MARSH and ORS v CLIFT and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, KIRBY P and SAMUELS JA 3 July 1991, 3 July 1991 [1991] NSWCA 193 Gleeson CJ This is an appeal from a decision of Mr Justice Newman in relation to some proceedings commenced in this Court by way of challenge to a decision of the Licensing Magistrates given in June 1990. The proceedings in this Court were compound in nature. In part they involved an appeal pursuant to the provisions of s146 of the Liquor Act 1982 and in part they involved an application for relief in the nature of an order of mandamus based upon what was claimed to have been a denial of natural justice on the part of the Licensing Magistrates. Mr Justice Newman decided the second of those two matters in favour of the plaintiff in the proceedings before him and made no decision in relation to the first of the two matters. His Honour thereupon made a declaration that the Licensing Court had failed to afford natural justice to the plaintiff in its decision in the proceedings in question and directed that the matter be remitted to the Licensing Court to be dealt with according to law. The first, third, fourth, fifth, sixth and seventh defendants in the proceedings before Mr Justice Newman have appealed to this Court against his Honour's decision in relation to what I have described as the second issue. The respondents to that appeal are the plaintiff in the proceedings before Mr Justice Newman and also the Metropolitan Licensing Inspector. The plaintiff has also cross-appealed in relation to his Honour's failure to resolve the first issue in favour of the plaintiff and the argument sought to be advanced in support of that cross-appeal is alternatively propounded on the basis of a notice of contention. In short, therefore, the issue as to the alleged denial of natural justice comes before us by way of the appeal and the issue as to the alleged error of law comes to us by way of either the cross-appeal or the notice of contention. Since it was the matter of the alleged denial of justice that formed the basis of the decision of Mr Justice Newman it is convenient to deal with that subject first. In order to introduce the topic it is necessary to make some brief observations as to the nature and constitution of the proceedings before the Licensing Magistrates and the course of litigation in the Licensing Court. The proceedings in the Licensing Court concerned a proposed right described in the material before us as an "off-licence retail" in respect of certain premises at Cherrybrook Shopping Centre. Prior to August 1988 a company named Mac's Liquor Pty Limited, which appears to have been a kind of joint venture between a New Zealand corporation and some local businessmen carried on a business of selling liquor. The businessmen involved in that operation included a Mr Gordon. He was the Managing Director of Mac's Liquor Pty Limited. In early August 1988 a man named Gaskin made an application for an off-licence retail for the premises at the Cherrybrook Shopping Centre. At the time Mr Gaskin disclosed that if the licence were granted it would be owned by Mac's Liquor Pty Limited. He further disclosed that that company would be 2 UNREPORTED JUDGMENTS interested in the business carried on pursuant to the licence. Thereafter, before the application for the licence was taken further, and in circumstances the detail of which is not presently material, the joint venture to which reference has earlier been made came to an end and Mac's Liquor Pty Limited abandoned its intention to become the owner of the business at Cherrybrook Shopping Centre. What is of present significance is that, as part of the arrangements pursuant to which the business of Mac's Liquor Pty Limited was terminated, Mr Gordon entered into a contract under which he undertook certain restraints upon his future business activities and, pursuant to those restraints, he was prohibited from having a personal interest in the business the subject of the unresolved application for an off-licence retail. Mr Gaskin pursued his application for the licence in respect of the premises at the Cherrybrook Shopping Centre but he did so on the basis that the owner of the business would be Mr Bradley Ernest Clift, who was the plaintiff in the proceedings before Mr Justice Newman and who is the first respondent in the proceedings in this Court. On 3 and 5 October 1989 there was a hearing of the application in the Licensing Court. The present appellants were objectors to the grant of the licence. It suffices to say that motives for objecting are not presently relevant. The objection that was originally raised was based upon the issue of need and that issue was ultimately resolved by the Licensing Court in favour of Mr Clift. That resolution does not form any part of the subject matter of this appeal. Both Mr Gaskin and Mr Clift put forward the application upon the basis that no person other than Mr Clift would have any financial interest in the business of selling liquor at the Cherrybrook Shopping Centre. It appears that in the course of those proceedings counsel for the objectors obtained access to information which threw doubt upon the claim that nobody other than Mr Clift had an interest in the proposed business and Mr Clift was cross-examined vigorously about that subject. It was put to him by Mr Whealy QC, who appeared for the objectors, that he was "really only d front man" on behalf of Mr Gordon and two other named persons who had also previously been associated with Mac's Liquor Pty Limited. By the colloquialism "front man" I take Mr Whealy to have meant "nominee". The subject matter thus raised by Mr Nhealy was not the subject of any extant objection. Furthermore, it seems that the applicant was confronted with a procedural difficulty flowing from the provisions of s18(10) of the Liquor Act. It seems to have been agreed all round that the proceedings could not have been completed at that stage and had to be adjourned. The significance of the matter that arose in relation to s18 is as follows. Because of the provisions of that section it was regarded as prudent for Mr Clift, or Mr Gaskin, to endeavour to acquire what was described in argument in this Court as a dormant off licence. At a later time and before the further hearing of the Cherrybrook matter before the Licensing Court, such licence was transferred to Mr Clift. The result of that was that the further hearing of the proceedings that took place some time later was a combined hearing of an application to transfer the dormant off licence (at Mascot) that had been acquired by Mr Clift to Cherrybrook Shopping Centre or, alternatively, for the grant of the licence at Cherrybrook that had originally been applied for by Mr Gaskin. That procedural aspect of the matter is not of present importance. To return to the matter raised by the cross-examination of Mr Whealy, it seems to have been the contemplation of all parties that during the period of adjournment following 5 October 1989 the objectors would formulate grounds of URJ MARSH and ORS v CLIFT and ORS (Gleeson CJ) 3 objection expressing the matters on which they relied in relation to the suggestion of interest in the proposed business on the part of Mr Gordon and others. Before the proceedings were adjourned the Chairman of the Licensing Magistrates made an observation upon which considerable reliance was placed before Mr Justice Newman. It was made from the bench in the course of some discussion about the significance of what was being put by Mr Whealy to Mr Clift. I should add, for the purposes of advancing an understanding of what the Magistrate said, that Mr Gordon is Mr Clift's father-in-law. The Chairman said: "Tf the Court could just express its reservation, Mr Lawry, that it could understand a father-in-law providing some assistance to his son-in-law or Mr Gordon providing assistance to his daughter. It is the involvement of other parties, Mr Niebsch and Mr Thompson, that have not been satisfactorily answered and, in view of the adjournment, perhaps that is a matter to which some consideration could be given." Subsequently, and before the further hearing of the matter, additional grounds of objection were filed and they included the following: "That Bradley Ernest Clift being a person directly or indirectly interested in the application or in the business, or the profits of the business, to be carried on pursuant to the licence if the application is granted is not a fit and proper person to be so interested PARTICULARS 1 That he failed to disclose the fact that other persons, namely, Durnhouse Pty Limited, Michael John Gordon, Wolfgang Niebsch and Allan Thompson, are persons directly interested in the application or in the business, or the profits of the business, to be carried on pursuant to the licence if the application were granted. 4 That he permitted the application to proceed without the existence of the said interest of the other interested persons being disclosed to the Court. 6 That he has falsely stated in an affidavit tendered on the hearing of the application and in sworn oral evidence before the Court that he is the only personal financially interested in the application..." A further objection is as follows: "That each of Durnhouse Pty Limited, Michael John Gordon, Wolfgang Niebsch and Allan Thompson being a person directly or indirectly interested in the application or in the business, or the profits of the business, to be carried on pursuant to the licence if the application is granted is not a fit and proper person to be so interested. PARTICULARS 1 That he conspired with the other interested persons to conceal from the Court the interest of the interested persons, other than Bradley Ernest Clift, in the application or in the business, or the profits of the business, to be carried on pursuant to the licence if the application is granted." A reading of the transcript of proceedings of 3 and 5 October indicates that on that occasion it had been made apparent - indeed perhaps brutally apparent - that the suggestion that was being made on the part of the objectors was that Mr Clift was setting out to mislead the Licensing Court in his statements and in his evidence that he and he alone was the person who was interested in the proposed business to be carried on at the Cherrybrook Shopping Centre. 4 UNREPORTED JUDGMENTS The cross-examination was conducted upon the basis that the other people interested included his father-in-law, Mr Gordon, although it is true to say that a wider suggestion was being made to the effect that other persons who had previously been interested in the business of Mac's Liquor Pty Limited were also interested in the proposed new business. That approach is reflected in the grounds of objection quoted above and in the particulars of those grounds of objection. In my view, however, it was perfectly clear that the substance of the allegation that was being made by the objectors was that Mr Clift, who was undoubtedly a person interested in the proposed licence, was not a fit and proper person and that the reason why that conclusion should be reached by the Licensing Court was that he had set out to mislead the Court in relation to the question of the identity of the person or persons having an interest to be carried on pursuant to the proposed licence. Furthermore, it was at all times made perfectly clear that part of the suggestion that was being made was that Mr Gordon had an interest in the proposed business and that, furthermore, Mr Gordon for his part was not a fit and proper person because he also was setting out to conceal from the Licensing Court the existence of his interest. That this was obvious to all concerned, including Mr Gordon, appears from the terms of an affidavit by Mr Gordon himself sworn on 21 February 1990. In that affidavit he gave evidence concerning the history of his association with the proposed application and he made the following statement: "11 I have no financial interest in the said application. Not does my family company. 14 Tam aware that Bradley Ernest Clift has purchased an off licence (retail) at Mascot and has made an application to this court for the grant of removal of such licence to Cherrybrook. Neither Durnhouse Pty Limited or myself are financially interested in that purchase or application." In those circumstances it seems to me to be impossible to conclude that either Mr Clift or Mr Gordon could have been taken by surprise by any suggestion later made, either in the course of evidence or argument before the Licensing Magistrates or in the judgment of the Licensing Magistrates, that Mr Gordon had an interest in the proposed business or that Mr Clift was not the only person who had an interest in the proposed business. The matter came on again for hearing before the Licensing Magistrates in April 1980. The learned magistrates ultimately accepted the submission put on behalf of the objectors that Mr Gordon had an interest in the proposed business an that Mr Clift was not the only person having an interest in the proposed business and, further, that both Mr Clift and Mr Gordon had set out to mislead the Licensing Court in relation to those matters and for that reason were not fit or proper persons. It is unnecessary for purposes of this appeal to go into the full detail of the evidence that emerged in relation to that subject matter or the reasoning of the Licensing Magistrates upon that evidence. It suffices to say that the magistrates found the following facts. First, they found that early on there had been a conversation between Mr Gordon and a lady who was involved with the Cherrybrook Shopping Centre in the course of which Mr Gordon had made a statement to the effect that either he or he and some other persons were the persons who were contemplating carrying on the proposed business. Further, it was found that Mr Gordon was a person very experienced in this type of business and his son-in-law, Mr Clift, was a person who had no experience. Mr Clift had URJ MARSH and ORS v CLIFT and ORS (Gleeson CJ) 5 been unemployed for some time and there was considerable evidence as to the extent of his financial resources. Ultimately, the magistrates concluded, on the basis of the evidence before them, that the whole of the funds for the purchase and operation of the proposed business were to be provided to Mr Clift by Mr Gordon and that the practical day to day operation of the business was put in the hands of Mr Gaskin and Mr Gordon and that Mr Clift was to have no part in it. Reference has already been made to the circumstance that Mr Gordon, by reason of the restrictive covenant into which he had entered, had a reason to wish to conceal the existence of his interest in the proposed business. Further, the learned magistrates found that, in a number of particular respects, evidence that had been given by Mr Clift and Mr Gordon before the Licensing Court and in relation to the applications in question was incorrect and misleading. In those circumstances it was concluded as a fact that Mr Gordon had an interest in the proposed business, that Mr Clift was not the only person who had an interest in the proposed business, and that both Mr Clift and Mr Gordon were persons who were not fit and proper persons, and the applications were dismissed. When the matter came on for hearing before Mr Justice Newman the principal argument advanced on behalf of Mr Clift was to the effect that he had been kept in the dark about significant matters relevant to the allegations that were being made against him and that formed the basis of the conclusion of the Licensing Magistrates. For my part I would have thought that, far from being kept in the dark, Mr Clift and his legal advisers had been shown a fairly clear light. However, it was argued - and indeed successfully argued - before Mr Justice Newman that Mr Clift and his legal advisers had been lulled into some kind of sense of false security by the statement made by the Chairman of the Magistrates on 5 October 1989, which I have already quoted. This argument seems to have been coupled with the suggestion that the basis upon which the magistrates reached their conclusion that Mr Gordon had an interest in the proposed business and, consequently, that Mr Clift and Mr Gordon had set out to mislead the Licensing Court, was merely that Mr Gordon was providing the funds for Mr Clift's purchase of the business. In my respectful opinion this argument does not do justice either to the observation that was made by the Chairman of Magistrates on 5 October 1989 or to the reasons of the Licensing Magistrates. As to the reasons of the Licensing Magistrates, it is evident, I consider, that they were not intending to suggest that the mere fact that Mr Gordon was providing the funds for Mr Clift's proposed business operations, of itself and without more, produced the consequence that Mr Gordon had an interest in the business. The summary that I have earlier given of the reasons for the conclusion of the magistrates demonstrates that, as they saw the case, there was a great deal more to it than that. Nor do I understand the Chairman of Magistrates to have been indicating on 5 October 1989 that Mr Clift need have no concern about the suggestion that Mr Gordon had a financial interest in the proposed business and need only be worried about the suggested involvement of the two other persons named by the learned Chairman. The fact that Mr Gordon, and I infer Mr Clift, certainly did not at the time understand the Chairman of Magistrates to be saying so is fully demonstrated by the terms of the affidavit of Mr Gordon sworn 21 February 1990 to which reference has already been made. Furthermore, if any such impression had been created it would have been dissipated by the terms of the objections which were ultimately lodged. I understand the Chairman's remark to mean nothing more than that he would not for his part have been troubled merely by information to 6 UNREPORTED JUDGMENTS the effect that Mr Gordon was providing the funds to his son-in-law for the purchase of the proposed business. However, I understand the Chairman's remark to mean, or to signal, that, on the evidence before the Licensing Court, there appeared to be a good deal more to it than that. Mr Justice Newman's decision in favour of the first respondent upon this point seems to me to have been based upon, what I would respectfully regard as, too narrow an interpretation of the Chairman's remark. Further, as I have already indicated, the grounds of objection when ultimately filed were wide enough to comprehend the point that was ultimately accepted by the magistrates. It does not seem to me to advance the case of the first respondent that the allegation of the extent of other interests in the proposed business, in addition to that of Mr Gordon, was wider than that ultimately accepted by the magistrates. I consider that both Mr Clift and Mr Gordon were well and truly on notice of the proposition that it was being alleged that at least Mr Gordon had an interest and that, for that reason, both Mr Clift and Mr Gordon had attempted to mislead the Licensing Court and were, therefore, not fit and proper persons. I should add, having regard to one reference to authority that was made on behalf of the first respondent, that this was never a case in which it was suggested that Mr Clift or Mr Gordon were not fit and proper persons because they had been found out in some collateral and relatively minor inaccuracy in their evidence. This is a case in which the suggestion was based upon an allegation that they had set out to conceal from the Licensing Court a matter of obvious significance for the application and that they had given evidence in that regard which was incorrect and which related to subject matters about which they could hardly have been mistaken. In my view there was no denial of natural justice in the event that occurred and the appeal against the decision of Mr Justice Newman, in that respect, should be allowed. It becomes necessary, then, to consider the matter which was the subject of the cross-appeal and notice of contention. It was argued on behalf of Mr Clift in this Court that the Licensing Magistrates erred in law in their process of decision-making on the question of whether Mr Gordon had an interest in the proposed business and also on the question of whether Messrs Clift and Gordon were persons who were not fit and proper persons. In relation to the second matter it seems to me that if the magistrates were correct in their conclusions of fact as to the interest of Mr Gordon, then it was well open to them to conclude that Mr Clift and Mr Gordon were not fit and proper persons. The reasons for that follow from what I have recently stated. The question of whether or not Mr Clift was the only person with an interest in the proposed application or business and the related question of whether Mr Gordon had an interest in it, was the principal subject that was litigated in the proceedings in the Licensing Court, and was a matter of clear significance in relation to the question of whether a licence should be granted. If the magistrates were correct in concluding that Mr Clift and Mr Gordon had set out to mislead them upon that subject matter then, as I have said, it was well open to conclude they were not fit and proper persons. I see no error of law in that aspect of their reasoning. The reasoning of the learned magistrates on the question of whether Mr Gordon had an interest in the proposed business has been criticised upon the following grounds. Having recited at some length the facts, which I have stated in summary form above, the magistrates quoted a passage from the judgment of Mr Justice Moffitt in Delaney v Boyling (1967) 86 WN (NSW) 241. There Mr URJ MARSH and ORS v CLIFT and ORS (Gleeson CJ) 7 Justice Moffitt was dealing with a subject somewhat different from that which arose in the present case. His Honour was dealing with the question of the significance to be attached to a conclusion that in the case of an application for a particular licence a particular individual had an interest. His Honour pointed out that, when it came to a discretionary decision on the question whether the existence of that interest should lead to a refusal to grant the licence, it would be material to look at the question of the extent of the control or influence that the interested person would have over the business to be conducted pursuant to the licence. In the present case, having quoted that passage at some length, the Licensing Magistrates expressed their conclusion about the matter of interest in a way which I am bound to agree is capable of being interpreted as meaning that they thought that the question which Mr Justice Moffitt regarded as a question subsequent to the resolution of the issue of interest was to be treated as a question anterior to the resolution of the question of interest. There is, I believe, some force in the criticisms that have been addressed to the method of expression of their reasons by the magistrates in this regard. However, having considered the evidence and the reasons of the magistrates as a whole, I am ultimately not persuaded that they fell into any material error of law. The matter of control is one which may have significance in a case such as the present in a variety of ways. It is true that it has the potential significance discussed by Mr Justice Moffitt in the case earlier mentioned. However, in a case such as the present it has another and different significance which is of a factual or evidentiary nature. Where there is a dispute in a particular case as to whether or not a person has an interest in a business or a proposed business then, depending upon the facts and circumstances of the case, the control that is being exercised, or will be exercised, by that person in relation to the business may be relevant to a determination of the question whether an interest exists. It is easy to think of examples of forms of association or connection between a person and a business that might, or might not, amount to an interest in the business, depending upon whether or not the associated or connected person has control of, or in relation to, the business, and depending upon the degree of such control. There are many commercial situations in which control is at least as important as ownership. The fact and degree of control that exists in a particular case may well be of evidentiary or factual significance in deciding whether there exists in a particular person an interest in a business. The present case seems to me to be such a case. Furthermore, it is to be borne in mind that the magistrates were confronted with a situation in which there was evidence from which they could properly infer that Mr Gordon had an interest in the business or proposed business in question but where the precise nature and extent of that interest may well have been something that would be defined by a private arrangement between Mr Clift and Mr Gordon. Mr Clift and Mr Gordon for their part were denying that there was any interest of any kind. It was for the magistrates to deal with those issues of fact and I express no opinion on whether or not the resolution of those issues of fact by the magistrates was correct. I am of the view, however, that the conclusions that they reached were open to them on the evidence that was before them. In those circumstances they were justified in concluding that Mr Gordon had an interest in the business, or the proposed business, although they may well have concluded that it was impossible for them to reach any concluded view as to the precise nature and extent of that interest. 8 UNREPORTED JUDGMENTS I do not consider that there has been shown to be an error of law of the kind suggested on the part of the first respondent. I would propose that the appeal be allowed, that the orders and directions made by Mr Justice Newman be set aside, and that this Court should order that the summons be dismissed and that the cross-appeal should be dismissed. The first respondent should pay the appellant's costs of the appeal and the cross-appeal and should also pay the costs of the appellants in the proceedings at first instance. I would propose there be no order as to the costs of the Metropolitan Licensing Inspector either before Mr Justice Newman or in this Court. Kirby P I agree. Samuels JA I also agree. The orders of the Court will be as stated by Gleeson J, (Judge 1). Counsel for Appellant: A G Whealy QC with L Gyles Counsel for Ist Respondent: W J Holt QC with I A N Lawry Counsel for 3rd Respondent: D Cowan Solicitors for Appellant: Phillips Fox Solicitors for 1st Respondent: Connery and Partners Solicitors for 3rd Respondent: H K Roberts, Crown Solicitor