Slatter v Railway Commissioners (NSW) [1931] HCA 13; (1931) 45 CLR 68 (20 April 1931)

HIGH COURT OF AUSTRALIA

Slatter Defendant, Appellant; and Railway Commissioners for New South Wales Plaintiffs, Respondents.

H C of A

On appeal from the Supreme Court of New South Wales.

20 April 1931

Gavan Duffy C.J., Starke, Dixon and McTiernan JJ.

Jordan K.C. (with him D. Williams), for the appellant.

Maughan K.C. (with him Bradley and Moors), for the respondents.

Jordan K.C., in reply.

The following written judgments were delivered:—

April 20

Gavan Duffy C.J.,

Starke and Dixon JJ.

On 29th November 1929 the appellant entered into an agreement with the respondents for a quarterly tenancy of premises licensed for the sale of Australian wines. The appellant was then in occupation of the premises as assignee of a prior lease, and the agreement with the respondents for a quarterly tenancy was expressed to be subject mutatis mutandis to the terms and conditions contained in the memorandum of that lease. The respondents gave to the appellant three months' notice expiring on 10th December 1930 terminating the tenancy. Before the expiration of the notice, the appellant claimed to be entitled to apply to the Licensing Court at the end of his tenancy to remove his licence to other premises. The respondents, on the other hand, entered into a contract with a stranger to sell to him the fee simple of the land together with the licence, claiming to be entitled to dispose of the licence at the end of the tenancy. The respondents at once brought a suit in equity and, before the tenancy expired, a decree was made in the suit declaring that the respondents were entitled as against the appellant, by virtue of his contract, at the termination of the tenancy existing under the agreement to transfer or cause to be transferred the Australian wine licence to whom they please or to remove the said licence or cause it to be removed to what premises they please, and ordering that the appellant be perpetually restrained from proceeding with any application for the removal of the licence to other premises, and from dealing with the licence in any way to the prejudice of the respondents' rights. In our opinion this decree was right. The provisions incorporated in the agreement of tenancy imposed upon the appellant an obligation to yield up the demised premises to the respondents at the expiration of the notice terminating the tenancy, until the end of the tenancy to use the premises only as a place for the sale and consumption of Australian wines, and not to do or suffer any act whereby the licence necessary for using the premises as a place for the sale of colonial wines might be, or become liable to become, forfeited, or become void, suppressed or suspended in any manner howsoever, or the removal withheld or refused. The provisions also required the appellant at all proper times and from time to time to apply for and use his best endeavours to obtain the necessary licences or renewal of licences for opening and keeping open the demised premises during the term of the tenancy as a place duly licensed for the sale and consumption therein of colonial wines; and they gave the respondents a power of forfeiture in case the appellant was convicted of any offence which might render the licence liable to be forfeited, or become void, or suppressed in any manner howsoever, or in case the licence should be cancelled, or the renewal refused, or in case of the breach or non-performance by the appellant of his agreement. These stipulations appear to us to be intended to preserve the licence in the interests of the landlord, so that at the end of the term the premises would enjoy the advantage of being licensed for the sale of Australian wines. After the proviso for forfeiture the provisions incorporated in the agreement of tenancy proceed: "And for the better preservation of the licence of the said demised premises the lessee doth hereby irrevocably appoint the lessors and the estate agent for the time being of the lessors jointly and severally the true and lawful attorney and attorneys of the lessee to transfer or cause to be transferred the licence or licences held in connection with the said demised premises to any person whom the lessors or their estate agent aforesaid may nominate and to apply for the renewal and removal of the said licence or licences or any new licence and to sign all notices transfers and documents for such purpose in the name of the lessee his executors administrators or assigns or other the person in whose name the said licence or licences may then stand."

We can see no reason whatever for confining the operation of this clause to the duration of the tenancy. It appears to us naturally to extend beyond the term so as to enable the respondents to apply in the name of the appellant as licensee for the transfer of the licence to a new occupier of the premises. It is an irrevocable authority for the advantage of the persons authorized. Any act on the part of the appellant which would destroy the authority or impair its operation must be a breach of the conditions necessarily implied in granting an irrevocable authority exercisable exclusively for the benefit of the persons authorized. An attempt to secure the removal of the licence to other premises pursuant to the provisions of sec. 39 of the Liquor Act 1912-1929 appears to us to be designed to impair if not destroy the authority irrevocably appointing the respondents attorney for the purpose of transferring or removing the licence, and accordingly to be a violation of the conditions necessarily imported in the grant of the authority. We think the evident purpose of the provisions incorporated in the tenancy agreement was to preserve the licence for the benefit of the premises, and at the end of the term to enable the landlords to ensure that it was available to the person who next occupied the premises under them. The advantage obtained by a landlord from such provisions does not, in our opinion, amount to a beneficial interest in the licence within the meaning of sec. 41 of the Liquor Acts. The tenant remains entitled to exercise the licence for his own benefit so long as he is entitled to occupy the premises. But the licence is exercisable by its terms only in the premises which the tenant holds of the landlord and when he ceases to occupy the premises he can no longer exercise the licence. The contractual rights given to the landlord to ensure that the licence is not destroyed or removed to other premises, but is kept on foot and transferred to a person chosen by the landlord, do no more than safeguard the interests of the owner which secs. 37 (2), 38, 39 (4), 128 (2) and (3) and 130 of the Liquor Acts recognize.

In our opinion the appeal should be dismissed with costs.

McTiernan J.

I agree that the appeal should be dismissed. Although an Australian wine licence, granted under the Liquor Act 1912-1929, is not property in the strict sense and assignable as property, the licensee may bind himself by a contractual or fiduciary obligation with respect to the exercise of his rights under that Act to apply for the renewal or transfer or removal of such licence, and such an obligation will in a proper case be enforced (Jack v. Smail[1]). It was argued on behalf of the appellant that clause 18 of the memorandum of lease of 8th January 1925, which was incorporated in the agreement under which the appellant leased the premises from the respondent, bound the appellant only during the period of the tenancy, and the power of attorney contained in the clause had no effect when the tenancy terminated, and the licensee then became free to apply under the provisions of the Liquor Act 1912-1929 to remove the licence to other premises. In my opinion, that is not the meaning and effect of the clause.

Reliance was placed by counsel for the appellant on the words introducing the power of attorney, as exhibiting an intention to confine the operation of the provision of the agreement creating the power of attorney to the duration of the tenancy. The words are: "And for the better preservation of the licence of the said demised premises." Those introductory words appear to me to convey the meaning that the clause is being continued in order to provide additional safeguards for the preservation of the licence and its maintenance on the respondents' premises. In the dissection of clause 18 the fact should not be overlooked that it is part of an agreement under which the appellant held the licence as the tenant of the owner of the premises. In the case of a lease of licensed premises it is necessary that the tenant, who is to carry on business on such premises, should be the person authorized by the licence to sell liquor. The owner of the premises, therefore, may deem it necessary to obtain covenants from the tenant for the protection of the licence (see Encyclopædia of Forms and Precedents, vol vii., p. 368). "The licence may be described as having two attributes each being absolutely distinct from the other. First, it is a personal licence ... and secondly, it is a licence to carry on business in these premises" (Jack v. Smail[2]). In my opinion, the object of the whole clause was to protect the licence in respect of both its attributes. The power of attorney was expressed to be added "for the better preservation of the licence" which had been described in the clause as the licence "necessary for using the said premises as a place for the sale and consumption of colonial wines." The Liquor Act 1912-1929 provides that the holder of a licence may apply to remove the licence to other premises; it also provides that the owner should be served with notice of the application, and that the application should be refused if the Court is satisfied that the owner has a valid objection (see sec. 39). Notwithstanding the owner's right to object, it is conceivable that, if the tenant were unfettered by any contractual or fiduciary obligations and free to make such an application, and able to show strong grounds for the removal, the continuance of the premises as licensed premises might be placed in jeopardy. The purpose of the agreement, in aid of which the power of attorney was inserted, negatives the intention that the tenant should, as the licensee, be free as against the owner of the premises to make such an application during the tenancy or after its termination. In my opinion, clause 18 bound the tenant as long as he was holding the licence, because he was or had been the tenant of the premises under the agreement, and was capable, therefore, of endangering the licence, by refusing to make or by making the applications respectively mentioned in the power of attorney. Moreover, if upon its proper construction the power of attorney were available only during the tenancy, it would not be effective to protect the licence in the event of the tenant's incapacity, absence, contumacy or other cause personal to him, preventing him, as the licensee, from applying to transfer the licence to another tenant, after the termination of his tenancy. Clause 18 guards the respondents against such a contingency. Upon this construction of the power of attorney it had not, in my opinion, the effect of giving the respondents a beneficial interest in the licence, within the meaning of sec. 41 of the Liquor Act 1912-1929. It protects the interest of the respondents only as the owners of the licensed premises.

Appeal dismissed with costs.

Solicitors for the appellant, Murphy & Moloney.

Solicitor for the respondents, Fred. W. Bretnall.

[1] [1905] HCA 25; (1905) 2 C.L.R. 684.

[2] (1905) 2 C.L.R., at p 714.