Roosters Club Inc v Northern Tavern Pty Ltd (No 2)

THE ROOSTERS CLUB INC
v THE NORTHERN TAVERN PTY LTD & ANOR
[2003] SASC 143
Full Court: Doyle CJ, Nyland and Bleby JJ

DOYLE CJ: The Court has dismissed an appeal against a decision by a judge of this court.
The judge decided that the grant of a gaming machine licence to the appellant was void because the grant was made in contravention of s 15A(1) of the Gaming Machines Act 1992 (SA) (“the Act”).
The plaintiff before the judge, and now the respondent, is a business competitor of the appellant. The plaintiff has opposed the grant of the gaming machine licence at all stages.
The judge’s decision resulted in an order of the court which declared:
“The grant of the gaming machine licence with respect to the subject premises is void.”
The judge made the following further order:
“The declaration be stayed until further order, with liberty to the parties to apply at short notice to vary or discharge the stay.”
When this Court published its reasons for dismissing the appeal, it made an order that the appeal be dismissed. The appellant indicated that it proposed to apply to the High Court for special leave to appeal against the decision of this Court. After hearing some quite brief submissions, the Court made the following order:
“Order dismissing appeal to be stayed until further order.”
That order was made on 11 April 2003.
The appellant has made an application to the High Court for special leave to appeal. The matter came on before this Court once more on 2 May 2003, on an application by the appellant for an order continuing the stay already granted.
The Court then raised the question of whether it had power to stay the declaration made by the single judge. This point has not been raised by the parties. Counsel for each party put relatively brief submissions on the point. Because of the importance of the issue, the Court required the parties to provide written submissions on the question of power. Those submissions were filed on 9 May 2003.
The Court has still not heard full oral argument on the point. The point is one of some importance. However, if the Court were now to sit to hear further oral submissions, and then to reserve its judgment, there is a real chance that the hearing date for the application for special leave to appeal will have arrived before the Court gives its decision. Between now and the likely hearing date of the application to the High Court, each member of the Court is likely to be absent from the Court for some time.
Accordingly, I consider that the Court should decide the matter without further delay.
It was not disputed that the Court has power to grant a stay pending an application to the High Court for special leave to appeal.
Rule 95.17 of the Supreme Court Rules assumes the existence of such a power. That Rule regulates the manner in which an application for a stay is to be made. The Rule refers to:
“An application for a stay of execution of proceedings, or for any interlocutory injunction to preserve the subject matter of the proceedings, pending the hearing …”
It is significant that the reference is to a stay of execution and to an interlocutory injunction.
Section 17 of the Enforcement of Judgments Act 1991 (SA) may be a further source of power to grant the stay. That section refers to “a stay of execution.”
It may be that the court also has an inherent power to grant a stay in such a case.
Whatever the source of power, the difficulty that the applicant confronts is that there is no suggestion in the present case that the respondent can or will enforce the judgment of the Court or execute upon the judgment. Nor are there any rights that the respondent can assert, consequential upon the judgment. The judgment of the Court simply declares that on the basis of the facts proved before the Court, the grant of the gaming machine licence is rendered void by s 15A of the Act.
That issue could have arisen in other ways. If the appellant had been prosecuted under the Act for an offence that involved proof that the appellant did not hold a gaming machine licence, it would have been open to the Prosecutor to allege and to prove that the appellant’s licence was void. This Court’s decision has now resolved that point, subject to a successful appeal to the High Court. But the decision of the Court is no more than an authoritative statement of the legal position, the matter having been raised in the court.
Any action consequential on the decision of this Court is likely to take the form of action by the police or by the Liquor and Gambling Commissioner to prosecute the appellant for offences arising from the fact that the appellant’s gaming machine licence is not valid: s45 of the Act. Contrary to the suggestion in argument, in my opinion the Commissioner does not have power under s 36 of the Act to revoke the appellant’s licence.
If the appellant is prosecuted for an offence that involves proof that it does not hold a licence, the court in which the prosecution is instituted would have power to stay those proceedings pending the disposition of the application to the High Court. If the Commissioner were to take steps to revoke the appellant’s licence, this Court would have power to restrain the Commissioner from doing so pending the disposition of the application to the High Court. Whether those powers should in fact be exercised by the relevant Court is another matter.
As I have said, the difficulty that the appellant confronts is that there is no question of any execution of the Court’s judgment, of proceedings in respect of the court’s judgment, and no reason to grant an interlocutory judgment. Conceptually, it is difficult to see how the Court can stay what it has already declared, namely, that the grant of the licence is void.
There is support in a number of textbooks for the view that a declaratory order cannot be stayed. That was the view of a judge of the Federal Court in Bunnings Forest Products Pty Ltd v Bullen (1994) 54 FCR 342; (1994) 126 ALR 660. That judge referred to the possibility of the Court suspending or postponing its order coming into effect. That is another possibility. As it happens, however, the Court has already ordered that the appeal be dismissed, although that order does not necessarily overtake the order of the single judge that the declaration be stayed.
But what is the effect of the order that the judge has made, and that we are asked to continue or, possibly, to leave in place? Section s 15A (2) of the Act renders void a grant of a licence in contravention of s15A (1). The decision of this Court does no more than declare authoritatively that, in the circumstances, s 15A (2) renders the grant of this particular licence void. The appellant wishes to continue to operate its gaming machines until its application to the High Court for special leave to appeal has been disposed of. The appellant appears to believe that the grant of a stay will mean that it is to be treated as holding a licence meantime, even though the Court has declared that it does not. The appellant may also believe, although this is not clear, that the effect of a stay will be that even if its application to the High Court is unsuccessful, or even if it gets leave to appeal and an appeal is ultimately unsuccessful, the appellant will be treated meantime as holding a gaming machine licence under the Act. In short, the application for a stay seems to be premised on the assumption that a stay would have the effect of deeming the appellant to hold a licence under the Act, even if ultimately the decision of the judge stands.
My view is that that assumption is wrong. I consider that a stay cannot alter the situation in that manner. If the decision of this Court and of the single judge stands, the position will be that the appellant does not hold the licence in question, and has never held it. That is the consequence of the terms of s 15 A (2) of the Act. Even if this Court were to continue the stay, my view is that if the decision of the single judge stands, the appellant will not have held the licence in question at any stage, and that this will be so notwithstanding the stay granted by the single judge.
The grant of a stay cannot confer immunity from the consequences of an ultimate decision that the grant of the licence is void, in respect of the period between the grant of the licence and the making of that ultimate decision. If the ultimate decision is that the licence is void, it has been void from the outset. The Court cannot, by granting a stay, avoid whatever consequences may flow from that result, in respect of the period pending the ultimate decision.
Accordingly, the Court should not grant a stay that might create an impression that the continued operation of the gaming machines in question is lawful, and will be lawful even though the appellant’s application or appeal to the High Court ultimately fails.
If my view is correct, there is no point in ordering a stay. The appellant must decide whether it will continue to operate the gaming machines in question, and must accept whatever consequences flow from that decision. The Court is unable to protect it against the consequences that will flow, in respect of the period pending an ultimate decision, by the grant of a stay.
I realise that this puts the appellant in a difficult position. The point I make is that there is nothing that the Court can do about that, and the grant of a stay would be misleading if it were taken by the appellant to be providing protection to it.
For those reasons I would revoke the stay ordered by this Court, revoke the stay ordered by the single judge, and would refuse to grant a further stay.
If the Court had power to make an order which would have the desired effect, I would make the order.
My reasons are these in brief. I apply the principles identified by me in Duke Group Ltd (In Liq) v Pilmer [1999] SASC 373. The evidence provided by the appellant is by no means as clear as it might be. Nevertheless, I accept that the appellant will suffer a significant loss if it is unable to operate its gaming machines between now and the hearing of its application for special leave to appeal, and an even greater loss between then and the ultimate disposition of the appeal, if leave to appeal is granted. I am unable to quantify the loss, because the material from the appellant is lacking in relevant detail, but I accept that the loss will be significant. That loss will be irrecoverable, if an appeal to the High Court succeeds. There is a risk of the appellant having to close its business if it cannot operate the gaming machines, but I put it no higher than that. I am not prepared to make a finding that that will occur. I am not prepared to act on the claims made about the impact on the North Adelaide Football Club of the loss that might be suffered by the appellant, or of the closure of the appellant’s business. There is insufficient evidence to enable me to make a finding about that. I agree that the respondent may suffer financial loss from the presence of the appellant as a competitor. However, the Act is not intended to protect competitors, and so this is not a factor of any significance. I accept that the appellant incurred substantial financial commitments in establishing and opening its premises, knowing that the grant of its gaming machine licence was under challenge in this Court. But I accept that in all the circumstances the appellant was in a difficult position. Had it not proceeded as it did, it would have suffered substantial loss in any event. The Commissioner’s grant of the licence had been upheld by the Licensing Court. Under all the circumstances, in the appellant’s difficult position I consider that it acted reasonably in acting as it did. I consider that the appellant has some prospect of obtaining the grant of special leave to appeal, although I would describe that prospect as moderate only.
It is for those reasons that I would make an order of the kind sought, if the power existed.
I would have preferred the opportunity to hear full submissions on this important issue, but for the reasons that I have explained it seems that the better course is to proceed to decide the matter on the relatively limited submissions available to the Court.
NYLAND J: I agree that a stay of proceedings should be refused for the reasons expressed by the Chief Justice. I further agree that if there was power to grant a stay that it would have been appropriate to make an order in this case.
BLEBY J: I agree that the stay ordered by the single Judge and by this Court should be revoked. I would also refuse to grant a further stay. I agree with the reasons of the Chief Justice for so ordering. I merely add some further observations of my own.
In my opinion, it will seldom, if ever, be the case that a purely declaratory order can be stayed. As the Chief Justice has pointed out, both the Enforcement of Judgments Act 1991 and the relevant Supreme Court Rule refer to a stay of execution or a stay of execution of proceedings. The Rule also contemplates the granting of an interlocutory injunction to preserve the subject matter of the proceedings pending the hearing of an application for leave to appeal. None of those orders are appropriate in this case.
It has been suggested that there is nevertheless an inherent power to stay an order of the Court or the effect of an order: Daley “Interlocutory orders pending High Court Litigation” (1995) 13 Aust Bar Rev 41 at 43.
In Re Moore; Ex parte Pillar (1991) 103 ALR 11 Dawson J acceded to an invitation to stay an order of the Australian Industrial Relations Commission fixing a day on which the amalgamation of two registered organizations was to take effect. The Industrial Relations Act 1988 (Cth) prescribed a number of consequences which followed the fixing of such a date in relation to the amalgamation of the organizations concerned. Judicial review proceedings had been commenced calling into question the validity of the order made.
Dawson J acceded to the invitation to grant a stay of the order “[w]ith some hesitation” (Ibid at 14). However, that was in a situation where rights were created by the making of the order, and where the application for judicial review would have been rendered nugatory without a stay of the order. In this case there are no proceedings which can be stayed, and the failure to grant a stay of the order (assuming it can be done) will not render nugatory the appellant’s application for leave to appeal or the appeal itself, if leave is granted. Furthermore, the order in this case is not one which creates rights, as did the declaration in Re Moore, but one which merely declares what those rights have been since the purported grant of the licence to the appellant.
In Re Marks; Ex parte ABCE and BLF (1981) 34 ALR 208 the order sought to be stayed, again pending the hearing of a judicial review application in the High Court, was an order under s 142A of the Conciliation and Arbitration Act 1904 (Cth). Under that section the Australian Conciliation and Arbitration Commission had power “if it thinks it in the public interest to do so, (to) make an order providing that an organisation of employees shall have the right to represent, in respect of all or some industrial interests under this Act, a class or group of employees who are eligible for membership of the organisation, either generally or subject to such limitations as it may specify, to the exclusion of another organisation or organizations ….”. An order made under that section by a single member of the Commission had been confirmed on appeal. The order concerned the rights of one organisation of employees, to the exclusion of another, to represent employees engaged on a particular construction site, work on which was due to finish before the High Court would have been in a position to determine the issue.
Mason J (as he then was) was urged to stay the order pending the hearing of the application. He had occasion to consider the difference between a stay of proceedings and a stay of an order. He said, at 211:
“The distinction between a stay of proceedings and a stay of an order or judgment is perhaps not altogether clear. Contrast O 55, r 10 with O 70, r 12(2) and see the discussion in Allanson v Midland Credit Ltd (1977) 16 ALR 43; 30 FLR 108 at 112-3. Speaking generally, the distinction is between a stay of further proceedings in litigation and a suspension of a judgment or order. The fact that O 55, r 10 makes provision only for a stay of proceedings, and then on an order nisi, indicates that the stay of an order of the kind in question in the exercise of the inherent jurisdiction pending an application for prohibition is at best an exceptional undertaking.”
Mason J did not suggest that the Court did not have inherent power to grant the stay of an order, rather than of proceedings. Nevertheless, it was only argued in that case that the jurisdiction to grant a stay of the order itself should apply to an order which creates rights, as opposed to an order which merely declares rights. Whilst acknowledging that power Mason J said (at 211):
“Even so, the court will be more reluctant to stay an order which, though it creates rights, is otherwise declaratory in the sense that, unlike an injunction, it does not require a party to do or abstain from doing something.”
Because of the exceptional nature of a stay of an order, and because of other relevant factors listed by the court (at 212), the application was refused.
However, even if all factors had weighed heavily in favour of the grant of the stay of the order in that case, the order to be stayed was still a declaratory order which created exclusive rights of industrial representation. It was not declaratory in the sense that the order was declaring existing rights, such as the order in this case.
In a similar category to the declarations in Re Moore and Re Marks is the declaration the subject of consideration in Sibuse Pty Ltd v Shaw [No. 2] (1988) 13 NSWLR 125 relied on by the appellant. The declaratory order made in that case was one contemplated by the Disorderly Houses Act 1943 (NSW) to the effect that certain premises were declared to be a “disorderly house”. That declaration could only be made after certain findings of fact were made by the Court, and had the effect of changing, prospectively, the status of the premises, with serious consequences for the occupier of and persons entering the premises. An application for a stay of execution of the judgment and an order restraining the applicant for the declaration from taking any steps pursuant to the provisions of the Disorderly Houses Act consequent upon the making of the order was dismissed by a majority of the New South Wales Court of Appeal. The question of the power to grant a stay pending an application for leave to appeal to the High Court was not in issue. The refusal of the stay was based on discretionary factors.
The application for a stay was renewed before Mason CJ in the High Court. It is incorrect to say, as the appellant submitted, that the stay was granted. Mason CJ granted the injunction, but there is no suggestion from the transcript submitted that an order in the nature of a stay was made. Even if it were, it is clear that this was one of those exceptional declarations where it might be appropriate to grant a stay of the order, being a delaration which had the effect of changing the status of premises prospectively. That is very different from the declaratory order in this case which is purely declaratory of what has been the situation in law since the purported grant of the licence.
Subject to the qualification which appears below, I respectfully agree with what Carr J said in Bunnings Forest Products Pty Ltd v Bullen (1994) 54 FCR 342 of the difficulty in granting a stay of an order declaring rights. He said, at 347:
“(I)t might be said that an order which had already taken effect could be suspended temporarily. However, once a declaration has been made, as here, that a deed is void it seems to me that the order itself has done its work. The legal rights or obligations of the parties which depended upon whether the deed had any effect or not are, subject to appeal, settled. In the absence of clerical or similar errors arising from a slip or accidental omission the order stands unless set aside on appeal. It seems likely that the declaration took effect upon its pronouncement but could have been recalled by the Full Court before it was passed and entered: see the discussion by von Doussa J of this matter in another context, in Cavanagh v Bank of New Zealand (1990) 22 FCR 124. Furthermore, if an appeal were foreshadowed and the circumstances warranted taking such a course, a Full Court might before pronouncing judgment or, perhaps, before entry of judgment stay a declaratory order by suspending or postponing its coming into effect for a period fixed by reference to some appropriate stage of the further appellate process. Alternatively, the court or a judge might, in an appropriate case, stay the exercise of rights which might be declared to exist, pending an appeal which might have the result of the declaration being set aside.”

The circumstances which might warrant taking one of the alternative courses suggested by Carr J would only be appropriate where the declaratory order had some prospective effect such as those discussed above in Re Moore, Re Marks and Sibuse Pty Ltd v Shaw. The Chief Justice has explained, in words which I need not repeat, how the effect of the order made in this case has rendered the grant of the licence void ab initio. There is nothing that this Court can do to render the grant valid for a period pending the hearing of an application for leave to appeal. If the declaration was correctly made, there has never been and cannot now be a validly issued gaming machine licence.
While it is not necessary to express a view as to whether a stay should be granted if there were power to do so, I am not persuaded that it would be appropriate to grant such a stay. In this regard I respectfully differ from the conclusion of the Chief Justice.
I accept that, if the appellant is unable to operate its gaming machines, it will suffer financial loss. Like the Chief Justice, I am not persuaded that the appellant would necessarily have to close its business. I would not be prepared to consider the effect of the financial detriment on the North Adelaide Football Club, a separate incorporated body not a party to the litigation.
I agree that the financial effect on the respondent of granting or of not granting a stay is irrelevant. The relevant legislation is not designed to protect competitors but to protect what is perceived by Parliament to be a wider public interest in regulating the location of gaming machines.
I accept that the appellant was under great pressure, having signed a contract for the purchase of the premises, to complete the purchase once it had received favourable decisions from the Liquor and Gambling Commissioner and from the Licensing Court. However, in the circumstances, it was open to negotiate a purchase subject to the grant of a valid gaming machine licence and to the completion of any legal proceedings extant at what would otherwise have been the date of settlement and which called in question the validity of the grant of a licence. However, having acquired the property, the appellant then proceeded to spend $750,000 in fitting out the premises for its own use, borrowing the entire amount, knowing that these proceedings were in train and that, if the application were successful, the club could not lawfully operate gaming machines. Like its own gaming machine patrons, it gambled – in this case, on the chance of winning the case. I would be loathe to extend the aid of the Court in protecting the appellant from its own gambling loss.
I am not satisfied that if a stay were not granted, and the appellant succeeded in the appeal, it would be at risk of losing for ever the right to operate the machines the subject of the invalid licence. If the licence was invalidly issued by the Commissioner in the first place and is a nullity, it cannot be revoked by the Commissioner. There is nothing to revoke. It would not mean that the appellant would have to apply for a fresh licence which would now be precluded by the operation of s 14A of the Gaming Machines Act 1992, if in fact that section continues to operate past its present expiry date of 31 May 2003. The effect of a successful appeal will be that the licence was validly issued and has effectively been in force since its issue.
Where the prospect of obtaining leave to appeal is only moderate at best, and where the interest of the appellant must also be balanced against the interest of the public which the legislation is designed to protect, I am not satisfied that it would be appropriate to grant a stay if there were power to do so.

[2003] SASC 143

22 May 2003