have power to grant the licence sought. The exercise of the Licensing Court’s discretion under s 53 did not arise.
If my conclusions about the Act are wrong, and the Court has power to grant the licence sought, it would remain for the Court to consider whether, in the exercise of its discretion, the licence should be granted. Most of the matters referred to by Perry J in Wine Net would be relevant, although in the present case, if s 40 permits the grant of a licence of the kind sought, it could not be said that the applicant was seeking to convert a particular category of licence into something different.
Finally, I repeat that, in my opinion, this case is not about the ability of a holder of a licence under the Act to conduct business using the Internet, or other contemporary means of doing business. The issue is whether, however orders may be obtained and payment made, the licence can be granted under the Act in respect of premises at which liquor is not kept and sold in the traditional manner. While facilities such as the Internet might make it attractive to conduct a business in the manner proposed by the applicant, the real issue in this case is the significance of the requirement of the Act that there be licensed premises.
I would dismiss the appeal.
DUGGAN J. I am of the opinion that this appeal should be dismissed for the reasons given by the Chief Justice.
LANDER J.I agree for the reasons given by the Chief Justice that this appeal should be dismissed.
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