Another Nail in the Coffin for the NSW Liquor Industry? The Liquor Amendment (3 Strikes) Bill 2011: what it means for your licensed premises

The assault on licensed premises has not ended with the change of government, with the introduction of the Liquor Amendment (3 Strikes) Bill 2011 (3 Strikes Bill) into New South Wales parliament on 22 June 2011 by the Minister for Tourism, Major Events, Hospitality and Racing, George Souris.

Picking up where the former government left off, the 3 Strikes Bill appears premised on the assumption that NSW is currently suffering an epidemic of alcohol related violence, crime and anti-social behaviour for which licensed premises are primarily responsible.

Like the Labor government's "violent premises" legislation that preceded it (Declared Premises), the 3 Strikes Bill inserts a new "Part 9A – Disciplinary action – 3 strikes" into the Liquor Act 2007 (the Act) but does not add any new ability to regulate licensed premises (the existing "Part 9 – Disciplinary action" of the Act already contains ample powers to regulate problem venues, including imposition of restrictive conditions, penalties, suspension and cancellation of the licence). It does, however, remove some of the procedural fairness provisions that would otherwise need to be followed under the current disciplinary provisions of the Act.

One particularly disturbing element of procedural fairness that is removed is the need for an alleged offence to actually be proven before it will count against you towards a strike.

Only certain types of prescribed offences will count towards a strike.

If a licensee is charged with a prescribed offence that is later withdrawn (presumably for good reason – such as the charge being improperly laid or for lack of evidence) or dismissed by the court (where the court finds the licensee not guilty), it will still count as a "charge" for the purpose of contributing to a strike against that licence.

This means that a court may find a licensee innocent of the alleged offence, yet for the purpose of incurring a first or second strike under the 3 Strikes Bill, the mere fact that the charge was laid is enough.

The abrogation of the presumption of innocence, and the denial of procedural fairness, both fundamental bases of our legal system, are manifestly unfair and it is this aspect of the 3 Strikes Bill that is by far the most concerning.

When strikes are incurred, the conditions of the licence will be changed to tighten the restrictions on the operation of the premises. After two strikes, quite severe restrictions can be imposed, such as lockouts, suspension of the licence for 6 months, and restricted trading hours. If a third strike is imposed, the licence will automatically be cancelled.

The consequences of incurring strikes against a premises may therefore be very serious and may have a significant detrimental impact on the business and the asset value of the licensed premises itself.

Hotel licences, in particular, are of significant value and a new hotel licence is virtually impossible to obtain. The consequences of losing a hotel licence are likely to be particularly dire.

Despite this, the business and premises owners of licensed premises will not be notified of any impending strikes against the premises until such time as the Director-General is considering imposing a third strike (which results in automatic cancellation of the licence).

The strikes, and prescribed offences leading to a strike, continue to accrue regardless of any change in ownership or licensee (as is the case with the Declared Premises provisions). This means that lessees, purchasers, and financiers of licensed premises must be wary of the compliance history of a premises under previous operators.

However, this compliance history will not be disclosed on licence searches and there is no ability to request this information from OLGR. Incoming lessees, purchasers and financiers will therefore find it very difficult to ascertain whether a premises is subject to one of more strikes, or is on its way towards incurring a strike.

Right to be heard and appeal

There are limited rights to be heard and to appeal to the Administrative Decisions Tribunal.

Most fundamentally, these rights only apply to decisions of the Director-General. This means that there is no right to be heard and no right of appeal against strikes which may be automatically incurred (as in the case of the first and second strike). There is however a right of appeal on the third and final strike (as the third strike requires a decision by the Director-General and cannot be incurred automatically).

Before making such a decision, the Director-General must give 21 days written notice to the licensee, manager and any person prescribed by the regulations and must invite submissions. The Director-General must then consider those submissions, and the submissions of the NSW Police, OLGR and the Bureau of Crime Statistics and Research, as well as certain mandatory considerations.

Owners of licensed premises kept in the dark

It is significant to note that the business owner and premises owner are not informed of any proposed decision and are not able to make submissions in relation to any decision other than the decision as to whether a third strike should be imposed.

In practice, most business owners would be kept informed by their licensee and will therefore not be surprised– but the position is quite different for a premises owner who may be a mere landlord.

By the time that the Director-General is contemplating imposing a third strike, the situation is already quite dire. The cancellation of the licence, which in most cases is beneficially owned by the landlord, is likely to have a devastating impact on the value of the property.

For any additional information on these issues or the detailed provisions of the 3 Strikes Bill, please contact Christina Renner or Anthony Whealy.

This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.