In the Matter of Liquor Licensing Act: Woolies Liquor Stores Pty Ltd v Port Pirie Licensed Victuallers Association, Hotel

[1993] SASC 3956

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA LEGOE (1), MATHESON(1) AND DUGGAN(2) JJ

CWDS
Liquor - Liquor Licensing Act 1985 - unsuccessful application for removal of a retail liquor merchant's licence from Jubilee Cellars at Port Pirie to premises 200 metres away and within the redeveloped Woolworths supermarket - whether s.67 of the Act applied to the application - consideration of existing facilities in Port Pirie - consideration of "need" evidence - no need to consider discretion under s59 - consideration of discounting at Port Pirie - appeal dismissed.
Liquor Licensing Act, 1985 and Trade Practices Act, 1974. New World Supermarkets Pty Ltd v K Pandelis Nominees Pty Ltd and Ors Supreme Court Unreported Judgment No. 2586 delivered 28 November 1990, distinguished.

HRNG ADELAIDE, 9 February 1993 #DATE 17:6:1993
Counsel for appellant:     Mr J R Mansfield QC
   with him Mr B F Beazley
Solicitors for appellant:    Ross and Mccarthy
Counsel for respondent:     Mr J L Firth
Solicitors for respondent: Kelly and Co

ORDER
Appeal dismissed.

JUDGE1 LEGOE J (The Honourable Justice Legoe concurred with the judgment of Matheson, J)

JUDGE2 MATHESON J The appellant Woolies Liquor Stores Pty Ltd applied in the Licensing Court of South Australia for the removal of a retail liquor merchant's licence from premises as 23 Jubilee Place, Port Pirie and known as "Jubilee Cellars", to premises about 200 metres away to be erected within the redeveloped Woolworths Supermarket at Norman Street, Port Pirie, and to be known as "Macs Liquor Port Pirie". The appellant has entered a conditional contract to purchase the present business and site of Jubilee Cellars. The condition is that the sale will only proceed if the removal is granted. If the Licensing Court had been in favour of the removal, it would have been asked to authorise a transfer immediately and grant a certificate for the removal. In the event, the learned judge refused the application for removal, and the appellant appeals with leave to this Court. 2. His Honour introduced his reasons with the following observations:
    "Without a consideration of other liquor outlets in the town,
    Jubilee Cellars is presently, I accept, too small, has too
    narrow a range and is inconvenient (in terms of parking
    facilities) to a significant public. The new site at Woolworths
    is undoubtedly by way of comparison a great improvement given a
    number of factors. I will not be exhaustive but size of
    premises, promised range of liquor, parking facilities and an
    ability to 'one stop shop' for groceries and liquor are some of
    them. I have no doubt in terms of public need simpliciter that
this applicant would 'overcome' s.67 of the Liquor Licensing Act
..." 3. However, his Honour decided, inter alia, that s.67, properly construed as a whole, presented an insurmountable obstacle for the appellant. It provides:
    "67.(1) An applicant for the removal of a ... licence must
    satisfy the licensing authority by such evidence as it may
    require that, having regard to the licensed premises already
    existing in the locality in which the premises ... to which
    removal of the licence is sought are ... situated, a licence of
    the class to which the application relates is necessary in order
    to provide for the needs of the public in that locality.
    (2) A reference in this section to licensed premises already
    existing in a locality extends to premises in that locality ...
    in respect ... to which a licence is to be removed, in
pursuance of a certificate under this Part." 4. The words "Category A licence" are defined in s.4 to mean: "(a) hotel licence; (b) retail liquor merchant's licence; (c) wholesale liquor merchant's licence; (d) entertainment venue licence; (e) general facility licence:" 5. There was no dispute in the Licensing Court, or before us, that Port Pirie constitutes one "locality". It has a population of about 15,000 people. 6. In this Court, Mr. Mansfield QC, counsel for the appellant, argued that his Honour erred in applying s.67 to this case at all, and argued that it only applied where an applicant was seeking to remove a licence from one locality to another locality, and not to remove a licence already existing within the same locality. The point was not taken in the Licensing Court, and to follow the argument, it is necessary also to set out s.38, so far as it is material:
    "38.(1) Subject to subsection (2), a retail liquor merchant's
    licence shall not be granted in respect of, or removed to,
    premises unless the licensing authority is satisfied that the
    public demand for liquor in the locality in which the premises
    are situated cannot be met by other existing facilities for the
    sale of liquor.
    (2) Subsection (l) does not apply to the removal of a retail
    liquor merchant's licence to premises situated not more than 500
    metres from the premises from which its removal is sought.
    (3) - (5) ..." 7. Section 38 does not apply here because of the terms of sub-section (2) thereof, but it was, however, relevant in the case of New World Supermarkets Pty Ltd v. K. Pandelis Nominees Pty Ltd and Ors (Unreported Judgment No. 2586 delivered on 28 November, 1990). That case concerned an application for removal of a retail liquor merchant's licence from premises situated at 80 Essington Lewis Avenue, Whyalla to shop premises in the Westlands Shopping Centre at Whyalla Norrie. On appeal to the Full Court, there was no challenge to the learned judge's finding that the relevant locality was the whole of the built-up area of Whyalla, and accordingly what the applicant in that case was seeking to do was to remove his licence from one place in the locality to a different place in the same locality, albeit more than 500 metres away (see s.38(2)). Jacobs J, in a judgement with which Cox J and I agreed, said:
    "(Section 67) asks whether the proposed removal is necessary 'to
    meet the needs of the public having regard to the licensed
    premises already existing in the locality'. Those words
    include, in this case, the existing premises of the applicant,
    and the judge has found that the removal of the licen(c)e to
    more spacious, attractive, and accessible premises in the hub of
    the retail trading area is necessary to meet the reasonable
    needs of the public. That finding, which as I have said is not
    challenged, implies that none of the existing premises offers
    the facilities and range of liquors which the public in the
    locality, i.e. the 'built-up' City of Whyalla, reasonably needs.
    Section 38 addresses a different question, but the issue on this
    appeal is whether it speaks at all to a case such as this. It
    is to be observed in the first place that it applies to a new
    licence as well as to removal of an existing licence, and it
    looks to the ability of other licensed premises in the locality
    to meet the public demand for liquor. Both its language and its
    history are consistent with the view that its concern is with a
    new, i.e. an additional licence in the locality, whether by
    grant of a new licence, or removal. In the case of removal,
    that necessarily implies removal from another locality, for
    otherwise it is not a new licence in the locality, and any other
    construction gives no meaning or effect to the word 'other'.
    What has to be determined under s.38 is whether the public
    demand for liquor (not the needs of the public) can be met
    without the intrusion of another licence into the locality. The
    very purpose of the barrier erected by s.38 was to prevent undue
    or indiscriminate proliferation of licences. It therefore
    follows that s.38 cannot speak sensibly at all to removal within
    a locality. That conclusion can be tested in another way. The
    decision of the learned judge that s.38 is an insurmountable
    obstacle to the present application involves a finding that the
    public demand for liquor in the locality can be met without the
    applicant's existing licensed premises, notwithstanding that
    those premises help to meet the demand. That implies that its
    existing licence is redundant, which is in itself an anomaly;
    but there is a further anomaly, for it follows that the existing
    licence can continue to operate and meet the public demand in
    its present situation in the locality, but is not necessary to
    meet the demand in the locality as a whole if moved to a
    different part of the same locality. The Act in my opinion
    should not be given a construction which leads to that
    unsatisfactory and extraordinary result, more especially when
the test under s.67 has been satisfied, and in my view the
    better construction dictated by the language of s.38, and the
    significance of the word 'other', is to confine its operation,
    in the case of removal, to removal from one locality to a
    different locality, i.e. to the introduction of a new licence
    in the locality to meet the demand that is not being met by
    other licences in the locality. Sub-section (2) of s.38 appears
    to me to lend support to that view, for it denies the operation
    of s.38(1) in the case of a removal of a retail liquor
    merchant's licence to premises situated not more than 500 metres
    from the premises from which its removal is sought. It was
    contended for the respondent that this sub-section is
    'exhaustive' of the exemption from the application of s.38(1),
    but I do not think that is so. No doubt a distance of 500
    metres between the existing premises and the proposed premises
    will often place them in the same locality, and to that extent
    it acknowledges the reasoning which underlies the preferred
    construction of s.38(1), but sub-section (2) does not speak of
    'locality' at all, or purport to limit the 'locality' in which
    sub-section (l) ceases to apply. As this Court has said many
    times, 'locality' in this legislation is a flexible concept and
    not a term of art. It will sometimes be defined, for example,
    by geographical or other identifiable boundaries, such as a
    river, a railway line, or a main highway, and in such a case
    sub-section (2) could still apply across the boundary from one
    locality to another. That would require s.38 to be applied,
    i.e. in the case of removal from one locality to another,
    unless the existing and proposed premises were within the
    distances which attract the statutory exemption. Section 38(2)
    does not say or purport to say that s.38(1) does not apply to
    removal within the same locality if, but only if, the proposed
    premises and the existing premises are not more than 500 metres
    apart. For the reasons stated above, s.38(1) cannot sensibly be
construed to operate upon any removal within the same locality." 8. In the case of Pandelis, the Licensing Court judge found that the requirements of s.67 had been met, and consequently the Full Court did not have to express a view on whether the section actually applied at all in that case. I agree, however, with Mr. Firth, counsel for the respondents, that the judgment of Jacobs J appears to imply that s.67 was properly considered by the Licensing Court. Moreover, his Honour was at pains to stress differences in the wording and application of the two sections. Section 38 applies to an application for a new licence as well as for the removal of an existing licence. It looks to the ability of other licensed premises, whereas the word "other" is not included in s.67. Further, as Jacobs J said: "What has to be determined under s.38 is whether the public demand for liquor (not the needs of the public) can be met without the intrusion of another licence into the locality." Section 67, unlike s.38, applies equally to removals under and over 500 metres. Section 38 only applies to retail liquor merchant's licences, whereas s.67 applies to all Category A licences, including hotel licences. 9. I also agree with Mr Firth that the fact that the proprietors of Jubilee Cellars have a retail liquor merchant's licence does not imply that there is a present need for that licence at the site in that locality. It merely implies that such a need existed when it was granted, and that the licensee is entitled to stay there, whether there is a present need or not. Needs may have changed since the original grant, and it seems to me entirely reasonable that Parliament intended that the court should look at need again when a removal is applied for, even if only to premises within the same locality. 10. Finally, I agree that the respondents get some assistance from the wording of s.85(4)(b). Section 85, as the marginal note says, is the general right of objection section, and I quote the relevant part:
    "(4) An objection may be made on one or more of the following
    grounds:
    ...
    (b) in the case of an application for the grant or removal of a
    Category A licence - that the grant of the application is not
    necessary in order to provide for the needs of the public in the
    area in which the premises or proposed premises to which the
    application relates are situated;
..." 11. The ground is not restricted to the case where the application is made to remove a Category A licence from one locality to another, and it would be an extraordinary result if the appellant's construction of s.67 was correct and yet an objector could still succeed on an objection under s.85(4)(b). 12. In my opinion, the learned judge was correct in treating s.67 as relevant to the application. 13. The learned judge discussed the existing facilities for the sale of liquor in Port Pirie. He said: "I will be encapsulating what the witnesses feel about them as I read their evidence and applying my own knowledge of contemporary needs and tastes generally always having at the forefront of that consideration the evidence in this particular case." 14. He then commented on the Pasminco BHAS and Community Club, which is a non profit making organisation with approximately 1600 members. His Honour said that it was: "... of little relevance here. Certainly it is a benefit to members and no doubt there are quite a lot of them. But here we are talking of a general public need clearly not reasonably and realistically catered for by a Club." 15. He then commented on the hotels of which there are eight. Two of them, the Sportsmans Hotel and the Risdon Hotel, have drive-in bottle shops which are quite successful and extensive. The Sportsmans Hotel also has a Sky Channel television facility and a TAB betting facility. Some of the other hotels have a designated bottle shop in the sense that you walk into a room which has a counter, and behind it you can see displayed bottles and you ask for what you want. His Honour said in relation to the hotels: "They, of course provide for the public who prefer drive in or over the bar sales. But on my assessment there is a significant public who want more than this and reasonably so." 16. His Honour then commented on the retail liquor merchant's licences of which there are five. One called the Knapman Street Liquor Store is really a delicatessen with a liquor facility. The Terrace Bottle Shop is likely to be the subject of a removal application itself to premises within Coles Supermarket in a place called Pirie Plaza. Then there are the subject premises, namely Jubilee Cellars, the Orange Grove Cellars (which is a member of the Karana group selling for discount purposes) and the Main Road Cellars at 91 Main Road, Port Pirie. His Honour said:
    "On my assessment, they - I particularly speak of Orange Grove
    and Main Road Cellars - do provide facilities which meet the
    needs of the public of Port Pirie both in standard of premises
    and range of liquor. Not one witness was in a position to
    dispute this and I accept that general proposition. So my
    consideration must relate to questions of taste and preference
    outside those areas." 17. His Honour did not actually state, but I regard it as not unimportant that the Orange Grove Cellars are next door to Woolworths. A section of the fence that separates these two properties had been removed and people go back and forth with their shopping trollies. It was not disputed that Orange Grove Cellars has the largest range of liquor of all the existing facilities in Port Pirie. 18. His Honour then proceeded to look at the "need" evidence more closely. He said:
    "The thrust of the 'need' evidence when one puts aside range and
    suitability of premises as mentioned above seemed to boil down
    to, essentially but not exclusively, three topics. There was
    firstly the desire for a 'one stop shop' venue i.e. an ability
    to purchase groceries and liquor in the one place. Then,
    connected with this in many ways, a question of convenience
    (parking facilities being one of these) and finally the
    convenience and saving in cost to those who must, because of
    disability, use taxis to purchase their liquor. Let me deal
    with the last of these first. Such people were represented by
    Mr. Ey. They have a need for liquor of basic range. The extra
    cost of getting that liquor from a place other than Woolworths
    (where they shop for groceries) is in the region of $2.00. Not
    a large amount but must be viewed relative to their income.
    Also to be considered is the availability of deliveries - I find
    them to be freely available on request. A further consideration
    is the number of such people in the general community. This is
    a section which is clearly small but is a real factor in an
overall consideration of s.67. Then I turn to matters of
    convenience outside the 'one stop shop' desire. In general
    terms I find it hard to say that there is any real disadvantage
    other than very small inconvenience on the evidence. I thought
    Mr Keain to perhaps be the most realistic and most
    representative witness on this general topic. He will get his
    liquor when and where it happens to be convenient. Any
    inconvenience suggested by other witnesses seemed to me to be of
    very slight concern. Now - 'one stop shop'. Clearly this is a
very weighty factor to be taken into account under s.67. All of
    the witnesses (to a lesser extent Mr Keain) supported this
    desire and, without regard to other licensed premises, a need in
    this respect is demonstrated. But to suggest to all of these
    people (apart from the disabled as discussed above) that they
    can almost do the same thing by going to Orange Grove Cellars in
    their cars on the way home or indeed walking there from
    Woolworths involves to my mind the slightest of inconvenience
    despite some little protestation when it was put to some of
    them. But all of these things and all of the points made by
    counsel must be considered as a whole and assessed objectively.
    In the end I am unable to find that this applicant has in fact
'overcome' s.67 and must fail on that basis alone." 19. It is sufficient for me to say that there was ample material to justify his Honour's conclusion, and I am not persuaded he was in error. 20. Given his decision that the appellant had not satisfied him that it had "overcome" s.67, it was not strictly necessary for the learned judge to go on, as he did, to consider his discretion under s.59. That section provides:
    "59.(1) Subject to this Act, the licensing authority has an
    unqualified discretion to grant or refuse an application under
    this Act on any ground, or for any reason, that the licensing
    authority considers sufficient.
    (2) The licensing authority should not grant an application as a
    matter of course without proper inquiry into its merits (whether
    or not there are objections to the application).
    (3) ..." 21. His Honour was criticised by Mr. Mansfield for stating that he was "convinced that the balance in the licensing industry in Port Pirie will be unduly upset by the advent of an aggressive discounter such as Woolworths ...". His Honour later enlarged on that statement. He said:

    "I, like the objectors, doubt the 'Woolworths scenario' of
    meeting competition and not undercutting it. Mr. Miers does
    not impress me on this subject and the past history of the two
    licences held by Woolworths in this State gives me further cause
    to doubt the general proposition. I think the transcript on
    this topic demonstrates the reason for my doubt. I would not be
    surprised at all if, upon a grant, an undercutting by Woolworths
    took place thus taking a great deal of business away from other
    licences in the town. Indeed, quite apart from this, the fact
    that there will be a 'one stop shop' situation itself will have
    the effect of high loss from other businesses. Mr. Miers(')
    estimate of weekly takings itself demonstrates much of what I
    would fear. Mr. Miers talks of an income of $20,000 per week
    of which $6,000 will simply transfer from present Jubilee
    Cellars clients. I accept that. Then he speaks of impulse
    buying and new custom. I accept this will occur though I doubt
    its suggested magnitude. Even so, it leaves a large turnover
    which must come from other licences. Indeed I doubt his $20,000
    per week figure. I have yet to come across an applicant who
    over estimates initial income in these matters. To the
    contrary. Indeed Woolworths has itself substantially
    underestimated for Kadina and Gilles Plains. I would not be at
    all surprised if something like $25,000 per week was nearer the
    mark. I am not prepared to countenance this situation
    particularly in these difficult times. I do not comment on what
    my attitude might be in better circumstances." 22. Mr. Mansfield argued that price competition was in the public interest and that the purported preservation of the balance of the licensing industry in Port Pirie by impeding price competition is beyond a legitimate exercise of the relevant discretion. He also referred to the provisions of Part IV of the Trade Practices Act 1974, which make anti- competitive behaviour unlawful, and to the fact that the appellant which he described as an "aggressive dissenter" was entitled to the transfer of the license of Jubilee Cellars at the present premises anyway. 23. As I consider that the learned trial judge was correct in deciding that s.67 was applicable, and that he was correct in deciding that the appellant had not overcome the obstacle it contained, it is not strictly necessary for this Court to comment on his Honour's further decision that if he had to exercise a discretion pursuant to s.59, that the application should fail, and notwithstanding Mr. Mansfield's eloquent and well prepared arguments, I will content myself with a few observations. 24. His Honour did not say that discounting was wrong or that there should be no discounting in Port Pirie. He had evidence that there was extensive discounting in fact. What concerned him, and I am not persuaded his concern was wrong, was the additional effect on the overall public interest of the success of the application, having regard to all the evidence he had heard, including that of Mr. Miers, and what he was entitled to take into account as a specialist tribunal of the past history of the two licences held by the appellant at Kadina and Gilles Plains. He had much detailed evidence of what was happening in 1992 in regard to the liquor licensing industry in Port Pirie and the impact of the recession in Port Pirie. In my opinion, his Honour's conclusions were reasonably open to him. 25. I would dismiss the appeal. $NJUDGE3 DUGGAN J I agree with Matheson J's view that s.67 of the Liquor Licensing Act, 1985 applies to the application for the removal of a Category A licence notwithstanding that the contemplated removal is from one place to another within the same locality. 26. The argument to the contrary advanced by Mr Mansfield QC relies heavily upon the decision of this court in New World Supermarkets Pty Ltd v K. Pandelis Nominees Pty Ltd (unreported judgment no. 2589 delivered 28th November, 1990) where it was held that s.38 of the Act did not apply to an application for the removal of a retail liquor merchant's licence within the same locality. That case does not provide any direct support for the argument advanced in the present case; indeed the court not only impliedly acknowledged that s.67 was applicable in such circumstances, but Jacobs J, who wrote the main judgment, found support for the view that s.38 did not apply by adverting to the anomalous result which its application would produce "more especially when the test under s.67 has been satisfied". 27. Furthermore the decision in Pandelis places considerable emphasis upon the use of the word "other" in s.38 in the phrase "cannot be met by other existing facilities for the sale of liquor". It was held that this highlighted the nature of the assessment required by s.38, namely, whether the demand for liquor could be met without the intrusion of another licence into the locality. The word "other" is not used in s.67 and in my view the wording of that section does not attract the reasoning found to be applicable in the case of s.38. Nor is there in s.67 the qualification that the section does not apply to removals within a distance of 500 metres or less, a factor found to be of significance by the court in Pandelis in its interpretation of s.38. 28. Finally, there is the distinction in purpose between the two sections, a point made in many cases but most notably in Lincoln Bottle Shop Pty Ltd v Hamden Hotel Pty Ltd (No. 2) (1981) 28 SASR 458 at 460. In Pandelis Jacobs J said:
    "The decision of the learned judge that Sec. 38 is an
    insurmountable obstacle to the present application involves a
    finding that the public demand for liquor in the locality can be
    met without the applicant's existing licensed premises,
    notwithstanding that those premises help to meet the demand.
    That implies that its existing licence is redundant, which is in
    itself an anomaly; but there is a further anomaly, for it
    follows that the existing licence can continue to operate and
    meet the public demand in its present situation in the locality
as a whole if moved to a different part of the same locality." 29. It seems to me that these arguments are inapplicable to the interpretation of s.67 with its wider purpose concentrating attention "not on the desire for liquor specifically, but on the more general concept of needs in relation to licensed premises and the services provided by them". (Lincoln Bottle Shop supra at 55.) 30. It was argued that even if s.67 were applicable the learned judge incorrectly applied the test contemplated by the section. According to the argument he failed to consider the operation of Jubilee Cellars the present holder of the licence in having regard to the licensed premises already existing in the locality. In my view this criticism is unjustified. The learned judge considered the operation of Jubilee Cellars, made some comment about it and then said that he was required to have regard to the other facilities in the locality. He then proceeded to consider those facilities. I can find nothing in his Honour's reasons which indicates that his assessment was based on the other outlets and that he did not take into account the complete picture including Jubilee Cellars. 31. Then it was suggested that the learned judge had erred in the exercise of the discretion given by s.59 of the Act in attaching significance to the consideration that Woolworths would be an aggressive discounter. Mr Mansfield's criticisms of this approach included the contention that it was contrary to the spirit of the Trade Practices Act. It must be conceded that the public interest is paramount in applying the legislation which regulates the sale, supply and consumption of liquor. To restrict consideration to the effect on individual outlets caused by the grant or removal of a particular licence would be too narrow a view for the court to take. But it is well established that the court can have regard to an impact on existing outlets which would reduce their capacity to provide service to the public. (Swanport Bottle Shop Pty Ltd v Bridgeport Hotel Pty Ltd (1986) 47 SASR 449 at 450; Stewart v Liquor Licensing Commissioner 137 LSJS 379.) When the learned judge referred to what he anticipated would be aggressive discounting by Woolworths and the effect of this in the present economic climate on other outlets I am of the view that he was doing so in the context of the consequent effect that this might have on the public interest. In particular I draw attention to his statement at the commencement of his remarks on this topic: "In the case at hand there is no doubt on the evidence that losses of any significant magnitude (again I will elaborate) must have an effect on employment and the ability of premises particularly the hotels to maintain standards." 32. In reasoning in this way his Honour did not cut across the concepts promoted by the Trade Practices Act. His concern was not related to discounting per se but rather the effect it could have on the extent and variety of services available to meet the taste, preference and convenience of the public. 33. I would dismiss the appeal.