Mayne v Twinbrook Corporation Pty Ltd

[2008] WASCA 131

MAYNE -v- TWINBROOK CORPORATION PTY LTD [2008] WASCA 131

Jurisdiction: SUPREME COURT OF WESTERN AUSTRALIA   Citation No: [2008] WASCA 131

Court:           THE COURT OF APPEAL (WA)  

Case No:      CACV:26/2007       Heard:          11 APRIL 2008
Coram:         BUSS JA
NEWNES AJA       Delivered:     27/06/08

No of pages: 16       Judgment Part:      1 of 1
Result:         Appeal dismissed               
Category:     B  

PDF Version           
Parties:        WILLIAM ERNEST MAYNE
JENNIFER MAY MAYNE
TERRY ERNEST BARTER
LINDA CHRISTINE BARTER
MAYNE ENTERPRISES PTY LTD
LANSOFT ENTERPRISES PTY LTD
TWINBROOK CORPORATION PTY LTD

Catchwords:
Contracts
Liquor licensing
Contract for sale of hotel
Whether contract void
Contract subject to condition subsequent that liquor licence be transferred to purchaser
Whether s 84(2)(a) of Liquor Licensing Act 1988 (WA) requires that approval of transfer of liquor licence be condition precedent to formation of enforceable contract
Whether contractual condition complied with s 84(2)(a)
Effect of s 84(2)(a)

Legislation: 
Liquor Licensing Act 1988 (WA), s 84(2)(a)
Transfer of Land Act 1893 (WA), s 138C(1)

Case References:   
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390
Nelson v Nelson (1995) 184 CLR 538
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Twinbrook Corporation Pty Ltd v Mayne [2006] WASC 293

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION : MAYNE -v- TWINBROOK CORPORATION PTY LTD [2008] WASCA 131

CORAM : BUSS JA

NEWNES AJA

HEARD : 11 APRIL 2008

DELIVERED : 27 JUNE 2008

FILE NO/S : CACV 26 of 2007

BETWEEN : WILLIAM ERNEST MAYNE

JENNIFER MAY MAYNE
    TERRY ERNEST BARTER
    LINDA CHRISTINE BARTER
    MAYNE ENTERPRISES PTY LTD
    LANSOFT ENTERPRISES PTY LTD
    Appellants

AND

TWINBROOK CORPORATION PTY LTD
    Respondent

ON APPEAL FROM:

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Coram : MASTER SANDERSON

Citation : TWINBROOK CORPORATION PTY LTD -v- MAYNE & ORS [2006] WASC 293

File No : CIV 1616 of 2006

(Page 2)

Catchwords:

Contracts - Liquor licensing - Contract for sale of hotel - Whether contract void - Contract subject to condition subsequent that liquor licence be transferred to purchaser - Whether s 84(2)(a) of Liquor Licensing Act 1988 (WA) requires that approval of transfer of liquor licence be condition precedent to formation of enforceable contract - Whether contractual condition complied with s 84(2)(a) - Effect of s 84(2)(a)

Legislation:

Liquor Licensing Act 1988 (WA), s 84(2)(a)

Transfer of Land Act 1893 (WA), s 138C(1)

Result:

Appeal dismissed

Category: B

Representation:

Counsel:

Appellants : Mr J C Curthoys
    Respondent : Mr G R Hancy

Solicitors:

Appellants : Slee Anderson & Pidgeon
    Respondent : Denis Meagher

Case(s) referred to in judgment(s):

Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390
Nelson v Nelson (1995) 184 CLR 538
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Twinbrook Corporation Pty Ltd v Mayne [2006] WASC 293

(Page 3)

1 BUSS JA: I agree with Newnes AJA.

2 NEWNES AJA: This appeal arises from an application brought by the respondent under s 138C(1) of the Transfer of Land Act 1893 (WA) to extend a caveat lodged by the respondent over a property in Bunbury.

3 The respondent's application was ordered to proceed on pleadings and progressed to a two-day hearing before Master Sanderson on 27 and 28 November 2006. The learned master delivered his reasons on 20 December 2006 (Twinbrook Corporation Pty Ltd v Mayne [2006] WASC 293) and, on 16 February 2007, made a declaration to the following effect:

The [respondent] has an estate or interest as purchaser in the whole of the land in certificate of title volume 2225 folio 38 and is entitled to protect that estate or interest by caveat.

4 The learned master further ordered (relevantly) that the operation of the caveat 'be extended until the caveat is withdrawn by the [respondent] or further order'.

5 The appellants appeal against those orders on the ground that the contract of sale upon which the caveat depended did not comply with s 84(2)(a) of the Liquor Licensing Act 1988 (WA) [now the Liquor Control Act 1988 (WA)] (the Act), and was therefore void. I will return to the grounds of appeal in due course. It is convenient first to set out, so far as relevant, the circumstances which gave rise to the application before the learned master.

The background

6 On 1 September 2005, the respondent entered into two contracts with the appellants. One was a contract to purchase from the appellants the business of the Burlington Hotel (hotel contract). The other was a contract to purchase from the appellants the property at 51 Victoria Street, Bunbury, on which the Burlington Hotel stood (land contract).

7 Under the hotel contract, the respondent agreed to pay to the appellants the total sum of $330,000, of which $100,000 was allocated to 'goodwill and licences', $200,000 to fixtures, and $30,000 to stock in trade. Certain special conditions were annexed to the contract. The conditions were (so far as relevant) as follows:

2. Simultaneous settlement with purchase of freehold contract.

(Page 4)

3. Subject to the transfer of Liquor Licence No. 6010009852 being successfully transferred to the purchaser within 90 days.

…

7. Settlement within 30 days of condition 3 or within 30 days of City of Bunbury approval for planning and building licences of whichever is the latest.

8 A copy of the liquor licence was annexed to the hotel contract. The licence is a hotel licence entitling the appellants, as licensee, to sell and supply liquor at the Burlington Hotel at 51 Victoria Street, Bunbury, in accordance with the provisions of s 41 of the Act. There is endorsed on the licence a permit, granted under s 60 of the Act, permitting extended trading hours for liquor consumed on the premises, subject to certain conditions.

9 Under the land contract, the purchase price for the land of $1,670,000 was payable by the respondent by an initial payment of $10,000 within seven days of acceptance of the respondent's offer and the balance on the settlement date. The settlement date is described as 'as per clause 9'. Clause 9 of the conditions of contract provided:

Simultaneous settlement with purchase of business of the Burlington Hotel as per contract of sale to purchase a business.

10 The land contract was also subject to several other conditions. They were, so far as relevant:

10. Due diligence to the purchaser's satisfaction within 60 days of acceptance of this contract.

11. Annexure 'A' forms part of this contract Liquor Licence No. 6010009852.

12. Annexure 'B' forms part of this contract Plan of Licensing Area.

11 Both contracts provided, in effect, that possession would be given to the respondent upon settlement. The effect of cl 7 of the hotel contract and cl 9 of the land contract was that settlement was to take place 'within 30 days of condition 3 [of the hotel contract being fulfilled] or within 30 days of City of Bunbury approval for planning and building licences whichever is the latest'.

12 It is common ground that the liquor licence has not been transferred to the respondent. Nor, it appears, have any planning or building licences been issued to the respondent by the City of Bunbury.

(Page 5)

13 On 1 September 2005, the respondent's real estate agent, on behalf of the respondent, sent to the appellants a document described as a 'Conditions Waiver'. After referring to the hotel contract, it provided (so far as relevant):

I/We the undersigned buyer/s hereby notify that the condition/s specified in the Offer and Acceptance as listed below:

ii. have been waived

CONDITIONS

3 subject to the transfer of Liquor Licence No. 6010009852 being successfully transferred to the purchaser within 90 days.

14 On 5 April 2006, the appellants' solicitors wrote to the respondent's solicitors saying that the hotel contract did not comply with s 84(2) of the Act and accordingly the contract was void. They also said that, in any event, the respondent had failed to comply with the provisions of condition 3 of that contract and that constituted a repudiation of the contract. The appellants' solicitors said that the respondent's purported waiver of condition 3 was invalid and, in any event, the contract had lapsed on 28 November 2005 [apparently on the basis that the 90-day period had thereupon expired]. The solicitors stated that no contract had ever existed in respect of the sale of the land and the business but, so far as was necessary, they gave notice that the contracts were terminated.

15 The respondent then lodged a caveat over the land claiming an interest as the purchaser under a contract of sale. The appellants in turn caused the Registrar of Titles to issue a notice under s 138B of the Transfer of Land Act, notifying the respondent that the caveat would lapse unless within 21 days the respondent obtained from the Supreme Court an order extending the operation of the caveat. The respondent then brought the application which is the subject of this appeal to have the operation of the caveat extended.

The proceedings at first instance

16 On the hearing of the application the appellants contended that the respondent had no interest in the land. The appellants relied on a number of grounds but the learned master found against the appellants on all of them. For the purposes of this appeal it is necessary to refer to only one of those grounds, namely, the appellants' contention that the hotel contract was void by virtue of s 84(2)(a) of the Act.

(Page 6)

17 The appellants submitted that the hotel contract was not, as s 84(2)(a) of the Act required that such a contract must be, subject to a condition precedent under which the prior approval by the Director of Liquor Licensing (Director) of the proposed transfer of the liquor licence was a prerequisite to the contract taking effect. The hotel contract was therefore illegal and void. They argued that the hotel contract was so intimately entwined with the land contract as to be one contract, with the consequence that both contracts were of no effect. The respondent denied that the contract contravened s 84(2)(a) of the Act.

18 The learned master did not accept the appellants' contention. The learned master concluded:

In my view, as a matter of contractual interpretation, condition 3 of the special conditions makes it a condition precedent to the sale agreement that the liquor licence is to be transferred to the purchaser. The condition has a temporal element, but that is neither here nor there. The simple effect of the clause is that transfer of the licence is a prerequisite to the contract taking effect. In my view, the contract complies precisely with the requirements of the Act and is in no way tainted by illegality.

…

The contract is to be read as being subject to the licence being successfully transferred and that complies with the requirements of the Act [8] - [9].

19 The respondent also contended that in any event the effect of the notice of 1 September 2005 was to relieve the appellants of the obligation to transfer the licence to it. The learned master considered that rather than a waiver it appeared to be a unilateral variation of the contract, varying the property that was to be transferred by the appellants under the contract. He went on:

But whatever the proper description of that argument, it has no bearing on the case put by the [appellants]. Their case was that because the agreement to purchase the business was tainted by illegality, the contract was void. That is, it was of no force and effect from the moment it was signed. If that was so, an attempt to revive the contract by removing a part of it which had, at the moment it was signed, rendered it void, could not possibly succeed. It would be necessary to establish that as at the date the condition was waived, the formerly void contract was somehow brought into existence. Whether or not such possibility exists, it was not the [respondent's] pleaded case [11].

20 The learned master found that the hotel contract and the land contract were each still on foot and the land contract gave the respondent a

(Page 7)

proprietary interest sufficient to allow it to maintain a caveat. He made the following declaration and orders:

1. The [respondent] has an estate or interest in the whole of the land in Certificate of Title Volume 2225 Folio 38 and is entitled to protect that estate or interest by caveat.

2. The operation of caveat J751508 be extended until the caveat is withdrawn by the [respondent] or further order.

3. The [appellants] do pay the [respondent's] costs of the action, including reserved costs, to be taxed.

The grounds of appeal

21 The appellants' grounds of appeal are as follows:

1. The learned master erred in law in holding that condition 3 of the special conditions is a condition precedent to the sale agreement taking effect and should have found that condition 3 is a condition subsequent dealing with the actual transfer of the licence, or alternatively a condition precedent to performance (being the transfer of the licence).

2. The learned master erred in law in failing to hold that because condition 3 is a condition subsequent, or alternatively a condition precedent to performance (being the transfer of the licence), it failed to comply with s 84(2)(a) of the Liquor Licensing Act ('the Act') and that the contract, or contracts were void.

3. The learned master erred in law in not holding that the respondent's action should be dismissed and a declaration made that the sale of land contract and the sale of business contract are void for failing to comply with s 84(2)(a) of the Act.

The appellants' submissions

22 It was submitted on behalf of the appellants that condition 3 of the hotel contract did not comply with the requirements of s 84(2)(a) of the Act.

23 In the first place, it did not refer to the approval of the Director to the proposed transfer as a prerequisite to the contract taking effect. It related only to the time by which the actual transfer of the licence must be effected; that is, it simply made the contract conditional upon the licence actually being transferred within 90 days of the date of the contract. It was therefore irrelevant to s 84(2)(a).

(Page 8)

24 Secondly, condition 3 was not expressed to be, and was not, a condition precedent to the formation of the contract, but was a condition precedent to performance or, in other words, a condition subsequent. Section 84(2), however, requires that the contract contain an express term that the approval of the Director is a condition precedent to the formation of a contract, not simply a condition precedent to performance.

25 It was submitted that a breach of s 84(2) of the Act has the consequence that the contract is void. The hotel contract and the land contract were not divisible. The hotel business could only be operated by the occupant of the land and there was no intention that the land and the business would be sold separately. Nor could condition 3 be severed. Accordingly, the contracts stood or fell together. In this case, they fell together.

The respondent's submissions

26 Counsel for the respondent accepted that condition 3 was a condition precedent to performance, not a condition precedent to the formation of the contract. He submitted, however, that s 84(2)(a) of the Act did not require that the approval of the Director be a condition precedent to the formation of the contract; it was sufficient that it was a condition precedent to the performance of the contract.

27 The effect of condition 3 was to make the approval of the Director to the transfer of the liquor licence a condition precedent to performance of the hotel contract. It was not possible for a liquor licence to be 'successfully transferred' unless first, an application had been made for approval, secondly, the approval had been obtained, and thirdly, the Director had made the requisite endorsement on the licence. It is necessarily implicit in condition 3 that the approval of the Director to the transfer of the licence must be obtained before the contract settles.

28 It was further submitted that even if the provision in the contract for the transfer of the liquor licence was contrary to s 84(2)(a), and therefore unenforceable, that did not render the balance of the contract unenforceable. To render the entire transaction unenforceable would be disproportionate to the breach. Counsel referred to Nelson v Nelson (1995) 184 CLR 538, 612 - 613. The term relating to the transfer of the liquor licence to the respondent was not an integral part of the transaction and, if it was void, the balance of the transaction was nevertheless enforceable.

(Page 9)

29 The respondent also relied on a notice of contention, submitting that the decision of the learned master was maintainable on other grounds, namely, that by the notice of 1 September 2005 the respondent had waived condition 3 of the contract; that is, the respondent had waived the appellants' obligation to transfer the liquor licence. Counsel argued that the provision for transfer of the liquor licence was for the benefit of the respondent and by the notice of waiver the respondent had waived the benefit of that provision.

The disposition of the appeal

The statutory provision

30 Section 84 of the Act provides, so far as relevant:

(1) The Director shall not grant an application for approval of the transfer of a licence in relation to any premises unless the application is made -

(a) pursuant to a contract for the sale or assignment of the right of the licensee to carry on business under the licence, the licensee consenting to the application;

…

(2) A licensee shall not purport to sell or assign the right to carry on business under the licence or to sell or assign the licence itself unless -

(a) the contract of sale or assignment is subject to a condition precedent under which the prior approval by the Director of the proposed transfer of the licence is a prerequisite to the contract taking effect; or

(b) the Director has approved the proposed transfer.

…

(4) An applicant for approval to the transfer of a licence -

(a) must satisfy the Director -

(i) that the applicant is a fit and proper person to hold the licence; and

(ii) as to the matters referred to in section 37(1)(a), (b), (c) and (d);

…

(Page 10)

(c) shall provide or cause to be provided such further or other records or information as the Director may require.

(5) On an application for approval to a proposed transfer of a licence the Director may make the grant of approval subject to such terms and conditions as the Director thinks fit …

Ground 1

31 The learned master noted (and it was not challenged on the appeal) that the contracts had been drawn by the appellants' agents. The contracts appear, unfortunately, to have been drawn without any legal assistance and condition 3 of the hotel contract, in particular, is framed in confusing language. The condition that the 'transfer' of the liquor licence be 'successfully transferred' obviously makes no grammatical sense. Similarly, condition 7 of the hotel contract which provides for 'settlement within 30 days of condition 3 …' is obviously intended to mean 'settlement within 30 days of condition 3 being satisfied'.

32 It is therefore apparent that the intention of the parties is not to be ascertained by a strict or literal interpretation of the words they have used in condition 3, but that due allowance must be made for a certain looseness of language.

33 It is clear that the liquor licence could not be transferred to the respondent unless approval of the transfer was first obtained. It is apparent from the inclusion of condition 3 in the hotel contract that the parties had in mind the need for that approval. As approval of the transfer was a prerequisite to the actual transfer, it follows that the stipulation in condition 3 that the contract was subject to the actual transfer of the licence within 90 days necessarily included a requirement that approval of the transfer be obtained within the same time. Under cl 7 of the hotel contract and cl 9 of the land contract, settlement of the contracts was to occur within 30 days after condition 3 had been satisfied. The approval of the transfer was therefore required to be obtained before settlement of the contracts.

34 In fact, when regard is had to the relevant circumstances of the transaction, including the commercial objective of the parties to effect a transfer of the hotel business, including the land and liquor licence, to the respondent, it is, I think, clear that the condition is intended to mean that the contract was subject, not necessarily to the actual transfer, but to approval of the transfer of the liquor licence to the respondent.

(Page 11)

35 It could not have been intended by the parties that the liquor licence would be transferred at some time prior to settlement of the contracts, before the respondent was entitled to possession of the hotel. Apart from the fact that no purpose would be served by a transfer prior to settlement, it is not to be assumed that the parties were unaware of the requirement of the Act that the licensee must at all times be entitled to, and actually be in, occupation of the hotel, failing which the licensee's interest in the licence terminates: s 37(5). In any event, it is evident from the terms of the licence which the parties have annexed to the hotel contract that the licence cannot be divorced from occupancy of the hotel.

36 In my opinion, it is clear that condition 3 required that the approval of the Director to the transfer be obtained within the 90-day period and before settlement of the contracts.

37 I consider that ground 1 of the grounds of appeal has not been made out.

Ground 2

38 This was the substantive issue on the appeal; namely whether or not condition 3 of the hotel contract was 'a condition precedent' under which the prior approval by the Director of the proposed transfer of the licence was 'a prerequisite to the contract taking effect'.

39 It was common ground that condition 3 was not a condition precedent to a binding contract of sale coming into existence; rather, it was a condition precedent to performance of the contract, or, in other words, a condition subsequent to the formation of the contract. The appellants contended that that was not sufficient; s 84(2)(a) required that the prior approval by the Director to the proposed transfer of the licence be a condition precedent to the contract coming into existence. The respondent, on the other hand, contended that it was sufficient that the approval of the Director was a condition precedent to performance of the contract.

40 The outcome of this issue plainly depends upon the proper construction of s 84(2)(a) and, in particular, the requirement that 'the contract of sale … is subject to a condition precedent … to the contract taking effect'.

41 The duty of the court is, of course, to give the words of a statute the meaning that the legislature is taken to have intended them to have. For that purpose, it is well-established that the meaning of a statutory

(Page 12)

provision is to be determined by reference to the language of the statute viewed as a whole. The primary object of all statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. And the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed; thus, the process of construction must always begin by examining the context of the provision that is being construed: Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390, 397; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 [69], [78].

42 As I have mentioned, at the relevant time the Act was known as the Liquor Licensing Act 1988. By an amendment made by s 4 of the Liquor and Gaming Legislation Act, no. 73 of 2006, the short title of the Act was amended to the Liquor Control Act 1988.

43 At the relevant time, the long title to the Act provided that it was:

An Act to regulate the sale supply and consumption of liquor, the use of premises on which liquor is sold, and the services and facilities provided in conjunction with or ancillary to the sale of liquor, to minimize harm or ill-health caused to people, or any group of people, due to the use of liquor … and for related matters.

44 The long title reflected the relevant 'primary objects' of the Act as set out in s 5(1). Section 5(2) provided, relevantly, that:

In carrying out its functions under this Act, the licensing authority shall have regard to the primary objects of this Act and also to the following objects -

…

(d) to provide adequate controls over, and over the persons directly or indirectly involved in, the sale, disposal and consumption of liquor.

45 Part 2 of the Act provides for a licensing authority comprising the Liquor Licensing Court [now the Liquor Commission] and the Director: s 7. The powers and jurisdiction of the Director are set out in s 13. The division of responsibility between the Liquor Licensing Court and the Director was dealt with in s 30 of the Act.

46 Part 3 of the Act deals with licences and permits. Section 30A empowers the licensing authority to grant licences in accordance with the Act. It provides that a licence vests personally in the licensee to whom it

(Page 13)

is granted and is not capable of being vested in any other person except in accordance with the Act.

47 Subject to the Act, any other written law and any conditions of the licence, a licence authorises the holder to sell and supply liquor in accordance with its terms from the buildings or places referred to in the licence or otherwise as provided in the licence but, except to the extent the licence is varied by a permit or otherwise under the Act, in no other manner: s 31(3).

48 The Act confers on the licensing authority a very wide discretion in dealing with applications made under the Act. Subject to the Act, the licensing authority has an absolute discretion to grant or refuse an application on any ground or for any reason that it considers is in the public interest: s 33(1). While an application is required to be dealt with on its merits, it may be refused even if the applicant meets all the requirements of the Act: s 33(2).

49 A licensing authority cannot grant a licence, approve the transfer of a licence or issue a permit unless it is satisfied that the applicant - or in the case of a body corporate, every person occupying a position of authority in it - and every person directly or indirectly interested in the application or business, is a fit and proper person: s 37(1)(a) - (d). A hotel licence is subject to the condition that the licensee occupies, and retains the right to occupy, the licensed premises to the exclusion of others and if a licensee ceases to occupy the licensed premises the interest of the licensee in the licence terminates: s 37(5).

50 A person who sells any liquor commits an offence unless they, or their employer or principal, is the holder of a licence or permit which authorises the sale: s 109. A licensee who sells any liquor, or acts in any way contrary to the Act or any term or condition of their licence or permit, commits an offence: s 110, s 111.

51 Disciplinary action may be taken against a licensee where the business conducted under the licence has not been properly conducted in accordance with the licence or the licensee has contravened the Act or a term of the licence: s 95.

52 Division 9 of pt 3 of the Act deals with the transfer of licences. By s 82, the Director has the same powers in relation to the approval of a transfer of a licence as the licensing authority has in relation to the grant of a new licence. An application for approval of a transfer must be made by the proposed transferee: s 82(2). The transfer of a licence is effected

(Page 14)

by an endorsement, in a form approved by the Director, made on the licence by the licensing authority and takes effect on the date specified in the endorsement: s 82(3).

53 On this appeal, counsel for the appellants placed considerable reliance on the words 'condition precedent' in s 84(2)(a) as indicating a legislative intention that the effect of the condition must be that no contract is to come into existence unless the condition is fulfilled. I think that is to place on those words more weight than they can bear.

54 The learned authors of Cheshire and Fifoot's Law of Contract (8th Australian ed) observe (at [20.4]) that:

[T]he designation of conditions as precedent and subsequent has been bedevilled by inconsistent usage … In the case of a contingent condition of formation … the condition is usually described as 'precedent' in the sense that its fulfilment is precedent to the existence of the contract. But conditions of performance are also often called 'precedent'.

55 The distinction was described by Mason J in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 as follows:

There is an obvious difference between the condition which is precedent to the formation or existence of a contract and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitles the party to terminate the contract on non-fulfilment. In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate (551 - 552).

56 However, provided the effect of a condition is clearly understood, its classification may be merely a matter of words: Perri v Coolangatta Investments Pty Ltd (541) (Gibbs CJ).

57 In my view, the resolution of whether s 84(2)(a) requires that the approval of the Director be a condition precedent to the contract 'taking effect' in the sense of coming into existence as a binding contract, or whether it requires only that the approval of the Director be a condition precedent to the contract 'taking effect' by performance, is not, therefore, aided by focusing attention on the words 'condition precedent'. In light of the inconsistent usage to which that expression has been subject, little assistance is to be derived from doing so.

(Page 15)

58 The appellants' counsel also submitted that support for the appellants' construction was to be found in the words in s 84(2) that 'a licensee shall not purport to sell or assign the right to carry on business under the licence … [or] the licence itself' [emphasis added], arguing that those words reinforced an intention that the relationship of the parties must be pre-contractual prior to approval being obtained.

59 I do not accept that submission. It is clear that under the Act it is not within the capacity of a licensee to vest any rights under a licence in another person. The rights in respect of a licence can be transferred to another person only if an application is made to the Director and the Director approves the transfer. The word 'purport' in s 84(2) is simply consistent with that position; that is, that it is not within the contractual capacity of a licensee to confer any interest in a licence on another person. On the other hand, a licensee can 'purport to sell or assign' any rights under a licence so long as the contract is subject to the condition precedent referred to in s 84(2)(a).

60 In my view, when regard is had to the purpose and effect of the Act as a whole, it is clear that s 84(2)(a) is to be understood in the sense that the approval of the Director must be a condition precedent to the contract taking effect by performance; that is, in this case by settlement of the contract. Section 84(2)(a) does not require that the approval be a condition precedent to the formation of the contract.

61 In the context of the transfer of a liquor licence, it is plain that the relevant object of the Act is to provide 'adequate controls' over persons who are involved in the sale of liquor. The Act accordingly provides a regulatory framework intended to ensure that only those persons who satisfy the licensing authority they are fit and proper persons to sell liquor are licensed to do so. A licensee cannot, therefore, vest in any other person an interest in a licence. The proposed transferee of a licence must apply to the Director for approval of the transfer of the licence and the considerations to be applied in determining whether the transferee is a fit and proper person to hold the licence, and therefore whether the transfer should be approved, are in all material respects the same as those that apply to an applicant for a new licence.

62 If a transfer is approved, it takes effect, not on a date agreed by the parties, but on the date specified by the Director. Until the transfer takes effect, the transferee has no rights under the licence and the obligations of the existing licensee remain extant. In that context, it is relevant that a licensee is subject to disciplinary action if the business is not properly

(Page 16)

conducted in accordance with the licence and the Act, and in the case of a hotel licence (among others) the interest of the licensee in the licence terminates if the existing licensee ceases to occupy the licensed premises.

63 The Act contains no provision for the approval of the transfer of a liquor licence retrospectively.

64 In that context, it is readily explicable that in the case of the sale or assignment of a liquor licence the Act should specify that the contract is expressly to provide that approval of the transfer of the liquor licence must be obtained before the contract is required to be performed. There is, however, no basis for construing s 84(2)(a) as requiring that the approval must be obtained before any contract for the sale or assignment of the business or of the licence comes into existence. No purpose would be served by such a requirement. The Act is concerned to regulate the persons who are involved in the sale of liquor, not to regulate the formation of contracts.

65 I do not, therefore, accept the construction of s 84(2)(a) contended for by the appellants. In my opinion, that provision refers to a condition precedent to performance of the contract, not a condition precedent to the formation of the contract. I consider that condition 3 was a condition precedent of the nature required by s 84(2)(a). The second ground of appeal must fail. It follows that it is unnecessary to consider the third ground of appeal or the respondent's notice of contention.

Conclusion

66 The grounds of appeal have not been made out. I would therefore dismiss the appeal.