Japling Pty Ltd & Ors v Shenannigans One P/L & Ors No. Scgrg-98-1237 Judgment No. S6911

[1998] SASC 6911

JAPLING PTY LTD & ORS
v SHENANNIGANS ONE PTY LTD & ANOR
[1998] SASC 6911

Full Court:  Millhouse, Olsson and Debelle JJ

1. MILLHOUSE J :       I agree with the orders proposed by Debelle J and with his reasons for making them.

2. I must say that I was surprised when I read the judgment of the learned Licensing Court Judge.  He seems altogether to have ignored the criteria in the Licensing Act, criteria which he was obliged to follow.  Instead, without any sufficient evidence, he has come to a conclusion apparently on a hunch of his own, one arising from satisfaction with his previous decisions which, he believes have made Rundle Street East and its surrounds the kind of place it now is.

1. OLSSON J:       I agree with the reasons expressed by Debelle J and the orders which he proposes.

1. DEBELLE J.   This is an appeal from a decision of the Licensing Court granting an hotel licence.

2. On 26 May 1998 two companies applied for an hotel licence in respect of premises to be constructed at 206-208 Rundle Street, Adelaide.  The companies were Shenannigans One Pty Ltd and Shenannigans Two Pty Ltd.  It is convenient to refer to them as “the applicants”.  The hotel is to be called “Shenannigans Irish Pub (Adelaide)”.  The hotel is to be located in the eastern end of Rundle Street between Frome Street and East Terrace.  Fourteen persons objected to the application.  The objectors comprise persons holding a mix of licences for existing licensed premises.  They hold licences for either hotels or restaurants or are holders of special circumstances licences.  After hearing the evidence, the Licensing Court granted the application.  All but one of the fourteen objectors appeal from that decision.

3. At the forefront of the submission of the appellant objectors is the contention that the Licensing Court failed to discharge the duty imposed on it by s58(1) of the Licensing Act 1997 (“the Act”), namely, to determine whether there is a need for this hotel. 

Need Must be Proved

1. Section 58(1) of the Act requires that an applicant prove that, having regard to the licensed premises already existing in the locality of the proposed premises, the licence is necessary in order to provide for the needs of the public in that locality.  Section 58(1) is expressed in these terms:

   “An applicant for a hotel 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 or proposed premises to which the application relates are or are to be situated, the licence is necessary in order to provide for the needs of the public in that locality.”

That provision is expressed in almost identical terms to s63 of the Licensing Act 1985.  The operative parts of the section are in fact in identical. Section 58 casts a clear onus on the applicant.

1. Section 63 of the Licensing Act 1985 and its predecessor s47(a) of the Licensing Act 1967 have been examined by this Court on several occasions and the principles are well established.  The following summary of the principles which are relevant to this appeal is taken from Anglers Hotel/Motel v Taranto (1980) Pty Ltd (1996) 188 LSJS 321 at 322:

   “1....... The need to which s63 refers is need in the sense of a reasonable demand as judged by contemporary standards; it cannot mean need in the sense of necessity as judged by some ethical or sociological test:  Buttery v Muirhead [1970] SASR 334 at 337 per Bray CJ who pointed out that, if the last were the real test, it might be difficult to show a need for any commodity above the minimum requirements of food, clothing and shelter.

2.The test is objective in the sense that for the demand to amount to a need, it must be a reasonable demand by contemporary standards:  Blackwood Foodland Pty Ltd v Milne [1971] SASR 403, 407.

3......... The needs of the public are not necessarily concerned with the mere availability of liquor.  They may be concerned with matters of taste, convenience, preference for one type of facility over another, the manner in which liquor is displayed and served, and the type and standard of accompanying services:  Lincoln Bottle Shop Pty Ltd v Hamden Hotel Pty Ltd (No 2) (1981) 28 SASR 458 at 460.

4......... The convenience of the public is one aspect of the concept of need:  Gladstone Cellars Pty Ltd v Fricker (1984) 36 SASR 22 at 26, 27 and 31. So, the desire to purchase liquor at particular premises becomes a need within the meaning of s63 but only if the desire is not sufficiently and reasonably met by other licensed premises existing in the locality: Gladstone Cellars Pty Ltd v Fricker at 26.

5......... The question of need has a dynamic element so that the assessment of the need by reference to contemporary standards requires the Court to have regard to any perceived shift in public expectations about liquor marketing:  per Cox J in Lovell v New World Supermarket Pty Ltd (1990) 53 SASR 53 at 58.

6......... The public includes tourists who are sufficiently close to the proposed licensed premises to regard the availability of liquor at those premises as a practical means of meeting their demands:  Lincoln Bottle Shop Pty Ltd v Hamden Hotel Pty Ltd (1978) 19 SASR 326, 340; Tonsley Hotel Pty Ltd v Whelan (1982) 31 SASR 321, 332-334. The later decision contains as to who can be fairly considered to be tourists.

7......... Although many of these observations have been made in the context of applications for a retail storekeeper’s licence, they apply with equal force to an application for an hotel licence:  Le Cornu v Astor Tavern Pty Ltd (1983) 34 SASR 117.

It might be observed that some of these propositions are different means of expressing the one proposition.  Whether that is so, is of no consequence.  What is required is that the evidence of need must be assessed realistically against the background of what is known of contemporary habits and tastes:  Lincoln Bottle Shop Pty Ltd v Hamden Pty Ltd (No 2) (supra) at 462; Tonsley Hotel Pty Ltd v Whelan (1982) 31 SASR 321, 325; and Cufone v Harvey (1986) 40 SASR 261 at 262.”

Those propositions recognise the dynamic nature of a concept such as the needs of the public.  Thus, the changes which have occurred in the past 30 years in public expectations and attitudes to the manner in which liquor is marketed, the changes in the number and style and get-up of licensed outlets, and the different and additional kinds of licences do not alter the force of those propositions.

1. In Woolies Liquor Stores Pty Ltd v Carleton Investments Pty Ltd & Ors (unreported, 15 May 1998, Judgment No S6682) the Chief Justice made a further review of the legislative and forensic history of the requirement to prove need.  Noting that the 1997 Act has continued an approach of limiting the requirement to prove a need for a licence in the case of most licences, he emphasised that it is still necessary for an applicant for an hotel licence or a retail liquor merchants licence to prove a need for the licence.  He added:

   “Section 58(1) applies to the grant of a hotel licence.  It is set out above.  It is indistinguishable from s63 of the 1985 Act.  There is no reason to give it a different meaning.”

Shortly afterwards, he commented on the concept of need and what has to be proved. 

“The language used by Parliament suggests that, as before, the focus of s58(2) is upon the demand for liquor and the availability of liquor, whereas the focus of s58(1) is on the needs generally of the public in the locality, although of course those needs are to be considered in relation to the facilities that might be provided by a hotel licence.  That broader focus in relation to a hotel licence is apt to enable more emphasis to be given to the wishes and preferences of the public in relation to matters of style of premises, the availability of choice and of a variety of outlets, matters of preference, matters of convenience and so on.  The language used in relation to a retail liquor merchant’s licence focuses attention more closely on the demand for and availability of liquor.  Matters of the type just adverted to by me are not wholly irrelevant in that context.  However, they are to be given less weight because the court is concerned with the demand for liquor and its availability, and not with the wider concept of the needs of the public.

“However, in deciding whether the existing premises adequately cater for the public demand, the court has to apply some standard.  None is indicated by the legislation.  I consider that Parliament must have had in mind that the court would consider contemporary standards, using the knowledge and experience that the Licensing Court gains through its work as a specialist court dealing with the liquor industry.  By this I mean that the Licensing Court is to apply contemporary standards in deciding what distances one could reasonably expect customers to travel to obtain liquor, in deciding how much time one could reasonably expect them to spend getting to a liquor outlet, in deciding the amount of inconvenience that one could expect them to accept if, as will often be the case, a liquor outlet is not available at the place where they prefer to do most of their shopping, and in deciding the range of liquor and level of service that it is reasonable for them to expect.  The court is required to determine not just what the public in the relevant locality want.  If, whatever the public may want, there are existing premises that are scapable of catering for the public demand for liquor, the court must decide, by reference to contemporary standards, whether, if the public are to satisfy their demand at those premises, it can be said that their demand is adequately catered for.”

Those observations were approved by the Full Court in South Eastern Hotel Pty Ltd v Woolies Liquor Stores Pty Ltd [1998] SASC 6819. In addition, they are entirely consistent with and do not alter the force of the principles which have been extracted from previous decisions on the legislative progenitors of s58(1). Although the latter part of his observations are directed to proof of need for a retail liquor merchant’s licence, they apply mutatis mutandis to proof of need for an hotel licence.

1. Unlike its predecessor, the 1997 Act expressly states its objects.  They are set out in s3:

   “The object of this act is to regulate and control the sale, supply and consumption of liquor for the benefit of the community as a whole and, in particular -

   (a).... to encourage responsible attitudes towards the promotion, sale, supply, consumption and use of liquor, to develop and implement principles directed towards that end (the responsible service and consumption principles) and minimise the harm associated with the consumption of liquor; and

   (b).... to further the interests of the liquor industry and industries with which it is closely associated - such as tourism and the hospitality industry - within the context of appropriate regulation and controls; and

   (c).... to ensure that the liquor industry develops in a way that is consistent with the needs and aspirations of the community; and

   (d).... to ensure as far as practicable that the sale and supply of liquor contributes to, and does not detract from, the amenity of community life; and

   (e).... to encourage a competitive market for the supply of liquor.”

I respectfully note that the observations of the Chief Justice are consistent with that statement of objectives.  I add that the objectives stated in paras (a) to (e) are to be considered as a whole.  No one of them has prominence over the others.  They are all means of achieving the overall objective of regulating and controlling the sale, supply and consumption of liquor for the benefit of the community as a whole. 

The Decision

1. The Licensing Court Judge has made few findings of fact.  This Court has already reminded the Licensing Court of the desirability of making findings of fact that provide a context for its conclusions on the issues that arise under a provision such as s58: South Eastern Hotel Pty Ltd v Woolies Liquor Stores Pty Ltd [1998] SASC 6819 at page 5. The findings should address the facts which are necessary to determine whether a need has been proved for the proposed premises having regard to the existing licensed premises.

The Proposed Hotel

1. The application has been made in respect of existing premises which are currently empty and in a derelict state.  The premises will be substantially reconstructed.  The facade of the existing building will be retained.  The hotel premises will be on three levels, basement, ground floor and first floor.  Bars will be provided on all three floors.  The ground floor also includes a small stage and dance floor.  On the first floor, an area is provided for dining and there is a function room.  It is proposed to decorate the premises to reflect the appearance of old Irish buildings.

2. The application is for what is called “an Irish pub”. The applicant says that the food and liquor to be provided will follow an Irish theme.  In particular, Irish ales and stout will be served. Entertainment, said to be Irish entertainment, of different kinds will be provided throughout the week.  The hotel will be licensed for a capacity of 420 persons.  It will trade until 3.00am on Mondays to Saturdays and until midnight on Sundays.

3. Stripped to essentials, this application is for an hotel providing the usual range of facilities to be found in an hotel other than accommodation.  It will have bars, lounges, a dining area, a function room and a small facility for selling liquor for consumption off the premises.

The Existing Licensed Premises

1. The Licensing Court Judge has made no finding as to locality.  However, it appears to have been common ground that, although the locality cannot be defined with precision,  it was convenient to have regard to a locality extending from East Terrace in the east to Gawler Place in the west, and from Pirie Street in the south to North Terrace in the north.  Within that locality there are

2. ·....... 11 hotels

   ·27 restaurants

   ·....... 25 special circumstances licences

If the locality is restricted to the area between North Terrace and Grenfell Street and between Frome Street and East Terrace, the number of licensed premises is still very high.  Within the locality there are       

·....... 8 hotels

·27 restaurants

·....... 24 special circumstances licences

Thus, by any chalk, there is a substantial number of licensed premised in both the larger and smaller localities.  The hotels in the smaller locality include an hotel called “P J O’Brien’s” which is a so-called Irish pub.

The Issue of Need

1. The Licensing Court Judge dealt with the question of need in this way.  He noted that he had been told that hotels with what he called “an Irish orientation” are popular interstate and overseas and are becoming popular in South Australia.  He then noted that the eastern end of Rundle Street has become an attractive area both for local residents and tourists.  It has become attractive, he finds, because of the grant of licences to sell liquor in recent times:

   “Quickly, after the grant of a number of licences, Rundle Street came alive and the grants have continued because people in Adelaide and interstate now know it to be “the” place for dining and non-threatening entertainment generally.  Families are feature of its clientele.  Picture theatres have sprung up.  It all has a cosmopolitan flavour.  It really is an enormous attraction to the local population and, indeed, tourists.”

He then rejects the argument of the objectors that there are too many licences in the area.  He then finds that people want variation.  He concludes that the proposed hotel would add to its attraction, stating that the community want variation and regard must be had to “preferences and tastes”.  He finds that “this venture will be hugely popular”.  Although the Judge then reminds himself that popularity of itself does not prove need, he has failed correctly to address the issues which s58(1) poses.

1. When dealing with the issues raised by the objectors, the Judge said:

   “Despite all of this we have these objectors talking about something akin to “saturation point”, too many Irish pubs, too many licences generally and so on.  If I had listened to this sort of nonsense in years past Rundle Street would be a much less populous and interesting place than it is today and public demand would have been thwarted.  Indeed I suggest their own businesses would have either suffered or not even have been  launched.

   I reject the idea that there are too many licences.  I reject the view that saturation point is now with us.  I reject the assertion that there are too many Irish Pubs.  Sure there is one just out of Rundle Street on East Terrace which is in the locality.  Another project which was to be Irish oriented is proceeding but in another guise.  This present project promises to be different again even though leaning towards what I will call “Irishness”.  It will be that but it will be everything else besides as explained in the evidence.”

The Judge then finds that the proposed premises will be attractive to those who visit Rundle Street and will attract new people to the area.  He concludes that “there is a very significant population looking for what this project promises and I see no reason to deny a licence to these premises”. 

1. The reasoning is seriously flawed in a number of respects.  First, it is apparent that the Judge has failed to examine the question posed for him by s58(1), namely,

   “whether there is any need for the licence having regard to the existing licensed premises in the locality”.

One searches the reasons in vain for any examination of that question.  There is no examination of the facilities provided by the substantial number of licensed premises in this locality which include, depending on the relevant locality, either eight or eleven hotels. 

1. Secondly, the reasoning proceeds on the footing that the premises will be attractive to those who frequent Rundle Street and will attract others to the area.  While the capacity of premises to attract custom is one aspect of the question of need, it does not, standing alone, prove need.  It is quite possible for hotel premises to be attractive and popular without there being any need for them.

2. Thirdly, the Judge’s reasoning turns the question posed by s58(1) on its head.  The question is not whether there are too many licences or whether saturation point has been reached.  Instead, the question is whether the needs of the public are not being catered for by the existing outlets.  It was submitted that the Judge’s comments on the question of saturation were intended only to be an answer to the submissions made by the objectors.  That may be.  But they also form a very material part of the Judge’s reasoning on the question of need.

3. Fourthly, the reasoning, when viewed as a whole, overlooks the fact that since 1985 it has not been necessary to prove a need for a restaurant licence.  Restaurant licences have proliferated and, as the Judge found, have attracted people to the locality and in particular Rundle Street East.  The other kind of licences which have proliferated are special circumstances licences which under the Licensing Act 1985 were called general facility licences.  Those licences would be granted under the 1985 Act if the applicant proved, among other things, that the licence was necessary “to provide adequately for the needs of those attracted to premises that, in the opinion of the licensing authority, are or will prove to be a substantial tourist attraction”: s44(1)(a) of the 1985 Act.  That kind of need was significantly different from the need for an hotel licence.  It is a need which is satisfied if premises will be a substantial tourist attraction.  Thus, a number of licences have been granted in the area of Rundle Street East for premises which will be a tourist attraction.  It is restaurant licences and special circumstances licences, not hotel licences, which have proliferated in the locality.  No doubt one reason for that has been the requirement to prove the need for an hotel licence. 

1. The task for the Licensing Court Judge is twofold.  He is required by the Act, first, to examine whether a need simpliciter for an hotel has been demonstrated and then to determine whether that need is not satisfied by existing licensed premises.  In other words, the mere fact that members of the public will frequent the premises does not prove need.  Regard must also be had to the licensed premises in the locality.  As Bray CJ observed in Buttery v Muirhead [1970] SASR 334 at 337 to 338:

   “What has to be proved is need having regard to the neighbouring licensed premises.  It is not enough to prove a demand for liquor at the appellant’s site.  It must be a need in the sense of demand having regard to the neighbouring licensed premises.  It must be a demand which is not sufficiently and reasonably met by those premises.”

Although His Honour was speaking of the need for a retail storekeeper’s licence, his observations apply with equal force to the question of proof for an hotel licence. 

1. In this case, the Judge has entirely failed to examine whether existing licensed premises sufficiently cater for the needs of the public.  Instead, he has approached the question by finding that the premises would be attractive and has then considered whether a saturation point has been reached. All due weight must be given to the fact that the decision appealed from is that of a specialist tribunal with a very wide discretion.  However, as the Judge has failed to address the question of need in the manner required by s58(1),  the appeal must be allowed.

2. The question then arises whether it is appropriate to send the matter back to be heard and determined in accordance with these reasons.  For the reasons which follow, I do not think that is the proper course.

The Applicants’ Case

1. The evidence of need for an hotel was thin.  When opening the case in the Licensing Court, counsel for the applicants accepted that two hotels in the locality provided the same kind of safe atmosphere that the appellants sought to promote.  They were P J O’Brien’s and the Elephant & Wheelbarrow.  P J O’Brien’s is an hotel which has existed for a long time which has been altered to provide a so-called Irish theme hotel, an Irish pub.  The Elephant & Wheelbarrow is an hotel which was to be established as an Irish pub but the proprietors decided to alter its theme to that of a British pub because they perceived that there were already enough Irish pubs in Adelaide.  The Elephant & Wheelbarrow does, however, serve Irish ales and stout as well as English ales in premises of a similar kind to the present proposal.

2. Mr Coleman, a director of the applicants, gave evidence that he believed that, on the basis of his experience with a like hotel in Darwin and his observations of other like hotels, the proposal hotel would be popular.  It was intended to provide a safe and friendly atmosphere attractive to a wide cross-section of the community.  He said that it would have the same atmosphere as P J O’Brien’s.  He conceded that it would cater for the same cross-section of the community as P J O’Brien’s and the Elephant & Wheelbarrow.  He chose the site because of its popularity. 

3. The applicants called five other witnesses.  The first was a travel agent who know the applicants and had frequented their Irish pub in Darwin.  She did, however, describe herself as “not a great pub person per se”.  She did not express any dissatisfaction with existing hotels and restaurants but said she liked the applicants’ concept.  It was the ambience and atmosphere which appealed to her.  Similar evidence was given by  Mrs Burford.  Mr Treloar saw the proposal as providing another option for entertaining clients or for his own entertainment and recreation.  He sought to have what he quite frequently called “a lot more options”.  Mr Harbison, the holder of a special circumstances licence, supported the proposal because it was close to his place of work and he preferred to go to places frequented by older people which were not over-crowded.  Finally, an economist spoke of the growth and popularity of the locality.

4. Thus, the case on need essentially turned on three witnesses who preferred the atmosphere of the proposed hotel.  Mr Treloar’s evidence does not prove anything more than that some members of the public would like as many alternatives as possible.  It does not in any sense prove the need identified in s58(1).  The fact that the area is popular is plainly relevant when proving need but the question is whether the needs of the public are not being sufficiently catered for by existing licensed outlets.  Finally, the atmosphere identified by the three witnesses is already provided in two hotels in the locality.  In other words, the applicants’ case turned on one small facet of the operation of an hotel, namely, its atmosphere.  There was no proof of any need to be able to purchase meals with liquor which was not being satisfied.  There was no evidence at all on the need for bottled liquor for consumption off the premises.  There was no evidence that there were inadequate facilities available to purchase liquor for consumption on the premises.  That is hardly surprising since the holder of a restaurant licence may serve liquor with a meal at any time and the holder of a special circumstances licence may sell liquor for consumption on or off the premises at those times permitted by the licence.

5. A case proving a need based on providing premises with a different atmosphere from others in the locality is very ephemeral.  The need for an hotel is not demonstrated in that way.  If that were so, the need for another hotel would be demonstrated whenever fashions or tastes might change.  Thus, a shift in tastes or preferences from an Irish pub to some other kind of decor and operation would provide a need for a licence.  Plainly that is not what s58(1) contemplates. Plainly, some weight should be attached to the fact that preferences and tastes will change.  But matters of preference and taste cannot be pressed too far for there is nothing to prevent an applicant for an hotel licence from altering the decor and get-up of an hotel and its manner of operation in order to attract custom.  Two hotels mentioned in the evidence in this case provide concrete examples.  The Norwood Hotel is an old and well-established hotel.  Its licensee is Saterno’s Norwood Hotel Pty Ltd.  It has recently changed its get-up and manner of operation to emulate an Irish pub and is called “Finn McCool’s”.  Reference has already been made to the Elephant & Wheelbarrow, where the proprietors changed their proposed premises from an Irish pub to an English pub.  Thus, while matters of taste and preference may have a bearing, the weight to be attached to them must often be slight.  To adopt a facon de parler of Gertrude Stein, an hotel is an hotel is an hotel is an hotel.  What must be established is the need for the range of facilities provided by hotels as explained in Anglers Hotel/Motel v Taranto (1980) Pty Ltd (supra) at 325.

6. This Act was enacted after an inquiry into the operation of the Liquor Licensing Act 1985. The obligation on an applicant for an hotel licence to prove need was retained. As the Chief Justice observed in Woolies Liquor Stores Pty Ltd v Carleton Investments Pty Ltd (supra):

   “Parliament made a judgment under the former Act that competition was not to be given unrestrained effect.  Nor was desire or wish by the public in a given locality for the presence of a liquor outlet, of itself, a sufficient basis for the grant of a licence.”

While the concept of need exists in its present form in s58(1), an applicant for an hotel licence must demonstrate more than the fact that the proposed premises will be popular or will appeal to a sector of the community.  The case presented by the applicants went little further than expression of a desire for the presence of a liquor outlet with a particular kind of atmosphere  and, as there are already two hotels in the locality which provide the same kind of atmosphere, the applicants failed to prove need.

1. The Licensing Judge also sought to make something of the fact that the owner of two licensed premises had not objected.  He said:

   “One last observation.  If these objectors feel themselves right in saying something like saturation point is here, too many Irish pubs and so on, how strange it is that P J O’Brien’s and the Elephant & Wheelbarrow are not objectors.  For the reason, I suspect, that they realise the demand is such that this venture can only add to the atmosphere of Rundle Street and will not affect their own businesses.”

There is no evidence on which the Judge could reach the conclusion that those two outlets did not believe the new venture would affect their own businesses.  There might be any number of reasons why a licensee chooses not to object.  More importantly, the Judge has again failed to identify the true question he had to determine.  The fact that two licensees did not object entirely misses the point.  Whether or not they object, regard has to be had to their licensed premises when determining whether there is a need for the licence. 

1. The Judge also sought to gain some support for his decision from para (e) in s3 of the Act which states the objectives of the Act.  Para (e) states that it is the objective of the Act “to encourage a competitive market for the supply of liquor”.  It does not avail in this case.  First, as already mentioned, all of the objectives must be considered.  Secondly, there was nothing to show any lack of competition in this case.  The plethora of licensed premises points to the contrary.

1. I repeat that all due weight must be given to the fact that this is an appeal from a specialist tribunal which is invested with a very wide discretion.  Similarly, because it does not have the day to day experience of a Licensing Court judge, this court will, as a general rule, be loathe to determine the question whether an applicant has demonstrated the need for licensed premises.   However, because the case presented by the applicants on the question of need was very thin and was presented on such a limited basis, it is possible for this court to determine the issue.  There is no evidence of the need for the range of facilities provided by an hotel.  The case presented simply did not establish the need for an hotel licence, particularly when regard is had to the very substantial number of existing licensed outlets in the area and the large number of hotels in the locality, two of which provide the same kind of atmosphere to that which the applicants seek to provide.  In my view, the proper course is not to remit the matter to the Licensing Court.

2. For these reasons, I would make the following orders:

3. Appeal allowed.

1. Set aside the grant of the certificate made on 27 August 1998 pursuant to s59 of the Liquor Licensing Act 1997.