International Hotel Limited v McNally [1940] HCA 26

Pov

C1366) 754 SASR 12

H.C. or A.

1940. eae; ADELAIDE,

Sept. 17, 18.

MeEvBourNE, Oct. 11.

Rich J., Starke, e, Dixon,

McTiernan JJ.

HIGH COURT

[HIGH COURT OF AUSTRALIA.)

INTERNATIONAL HOTEL LIMITED APPELLAN APPELLANT, AND McNALLY REsPonpeEnt. REsPONDENT,

ON APPEAL FROM THE SUPREME COURT OF SOUTH AUSTRALIA.

Liquor—Licensing—Limited-company licensee—Manager " deemed" to be Ti —Forfeiture of licence—Forfeiture "if any person holding a licence is . . convicted" —Commission by manager of offence involving forfeiture—Change of manager between date of offence and date of conviction—Licensing Act 1932-1936 (S.A.) (No. 2102—No. 2303), secs. 7 (2), 85*—Acts Interpretation Act 1915- 1936 (S.A.) (No. 1215—No. 2293), sec. 22.*

Secs. 77 (2) and 85 of the Licensing Act 1932-1936 (S.A.) do not author the forfeiture of a licence unless the person holding or deemed to be holding the licence has within three years been convicted three several times of offen for which a licence is liable to be forfeited.

Pursuant to the Licensing Act 1932-1936 (S.A.) a limited company was th holder of a publican's licence in respect of a hotel. M. had been approved by the Licensing Court as manager of the licensed premises for the purposes the Act, and was accordingly, under sec. 85 (3) of the Act, deemed to be

* The Licensing Act 1932-1936 (S.A.)

provides :—By sec. 77 (2): "Tf any person holding a licence is within a period of three years convicted three several times of" certain " offences ; the special magistrate or jus- tices by whom that person is convicted for the third offence or the court shall declare the licence to be forfeited." By sec. 85:—'(1) A company incor- porated 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

pany shall submit to the court the of a'person as its manager of the lie premises. The licence s state the manager's name, and approval in writing of the special ma trate constituting the court shall necessary before any change of manag will be recognized for the purposes this Act. (3) For the purposes of th Act the manager of the licensed pre ises shall be deemed to be the person licensed in respect of the premises or the holder of the licence thereof; an

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holder of the licence. M. was within three years convicted three several times H. C. or A.

* of offences for which a licence was liable to forfeiture under sec. 77 (2) of the Act, but, although the third offence was committed while he continued as manager, he was not convicted for that offence until after he had ceased to be

1940. he

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manager and a new manager had been appointed and approved by the Licensing Hore, Lrp.

Court.

Held that, as at the time of the third conviction M, had, with the approval of the court, ceased to be manager, he was no longer deemed to be licensee and the licence could not be forfeited by reason of his conviction.

Decision of the Supreme Court of South Australia (Full Court): Inter- national Hotel Ltd. v. McNally, (1940) 8.A.S.R. 21, reversed.

Appar from the Supreme Court of South Australia.

International Hotel Ltd. was the holder of a publican's licence in respect of the International Hotel at Port Pirie. It held this licence pursuant to the Licensing Act 1932-1936 (S.A.). On 30th August 1933 one Mullins was duly approved as manager of the licensed 'premises on behalf of the company. He continued as manager until 18th September 1939. On that date one Morris was approved as 'manager of the licensed premises by the special magistrate con- stituting the Licensing Court, and he thereafter acted as such 'manager. During Mullins's term as manager, he committed three offences which were of such a kind as to render a licence liable to forfeiture under sec. 77 (2) of the Act. He was convicted of the first two offences on 23rd September 1938 and 8th February 1939 respectively. In respect of the third offence, which was committed con 17th July 1939, he was convicted on 3rd October 1939. The substitution of Morris for himself as manager of the hotel thus occurred between the commission of the third offence and the date of the conviction of Mullins therefor.

The Licensing Court declared the licence to be forfeited under sec. 77 (2) of the Act, and, on an appeal by the company, the Full 'Court of the Supreme Court of South Australia held that the licence was liable to forfeiture for the commission of the three offences,

- notwithstanding that the conviction for the third offence occurred

licensed beens or the premises in Act, and every provision or enactment ae which he is licensed or holds thereof, shall be deemed to be remedial, a (4) In addition to the man- and shall accordingly receive such fair, = the company shall be liable to pay large, and liberal construction and amount of any fines or penalties interpretation as will best ensure the _ incurred or inflicted in consequence of attainment of the object of the Act _ any offence upon the licensed premises and of such provision or enactment, against this Act." according to their true intent, meaning, Sec. 22 of the Acts Interpretation Act and spirit." 1915-1936 (S.A.) provides: "Every

v. McNay.

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HIGH COURT [1940

after the manager's dismissal : International Hotel Ltd. v. McNalh

(1). From this decision the company appealed to the High Court.

Travers (with him J. E. Kelly), for the appellant. In Roenfeldi vy. Flecker (2) it was held that a limited company could not hold a licence under the Licensing Act of South Australia then in force A company was empowered to hold a licence by the amending Act of 1908, which contained the equivalent to the present sec. 8). Sec. 77 or its equivalent dates back to 1859. Having regard to th history of the legislation, secs. 77 and 85 do not have to be rea together. Moreover, without sec. 77, there are adequate sanction:

(4), 76 (2) (a), (6). For a valid forfeiture it is necessary, first that there is at the time of forfeiture an existing licence, a secondly, that a person has been thrice convicted while he held licence. In this case, when forfeiture was declared, an unconviet manager of an unconvicted company was holding the licence. a limited company cannot be prosecuted for licensing offences, it cannot be a person three times convicted within the meaning of sec. 77 (2). If it can be prosecuted, the answer to the forfeiture here is that it has not been. The manager is deemed to be holder of the licence, and forfeiture on account of his convictions merely forfeits what he is deemed to hold : See secs. 77 (4), 51, 66. In fact no forfeiture was ordered against Mullins. He would not be disqualified, because no order for forfeiture was made against him. On the true construction of sec. 77 (2), for a forfeiture to be effective the manager must be manager at the time of each convic- tion. Sec. 79 shows that, if manager B were to succeed to the convictions of manager A, the Act would have expressly said so. The Supreme Court of South Australia held on the authority of Coppen v. Moore (No. 2] (3) that the company was not liable to conviction for acts of its manager. It is submitted that it is a fortiori regarding forfeiture of the licence. If the company is othe responsible for penalties, sub-sec. 4 of sec. 85 is superfluous. however, that sub-section is necessary to render the company

licence is subject to forfeiture under that section. [He also referre to Mellor v. Lydiate (4); Pharmaceutical Society vy. London Provincial Supply Association Ltd. (5).]

(1) (1940) S.A.S.R. 21. (4) (1914) 3 K.B. 1141, at pp. 1153, (2) (1903) S.A.L.R. 136. 1160, (3) (1898) 2 Q.B. 306. (5) (1880) 5 App. Cas. 857.

64.C.L.R.] OF AUSTRALIA.

Hannan K.C. (with him Pickering), for the respondent. It is unlikely that the legislature intended to confer on a company licensee any greater immunity than that enjoyed by a physical licensee. "For the purposes of this Act" in sec. 85 (3) refers to the kind of provision, mostly contained in Part VI. of the Act, which relates to tights, duties and liabilities of licensees. Sec. 85 makes it clear that the licence and the business are the company's. Sec. 57 and a number of other sections which refer to the licensee must refer to the company. " Person holding a licence" in sec. 77 (2) means the company, but, Mullins being deemed to be the licensee, the company's licence becomes vulnerable because of his three convic- tions. The company comes within sec. 77 (2) because Mullins, qua manager, has been thrice convicted. There is only one licensee, the company, and three indorsements have been made on the 'company's licence pursuant to sec. 257. This is the rational construction ; any other construction would confer on a company licensee immunity from forfeiture for three convictions. At the least, sec. 77 (2) is satisfied by three convictions of persons deemed to be the holder of the licence at the time of the offence. The company is vicariously liable for the offences committed by its manager so as to make the licence subject to forfeiture (Acts Inter- pretation Act 1915-1936 (S.A.), sec. 22).

Travers, in reply. Sec. 77 (2) is so ambiguous that it ought to be construed against forfeiture (R. v. Adams (1); Bond v. Denton (2)).

Cur. adv, vult.

The following written judgments were delivered :—

Ricu J. 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

(3), 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 (4) ).

(1) (1935) 53 CLR. (2) (1933) . R.

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Rich J.

HIGH COURT

"The word 'deemed ' introduces an artificial definition which, in my view, is only intended to be applied as long as the condition: exist to which it is intended to apply " (per Sankey L.J., as he then was, in Leitch v. Emmott (1) ). Now, what are the conditions in the instant case? The admitted facts are that one Mullins

allen by another manager duly approved by the Licensing Court By sec. 85 (3) the manager of an incorporated company is to b

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."

For these reasons I think the appeal should be allowed.

Starke J. The North-Eastern Licensing Court of South Austra i made an order that the licence of the International Hotel Ltd should be forfeited. An appeal is now brought to this court

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 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 forfeit under the Act, ae on 23rd September 1938, 8th Feb

manager of the licensed premises, and on 18th September 1939 one: Morris was approved by the special magistrate constituting court and thereafter acted as manager of the hotel.

The question depends upon the interpretation of some con! sections in the Licensing Act 1932-1936 of South Australia. sec. 77 (2) it is provided that, if any person holding a licence is with a period of three years convicted three several times of certa

(1) (1929) 2 K.B, 236, at p. 248.

64 C.L.R.] OF AUSTRALIA.

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 Jaw 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 H.C. or A.

1940. wg INTER.

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Starke J

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"?- manager could not bring it within the words of the section, for it

HIGH COURT [194

penalties incurred or inflicted in consequence of any offence up the licensed premises against the Act.

The question comes back to sec. 77. The company was t holder of the licence, but even a vicarious responsibility for it

was never convicted. i

That leaves for consideration the question whether a perso1 deemed to be holding the licence was, within a period of three years convicted three several times of offences for which a publi licence is liable to forfeiture. If such a person were so convicted, there is no difficulty in concluding that the licence of the hotel i forfeited, for the licence is, for the purposes of the section, his, deemed to be his, licence. The learned judges of the Suprem 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 court to declare the licence forfeited " if the person holding," which includes a person "deemed to be holding," the licence, was con victed within the prescribed period three several times of offences for which a licence is liable to forfeiture. Mullins, the forn manager, however, was not within a period of three years convicted three several times of offences for which a licence was liable to for feiture. He had ceased to be the manager and to hold or to bi deemed to hold the licence before the third conviction. The con- ditions prescribed for the declaration of the forfeiture of the hotel licence did not therefore exist. The words of the Act itself are th only guide to its " true intent, meaning, and spirit," and that must especially be so in the case of forfeiture of publicans' and othe1 licences. 4

The appeal should be allowed.

Drxon J. The judgment under appeal affirms an order of Licensing Court which adjudges that the publican's licence held by the appellant company in respect of the premises called the Inter national Hotel at Port Pirie should be forfeited. The ground of the forfeiture is that the person who was the approved manager of th hotel was convicted three several times of offences for which, unde the Act, a licence is liable to forfeiture. In fact he was so convicte 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.

64 C.L.R.] OF AUSTRALIA.

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 com- panies 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 a 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 H.C. or A.

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under the Act. It is to be found in sub-sec. 2 of sec. 77 and j expressed as follows: "If any person holding a licence is wi a period of three years convicted three several times of such offence as aforesaid, the special magistrate or justices by whom that person is convicted for the third offence or the court shall declare the lice to be forfeited." The reference in the expression " such offences is to the offences described in the preceding sub-section, whid confers a discretion to forfeit the licence of a person convicted twi 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-see. 8, Though sub-sec. 2 might appear to require the special magistrate or justices when convicting to forfeit the licence, the ensuing sub- sections 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 onl the variety of the consequences flowing from the provision but the difficulty of many of its suggested applications, the precise probl

sec. 77 than by an attempt to determine the general scope of the former sub-section. If this course is pursued, it will, I thi appear clearly that a company holding a licence under sec. 85 ( 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 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 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. 7 (2) is deemed to hold i 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 10 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"

64 C.L.R.] OF AUSTRALIA.

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 com- pulsory 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. Sees. 5b (1) and 56 (4) (b) confirm the view that no such consequence is intended. Among the objections open to a proposed transfer, sec. 5D (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

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pany in law suffered the convictions. In aid of this argument sec. of the Acts Interpretation Act 1915-1936 was relied upon as req

the court to give " such fair, large, and liberal construction and inter-

applied to sec. 77 (2). The basis of the former provision is 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 persis ence in offending. But in any case I do not think that the legislation should be given the operation contended for by the complainant. I think the appeal should be allowed.

McTiernan J. I agree that the appeal should be allowed.

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 incor- porated company, but because the conditions which that sub-section requires to support a declaration of forfeiture were not fulfilled in the present case. PD

The first question is whether the condition that the person con- victed 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).

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64 C.L.R.} OF AUSTRALIA.

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

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when he was the appellant's manager and, therefore, at such times McNa

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

McTiernan J

36 HIGH COURT in

H.C. or A. Licensing Court to the Supreme Court cba South Australia allowed. Respondent to p — ; ane the costs of the appeal to the Supreme Co

NATIONAL of South Australia to the appellant with

sore Len: twenty-one days of the taxing

McNauy. certificate or allocatur. Order of the s

ey magistrate of the Licensing Court set aside Solicitors for the appellant, Kelly, Hague & Travers. c

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