Costco Wholesale Australia Pty Ltd v Woolworths Ltd

Costco Wholesale Australia Pty Ltd appealed a decision of the Licensing Court of South Australia concerning its application for a liquor licence for its Kilburn store. The proposed licence would permit the sale of liquor within a designated area of the general store, with sales restricted to Costco members and employees. Purchases would be made at existing checkouts, and the store would stock a limited range of high-quality liquor. Woolworths Ltd was the respondent in the appeal.

The primary legal issues before the Full Court of the Supreme Court of South Australia were whether the judge erred in finding that Costco's proposed business model could not operate under a retail liquor merchant's licence, whether Costco could properly be granted a special circumstances licence, and whether the judge erred in exercising his discretion to refuse the application. A key aspect of the dispute revolved around section 37(2) of the relevant Act, which generally requires licensed premises to be devoted entirely to the sale of liquor and to be physically separate from premises used for other commercial purposes, subject to exceptions.

The Court reasoned that Costco's proposed business model could not be accommodated by a standard retail liquor merchant's licence due to the requirement for physical separation of the liquor sales area from other commercial activities, a requirement Costco was unwilling to meet. The Court also considered whether Costco's membership-based sales model satisfied an implied requirement that a retail liquor merchant's licence holder must sell to the public generally. Ultimately, the Court concluded that Costco had not established that its business would be substantially prejudiced if its trading rights were limited to those possible under a retail liquor merchant's licence, and therefore, it was not entitled to a special circumstances licence.

The appeal was dismissed.