International Hotel Ltd v McNally [1940] HCA 26; (1940) 64 CLR 24 (11 October 1940)

International Hotel Limited Appellant, Appellant; and McNally Respondent, Respondent.

This appeal involves the question whether the forfeiture of the licence of the appellant company is valid or not. The special magistrate ordered that it should be forfeited, and the Supreme Court of South Australia upheld that order.

Before the alteration in the law effected in 1908 which is now expressed in sec. 85 of the consolidating statute—the Licensing Act 1932-1936 of South Australia—it was held, in Roenfeldt v. Flecker[1], that neither an incorporated company nor any person on its behalf could hold a licence. Sec. 85 (3), which provides that the manager of an incorporated company shall be "deemed to be" the licensee, contains the machinery for making the Act effective where a licence is granted to such a company (Bond v. Denton[2]). "The word deemed introduces an artificial definition which, in my view, is only intended to be applied as long as the conditions exist to which it is intended to apply" (per Sankey L.J., as he then was, in Leitch v. Emmott[3]). Now, what are the conditions in the instant case? The admitted facts are that one Mullins had been convicted three several times of offences for which a licence is liable under sec. 77 of the Act to be forfeited. At the date of the first two convictions this person was the manager of the appellant's hotel, but on the occasion of the third conviction he had been replaced by another manager duly approved by the Licensing Court. By sec. 85 (3) the manager of an incorporated company is to be deemed to be the holder of the licence belonging to the company. This licence becomes forfeitable under sec. 77 (2) when the manager in his artificial capacity is thrice convicted. But at the date of the third conviction an approved change of managership had been effected and "the conditions no longer existed to which the artificial definition is intended to apply."

The North-Eastern Licensing Court of South Australia made an order that the licence of the International Hotel Ltd. should be forfeited. An appeal is now brought to this court from a judgment of the Supreme Court of South Australia affirming that order.

The facts are not in dispute. The appellant, the International Hotel Ltd., was the holder of a publican's licence under the Act in respect of the International Hotel at Port Pirie. One Mullins had been approved by the court as manager of the licensed premises for the purpose of the Act. He was, within three years, convicted of three several offences for which the licence was liable to be forfeited under the Act, namely, on 23rd September 1938, 8th February 1939 and 3rd October 1939. But between the date of the commission of the third offence, namely, on 17th July 1939, and the date of conviction for that offence, 3rd October 1939, Mullins ceased to be manager of the licensed premises, and on 18th September 1939 one Morris was approved by the special magistrate constituting the court and thereafter acted as manager of the hotel.

The question depends upon the interpretation of some confused sections in the Licensing Act 1932-1936 of South Australia. By sec. 77 (2) it is provided that, if any person holding a licence is within a period of three years convicted three several times of certain offences, the special magistrate or justice by whom that person is convicted for the third offence or the Licensing Court shall declare the licence to be forfeited. By sec. 4 "licensed person" or "licensee" means a person holding a licence which is for the time being in force and authorizes the act or matter referred to. And sec. 85 provides:—"(1) A company incorporated under the laws of the State, and with the sole object of carrying on the business of a licensed victualler, may hold a publican's licence in respect of one hotel only ... (2) Upon applying for any such licence, the company shall submit to the court the name of a person as its manager of the licensed premises, and for the purpose of objections that person shall be deemed the applicant. The licence shall state the manager's name, and the approval in writing of the special magistrate constituting the court shall be necessary before any change of manager will be recognized for the purposes of this Act. (3) For the purposes of this Act the manager of the licensed premises shall be deemed to be the person licensed in respect of the premises or the holder of the licence thereof; and the premises shall be deemed to be his licensed premises or the premises in respect of which he is licensed or holds a licence. (4) In addition to the manager, the company shall be liable to pay the amount of any fines or penalties incurred or inflicted in consequence of any offence upon the licensed premises against this Act." Perhaps I should add a reference to a curious section in the Acts Interpretation Act 1915-1936 (S.A.). It is sec. 22 and provides: "Every Act, and every provision or enactment thereof, shall be deemed to be remedial, and shall accordingly receive such fair, large, and liberal construction and interpretation as will best ensure the attainment of the object of the Act and of such provision or enactment, according to their true intent, meaning, and spirit."

Now, the Act allows companies incorporated in South Australia to hold publicans' licences, but it recognizes that an abstraction in law such as a company can only operate through agents. So the Act requires that it shall operate through a manager approved by the court, who shall be deemed to be, though he is not in fact, the person licensed in respect of the premises or the holder of the licence thereof. However, I agree with the learned judges of the Supreme Court that the Act does not impose a dual responsibility which allows a company to be prosecuted for offences committed by its manager. It is the manager who is responsible for the observance of the provisions of the Act, and who is subject to the sanctions imposed by it, subject to the provision, however, that in addition the company shall also be liable to pay the amount of any fines or penalties incurred or inflicted in consequence of any offence upon the licensed premises against the Act.

The question comes back to sec. 77. The company was the holder of the licence, but even a vicarious responsibility for its manager could not bring it within the words of the section, for it was never convicted.

That leaves for consideration the question whether a person deemed to be holding the licence was, within a period of three years, convicted three several times of offences for which a publican's licence is liable to forfeiture. If such a person were so convicted, there is no difficulty in concluding that the licence of the hotel is forfeited, for the licence is, for the purposes of the section, his, or deemed to be his, licence. The learned judges of the Supreme Court said that, if the act (the third offence) was an offence when it was done, the manager (Mullins) was liable to conviction in that capacity, notwithstanding his subsequent retirement or discharge. In this I agree, but still the words of the section only enable the court to declare the licence forfeited "if the person holding," which includes a person "deemed to be holding," the licence, was convicted within the prescribed period three several times of offences for which a licence is liable to forfeiture. Mullins, the former manager, however, was not within a period of three years convicted three several times of offences for which a licence was liable to forfeiture. He had ceased to be the manager and to hold or to be deemed to hold the licence before the third conviction. The conditions prescribed for the declaration of the forfeiture of the hotel licence did not therefore exist. The words of the Act itself are the only guide to its "true intent, meaning, and spirit," and that must especially be so in the case of forfeiture of publicans' and other licences.

The judgment under appeal affirms an order of a Licensing Court which adjudges that the publican's licence held by the appellant company in respect of the premises called the International Hotel at Port Pirie should be forfeited. The ground of the forfeiture is that the person who was the approved manager of the hotel was convicted three several times of offences for which, under the Act, a licence is liable to forfeiture. In fact he was so convicted, but between the time of the commission of his third offence and of the conviction therefor he had been replaced by a new manager and the change had been approved by the Licensing Court.

In my opinion the fact that, at the date of the conviction, he was no longer manager and someone else, with the approval of the court, held that place is fatal to the ground on which forfeiture of the company's licence is based, viz., three convictions operating against its licence. The reason for this opinion depends upon the manner in which the provisions of the Licensing Act 1932-1936 (S.A.) affecting companies as licensees and those governing forfeiture for repeated convictions operate in combination.

The general provisions of the Act are framed as if only natural persons could be licensees, but a special provision of later origin specifically authorizes the holding of licences by companies and states how the law is to apply to companies as licensees. This specific provision is sec. 85. The first sub-section authorizes companies to hold licences, but the company must be incorporated in South Australia and must not hold a publican's licence in respect of more than one hotel. The second sub-section requires that the company must submit the name of a manager of the hotel. His name is to appear on the licence, and for the purpose of objections he is to be deemed the applicant for the licence. The company cannot change the manager of its hotel except with the approval of the licensing magistrate. So far the section makes it clear that the holder of the licence is to be the company and the manager is to be its servant by whom it conducts the hotel. Then the third sub-section casts upon him the liabilities and protects him with the privilege of a licensee by enacting that he shall for the purposes of the Act be deemed to be the holder of the licence. So much turns upon this sub-section that it will be necessary to state its exact terms. There are two further sub-sections, however, of less significance. The fourth, in furtherance of the policy of the preceding sub-sections, makes the company additionally liable to pay fines and penalties imposed on the manager for breaches of the licensing laws; and the fifth validates licences granted to or held by or on behalf of a company at the passing of the Act.

The third sub-section of sec. 85 is in the following terms: "(3) For the purposes of this Act the manager of the licensed premises shall be deemed to be the person licensed in respect of the premises or the holder of the licence thereof; and the premises shall be deemed to be his licensed premises or the premises in respect of which he is licensed or holds a licence."

The decision of the appeal depends upon the result produced when this provision is combined with that which governs the forfeiture of licences held by natural persons who are thrice convicted under the Act. It is to be found in sub-sec. 2 of sec. 77 and is expressed as follows: "If any person holding a licence is within a period of three years convicted three several times of such offences as aforesaid, the special magistrate or justices by whom that person is convicted for the third offence or the court shall declare the licence to be forfeited." The reference in the expression "such offences" is to the offences described in the preceding sub-section, which confers a discretion to forfeit the licence of a person convicted twice of "offences for which his licence is liable to be forfeited as provided in this Act," and a long list of those offences is contained in sub-sec. 8. Though sub-sec. 2 might appear to require the special magistrate or justices when convicting to forfeit the licence, the ensuing subsections make it clear that a separate proceeding is necessary; it must be by complaint made within a specified time, and the holder of the licence must be notified of the time and place of hearing.

How, then, does sub-sec. 3 of sec. 85 operate upon sub-sec. 2 of sec. 77 in reference to the facts of this case? There has been much discussion of the general effect of sec. 85 (3) in the application to companies and their managers of the Licensing Act considered at large. While that discussion has its value in illustrating not only the variety of the consequences flowing from the provision but the difficulty of many of its suggested applications, the precise problem before us can be better solved by considering the particular operation of the terms of sub-sec. 3 of sec. 85 upon the terms of sub-sec. 2 of sec. 77 than by an attempt to determine the general scope of the former sub-section. If this course is pursued, it will, I think, appear clearly that a company holding a licence under sec. 85 (1) whose approved manager while occupying that position is convicted three times forfeits its licence. For, although in law and in fact the company holds the licence and is not convicted within the meaning of sec. 77 (2) considered alone, yet by sec. 85 (3) the manager is to be deemed to be the holder of the licence in respect of the premises, that is, of the licence which belongs to the company. It is that licence which under sec. 77 (2) is to be forfeited when he, as the person who for the purpose of sec. 77 (2) is deemed to hold it, suffers a third conviction. I see no difficulty in this. The crux of the case appears to me to lie in the special circumstance that, when the third conviction was imposed here, the person convicted was no longer manager. With the approval of the licensing magistrate a change of manager had taken place between the time of the commission of the offence and of the conviction. Now, it appears to me that once that change was made the operation of sub-sec. 3 of sec. 85 on events occurring after the change was to "deem" the new manager and not the old to be the holder of the licence. No doubt the old manager was rightly convicted of the offence even though it was one that only a licensee could commit. For at the time of its commission he was still manager and therefore to be deemed the holder of the licence. But at the time of the conviction not he, but someone else, was deemed to hold the company's licence for the purpose of sec. 77. If therefore under sub-sec. 2 of that section it is necessary that the person convicted should still be the holder of the licence at the very time of conviction and the licence is not liable to forfeiture if it has passed from him in the meantime to someone else, it would appear to follow that no compulsory forfeiture was incurred by the company. And in my opinion sec. 77 (2) does mean that at the time of conviction the person convicted must hold the licence of which a forfeiture is claimed. The expression "if any person holding a licence is within ... three years convicted" is not, I think, grammatically capable of any other construction. It cannot mean that it is enough that before or after conviction he was or became the licensee. An analogous provision is contained in sec. 76 (1), which says that if any person holding a licence is convicted of felony his licence shall immediately thereupon be forfeited and void. Surely if a licensee commits a felony and then transfers his licence, the licence does not, in the hands of all subsequent transferees, remain liable to forfeiture, if the felony should be discovered and his conviction secured. Secs. 55 (1) and 56 (4) (b) confirm the view that no such consequence is intended. Among the objections open to a proposed transfer, sec. 55 (1) includes the ground that the licence is liable to forfeiture; and sec. 56 (4) (b) provides that when a certificate of transfer is issued the transferor shall cease to be a licensed person in respect of the premises, though remaining liable for acts or omissions already done or made. A natural person, therefore, who commits three offences but succeeds in completing the transfer of his licence before his third conviction is not within the operation of sec. 77 (2), and the licence is not forfeited in the hands of the transferee. As the former manager when convicted was no longer deemed to be the licensee, the prima-facie consequence is that his conviction did not bring the licence within the operation of sec. 77 (2).

To escape this consequence it was urged for the complainant that the true meaning of the legislation is that the company sustains all the burdens thrown on the manager as presumed licensee, so that through him the company suffered three convictions; that is to say, that in his person the company committed the three offences vicariously and in his person, as the actual offender in fact, the company in law suffered the convictions. In aid of this argument sec. 22 of the Acts Interpretation Act 1915-1936 was relied upon as requiring the court to give "such fair, large, and liberal construction and interpretation as will best ensure the attainment of the object of the Act and of such provision or enactment, according to their true intent, meaning, and spirit." Such a metaphysical conception as that involved in the argument does not appear to me to represent either the object or the true intent of the provisions of sec. 85 (3) applied to sec. 77 (2). The basis of the former provision is the representation of the company by its manager so long as he holds that position, and, of the latter provision, the liability to forfeiture of a licence in the hands of a person convicted three times. If the Licensing Court thinks fit to approve a transfer before conviction in the case of a natural person or to approve a change of manager in the case of a company, then the licence escapes forfeiture on the ground of three convictions.

The law may have been so framed because it was thought enough to get rid of the licensee or manager who proved himself prone to offending, reliance being placed on the licensing authorities not to approve the transfer or the change of manager if it appeared but a device to preserve the licence and at the same time secure a persistence in offending. But in any case I do not think that the legislation should be given the operation contended for by the complainant.

The declaration of forfeiture made against the appellant's licence was, in my opinion, wrong, not because a publican's licence is immune from forfeiture under sec. 77 (2) if it is held by an incorporated company, but because the conditions which that sub-section requires to support a declaration of forfeiture were not fulfilled in the present case.

The first question is whether the condition that the person convicted should be a person holding a licence was satisfied. In my opinion, the three convictions of the manager, if made within the period and otherwise as required by the sub-section, would be sufficient to satisfy its provisions. This conclusion is justified by the provisions of sec. 85 (3), which say that the manager of the licensed premises of a company is deemed to be the holder of the company's licence. A manager deemed by the Act to be the holder of a licence is included in the class "any person holding a licence" mentioned in sec. 77 (2).

The next question is whether the person upon whose convictions reliance is made to support the forfeiture was within a period of three years convicted three several times of the offences for which a licence is liable to forfeiture. It is shown that a person was within that period convicted two several times of such offences when he was the appellant's manager and, therefore, at such times respectively deemed to be a person holding its licence. It is shown also that he was convicted of one such offence after he ceased to be such manager and was, therefore, not then deemed to be a person holding the licence. Thus, all that is shown is that a person holding the licence was convicted not more often than twice. The intention of the sub-section, according to its ordinary grammatical meaning, is that the ground of forfeiture should be three convictions of a person holding a licence, each conviction taking place at the time he was holding the licence. That construction is supported by other provisions of the Act; for example, sec. 76 (1). It follows that there are only two convictions available which satisfy the requirements of the sub-section and that the conditions necessary to support the declaration of forfeiture do not exist.

It is sought to overcome this defect in the material upon which the declaration was made by the argument that upon the true construction of the Act each of the three convictions is in point of law a conviction of the appellant and, as it was truly holding the licence at the time of each of the convictions, the case for the forfeiture of the licence was complete. It does not seem to me that it can be necessarily implied in the Act that, where a manager of the licensed premises is proceeded against for an offence for which the licence is liable to forfeiture, it is the intention of the Act that he should stand in the situation of a representative party for the company and that his conviction would bind the company as if it had been summoned to appear; or that, although the conviction may entail penal consequences to the company, it should not be a conviction of the manager only but should ipso facto be a conviction of the company as well as of the manager. Sweeping as are the provisions of sec. 22 of the Acts Interpretation Act 1915-1936, I cannot even with their aid gather the intention from the Act that the conviction of the manager should be regarded as a conviction of the company.

Appeal allowed with costs. Judgment of the Full Court of the Supreme Court of South Australia discharged and in lieu thereof appeal from the special magistrate of the Licensing Court to the Supreme Court of South Australia allowed. Respondent to pay the costs of the appeal to the Supreme Court of South Australia to the appellant within twenty-one days of the taxing master's certificate or allocatur. Order of the special magistrate of the Licensing Court set aside.

Solicitor for the respondent, A. J. Hannan K.C., Crown Solicitor for South Australia.

[1] (1903) S.A.L.R. 136.

[2] (1933) S.A.S.R., at p. 85.

[3] (1929) 2 K.B. 236, at p. 248.

High Court of Australia

International Hotel Ltd v McNally [1940] HCA 26; (1940) 64 CLR 24 (11 October 1940)

HIGH COURT OF AUSTRALIA