Meshlawn Pty Ltd & Anor v. The State of Queensland & Anor
[2009] QSC 215
•5 August 2009
SUPREME COURT OF QUEENSLAND
CITATION:
Meshlawn Pty Ltd & Anor v The State of Queensland & Anor [2009] QSC 215
PARTIES:
MESHLAWN PTY LTD (ACN 010 947 458)
(first plaintiff)
and
SURFERS PARADISE ROCK AND ROLL CAFÉ PTY LTD (ACN 050 412 612)
(second plaintiff)
v
THE STATE OF QUEENSLAND
(first defendant)
and
HELEN RINGROSE AS CHIEF EXECUTIVE OF THE LIQUOR LICENSING DIVISION
(second defendant)FILE NO:
BS 3013 of 2006
DIVISION:
Trial Division
PROCEEDING:
Claim
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
5 August 2009
DELIVERED AT:
Brisbane
HEARING DATE:
30 March 2009 – 1 April 2009, 11 – 13 May 2009, supplementary written submissions received 18 June 2009 and 20 July 2009
JUDGE:
Applegarth J
ORDER:
1. Judgment be entered for the defendants.
2. The plaintiffs pay the defendants’ costs of and incidental to the proceeding, including reserved costs, to be assessed.
CATCHWORDS:
TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – GOVERNMENT AND PUBLIC AUTHORITIES – where the plaintiffs applied for extended hours permits for their nightclubs to trade until 5 am – where the police and the Gold Coast City Council objected to the permits – where the second defendant declined to grant the plaintiffs’ applications – whether as Chief Executive administering the Liquor Act 1992 (‘the Act’) the second defendant owed a duty of care to the plaintiffs – whether the asserted duty of care was consistent with the terms, scope and purpose of the Act – whether the relationship between the Chief Executive and the applicants for extended hours permits display characteristics answering the criteria for interaction by the tort of negligence
TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – STANDARD OF CARE – GENERALLY – where the Chief Executive read briefing notes relating to the decision which summarised police and council objections but did not read the voluminous supporting material – whether the Chief Executive “had regard to” the objections – whether the Chief Executive breached the alleged duty of care
TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – GOVERNMENT AND PUBLIC AUTHORITIES – whether the State owed the plaintiffs a duty of care to ensure that the Chief Executive acted in accordance with her obligations under the Act
TORTS – MISCELLANEOUS TORTS – OTHER CASES – misfeasance in public office – whether the Chief Executive acted in excess of power – whether the Chief Executive acted with malice when declining to renew extended hours permits – whether the second defendant was recklessly indifferent to her alleged lack of power
Liquor Act 1992 (Qld), s 3, s 3A, s 49, s 102, s 107, s 107C, s 109C, s 116, s 117, s 118, s 118A, s 119, s 121, s 121A, s 134, s 139
Baume v Commonwealth (1906) 4 CLR 97, cited
Brodie v Singleton Shire Council (2001) 206 CLR 512, distinguished
Colbran v State Of Queensland (2008) Aust Torts Reports ¶81-958; [2008] QSC 132, cited
Coshott v Woollahra Municipal Council (1988) 14 NSWLR 675, applied
Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1, cited
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, applied
Jones v Department of Employment [1989] 1 QB 1, applied
Little v Commonwealth (1947) 75 CLR 94, cited
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, cited
Northern Territory of Australia v Mengel (1995) 185 CLR 307, cited
Perrett v Williams [2003] NSWSC 381, cited
Pyrenees Shire Council v Day (1998) 192 CLR 330, distinguished
Rowan v Cornwall (No 5) (2002) 82 SASR 152, cited
Romeo v Conservation Commission (NT) (1998) 192 CLR 431, cited
SB v State of New South Wales (2005) 13 VR 527, considered
Sanders v Snell (2003) 130 FCR 149, cited
Stuart v Kirkland-Veenstra (2009) 254 ALR 432, applied
Sullivan v Moody (2001) 207 CLR 562, cited
Tickner v Chapman (1995) 55 FCR 316, cited
Tickner v Chapman (1995) 57 FCR 451, considered
Trent Strategic Health Authority v Jain [2009] 2 WLR 248, applied
Trevorrow v South Australia (No 5) (2007) 98 SASR 136, considered
Vairy v Wyong Shire Council (2005) 223 CLR 422, cited
Zhang v Canterbury City Council (2001) 51 NSWLR 589, citedCOUNSEL:
P H Morrison QC and J W Peden for the plaintiffs
P J Flanagan SC and J M Horton for the defendantsSOLICITORS:
Hopgood Ganim for the plaintiffs
Crown Solicitor for the defendants
Until 31 March 2004 each plaintiff conducted nightclubs at Surfers Paradise until 5 am under extended hours permits that were granted from time to time. On 18 March 2004 the second defendant (“the Chief Executive”) refused each plaintiff’s application for extended hours permits to enable them to trade after 3 am as from 1 April 2004 (“the decisions”). The plaintiffs appealed against the decisions to the Commercial and Consumer Tribunal (“the Tribunal”) and on 23 March 2004 requested “interim permits” from the Chief Executive to allow trading to 5 am until the Tribunal made a decision on the appeal.[1] This was to mitigate the loss the plaintiffs were expected to suffer. The plaintiffs’ solicitors said that it would be “totally unfair” for their clients to suffer these severe losses if the Tribunal at a later date was to uphold their clients’ appeal. They offered to lodge further applications on the understanding that any extended hours permit would only be an interim one and would not prejudice the Department’s position in relation to the refusal of the plaintiffs’ original applications. The Manager, Licensing Administration took the view that there was no provision in the Liquor Act 1992 (Qld) (“the Act”) to grant interim permits. On 24 March 2004 a letter signed by the Chief Executive responded to the plaintiffs’ solicitor’s inquiry about interim permits by stating: “I do not intend to re-visit my decisions prior to any Tribunal determination”.
[1]Exhibit 8, vol 4 at 1300.
Prior to the Tribunal’s hearing of the appeal the Chief Executive and the Assistant Commissioner of Police no longer opposed the grant to the plaintiffs of a permit to trade until 5 am, provided “a lockout condition from 3 am” was imposed.[2] On 13 August 2004 the Tribunal delivered its decision to grant extended hours permits to the plaintiffs subject to a lockout condition being imposed. It found that the permits should be subject to the same management conditions as were imposed by the Chief Executive as from 1 April 2004 in respect of other late-trading venues on the Gold Coast. As a result, the decisions of the Chief Executive made on 18 March 2004 were set aside by the Tribunal.
[2]Surfers Paradise Rock & Roll Café P/L & Anor v Chief Executive Liquor Licensing Division, Department of Tourism, Fair Trading and Wine Industry Development & Anor [2004] QCCTL 6 at [42] (the decision became part of Exhibit 8, vol 4 starting at 1305). A “lockout condition” describes a condition that patrons “must not be permitted entry or re-entry to any part of the premises after 3.00 am on the day where trading occurs beyond 3.00 am, except where the exit and re-entry to the premises after 3.00 am is an emergency situation”.
In these proceedings the plaintiffs claim damages against the Chief Executive and her employer (“the State”) for losses they are alleged to have suffered as a result of not being able to trade between 3 am and 5 am from 1 April 2004 until the decision of the Tribunal on 13 August 2004. They pursue causes of action in negligence and misfeasance in public office. They plead that:
(a)The Chief Executive exceeded her powers under the Act in making the decisions and in writing the letter in which she refused to grant any interim permits to the plaintiffs (“the excess of power issue”).[3]
(b)The Chief Executive “owed a duty of care in the exercise of her functions under the Act in respect of the renewal of the extended hours permits to take reasonable care to avoid foreseeable risk of injury to the Plaintiffs” (“the duty of care issue”).[4]
(c)The Chief Executive breached her duty of care (“the breach of duty issue”).[5]
(d)The Chief Executive knew or ought to have known that she was acting outside her powers under the Act and made the decisions on 18 March and wrote the letter on 24 March 2004 “with knowledge that the need for any recommendation to refuse an extended hours permit must be supported by documentary evidence that can be directly related to the Businesses and that is capable of being defended in any appeal hearing in the Commercial and Consumer Tribunal” (“the issues concerning the Chief Executive’s state of knowledge”).[6]
(e)The Chief Executive acted as alleged with malice, with intent to cause loss to the plaintiffs and/or with reckless indifference to the loss to be caused to the plaintiffs by the failure to issue extended hours permits (“the malice issues”).[7]
(f)The State owed a duty of care to the plaintiffs to “ensure” that the Chief Executive “acted in accordance with her obligations under the Act” and to “process and approve the plaintiffs’ applications for extended hours permits for the six month period 1 April 2004 to 30 September 2004” (“the State’s duty of care issue”).[8]
(g)The State breached its duty of care (“the State’s breach of duty issue”).[9]
(h)As a result of the decisions of the Chief Executive on 18 March 2004, her refusal to grant any interim permits to the plaintiffs and the State’s negligence, the plaintiffs suffered loss and damage (“the loss and damage issues”).[10]
[3]Further Further Amended Statement of Claim (“FFASOC”) para 57.
[4]FFASOC para 60.
[5]FFASOC paras 62(d) and (e).
[6]FFASOC paras 61 and 62(a) and (b).
[7]FFASOC para 63.
[8]FFASOC para 60A.
[9]FFASOC para 63A.
[10]FFASOC para 64.
The defendants contest these matters. They contest the existence of the duties of care that are alleged, that the alleged duties were breached, that the decisions complained of were unauthorised and that the Chief Executive knew or ought to have known that her decisions were outside her powers. They plead that, on the contrary, the Chief Executive honestly and reasonably believed that she was acting within her powers, and made the decisions that she did based upon relevant materials and recommendations. In addition, the defendants plead that the Chief Executive’s decisions were made honestly and without negligence with the result that pursuant to s 49 of the Act she does not incur civil liability.
It will be necessary to deal in greater detail with the specific allegations raised in the parties’ pleadings and submissions. In broad outline, the plaintiffs contend that the decisions were in excess of power because:
(a)there was no “substantiated evidence” from the police or the Gold Coast City Council (“GCCC”), as opposed to mere assertion in the 15 March 2004 Briefing Note upon which the Chief Executive relied;
(b)the Chief Executive did not “have regard” to the comments and objections that were received from the police and the GCCC because she read summaries of them, and did not read the actual objections;[11] and
(c)there was no “comparative evidence” of the impact of the various nightclubs in the vicinity of the plaintiffs’ nightclubs to the overall amenity concerns expressed by the GCCC and the Department’s Liquor Licensing Division.[12]
[11]This matter was not pleaded as a ground upon which the Chief Executive was alleged to have acted beyond power.
[12]Plaintiffs’ submissions para 76.
The defendants’ general response is that:
(a)the plaintiffs misconceive the nature of the statutory power and the process involved in the renewal of an extended hours permit as requiring the kind of substantiation that might be required in court or disciplinary proceedings.
(b)in any case, and as the Tribunal found, there was evidence of “problems associated with patrons of the applicants’ premises which contribute to the incidents of violence and disorderly behaviour reported by police and officers of the [GCCC] in the vicinity of the Surfers Paradise nightclub precinct ”.[13]
(c)the Chief Executive had regard to the police and GCCC comments and objections, had an accurate summary of them in the 15 March 2004 Briefing Notes, and was not required to read the voluminous objections and comments, which consisted of more than 450 pages.
(d)there was no obligation to undertake a comparative analysis of
non-compliance or laxity on the part of other nightclubs or a comparative analysis of the extent to which patrons of the applicants’ nightclub were disorderly or contributed to a loss of amenity in the area.
[13]Surfers Paradise Rock & Roll Café & Anor v Chief Executive of Liquor Licensing Division supra at [34].
The plaintiffs complain that they were “singled out” from other premises for
non-renewal of the permits, that the Chief Executive knew that the evidence put forward by the police and the GCCC did not provide a basis for singling them out and that she failed to take account of the fact that the Gold Coast Regional Office of the Liquor Licensing Division assessed the plaintiffs’ compliance as good. The defendants deny that the plaintiffs were “singled out” by the Chief Executive. The applicants’ nightclubs and two others out of the 28 licensed premises on the Gold Coast backing the renewal of their extended hours permits were the subject of comments and objections by the police and the GCCC. According to the defendants, if the plaintiffs’ nightclubs were “singled out”, they were singled out by the comments and objections of the authorities to which the Chief Executive was required to have regard. The defendants also submit that the views expressed by an officer of the Division’s Gold Coast Regional Office about the plaintiffs’ compliance with the Act and patron behaviour within the premises did not render the decisions invalid or in breach of the alleged duty of care.
Significantly, the plaintiffs do not contend that the decisions were invalid because no reasonable decision-maker in the position of the Chief Executive would have refused to grant the permits. Although the contention was made by the plaintiffs that the Chief Executive had no evidence of a lack of safety in and around the vicinity of the businesses,[14] this contention could not be sustained since, as the Tribunal found:[15]
“...police evidence does outline a number of incidents which indicate a direct connection to the applicants’ premises. Between 27 January and 22 November 2003 there were 41 such incidents involving Cocktails and Dreams and 34 involving Crazy Horse. The incidents included serious violence of one patron against another, assault occasioning bodily harm, assault, indecent behaviour, offences against the police, obscene and offensive language and disorderly behaviour. A small number of these incidents are confined within the premises, some began inside but continued outside and some occurred when patrons were refused entry to or ejected from the premises...
The Tribunal agrees there are problems associated with patrons of the applicants’ premises which contribute to the incidents of violence and disorderly behaviour reported by police and officers of the Gold Coast City Council in the vicinity of the Surfers Paradise nightclub precinct...”
[14]FFASOC para 57.
[15]Surfers Paradise Rock & Roll Café & Anor v Chief Executive of Liquor Licensing Division supra at [25] and [34].
The terms, scope and purpose of the statutory regime
In order to determine the plaintiffs’ claims that the decisions were invalid and made in breach of a duty of care, it is appropriate to first consider the statutory regime which gave the Chief Executive the power to renew extended hours permits.[16] The terms and purpose of s 121A are critical to issues of invalidity and alleged abuse of power that arise in connection with the tort of misfeasance of public office. The statutory regime is the first point of reference in determining whether a duty of care was owed to the plaintiffs.[17] The “terms, scope and purpose of the relevant statutory regime” require examination.[18] The question is whether the regime “erects or facilitates” a relationship between the Chief Executive and a class of persons of which the plaintiffs are members that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.[19]
[16]The Act has been amended since the relevant decisions. The Act in force at the time appears in Reprint No 7 of the Liquor Act 1992 (Qld).
[17]Stuart v Kirkland-Veenstra (2009) 254 ALR 432 at 447 [52], 451 [75], 464 [130] (“Stuart”).
[18]Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 596 [146]; Stuart supra at 459 [112].
[19]ibid.
Section 121A of the Act provides:
“Renewal of permits for extension of hours beyond 3 a.m.
(1) As soon as practicable after the chief executive receives an application for renewal under section 121(6) of a permit for extension of hours beyond 3 a.m., the chief executive must tell the following about the application -
(a)the local government for the area to which the application relates;
(b)the assistant commissioner for the locality to which the application relates.
(2) The local government or assistant commissioner may comment on, or object to, the application by giving written comments or objections to the chief executive within 14 days of receiving the chief executive’s advice about the application.
(3) In considering the application, the chief executive must have regard to -
(a)comments and objections received under subsection (2); and
(b)the matters mentioned in section 121(5)(g);[20] and
(c)the impact on the amenity of the community concerned.”
[20]These matters are:
(a)the previous conduct of the applicant in discharging any duties under this Act previously placed on the applicant, especially for the premises for which the extension is sought; and
(b)the applicant’s ability to control the noise and behaviour of the number of persons that could reasonably be expected to be on and in the vicinity of the premises if the extension were granted; and
(c)the suitability of the premises and its facilities for the purpose for which the extension is sought.
The long title of the Act describes it as an Act “to regulate the sale and supply of liquor and the provision of adult entertainment”. The objects of the Act are:[21]
[21]The Act s 3.
“(a) to facilitate and regulate the optimum development of the tourist, liquor and hospitality industries of the State having regard to the welfare, needs and interests of the community and the economic implications of change; and
(b) to provide for the jurisdiction of the tribunal to hear and decide appeals authorised by this Act; and
(c) to provide for a flexible, practical system for regulation of the liquor industry of the State with minimal formality, technicality or intervention consistent with the proper and efficient administration of this Act; and
(c) to regulate the liquor industry in a way compatible with –
(i) minimising harm arising from misuse of liquor; and
(ii) the aims of the National Health Policy on Alcohol; and
(e) to regulate the sale and supply of liquor in particular areas to minimise harm caused by alcohol abuse and misuse and associated violence; and
(f) to regulate the provision of adult entertainment; and
(g) to provide revenue for the State to enable the attainment of the objects of this Act and for other purposes of government.”
The underlying principle of the Act in relation to the sale and supply of liquor is:[22]
“(a)a person may obtain a licence to sell or supply liquor as part of conducting a business on premises; and
(b)liquor may only be sold or supplied on the licensed premises as part of the person conducting a business, on the licensed premises, that is the primary purpose under the licence.”
[22]The Act s 3A.
Part 4 of the Act makes detailed provision for a variety of licences and permits. Part 4 provides for the granting of a variety of permits including an extended hours permit. That permit authorises the holder of the permit to sell liquor at their licensed premises at the times, and subject to the conditions, specified in the permit.[23]
[23]The Act s 102.
Section 107C gives the Chief Executive power to impose conditions on licences and permits to, amongst other things:
·minimise harm caused by alcohol abuse and misuse and associated violence; or
·minimise alcohol-related disturbances, or public disorder, in a locality.
Section 109C provides that an applicant for a licence, or a licensee, may apply for an extended hours permit for the relevant premises. Section 116 requires an applicant for certain specified licences or for an extended hours permit that would extend trading hours on a regular basis to satisfy the Chief Executive that it is in the public interest for the application to be granted.[24]
[24]Pursuant to s 116(4), in deciding the public interest relating to an application, the Chief Executive must take into account certain information and must also have regard to:
“(a)the existing and projected population and demographic trends in the locality; and
(b)the number of persons residing in, resorting to or passing through the locality, and their respective expectations; and
(c)the likely health and social impacts that granting the application would have on the population of the locality; and
(d)an assessment of the magnitude, duration and probability of the occurrence of the health and social impacts; and
(e)the proximity of the proposed licensed premises to identified sub-communities within the locality, including, for example, schools and places of worship, and the likely impact of those sub-communities; and
(f)other information the Chief Executive considers relevant to the reasonable requirements on the public for liquor and related services in the locality; and
(g)the objects of the Act as mentioned in s 3 and the underlying principle of the Act as mentioned in s 3A.”
As soon as practicable after the Chief Executive receives an application to which
s 116 applies the Chief Executive must tell the local government for the relevant locality about the application. In addition, if the application is for an extended hours permit the Chief Executive must tell the Assistant Commissioner of Police for the relevant locality.[25] The local government or Assistant Commissioner may:[26]
(a)comment on the reasonable requirements of the public in the locality; or
(b)object to the grant of the application on the grounds that the amenity, quiet or good order of the locality would be lessened.
[25]The Act s 117(1)(b).
[26]The Act s 117(2).
Section 118(1)(c) requires an application for an extended hours permit that would extend trading hours on a regular basis to be advertised. Section 118A enables an application that is required to be advertised to be the subject of written submissions concerning the public interest matters to which the Chief Executive must have regard under s 116. Section 119 allows for a member of the public to object to the grant of the application. Section 121 provides for the applicant and persons who properly made an objection to the grant of an application to attend a conference. In deciding whether to grant an application the Chief Executive must have regard to a variety of matters including the public interest matters referred to in s 116, objections made to the grant of the application and comments from the local government for the area to which the application relates. In the case of an application for an extended hours permit the Chief Executive must have regard to comments from the Assistant Commissioner of Police for the locality to which the application relates. Regard must be had to the impact on the amenity of the community concerned. In the case of an application for an extended hours permit to trade beyond 2 am the Chief Executive must have regard to:
“(a)the previous conduct of the applicant in discharging any duties under this Act previously placed on the applicant, especially for the premises for which the extension is sought; and
(b)the applicant’s ability to control the noise and behaviour of the number of persons that could reasonably be expected to be on and in the vicinity of the premises if the extension were granted; and
(c)the suitability of the premises and its facilities for the purpose for which the extension is sought.”
If the Chief Executive grants an extended hours permit for extension of hours beyond 3 am, the permit remains in force for a maximum period of six months and may be renewed only on application to the Chief Executive.[27]
[27]The Act s 121(6). References are to the Act as it applied at the relevant time. More recent amendments have extended the duration of extended hours permits to 12 months.
It is arguable that in order to renew an extended hours permit the applicant must satisfy the Chief Executive that it is in the public interest for the application to be granted. In this matter the Tribunal interpreted the Act as requiring an applicant to renew an extended hours permit to satisfy this public interest element. This view derives support from the fact that each permit has a finite duration, that a successful application under s 121A results in a new permit, and, in this sense, an application to renew under s 121A attracts s 116 because it is, strictly speaking, “an application for an extended hours permit that would extend trading hours on a regular basis”.[28] However, the Liquor Licensing Division and the Chief Executive in this case did not treat the applications for renewal as requiring satisfaction of the public interest element of s 116 and advertising of the applications.
[28]The Act s 116(1)(c).
The plaintiffs contend that an application for renewal, unlike an application for a new permit, does not need to satisfy the public interest requirement. The defendants formally submitted that it does, but were content to argue the matter on the alternative basis that the power to renew a permit under s 121A was to be exercised so as to advance the objectives of the Act, and these included “the welfare, needs and interests of the community”. I determine the issue concerning the application of s 116 on the basis for which the plaintiffs contend, and which the defendants adopted at the time of the applications, namely that the applications for renewal did not require the Chief Executive to be satisfied under s 116 that “it is in the public interest for the application to be granted”. However, the public interest considerations that appear in the Act’s objects and the impact on the community and its amenity of renewing extended hours permits would be relevant to the Chief Executive’s decision to renew an extended hours permit. A purpose of the Act is to regulate the liquor industry having regard to the welfare, needs and interests of the community. Another purpose is to minimise harm arising from the misuse of liquor. These purposes, the Act’s provisions that address noise, the behaviour of persons on and in the vicinity of licensed premises and the amenity of the community indicate that the determination of an application to renew an extended hours permit requires regard to the public amenity and other specified matters and may involve other public interest considerations.
Section 121A provides that as soon as practicable after the Chief Executive receives an application for renewal under s 121(6) of a permit for extension of hours beyond 3 am, the Chief Executive must tell the local government for the area to which the application relates and the Assistant Commissioner of Police for the locality to which the application relates. The local government or Assistant Commissioner may comment on, or object to, the application by giving written comments or objections to the Chief Executive within 14 days of receiving the Chief Executive’s advice about the renewal application.
The Act has been interpreted by the Tribunal so that “considerable weight” will be given to the views of the local authority as speaking on behalf of the local community and the views of the Queensland Police Service when deciding whether or not to grant or renew extended hours permits. This accords with the Minister’s Second Reading Speech on the Liquor Amendment Bill 1994 which introduced extended hours permits. The speech stated:[29]
“The Bill also provides reform of the extended hours permit system by differentiating between any regular extension of hours after 3 am and those up to that time. From 31 March 1995, all extended hours permits past 3 am will expire and will require renewal every six months from that date. The views of the relevant local government and assistant police commissioner will be invited at the time of each renewal.
Where sustainable evidence is provided by the local government or the police that the amenity of the area or the functions of those bodies in maintaining the amenity would be assisted by the non-renewal of a permit or all permits in the area, serious weighting will be given to their submissions.”
[29]Second Reading Speech for the Liquor Amendment Bill 1994 by R J Gibbs, Minister for Tourism, Sport and Racing, 19 October 1994, Hansard at 9674.
Licensees that are granted extended hours permits by satisfying the Chief Executive of their suitability, the suitability of their premises, their ability to control noise and the behaviour of patrons on and in the vicinity of their premises, the impact on public amenity and other public interest considerations acquire a permit that may be of substantial value. A purpose of the Act is to facilitate the development of the tourist, liquor and hospitality industries, and, it might be argued, that this purpose, the purpose of providing “revenue for the State” and the welfare of the community are advanced by granting licences and permits to licensees who comply with their duties under the Act. However, the purpose of the Act is not to advance the private interests of licensees who satisfy its requirements. A permit may be cancelled if the Chief Executive is satisfied that the use of the premises in respect of which the permit is held at the times authorised by the permit, or the behaviour of persons entering or leaving the premises at or about those times –
·is causing undue annoyance or disturbance to persons living, working or doing business in the neighbourhood of the premises; or
·is causing disorderly conduct in, or in the neighbourhood of, the premises.[30]
Such a cancellation may cause significant economic loss to the licensee whose permit is cancelled, but the Act provides that compensation is not payable to any person in respect of such a cancellation.[31] The Act confers valuable licences and permits upon persons who satisfy its requirements, but these are granted as a matter of discretion and may be cancelled in certain circumstances without compensation. The Act does not exist for the protection of persons who hold licences and permits.
[30]The Act s 134(1)(b).
[31]The Act s 139(b).
The Act seeks to regulate the liquor industry in a way that is compatible with minimising harm arising from misuse of liquor, and the aims of the National Health Policy on Alcohol.[32] The aim of the National Health Policy on Alcohol is the “minimisation of the harm associated with alcohol use while interfering as little as possible with the freedom of individuals to exercise personal responsibility for the use or non-use of alcoholic beverages”.[33] This is achieved through various educational and control policies. Paragraph 2.2 of the National Health Policy on Alcohol deals with “availability”:
“The availability of alcohol in Australian society is a reflection of a number of considerations, including the attitudes and values of Australians towards alcohol, which themselves determine such things as the legal minimum drinking age, hours of trading and the number and type of outlets all of which fall within the jurisdiction of the States and Territories.
Even though there is no single and invariable relationship between alcohol availability and alcohol problems, in every situation where it is proposed to increase availability, the real possibility of increasing problems should be considered. Similarly, the possibility of decreasing problems by reducing availability should also be given serious consideration.”
[32]The Act s 3(d).
[33]Exhibit 1 at 3.
Some of the Act’s objects potentially conflict. One object is to provide revenue for the State “to enable the attainment of the objects of [the] Act and for other purposes of government”.[34] The provision of revenue for the State based upon sales of liquor may be enhanced by increased availability and increased sales, whereas increased availability and increased sales may increase, not minimise, harm associated with alcohol use. In general terms, the purpose of the Act is to regulate the sale and supply of the liquor, and a principal object is “the welfare, needs and interests of the community”. This differentiates the Act from one which exists for the protection of a class of individuals.
[34]The Act s 3(g).
The Act confers a power on the Chief Executive to grant a renewal of an extended trading permit. It does not confer a right to a renewed permit upon proof of certain matters, or even upon the satisfaction of the Chief Executive that certain matters exist. The exercise of the power, whilst constrained by administrative law principles and the specific matters to which the Chief Executive must “have regard”, is not constrained by an exhaustive list of matters.[35] It follows that the Chief Executive is not required to grant a permit under s 121A upon proof that the applicant has previously complied with the Act, or, indeed, upon proof of any other matter.
[35]Section 107ff contain a variety of restrictions on the grant of an application for a licence or permit.
The power is contained in an Act that is concerned about the protection of the community, including public safety and the amenity of the community. It is a regulatory provision, not a disciplinary provision, and a permit might be refused by reason of matters beyond an applicant’s control. For instance, the noise and behaviour of persons that could reasonably be expected to be outside, but in the vicinity of, the applicant’s premises, may be beyond the applicant’s ability to control.[36] However, such noise and behaviour is a matter to which the Chief Executive must have regard.
[36]cf the Act s 121(5)(g)(ii), s 121A(3).
The terms of the Act, the 14 day timeframe for police and council comments and objections, and the subject matters to which those comments and objections may be directed differentiate the provision from one in which the grant or refusal of a permit, licence, qualification or certificate depends upon proof of certain matters. The police and the council are not required to prove some failure on the applicant’s part, or prove that noise or behaviour in the vicinity of the premises is due to the manner in which the applicant conducts its operations. If the police or the council make comments and objections adverse to the applicant, then procedural fairness and sound administrative practice require the applicant to be given an opportunity to respond. The Chief Executive should consider whether the comment or objection can be sustained in the light of the response and other information. However, the process is not one of proof of the kind undertaken in court or disciplinary proceedings.
The Chief Executive’s consideration of comments and objections, and responses to them, occurs in a context in which comments and objections are to be submitted in a fortnight, and in which substantiation or refutation of certain allegations may be difficult. For instance, an allegation of unruly conduct by persons in the street, who are alleged to have been previously in an applicant’s premises, or intending to go there, may be difficult to prove and difficult to refute weeks or months after the event. Not all incidents that may be of concern to the police or the council will lead to an arrest or proceedings, or constitute a breach of the applicant’s duties under the Act. It may be practically impossible to prove, or disprove, that disorderly conduct in the vicinity of the premises, and loss of amenity, was due to patrons of the applicant’s premises, rather than patrons of other nightclubs in its vicinity. Even alleged behaviour of persons on the applicant’s premises may be the subject of conflicting accounts which, by their nature, may be difficult to prove or disprove. The example was given in submissions of an allegation of “drink stacking” of 20 drinks at a table occupied by three people, where the explanation was given by the plaintiffs’ solicitors that most of the other persons from that table were on the dance floor and it was “not clear” how may patrons purchased the 20 drinks.
In the administrative, regulatory context in which s 121A operates, in which police and council comments and objections rely on allegations of varying degrees of generality about the past conduct of persons on or in the vicinity of an applicant’s premises, and in which neither the police nor the council are required to prove anything, the term “insufficient evidence”[37] assumes a different meaning to its meaning in the context of court or disciplinary proceedings. One reason is the Act does not create an entitlement to a permit upon the proof of certain facts. A second reason is that the criteria by which the Chief Executive determines an application are not exhaustively stated in the Act. A third reason is that considerations such as impact on amenity[38] and the potential for harm arising from misuse of alcohol are matters about which views may reasonably differ in a particular case. Whether or not material, including material in police and council comments and objections, provides “sufficient evidence” is a matter for the Chief Executive’s assessment, subject to an appeal by way of rehearing to the Tribunal.
[37]The plaintiffs plead that the permits were refused when there was “insufficient evidence” to do so: FFASOC 62(d)(ix).
[38]The Act s 121A(3)(c).
The plaintiffs’ contention that the Chief Executive was obliged to “ascertain whether there was any comparative analysis of non-compliance or laxity on the part of other late-night venues in the vicinity, or evidence as to the level of misconduct associated with other premises in the vicinity”[39] requires consideration of s 121A. Section 121A is premised on there being a single application for renewal of an existing extended hours permit, and does not call for a comparison between the applicant and other applicants. Fairness and good public policy may dictate equal treatment of an applicant whose circumstances are the same as another applicant. However, a comparative analysis is not expressly required by the Act, and does not arise as a matter of necessary implication.
[39]FFASOC para 60(d).
The Act permits an application under s 121A to be granted or refused according to a broad discretionary power given to the Chief Executive. The Chief Executive in practice may consider an applicant’s premises and business in comparison to others, and assess, if possible, their relative contributions to noise, disorder and other problems in their vicinity. However, the Act does not require such an exercise. If the Chief Executive is authorised to refuse an applicant’s renewal application on the basis of the matters to which regard must be had under the Act and in order to achieve the Act’s purposes, then the Chief Executive’s exercise of power is not invalidated because other premises are no better than the applicant’s premises and also contribute to noise, disorder and a loss of amenity in the same vicinity.
In summary, s 121A is part of a statutory regime that is principally concerned with the welfare of the community, not the welfare and protection of applicants for extended hours permits. The Act confers a broad discretionary power on the Chief Executive, who must have regard to the matters specified in s 121A(3). The grant of an application to renew a permit does not arise as a matter of right upon satisfaction by the applicant of stated criteria, or in the absence of proof by the police or the council of their objections. The Chief Executive must have regard to matters, including police and council objections, but ultimately decides an application on its merits and so as to achieve the Act’s purposes. Applicants whose interests are adversely affected by a decision have an appeal on the merits to an independent tribunal.
The role of the Chief Executive and her sources of advice
The second defendant was the Chief Executive of the Liquor Licensing Division which was responsible for regulating, granting and ensuring compliance with liquor licenses in Queensland.[40] She also was the Director-General of the Department of Tourism, Fair Trading, Racing and Wine Industry Development, which had portfolios for Tourism, Fair Trading, the Office of Racing and Liquor Licensing and Adult Entertainment.[41] There were 600 to 650 staff in the department with 15 regional offices and an operating budget of approximately $55 million. The second defendant’s role as Director-General required that she be involved in staff issues, attend many meetings each week, including meetings with the Minister, Executive Directors of the portfolios within the department and with the other Director-Generals, and to discuss reviews of legislation.[42]
[40]Transcript at 2-8 l 45.
[41]Transcript at 4-54 ll 35–40.
[42]Transcript at 4-56–4-58.
The second defendant chaired or was a member of several boards and committees.[43] These had regular meetings, in some cases monthly, in others every couple of months.[44] She was also required to oversee the administration of various tribunals and appeals tribunals, including the Commercial and Consumer Tribunal, the Racing Appeals Tribunal and the Residential Tenancies Authority.[45] The second defendant also held a position as the government representative for the Kowanyama indigenous community in Cape York.[46] She testified that the role required trips to the Cape, multiple meetings and telephone conferences.[47] She was the contact point for the community, and dealt with their requests.[48]
[43]Transcript at 4-56 l 10.
[44]Transcript at 4-56–4-57.
[45]Transcript at 4-55 ll 1–10.
[46]Transcript at 4-54 ll 40–42.
[47]Transcript at 4-54 ll 35–40.
[48]Transcript at 4-54 ll 50–60.
The second defendant had a lengthy career in the public service, including serving in the Victorian Public Service until 1995, the Brisbane City Council between 1995 and 1999 and the Queensland Public Service from 1999 until her retirement in July 2007. She became the Director-General of the Department of Tourism and Fair Trading in September 2003, after being the Director-General of the Department of Corrective Services for approximately two and half years. The second defendant was the Director General of the Department from September 2003 to July 2006.
As Chief Executive the second defendant relied upon advice from the Liquor Licensing Division. An Executive Director oversaw the Liquor Licensing Division,[49] and reported directly to the Chief Executive.[50] A Deputy Director-General, Lorna Andrews, had the role of Acing Executive Director of Liquor Licensing until late 2003.[51] Mr Mike Kelly then occupied the position. Mr Wayne Briscoe was the Acting Executive Director after February 2004.[52]
[49]Transcript at 4-7 l 30.
[50]Transcript at 4-33 l 5.
[51]Transcript at 2-92 l 15.
[52]Transcript at 4-7 l 30 and 4-58 l 50.
Within the Division there was a Liquor Operations Branch, and the Executive Manager of that Branch after January 2004 was Mr Geoffrey Murphy.[53] Mr Murphy was concerned with the objections made by the police and the GCCC, and how the applications should be dealt with by the department.[54] The Executive Manager was responsible to the Executive Director.[55] A Licensing Administration Unit and the Compliance Unit also existed. Mr Mark Farrah was the Manager, Licensing Administration in March 2004.
[53]Transcript at 5-44 l 15.
[54]Transcript at 5-44 and 5-45.
[55]Transcript at 5-51 l 22.
Matters were referred to the Chief Executive by Memoranda or Briefing Notes for her information or for a decision to be made. Some of these Briefing Notes would be prepared but never presented to the Chief Executive.[56] In addition, the Chief Executive met with the Executive Director formally once a week, and informally as often as once a day.[57] Where decisions needed to be made on questions such as licensing, the Chief Executive would normally receive the Briefing Notes and an oral briefing at a meeting.[58] Mr Briscoe said it was normal during meetings with the Chief Executive to “go over the Briefing Note itself prior to her [the Chief Executive] signing it”.[59] The Briefing Notes would have various options available, and the acting Executive Director of the Division would recommend a preferred option.[60] The second defendant almost always made the decision recommended by the Executive Director.[61] Usually, the meetings would involve 20 or 30 applications for licences that had to be renewed which were given to the Chief Executive in a bundle.[62]
[56]Transcript at 2-101 l 20.
[57]Transcript at 4-57 l 25.
[58]Transcript at 4-61 l 10.
[59]Transcript at 4-12 l 20.
[60]Transcript at 2-100 l 10.
[61]Transcript at 2-100 l 13.
[62]Transcript at 4-61 l 25.
On occasions the second defendant would refer material to a committee independent from the Liquor Licensing Division if there were any contentious or complex matters which warranted the committee’s advice.[63] The committee consisted of the head of the Wine Industry Division, the head of Finance and the head of Corporate Services.[64] The second defendant did not recall whether she referred the plaintiffs’ applications to the committee.[65]
[63]Transcript at 2-96 ll 20–30.
[64]Transcript at 2-92 ll 20–30.
[65]Transcript at 5-6 and 5-7.
The second defendant would read the Briefing Notes at home or in her office prior to the meeting at which its content was to be discussed.[66] Although the second defendant was busy, she did not contend that she was too busy to take time to properly consider the applications. In fact, she stated that she may have made time within her work schedule to accommodate further consideration of the matter if this had been required.[67]
[66]Transcript at 3-6 l 48–3-7 l 45 and 2-94 ll 48–50.
[67]Transcript at 5-39.
The decision-making process
Before giving an account of the decision-making process and making findings on factual matters that are in dispute, it is necessary to observe that the focus of the plaintiffs’ claims is on what the Chief Executive did or omitted to do, not on the conduct of the persons within the Liquor Licensing Division to whom she looked for advice, or on the adequacy of the decision-making processes adopted by the Liquor Licensing Division. For instance, the issue is not whether someone or other was required to read the voluminous police objections and analyse them, but whether the Chief Executive was personally obliged to read those documents. If the Chief Executive owed the duty of care for which the plaintiffs contend, then the content of that duty and issues in relation to its breach fall to be determined by reference to the standard of care to be expected of such a decision-maker, who necessarily relies on others for oral and written advice. The duty of care contended for by the plaintiffs[68] is said to be owed by the Chief Executive personally, not by the State. Subject to the separate contention that the State owed a duty of care to the plaintiffs to:
(a)ensure that the Chief Executive acted in accordance with her obligations under the Act;[69]
(b)process and approve the plaintiffs’ applications for extended hours permits for the six month period 1 April 2004 to 30 September 2004;
this is not a case about an alleged lack of care by officers of the Liquor Licensing Division who provided information, advice and recommendations to the Chief Executive. The State is not alleged to have owed a duty to take reasonable care to avoid foreseeable risk to the plaintiffs in respect of the course of the decision-making process that I will now describe.
[68]FFASOC para 60.
[69]These obligations are separately pleaded in para 55 of the FFASOC as being to:
(a)consider applications for extended hours permits;
(b)have regard to the matters in s 121A(3) of the Act in force as at March 2004;
(c)exercise her powers properly for the purposes of considering all such applications for extended hours permits.
Between 1989 and 2007 the first plaintiff operated two nightclubs in Orchid Avenue Surfers Paradise: ‘Cocktails and Dreams’ and ‘The Party Nightclub’. The second plaintiff has operated the ‘Crazy Horse Nightclub’, the ‘Bourbon Bar’ and ‘Micky’s Café’ in Orchid Avenue since 1992. The plaintiffs’ licences permitted them to trade until 3 am. After 1996 the plaintiffs traded until 5 am pursuant to extended hours permits that were renewed every six months. The plaintiffs’ nightclubs were in close proximity to a number of other nightclubs that were allowed to trade until 5 am.[70]
[70]Exhibit 2.
During mid-2003 concerns were expressed by the Queensland Police Service and the GCCC about behaviour in Orchid Avenue, which led to the police assembling reports on the behaviour and the GCCC monitoring the situation. The GCCC’s objections to extended hours permits were of a general kind, rather than in respect of particular nightclubs.[71] On 27 August 2003 the GCCC restated its long-standing concerns regarding the effect of extended hours permits in Surfers Paradise after 3 am on grounds of public amenity. It referred to the unwelcome interaction between alcohol-affected patrons and other persons using the streets and beaches of Surfers Paradise in the early hours of the morning, litter, noise, intoxicated persons within the precinct, security and safety and public urination by persons who had left nightclubs. The GCCC stated that it was:[72]
“extremely concerned about adverse amenity impacts, particularly violence in the Surfers Paradise precinct and the contribution of late night trading to loss of amenity.”
[71]Letter from Manager, Statutory Planning at the GCCC, to the Executive Director, Liquor Licensing Division, Exhibit 8, vol 2 at 325.
[72]Letter from Director, Planning and Environment and Transport to the Executive Director, Liquor Licensing Division dated 27 August 2003, Exhibit 9, tab 2.
In September 2003 the police lodged objections for the following nightclubs: Cocktails and Dreams and The Party,[73] Crazy Horse and the Bourbon Bar,[74] Shooters Saloon Bar and Mybar and The Drink Nightclub and Bad Girls.[75] Four applicants operated these eight nightclubs in Orchid Avenue, Surfers Paradise. The Assistant Commission of Police informed the Executive Director of the Liquor Licensing Division by letter dated 8 September 2003 that records indicated that these eight premises combined allegedly served liquor to 35.7 per cent of offenders arrested for public drunkenness within the Gold Coast district prior to arrest, and were currently licensed to hold over 3,375 patrons.[76] The objections were made on the grounds that if the applications were granted, undue annoyance, disturbance or inconvenience to persons who resided, worked or did business in the locality was likely to happen, or the amenity, quiet or good order of the locality would be lessened. Separate objection reports were prepared in respect of each application. The objection reports contained a general objection to alcohol consumption in Orchid Avenue, and then detailed specific situations of offending behaviour in bars along Orchid Avenue, including the plaintiffs’ premises. The reports provided a list of offences and where they were committed.[77]
[73]Queensland Police Service: First Objection Report: Extended Hours Permit Cocktails and Dreams Nightclub Surfers Paradise at Exhibit 8, vol 2 at 409–513.
[74]Queensland Police Service: First Objection Report: Extended Hours Permit Crazy Horse Nightclub Surfers Paradise at Exhibit 8, vol 2 at pp 326–408.
[75]Exhibit 9, tab 3.
[76]Exhibit 9, tab 3.
[77]Queensland Police Service: First Objection Report Crazy Horse Nightclub Surfers Paradise at Exhibit 8, vol 2 at 349; Queensland Police Service: First Objection Report: Extended Hours Permit Cocktails and Dreams Nightclub Surfers Paradise at Exhibit 8, vol 2 at 436.
On 10 September 2003 a Senior Licensing Officer, Mr Reinhold, sent a Memorandum to Mr Mark Farrah, the Manager, Licensing Administration Unit of the Liquor Licensing Division in relation to the police objection to an extended hours permit for Cocktails and Dreams. The Memorandum addressed the GCCC and police objections and calls for service to the Queensland Ambulance Service (‘QAS’) to the area of Orchid and Cavill Avenues. Whilst not identifying any direct link between calls for ambulance services and the businesses, the QAS data was said to be relevant and supported the police objection. The Memorandum noted that the incidents referred to by the police did not relate specifically to the businesses or to the 3 am to 5 am period and that the statistics known as “drunk figures” related to the Orchid Avenue generally. The conclusion was reached that Orchid Avenue had a disproportionate number of drunken arrests. As to liquor related incidents, the Memorandum stated:[78]
[78]Exhibit 9, tab 4.
“All liquor related incidents in this section relate to Cocktails and Dreams. The incidents represent a detailed collection of incidents including assault occasioning boldily [sic] harm, indecent behaviour, drug offences, public drunkenness, offences against police including assault and resisting arrest, hinder or obstruct and many disorderly conduct instances. The offences are numerous and while not including sexual assault as associated with other premises, are sufficient to describe an atmosphere of illegality that has a direct causal nexus to patrons in and around Cocktails and Dreams…”
It was noted that most of the offences were over the late night to early morning period, and not all of the incidents were specific to the 3 am to 5 am extended hours period. However, the opinion was expressed that the 3 am to 5 am period could not be considered as a distinct and separate period. The Memorandum concluded:
“I find that there is a sufficient weight of evidence on which, in the absence of evidence to the contrary, the Chief Executive could reasonably rely on to refuse the application. The police report is supported by local regulatory bodies and reveals endemic patron behaviour problems associated directly with Cocktails and Dreams.”
On 11 September 2003 Mr Reinhold submitted a similar Memorandum in relation to the police objection to the Crazy Horse nightclub. In relation to liquor related incidents the Memorandum stated:[79]
[79]Exhibit 9, tab 5.
“All liquor related incidents in this section relate to Crazy Horse. Amongst incidents reported are a range of assaults, disorderly conduct matters, assault causing unlawful wounding, robbery and obscene or offensive language. Some of the assaults are particularly brutal, involving malicious use of glass and violence on one patron by another. The offences are numerous and cannot be written off as simple occurrences in the everyday running of a premises. There is a clear connection between Crazy Horse and the actions of its departing patrons. As with other premises, it is difficult to avoid the conclusion that a common factor is alcohol.”
Mr Reinhold stated that the police incident reports presented “a substantiated case for a review of the extended hours trading” and that a sufficient nexus was established between extended hours and the level of public order incidents in and around Crazy Horse. He concluded that there was a sufficient weight of evidence on which the Chief Executive could reasonably rely on to refuse the application for an extended hours permit for Crazy Horse. His general overview was as follows:
“The police state generally that there are serious street offences occurring in relation to Crazy Horse around the immediate area outside the premises. As with the other three identified premises, common factors are excessive alcohol consumption and extended trading hours. The impacts are a high risk of injury and disturbance to residents, patrons, visitors and police present in the area at this time.”
On 26 September 2003 the Chief Executive gave all licensed premises on the Gold Coast extended hours permits for a further 2 months, ending at 30 November 2003, in order to allow licensees to respond to the objections of the GCCC and the police. The Liquor Licensing Division then monitored the situation for the period between 26 September and 30 November 2003. The monitoring program involved ten compliance visits to the first plaintiff’s premises and four compliance visits to the second plaintiff’s premises.
In October 2003 the plaintiffs sought to adopt a voluntary code of behaviour (the ‘Gold Coast Licensees Accord’)[80] which was decided upon by the Surfers Paradise Licensed Venues Association. The responsibilities of each licensed premises, as listed in the accord, was to maintain a safe and secure environment at licensed premises. This was done through various means, including RSA (Responsible Service of Alcohol) training and providing alcohol-free and low-alcohol drinks. Mr Reinhold described the accord as something that:
“would certainly address all the issues that recent evidence from the police has revealed. The challenge is always converting the rhetoric to reality.”[81]
[80]Exhibit 7.
[81]Exhibit 9, tab 8 at 2.
On 15 November 2003 the Chief Executive was given a Briefing Note with regard to the extended hours permit applications. This Briefing Note stated that four premises[82] were the subject of detailed objections from the police. The report stated that disciplinary action could be taken against the four, although
“[w]hile they are obviously the 4 worst in the eyes of the police, much of the evidence in the police objections points to problems in the vicinity of Orchid/Cavill/Elkhorn Avenues”.[83]
The Chief Executive read and made notations on this document.
[82]Described as Shooters, The Drink, Crazy Horse and Cocktails and Dreams.
[83]Exhibit 8, vol 2 at 570.
Ms Lorna Andrews, the Acting Executive Director prepared a Briefing Note dated 17 November 2003 that reported on the plaintiffs’ solicitors’ response to the police objections and recommended that the Chief Executive refuse the application for extended trading permits. The note was unsigned, and was not given to the Chief Executive.[84] However, it reflects the Division’s attitude at the time.
[84]Transcript at 2-101 ll 19–20.
An internal memorandum written by the Acting Manager of the Gold Coast Regional Office to the Acting Executive Director of the Liquor Licensing Division, Lorna Andrews dated 20 November 2003 stated that for Cocktails and Dreams and Crazy Horse the level of compliance with the Act was assessed as good.[85] The overall summary of compliance at the premises visited (including Cocktails and Dreams and Crazy Horse) suggested that:[86]
The parties and the experts agreed about the loss suffered by each plaintiff between 1 April 2004 and 30 August 2004 (when the plaintiffs resumed 3 am to 5 am trading) namely:
(a) first plaintiff: $90,000
(b)second plaintiff: $60,000
The second period is the period after 1 September 2004 until each business recovered. Based on Mr Garardi’s evidence this was the period until 1 April 2005 (seven months) in the case of the first plaintiff and “a little bit earlier”[234] (until 1 March 2005 or six months) in the case of the second plaintiff.[235] The recovery date could not be defined with precision, and I will adopt, in the plaintiffs’ favour, periods of eight and seven months respectively for this second period. Expert witnesses, Mr Vincent and Mr Wood, produced reports and a joint statement which became exhibit 10. Mr Vincent estimated the first plaintiff’s loss for the period between 1 September 2004 and 31 August 2005 to be $338,605 or a loss per month of $28,217.[236] He estimated the second plaintiff’s loss during the same period as $238,165 or $19,847 per month.[237] Mr Vincent’s assessment was based upon an estimate of notional sales, which averaged two year’s income for the business. Mr Wood did not agree with this approach in circumstances in which there was a decline in the first plaintiff’s business in the six months prior to the loss of the permit Mr Vincent was not able to identify the reasons for the apparent downturn.[238] Mr Vincent explained that the averaging over a period of two years was likely to produce a more accurate estimate of loss. He accepted that Mr Wood’s approach of adopting figures in the period immediately prior to the closure would be appropriate if one was assessing loss for the following month. However, it was inappropriate in assessing loss that extended over a longer period of months.[239] I accept that Mr Vincent’s approach is justified in circumstances in which the period of loss is several months in circumstances in which the business’ trade may be subject to short-term variations from month to month and seasonal variations. There is no evidence to suggest that the short-term decline in the first plaintiff’s business prior to the five month closure period was due to endemic problems or reflected a long-term trend.
[234]Transcript at 1-03 l 33.
[235]The plaintiffs’ submissions para 93 contend for a period of loss in the case of the first plaintiff of a further ten months and a further five months for the second plaintiff. However, the period of ten months seems to be based upon a proposition that the first plaintiff’s business did not recover until about July 2005, which is inconsistent with Garardi’s evidence. His evidence was that they had recovered after March 2005: Transcript at 1-102 ll 1–5.
[236]Exhibit 10 at para 2.3.14.
[237]Exhibit 10 at para 3.3.12.
[238]Exhibit 10 at para 2.3.4.
[239]Transcript at 2-42.
Mr Wood adopted a different approach to the assessment of loss which assumed that:
(a)had each plaintiff taken steps to mitigate its loss by incurring additional advertising and promotion costs, it would have recovered to expected levels by 30 September 2004 or approximately one month after the extended hours permits were reinstated;
(b)the additional advertising and promotion costs required to effect recovery of the plaintiffs’ sales over a one month period was $50,000, or $25,000 per venue being about 1.5 times the average annual advertising expenditure incurred in the 2003 and 2004 years;
(c)the loss of net profit incurred by each plaintiff during the one month period was equal to the average monthly loss assessed in the period 1 April 2004 to 31 August 2004.[240]
Mr Wood assessed loss based upon a loss of profits during the relevant period and the incurring of such additional expenditure. He provided a sensitivity analysis in respect of different amounts of additional advertising costs and additional months to recover.[241]
[240]Exhibit 10 at para 2.1.7, 3.1.7.
[241]Exhibit 10 at para 2.1.8–2.1.9, 3.1.8, 3.1.9.
I am disinclined to adopt this approach. It makes various assumptions about the additional advertising expenditure that would be required to effect recovery, and the period required for the recovery to occur. Mr Wood’s views were prepared in circumstances in which failure to mitigate was a live issue. I do not find that the plaintiffs failed to mitigate in failing to incur additional advertising costs. I consider that the plaintiffs were best-placed to assess the benefit of additional advertising costs and that the evidence does not permit me to conclude that it failed to mitigate by incurring additional advertising costs. The plaintiffs redirected their existing advertising to promote the fact that each business was able to trade until 5 am. The assumptions made by Mr Wood about the impact of additional advertising are not supported by the evidence, and therefore I do not adopt his calculations of loss.
Mr Wood also advanced a criticism of Mr Vincent’s approach in prorating losses. This criticism has some validity in circumstances in which sales would have been reduced on account of other factors.[242] This criticism has some validity, but will assume significance if the other factors were so significant that expected sales would have been less on account of other factors.[243]
[242]Transcript at 2-62.
[243]ibid.
Notwithstanding this criticism of this aspect of Mr Vincent’s methodology, I consider that Mr Vincent’s calculations provide a reliable, general guide to the quantum of loss after 1 September 2004.
I generally accept Mr Garardi’s evidence about the impact of the decisions on the plaintiffs’ businesses. I accept his evidence that smoking laws, which did not come into full effect until 1 July 2006, did not adversely affect the plaintiffs’ businesses during the relevant period and, if anything, had a positive effect on the businesses.[244] Account is required to be taken of the effect which a lockout condition would have had if the plaintiffs had been given extended hours permits, subject to a lockout condition, after 1 April 2004. I find that had permits been granted they would have been subject, like other businesses, to a lockout condition. Mr Garardi gave evidence that the plaintiffs “learnt to live with the lockout”, and that a lockout “can also be a lock-in so that if you gain customers before 3 am, they are actually locked in.”[245] However, I do not consider that this evidence, or any other evidence, suggests that the imposition of a lockout condition would have benefited the plaintiffs’ business. A lockout condition was resisted by the plaintiffs.[246] An offer of an extended hours permit subject to a lockout condition was rejected. One reason for this may have been some uncertainty about the impact which a lockout condition would have. However, it is clear that the plaintiffs and other nightclubs regarded a lockout condition as likely to have an adverse financial impact on their businesses. Another nightclub unsuccessfully appealed against the imposition of such a condition and the Tribunal found that such a condition “undoubtedly would be some degree of economic impact on all venues”.[247]
[244]Transcript at 1-103–1-104.
[245]Transcript at 2-12.
[246]Transcript at 2-11.
[247]Fame & Fever Night Club Pty Ltd et al v Chief Executive, Liquor Licensing Division & Gold Coast City Council & Assistant Commissioner Melville [2004] QCCTL 5 at [193].
I find that the imposition of a lockout condition would have had an adverse impact upon the plaintiffs’ businesses. The effect of that impact cannot be assessed with any precision in the light of the evidence. The plaintiffs’ submissions do not specifically address the impact which a lockout condition would have had upon the loss and Mr Vincent’s calculations did not bring into account any reduction on account of it.
In the circumstances, I consider that a reasonable approach to assessing damages is to discount the loss assessed by Mr Vincent by 20 per cent on account of the likely adverse impact of a lockout condition.
Damages will be assessed for the period after 1 September 2004 as follows:
(a) First plaintiff - $28,217 per month x 8 months = $225,736
(b)Second plaintiff - $19,847 per month x 7 months = $138,929
The defendants pleaded that the plaintiffs failed to mitigate their loss by not undertaking advertising and promotional activities additional to those that they had undertaken prior to 1 April 2004. I accept Mr Garardi’s evidence that attempts were made to rejuvenate the business using advertising and other promotional methods. I consider that the plaintiffs took appropriate steps to recover business once permits were granted and that the defendants have failed to prove that additional advertising and promotional activities would have warranted the additional expense. In short, the defendants have failed to discharge the onus of proving that the plaintiffs failed to mitigate their loss.
The assessment of loss may be summarised as follows:
First plaintiff 1 April 2004 to 31 August 2004 $90,000 1 September 2004 to 31 March 2005 $225,736 Subtotal $315,736 Discounted by 20% on account of impact of lockout condition
$252,589 Second plaintiff 1 April 2004 to 31 August 2004 $60,000 1 April 2004 to 1 March 2005 $138,929 Subtotal $198,929 Discounted by 20% on account of impact of lockout condition $159,143
If the plaintiffs had been entitled to recover damages then it would have been appropriate to award interest at the rate of nine per cent per annum in accordance with the Supreme Court Act 1995 from the date of their loss.
Conclusion
The decisions made by the Chief Executive on 18 March 2004 were made under a statutory regime that is principally concerned with the welfare of the community, not the welfare and protection of applicants for extended hours permits. The Act confers a broad discretionary power on the Chief Executive, who must have regard to the matters specified in s 121A(3) of the Act. The grant of an application to renew an extended hours permit does not arise as a matter of right upon satisfaction by the applicant of stated criteria, or in the absence of proof by the police or the council of their objections.
The Chief Executive did not exceed her powers under the Act in making the decisions and in writing a letter in which she refused to grant any interim permits to the plaintiffs. She was entitled to give substantial weight to police and council objections. As the Tribunal later found, police evidence concerning incidents indicated “a direct connection to the applicants’ premises” and there was evidence of “problems associated with patrons of the applicants’ premises which contribute to the incidents of violence and disorderly behaviour reported by police and officers of the Gold Coast City Council in the vicinity of the Surfers Paradise nightclub precinct.” The 15 March 2004 Briefing Notes upon which the Chief Executive reasonably relied effectively advised her that the objections had been substantiated.
The Chief Executive was not reckless as to whether her decisions were in excess of power or otherwise invalid. She did not in fact act outside her powers. She was not reckless as to the need for substantiation. The Briefing Notes did not suggest that these incidents were unsubstantiated. They indicated that police and council objections were substantial and substantiated.
The Chief Executive did not owe to the plaintiffs the duty of care alleged. The vulnerability of the plaintiffs to economic loss as a foreseeable result of the unfavourable exercise of the statutory power is a feature of a statutory regime that confers permits of limited duration on licensees and also confers a broad discretionary power upon the Chief Executive to not renew those permits. That vulnerability is ameliorated by a statutory appeal to an independent tribunal. Examination of the terms, scope and purpose of the relevant statutory regime leads to the conclusion that it does not erect or facilitate a relationship between the Chief Executive and the class of persons of which the plaintiffs are members, namely applicants for renewal of extended hours permits, that displays sufficient characteristics to impose a common law duty of care. The power conferred on the Chief Executive is not conferred for the protection of applicants for permits and the proper exercise of the power may be inimical to their private interests. The duty of care contended for by the plaintiffs is not consistent with the terms, scope and purposes of the Act.
In any case, the Chief Executive did not breach the alleged duty of care. The claim in negligence against her is not established.
The Chief Executive’s decisions were not invalid or unauthorised. She was not malicious. As a consequence, the plaintiffs have failed to prove two of the elements of the tort of misfeasance in public office.
The State did not owe the duty of care pleaded by the plaintiffs. In any case, the alleged duty was not breached. The plaintiffs’ claims against the State therefore are not established.
The result is that the proceeding should be dismissed. Subject to any submissions on costs, the order of the court will be:
1. Judgment be entered for the defendants.
2. The plaintiffs pay the defendants’ costs of and incidental to the proceeding, including reserved costs, to be assessed.
2
4
1