Gnych v Polish Club Ltd

The appeal concerned a dispute between the Polish Club Ltd (the Club) and Mr and Mrs Gnych (the appellants) regarding a lease agreement. The Club, a registered club holding a liquor licence, had granted the appellants a lease over part of its licensed premises, specifically a restaurant area and a storage area, along with rights to use an adjacent hall for functions. The central issue was whether this lease, granted in contravention of section 92(1)(d) of the *Liquor Act 2007* (NSW), was void and unenforceable. The matter reached the High Court of Australia following decisions by the Court of Appeal of the Supreme Court of New South Wales.

The High Court was required to determine whether the Club's contravention of section 92(1)(d) of the *Liquor Act 2007* (NSW), which mandates approval from the Independent Liquor and Gaming Authority for granting a lease over certain parts of licensed premises, rendered the lease void and unenforceable. The Court also considered the principles of statutory illegality in contract law, specifically whether the lease was void due to an express or implied prohibition by statute, or because it was associated with or in furtherance of an illegal purpose.

The High Court reasoned that the offence created by section 92(1)(d) was committed by the Club at the time the lease was granted without the necessary approval, and this offence was complete at that point. The continuation of the lease was not a continuing offence. While the contravention rendered the Club liable to a statutory penalty and empowered the Authority to cancel the Club's licence, the Act did not expressly provide that a lease entered into in breach of section 92(1)(d) would be void and unenforceable. The Court found no reason to infer that the Act necessitated the avoidance of such a lease, particularly as the Authority possessed regulatory powers to address any subsequent issues arising from the lease. The Court allowed the appeal, setting aside the orders of the Court of Appeal and remitting the matter for determination of damages.