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K-Generation Pty Ltd & Anor v Liquor Licensing Court & Anor [2007] SASC 319

30 August 2007 Supreme Court of South Australia - Full Court

This version of the judgment has been prepared by: Dr Robert N Moles and Bibi Sangha
Underlining where it occurs is for editorial emphasis]

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Gray J - dissenting judgment (part one)

Introduction

At issue on this application for judicial review is the proper construction of section 28A of the Liquor Licensing Act 1997 (SA). Broadly, section 28A enacts that “criminal intelligence” is not to be disclosed to any person other than the Liquor and Gambling Commissioner (the Liquor Commissioner), the Licensing Court of South Australia (the Licensing Court), or the Supreme Court of South Australia. The section authorises the Commissioner of Police to place undisclosed evidence before the Liquor Commissioner and the Licensing Court and have it acted on without there being disclosure of that material at any time to the other parties to the proceedings. The terms of section 28A are discussed in detail later in these reasons.

The plaintiffs, K-Generation Pty Ltd and Genargi Krasnov, seek to review a decision of the first defendant, the Licensing Court, which affirmed a decision made by the Liquor Commissioner refusing the grant of a licence. The plaintiffs complained that they were denied procedural fairness at both hearings. It was said that information that was taken into account in refusing the application for a licence was withheld from the plaintiffs. The plaintiffs further submitted that if the legislation allowed this breach of procedural fairness, then the section that permitted the breach is constitutionally invalid.

Initially, the second defendant, the Commissioner of Police, was not represented at the hearing before this Court but agreed to abide by the decision. However, in the course of the hearing submissions were advanced on behalf of the Commissioner of Police.

The first question arising is whether section 28A operates to exclude the right to procedural fairness at hearings before the Liquor Commissioner, the Licensing Court and before this Court on hearing appeals or reviews. In the event that procedural fairness is excluded, a second question arises. Does the section infringe the Australian Constitution, and in particular the constitutional protections identified in Kable v Director of Public Prosecutions (NSW)? (1996) 190 CLR 51. More particularly, does section 28A require a State court to act in a manner which has the potential to result in a serious denial of natural justice, is antithetical to the judicial process, and so is incompatible with the institutional integrity of the State courts required by Chapter III of the Constitution?

The observations of a number of High Court judges would suggest that Chapter III of the Constitution entrenches procedural fairness at both a state and federal level. Other judges have taken the view that the question remains open - Thomas v Mowbray [2007] HCA 33. However, even if procedural fairness is entrenched a question remains as to what extent. Some aspects of the procedural fairness hearing rule that have support as being entrenched are a party’s right to know what that party has been charged with, the right to know what evidence has been put against that party, and the right to know a court’s reasons for its decision. At issue in this case is whether a State court, with the capacity to exercise federal jurisdiction, can make a decision affecting the rights and interests of a party while keeping the basis of the complaint, adverse evidence, and reasons for decision wholly secret.

It is convenient at the outset to set out the terms of section 28A:
(1) No information provided by the Commissioner of Police to the [Liquor] Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence.
(2) If a licensing authority –
(a) refuses an application for a licence, the transfer of a licence or an approval, or takes disciplinary action against a person, or revokes or proposes to revoke an approval under Part 4 Division 10A; and
(b) the decision to do so is made because of information that is classified by the Commissioner of Police as criminal intelligence,  the licensing authority is not required to provide any grounds or reasons for the decision other than that to grant the application would be contrary to the public interest, or that it would be contrary to the public interest if the person were to be or continue to be licensed or approved, or that it would be contrary to the public interest if the approval were to continue in force.
(3) If the Commissioner of Police lodges an objection to an application under Part 4 because of information that is classified by the Commissioner of Police as criminal intelligence –
(a) the Commissioner of Police is not required to serve a copy of the notice of objection on the applicant; and
(b) the licensing authority must, at least 7 days before the day appointed for the hearing of the application, advise the applicant in writing that the Commissioner of Police has objected to the application on the ground that to grant the application would be contrary to the public interest.
(4) If the [Liquor] Commissioner or the Commissioner of Police lodges a complaint under Part 8 in respect of a person because of information that is classified by the Commissioner of Police as criminal intelligence, the complaint need only state that it would be contrary to the public interest if the person were to be or continue to be licensed or approved.
(5) In any proceedings under this Act, the [Liquor] Commissioner, the [Licensing] Court or the Supreme Court –
(a) must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of information classified by the Commissioner of Police as criminal intelligence, including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives; and 
(b) may take evidence consisting of or relating to information classified by the Commissioner of Police as criminal intelligence by way of affidavit of a police officer of or above the rank of superintendent.
(6) The Commissioner of Police may not delegate the function of classifying information as criminal intelligence for the purposes of this Act except to a Deputy Commissioner or Assistant Commissioner of Police.

The Liquor Licensing Act, in section 4, defines “criminal intelligence” as: Information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement.

Background

In October 2005, K-Generation applied for an entertainment venue licence pursuant to section 31(2)(d) of the Liquor Licensing Act. That section relevantly provides:
(1) A licence authorises the licensee to sell and supply liquor in accordance with the terms and conditions of the licence.
(2) Licences are to be of the following classes: … (d) entertainment venue licence;

The Commissioner of Police intervened before the Liquor Commissioner and before the Licensing Court, pursuant to section 75A of the Liquor Licensing Act. The Commissioner of Police produced evidence that had been classified as criminal intelligence under section 28A of the Liquor Licensing Act. The plaintiffs were not provided with any of the criminal intelligence.

The plaintiffs’ application was heard by the Liquor Commissioner on 20 December 2006. The decision not to grant the application was made on 17 January 2007. The plaintiffs sought a review of the Liquor Commissioner’s decision by the Licensing Court. The review was in the nature of a rehearing, pursuant to section 22(4) of the Liquor Licensing Act. Section 22 provides:
(1) A party to proceedings before the [Liquor] Commissioner who is dissatisfied with a decision made by the [Liquor] Commissioner in the proceedings may apply to the [Licensing] Court for a review of the [Liquor] Commissioner’s decision. ...
(4) A review is in the nature of a rehearing.
(5) On a review, the [Licensing] Court may exercise any one or more of the following powers:
(a) affirm, vary or quash the decision subject to the review;
(b) make any decision that should, in the opinion of the [Licensing] Court, have been made in the first instance;
(c) refer a matter back to the [Liquor] Commissioner for rehearing or reconsideration;
(d) make any incidental or ancillary order.

The hearing by the Licensing Court occurred on 8 and 12 February 2007. The plaintiffs were not provided with any of the criminal intelligence. On 12 February 2007 the Licensing Court affirmed the decision of the Liquor Commissioner.

The Proceedings

As earlier observed the plaintiffs have now sought judicial review of the Licensing Court’s decision, contending that they were denied procedural fairness, that the Liquor Licensing Act did not allow this denial, and in the alternative that section 28A is constitutionally invalid insofar as it does allow a breach of procedural fairness. The plaintiffs claimed the following relief:  
A declaration that the provisions of section 28A of the Liquor Licensing Act 1997 (SA) are invalid in so far as they impermissibly interfere with the exercise by the [Licensing Court ] of the judicial power of the Commonwealth.
A declaration that [Licensing Court], in affirming the decision of the [Liquor Commissioner] dated 17 January 2007, failed to observe the requirements of procedural fairness.
A declaration that the decision of the [Licensing Court] made on 12 February 2007 affirming the decision of the [Liquor Commissioner] made on 17 January 2007 refusing the application of [K-Generation] for an entertainment venue licence on the ground that to grant the application would be contrary to the public interest is void and of no effect.
An order for judicial review in the nature of certiorari quashing the decision of the [Licensing Court] made on 12 February 2007 affirming the decision of the [Liquor Commissioner] made on 17 January 2007 refusing the application of the [K-Generation] for an entertainment venue licence on the ground that to grant the application would be contrary to the public interest.
An order for judicial review in the nature of mandamus compelling the [Licensing Court] to consider [K-Generation’s] appeal from the decision of the [Liquor Commissioner] made on 17 January 2007 according to law.

The matter was referred to this Full Court for hearing and determination. At the hearing, affidavits were received by consent. They included 3 affidavits of Mr Krasnov. The Licensing Court tendered affidavits from an executive solicitor for the South Australian Police, an assistant Commissioner of Police, the Liquor Commissioner and an officer of the Police Prosecution Services Branch. The affidavits set out the facts relevant to these proceedings. There was no application to cross-examine any deponent. The undisclosed criminal intelligence in evidence before the Liquor Commissioner and the Licensing Court was not tendered in the proceeding in this Court.

The Scope of Judicial Review

Rules 199-201 of the Supreme Court Rules 2006 (SA) provide for judicial review by this Court. An order for judicial review is defined to include an order setting aside the decision of another court or tribunal that has a duty to act judicially because of error, absence of jurisdiction, failure to observe the requirements of natural justice or fraud. Judicial review is intended to replace the former prerogative remedies including certiorari.

When considering an application for an order in the nature of certiorari the court may have regard to the record of the tribunal including any reasons incorporated into that record Craig v State of South Australia (1995) 184 CLR 163. Rule 200(7) provides that claims for other relief may be included in proceedings for judicial review and the rule provides as an example, a claim for declaratory relief. This sub-rule would appear to permit declarations being sought in aid of judicial review as well as declarations being sought pursuant to the provisions of section 31 of the Supreme Court Act 1935 (SA) Manna Hill Resources Pty Ltd v South Australia (2001) 82 SASR 18.

The Facts

Before coming to discuss the issues arising in the application, it is necessary to record a number of factual findings. These findings are made on the basis of the affidavit evidence.
K-Generation is the trustee of the Krasnov Family Trust. Mr Krasnov is the sole director of K-Generation and a beneficiary of the trust. K-Generation is the registered proprietor of a business named Sky Lounge KTV. Mr Krasnov was earlier approved by the Office of the Liquor Commissioner as a responsible person and licensee of the Sweet Chilli Restaurant and the La Sing Karaoke Bar. Those licences span the period from 1995 to 2002. Mr Krasnov relinquished both licences on the sale of the businesses.

On 20 October 2005, K-Generation lodged its application for an entertainment venue licence. Previously, Mr Krasnov had completed a personal information declaration form in support of the application. The affidavits filed by the Licensing Court disclose that Judith Jefferson, the executive solicitor for the South Australian Police, was present when the Assistant Commissioner, Madeleine Glynn, was shown two files – PCO file 3522/06 and PCO file 3523/06. Ms Jefferson observed Assistant Commissioner Glynn look at both files. She then handed them to Ms Jefferson. Ms Jefferson retained custody of both files until they were produced to the Liquor Commissioner.

Assistant Commissioner Glynn considered the information in the two files on 26 April 2006. She classified the information contained within the two files as criminal intelligence within the meaning of the Liquor Licensing Act. She did so in the exercise of the function delegated to her by the Commissioner of Police by virtue of section 28A(6) of the Liquor Licensing Act. At the time of classifying the information, Assistant Commissioner Glynn was aware that the information related to proceedings before the Liquor Commissioner.

In June 2006, the plaintiffs became aware that the South Australian Police Licensing Enforcement Branch proposed to intervene in the proceedings. The plaintiffs sought the reason for intervention and were advised “it would be contrary to public interest if Mr Genargi Krasnov and Mrs Adeline Tay were approved as fit and proper persons. Section 28A of the Liquor Licensing Act 1997.”  Further requests for reasons and details were unsuccessful.

On 20 December 2006, the Liquor Commissioner conducted a hearing of the application for the entertainment venue licence. The application was refused. The following written reasons were delivered on 17 January 2007: 
K-Generation Pty Ltd as trustee for the K-Generation Unit Trust has applied for an entertainment venue licence in respect of premises … to be known as Sky Lounge K.T.V.
The application was advertised under section 52 of the Liquor Licensing Act.
The application attracted an objection from Wright Street Chambers which was settled by conciliation, the terms of the settlement being documented in order no 106036, dated 6 April 2006, copy on file.
The application also attracted an intervention from the Adelaide City Council which was resolved by agreed conditions Ex-1 (hearing 20 December 2006) and an intervention from the Commissioner of Police. The purpose of the police intervention is to introduce evidence and to make representation on the question of whether Genargi Krasnov and Adele Tay are fit and proper persons to occupy a position of authority in the proposed licensee company.
Section 56(1)(b) of the Act provides that:-
56 (1)   An applicant for a licence must satisfy the licensing authority –
(b) if the applicant is a trust or corporate entity – that each person who occupies a position of authority in the entity is a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application.
Section 55 then provides that:-
55 (1)   In deciding whether a person is a fit and proper person for a particular purpose under this Act, a licensing authority must take into consideration –
(a) the reputation, honesty and integrity (including the creditworthiness) of the person; and
(b) the reputation, honesty and integrity of people with whom the person associates.
The sole director of K-Generation Pty Ltd is Genargi Krasnov.
The unit holder of K-Generation Unit Trust is Genargi Krasnov as trustee of the Krasnov Family Trust (100 units) and the income and capital beneficiaries of The Krasnov Family Trust are Genargi Krasnov and Adele Tay (refer Schedule on pages 17 and 18 of the Trust Deed).

Section 28A of the Act provides that
(1) No information provided by the Commissioner of Police to the Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence.
Criminal intelligence is defined in section 4 of the Act to mean “information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement.”
The Commissioner of Police has provided criminal intelligence PCO File No 2006/003522 and 003523 in support of his intervention.
Section 28A(6) of the Act provides that “the Commissioner of Police may not delegate the function of classifying information as criminal intelligence for the purpose of this Act except to a deputy Commissioner or Assistant Commissioner of Police”. This information was certified as criminal intelligence by the Assistant Commissioner Crime Service.
I have considered the criminal intelligence together with the submissions made at the hearing on 20 December 2006 including the Statutory Declarations of
Woon Kit Chong Ex – 6
Lei Xiao Ex – 7
Mo Chai Yung Ex – 8
Brian Ho Ex – 9
May Siew Fou  Ex – 10
and the submission signed and dated by me 17 January 2007 (copy on file)
Section 28A(2) of the Act provides that:-
28A(2) If a licensing authority
(a) refuses an application for a licence, the transfer of a licence or an approval, or takes disciplinary action against a person, or revokes or proposes to revoke an approval under Part 4 division 10A; and
(b) the decision to do so is made because of information that is classified by the Commissioner of Police as criminal intelligence,  the licensing authority is not required to provide any grounds or reasons for the decision other than that to grant the application would be contrary to the public interest, or that it would be contrary to the public interest if the person were to be or continue to be licensed or approved, or that it would be contrary to the public interest if the approval were to continue in force.
Accordingly, I refuse the application on the ground that to grant the application would be contrary to the public interest.

The plaintiffs sought a review of the Liquor Commissioner’s decision before the Licensing Court. The review was conducted on 12 February 2007. A Judge of that Court affirmed the decision of the Commissioner. He gave ex tempore reasons as follows: 
His Honour I have located, on the Commissioner’s file, the material in relation to Mr Judd and I have read that as well. I think, in a nutshell, my view is that I would reach the same view as the Commissioner reached, to put it as simply and as quickly as I could. I have looked at the material the Commissioner looked at and quite frankly I would come to the same view.
[Counsel for the applicant]: Very well, your Honour.
His Honour: Now, I don’t particularly want to write a judgment about that but I think in a nutshell that is it and if you want to appeal against what I have just ordered or said, then feel free to do that to the extent that you are able to but I think that this is criminal intelligence. The Commissioner has refused the application, the approvals, because of criminal intelligence. [emphasis in judgment] He has indicated his reasons that it would be contrary to the public interest or he said, I should say:
I refuse the application on the ground that to grant the application would be contrary to the public interest.That is a view with which I agree but not only agreeing with him, I make my own independent assessment, that is the view that I would come to as well and indeed have come to. [emphasis added in judgment]

This review of the facts establishes that two police files were certified as criminal intelligence for the purposes of being tendered on the hearing of the application for the entertainment venue licence. The two files were tendered as evidence before the Liquor Commissioner and were also before the Licensing Court. The contents of both files were, and at all times have been, undisclosed and kept secret from the plaintiffs. It is apparent from the observations of the Liquor Commissioner and the Licensing Court that the contents of the files provided the evidence that led to the refusal of the application. Having regard to the other information put before the Liquor Commissioner and the Licensing Court, it may be concluded that there was no other basis for refusal. As a result, the plaintiffs were, and remain, unaware of the criminal intelligence, unaware of the allegations put against them, and unaware of the reason why that criminal intelligence led to the refusal of the application.

The Statutory Framework

The question of judicial review and the constitutional challenge should commence with an examination of the relevant statutory scheme. It is important to understand the pivotal role of section 28A of the Liquor Licensing Act in almost every application or process being pursued under the licensing legislation. The reach of section 28A extends to most aspects of the operation of the legislation. The Liquor Licensing Act regulates the sale, supply and consumption of liquor. The objects of the Act are set out in section 3, which provides:
(1) The object of this Act is to regulate and control the sale, supply and consumption of liquor for the benefit of the community as a whole and, in particular –
(a) to encourage responsible attitudes towards the promotion, sale, supply, consumption and use of liquor, to develop and implement principles directed towards that end (the responsible service and consumption principles) and minimise the harm associated with the consumption of liquor; and
(b) to further the interests of the liquor industry and industries with which it is closely associated – such as the live music industry, tourism and the hospitality industry – within the context of appropriate regulation and controls; and
(c) to ensure that the liquor industry develops in a way that is consistent with the needs and aspirations of the community; and
(d) to ensure as far as practicable that the sale and supply of liquor contributes to, and does not detract from, the amenity of community life; and
(e) to encourage a competitive market for the supply of liquor.
(2) In deciding any matter before it under this Act, the licensing authority must have regard to the objects set out in subsection (1).
Part 2 of the Act provides the procedures for proceedings before the Liquor Commissioner and the Licensing Court . Division 2 of Part 2 deals with the Licensing Court. Section 13 provides that “[t]he Court is a court of record”. Section 14 provides:
(1) The Court is constituted of –
(a) the Licensing Court Judge; or
(b) some other District Court Judge, or former District Court Judge, with authority to exercise the jurisdiction of the Court.
(2) The Court, separately constituted of different Judges, may sit at the same time to hear and determine separate proceedings.
“Licensing Court Judge” is defined in section 4 to mean “a District Court Judge designated by proclamation as the Licensing Court Judge”. Section 15 gives the Governor power to designate a District Court Judge as the Licensing Court Judge, and confer on other current or former District Court Judges authority to exercise the jurisdiction of the Court, and section 16 provides that the Court has the jurisdiction conferred on it by the Liquor Licensing Act or any other Act.

Section 17 outlines the division of responsibilities between the Liquor Commissioner and the Licensing Court. Where an application is contested, the Liquor Commissioner must make reasonable attempts to resolve the matter by conciliation pursuant to section 17(1)(b). If those attempts fail, the Liquor Commissioner must refer the matter to the Court unless the matter is an application for a limited licence, or the parties have requested the Liquor Commissioner to determine the application. Relevantly, section 17(2) provides that:
The Commissioner is not required to attempt conciliation in relation to an application to which an objection has been lodged by the Commissioner of Police on the ground that to grant the application would be contrary to the public interest.

Pursuant to section 21, the Liquor Commissioner may refer for hearing and determination by the Licensing Court any proceedings that involve questions of substantial public importance, any question of law that arises in proceedings before the Liquor Commissioner, and any other matter that should, in the public interest or in the interests of a party to the proceedings, be heard and determined by the Licensing Court.

Section 22 provides for reviews of the Liquor Commissioner’s decisions by the Licensing Court. As earlier observed, section 22(4) provides that those reviews are in the nature of a rehearing. Section 22(5) gives the Licensing Court power to make orders in relation to the Liquor Commissioner’s decision.

Division 5 of Part 2 of the Act deals with proceedings before the Licensing Court. Whilst these provisions require no “undue formality” and no adherence to the rules of evidence, the Licensing Court is empowered to summon witnesses and records, punish for contempt in respect of such witnesses and records, and parties may be represented by counsel. Section 23 provides:
In proceedings before the Court (under this Act or any other Act) the Court –
(a) must act without undue formality; and
(b) is not bound by the rules of evidence but may inform itself on any matter as it thinks fit.
Section 24 provides:
(1) The Court may exercise any of the following powers:
(a) by summons, require any person to attend before the Court at a time and place specified in the summons to give evidence relevant to proceedings before the Court;
(b) by summons, require the production of records;
(c) inspect records, and take copies of, or extracts from, them;
(d) require any person to take an oath or affirmation verifying evidence given, or to be given, before the Court;
(e) require any person appearing before it to answer a question put by the Court or some person appearing before the Court.
(2) A person who –
(a) having been served with a summons to attend before the Court fails, without reasonable excuse, to attend in obedience to the summons; or
(b) having been served with a summons to produce records fails, without reasonable excuse, to comply with the summons; or
(c) refuses to be sworn or to affirm, or to answer a relevant question when required to do so by the Court, is guilty of an offence. Maximum penalty: $2,500.
(3) A summons may be issued on behalf of the Court, on the application of any party to proceedings before the Court, by – (a) a Judge; or (b) the Commissioner.
Parties to proceedings may be represented pursuant to section 25. That section provides:
(1) A party to proceedings before the Court may appear in the proceedings—
(a) personally; or (b)     by counsel; or (c) if the party is a member of a genuine association formed to promote or protect the interests of a particular section of the liquor industry, or employees in the liquor industry—by an officer or employee of that association; or (d) if the party is a trust or corporate entity—by an officer or employee of the entity; or (e) with the permission of the Court—by any other person.
(2) The Commissioner of Police may be represented in proceedings before the Court by a police officer. Sections 27 and 28 provide, respectively, for appeals and referrals of questions of law from the Court to the Full Court of the Supreme Court. Section 27 provides:
(1) A party to proceedings before the Court may, with the permission of the Supreme Court, appeal against any order or decision of the Court.
(2) However, no appeal lies against—
(a) an order or decision of the Court made on a review of a decision of the Commissioner under this or some other Act; or
(b) an order or decision of the Court excluded from appeal under a provision of this or some other Act.
(3) An appeal must be commenced within the time, and in accordance with the procedure, prescribed by rules of the Supreme Court.
(4) An appeal under this section must be heard and determined by the Full Court.
(5) On an appeal under this section, the Supreme Court may—
(a) affirm, vary or quash the order or decision subject to the appeal;
(b) make any order or decision that should, in the opinion of the Supreme Court, have been made in the first instance;
(c) remit the subject matter of the appeal for further hearing by the Court;
(d) make any incidental or ancillary order.

Section 28 provides:
(1) The Court may refer a question of law to the Supreme Court.
(2) A question of law referred under this section must be determined by the Full Court.
Section 28A is set out in the introduction to these reasons.
Section 29 requires a person who sells liquor to be licensed. Pursuant to section 56, an applicant for a new licence must be a fit and proper person. The criteria for determining whether an applicant is a fit and proper person is set out in section 55. In deciding whether a person is a fit and proper person, the licensing authority must take into consideration the reputation, honesty and integrity (including the creditworthiness) of the person, and the reputation, honesty and integrity of people with whom the person associates. The terms of sections 55 and 56 are earlier set out in these reasons.

Section 43(1) gives the Liquor Commissioner and Licensing Court authority to impose licence conditions that the authority considers appropriate. Section 43(2)(c) provides that a licensing authority may impose a condition under section 43(1) on application by the Commissioner of Police.

Once an application has been made to a licensing authority, the Liquor Commissioner must provide a copy of each application listed in section 51A(1) to the Commissioner of Police. Part 4 of the Act deals with applications, interventions and objections. Part 4 deals with applications for new licences, removal of licences, transfers of licences, and the voluntary suspension and revocation of licences. Part 4 deals with all licences including hotel licences, retail liquor merchants licences, as well as entertainment venue licences. Part 4 addresses the alteration and redefinition of existing licensed premises, the extension of trading areas, and the variation of non-statutory conditions of licences. Part 4 also addresses the management and approval of crowd controllers.

Thus it can be seen that the reach of Part 4 encompasses every application and process under the Act. It also provides for the form of applications, the provision of applications to police, and the advertising of applications. It addresses the general powers and discretions of the licensing authorities. Importantly, Part 4 provides for the rights of intervention and objection including those of the Commissioner of Police.

Section 71C provides the Liquor Commissioner with power to revoke the approval of a “crowd controller”. Pursuant to section 71C(2)(a), the Commissioner must give written notice to the person of the proposed revocation, including, subject to section 28A, a statement of the reasons that the Commissioner considers justify the revocation.

The Commissioner of Police’s right to intervene is provided by section 75A: The Commissioner of Police may intervene in proceedings before a licensing authority for the purpose of introducing evidence, or making submissions, on any question before the authority and, in particular, may, if the proceedings are in connection with an application under this Part, intervene on the question of –
(a) wether a person is a fit and proper person; or
(b) wether, if the application were to be granted, public disorder or disturbance would be likely to result; or
(c) whether to grant the application would be contrary to the public interest.

Section 77(5)(d) and 77(5)(e) permit objection to applications on the grounds of “bad reputation or character” and of not being “a fit and proper person” to be licensed. Section 77 contemplates its use by the Commissioner of Police, as section 77(2) states that a copy of the notice of objection must be served by the objector subject to section 28A.

Section 120 allows the Commissioner of Police to lodge a complaint with the Licensing Court that grounds for disciplinary action exist against a specified person. Section 120(1a) provides that “[t]he complaint must, subject to section 28A, state the grounds for disciplinary action”.

There are important observations that should be made about the operation of the legislation. The Licensing Court is comprised of a District Court Judge. It has power to grant licences, revoke licences, and impose fines on licence holders. These acts have the potential to have a serious impact on the people affected by them. A successful business, operating for many years, could have its licence revoked on the ground that the licence holder is not a fit and proper person. Whether someone is fit and proper depends not just on their character, but on the character of people with whom they associate.

The Commissioner of Police, at every stage, has a right to intervene and make submissions. The Commissioner of Police can, at his discretion, classify information as criminal intelligence. Once information is so classified, the Liquor Commissioner and Licensing Court must consider that information when making their decision, but cannot disclose the criminal intelligence to the person affected by the decision. The person affected has a right to be heard, but will not know the allegations made against him or her by the Commissioner of Police, and will not discover the nature of those allegations or the evidence said to support those allegations in the reasons of the Liquor Commissioner or the Licensing Court. If a decision is based on criminal intelligence, the Licensing Court has no obligation to provide reasons other than a brief formulaic statement. The Licensing Court has no discretion to review whether information is properly classified as criminal intelligence. It must simply comply with the classification made by the Commissioner of Police.

The Plaintiffs’ Right to Procedural Fairness

The plaintiffs contended that they were denied natural justice, and that the statutory scheme did not allow such a denial. This submission will now be considered.  The procedural fairness that courts and administrative tribunals owe to persons whose rights and interests are affected by their decisions can be divided into two categories: the bias rule and the hearing rule.

The hearing rule is often divided into two further categories: the obligation to disclose the case against the applicant, and the obligation to provide an applicant the opportunity to respond to the case against himself or herself and put forward his or her own case.

It is a common law requirement that applicants are entitled to know the case against them. Courts have long acknowledged that for a hearing to be fair, parties affected by a decision must know the case against them and be provided with the opportunity to put forward their own case. See generally Mark Aronson, Bruce Dyer and Matthew Groves, Judicial Review of Administrative Action (3^rd ed, 2004) at 505; and Robin Creyke and John McMillan, Control of Government Action: Text, Cases & Commentary (2005) at 573-576.

A classic statement of the hearing rule can be found in Kioa v West (1985) 159 CLR 550.  In that case the High Court held by majority that the decision of the Minister to deport Mr and Mrs Kioa, without affording them an oral hearing or providing them the opportunity to correspond with the relevant department, resulted in a denial of procedural fairness. Brennan J observed, in an oft-quoted passage: “A person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interests which the repository of the power proposes to take into account in deciding upon its exercise.”

The obligation to afford procedural fairness is not readily susceptible to being reduced to statements of bright line rules. It is chameleon-like in nature, adapting to the circumstances of each case. A court or tribunal’s duty to afford procedural fairness adapts to the different constraints that the court or tribunal is placed under by the statutory framework that underpins it. The overriding concern of a court of review is to examine whether the applicant received a fair hearing.

In the present case, the Licensing Court was operating under two conflicting duties. The first was the duty that it owed, at common law, to the plaintiffs to ensure that the plaintiffs knew the case against them. The second was the duty imposed by section 28A – the duty to withhold criminal intelligence from the plaintiffs. That the statutory duty might conflict with the common law procedural fairness duty is not a reason to assume that Parliament has intended to exclude or override the common law duty. It is a long-standing principle of statutory interpretation that “an Act will not be construed as taking away an existing right unless its language is reasonably capable of no other construction”. Australian Crime Commission v AA Pty Ltd [2006] FCAFC 30; citing Sargood Brothers v Commonwealth (1910) 11 CLR 258 and Pyneboard Pty Ltd v Trade Practices Commission (1983) 45 ALR 609. See also Coco v R (1994) 179 CLR 427.

Further, in the specific context of common law procedural fairness duties, the fundamental principle expounded in Annetts v McCann (1990) 170 CLR 596 is that a statutory scheme cannot be taken to exclude common law procedural fairness purely on the basis of “indirect references, uncertain inferences or equivocal considerations”.  What is needed are “plain words of necessary intendment”.

In the case of the Liquor Licensing Act, the necessary intendment of section 28A is that the hearing rule duty to inform the plaintiffs of the case against them has been excluded, to the extent that that duty would require the Licensing Court to disclose the criminal intelligence. Section 28A, by imposing a duty on the Licensing Court to withhold criminal intelligence from applicants, removes an aspect of the duty to afford procedural fairness that the Licensing Court would otherwise owe to applicants. The second reading speech of the Bill inserting section 28A into the Liquor Licensing Act confirms that the overall purpose of section 28A is to ensure that criminal intelligence is withheld from applicants.

Nothing short of express words of necessary intendment can operate to exclude an aspect of the common law hearing rule. The terms of the Liquor Licensing Act contain such express words, or alternatively demonstrate a necessary intendment. The Licensing Court could not concomitantly fulfil both the statutory duty to withhold criminal intelligence and the common law duty to ensure that the plaintiffs knew the case against them.

Counsel for the plaintiffs submitted that an answer may be found in the context of applications for visas under the Migration Act 1958 (Cth), where the common law obligation to disclose information to an applicant is not necessarily excluded simply by the Refugee Review Tribunal being given confidential information NAVK v Minister for Immigration, Multicultural and Indigenous Affairs (2004) 135 FCR 567. Counsel for the plaintiffs relied on the decision of VEAL v Minister for Immigration, Multicultural and Indigenous Affairs VEAL v Minister for Immigration, Multicultural and Indigenous Affairs (2005) 222 ALR 411. where the High Court unanimously decided that whilst the Refugee Review Tribunal was not required to show the applicant a confidential letter that it had received, which made adverse allegations about the applicant, the applicant should have been told “the substance of the allegations”.

Under the Liquor Licensing Act, however, such an approach is not possible. Parliament has made it clear that none of the information contained in the criminal intelligence can be disclosed to applicants. Disclosing a summary of the allegations against the plaintiffs or information that would allow them to address the intelligence would still necessarily involve disclosing some of the information contained in the criminal intelligence.

Counsel for the plaintiffs submitted that the purpose behind section 28A was to protect the sources of the intelligence, and police operations, and that information that did not identify either the source or a police operation was able to be disclosed. This contention cannot be accepted. The words of section 28A are clear. To reach the conclusion contended for by counsel for the plaintiffs would involve ignoring the plain words of the statute and circumventing its evident purpose. The statute does not allow the Licensing Court to fulfil the two competing duties in a mutually compatible way. The statutory duty to withhold criminal intelligence therefore displaces the common law duty to provide that intelligence, if relevant, credible and material, to applicants.

Before examining whether section 28A of the Liquor Licensing Act is constitutionally valid, two submissions made by counsel for the Licensing Court should be considered. Both submissions rely on the premise that the Licensing Court breached a natural justice duty that it owed to the plaintiffs. As I have concluded that the Licensing Court did not breach the natural justice hearing rule – because the duty that the plaintiffs claimed they were owed was displaced by section 28A and so the Licensing Court did not owe the plaintiffs the duty that was the subject of the complaint – it is not strictly necessary to determine the following two submissions. However, as they were argued at length I will express my brief views on those submissions.

Waiver

Counsel for the Licensing Court submitted that the plaintiffs waived their right to natural justice because they did not request the information classified as criminal intelligence at the hearing before the Licensing Court on 12 February 2007. Further, counsel contended that the plaintiffs’ counsel at the hearing not only accepted the procedure of the Licensing Court, but suggested it. At the hearing on 8 February 2007, counsel for the plaintiffs had stated: “It occurred to me that the most satisfactory way of dealing with the application would be for that material which was before the Commissioner to be placed before you. If you decide there is a foundation in the Commissioner’s decision, then you find against Mr Krasnov and that will be, effectively, the end of the matter. … I can’t be privy to [the material], nor can my client so we can’t assist your Honour or make any submissions.”

However, it is to be noted that the plaintiffs’ solicitors made repeated attempts between February 2006 and December 2006 to obtain particulars of the criminal intelligence, all of which were refused. Counsel for the plaintiffs relied on Percerep v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 483 to support the proposition that procedural fairness cannot be waived by a party’s legal representatives. In Percerep, the applicant appealed against a decision of the Administrative Appeals Tribunal, which had affirmed a deportation order made by a delegate of the Minister under section 200 of the Migration Act. The order of the deportation of the applicant was based on his conviction for an offence committed in July 1985, and other offences in 1991. He had immigrated in August 1971. Although section 201 required that a person could be deported if they had committed an offence while having been a permanent resident for less than 10 years, section 204(1) provided that “the period for which the person was confined in a prison” was to be disregarded.

In the course of the Tribunal proceedings, prison files concerning the applicant were produced on a summons directed to the Correctional Services Commissioner. Unknown to the applicant’s representatives, pages from these files were the subject of a confidentiality order made by a Deputy President pursuant to section 35 of the Administrative Appeals Act 1975 (Cth). This Deputy President subsequently sat as the Administrative Appeals Tribunal for the hearing. The non-disclosed material was not referred to during the hearing, nor in the reasons of the Deputy President. The solicitor of the applicant had failed to read correspondence that had been addressed to him regarding the order of the Deputy President that prohibited the disclosure of the pages to any person other than the Presidential member of the Tribunal constituted to hear the matter.

On appeal, Weinberg J came to the conclusion that the right to natural justice could not be waived in circumstances where the legal representative of an applicant had overlooked the making of a request for documents that may have contained information adverse to his client Percerep. His Honour observed: “The fact that the contents of the 21 pages were confidential did not necessarily mean that some intimation could not be given to the applicant of their general nature. This would have enabled submissions to be made concerning the material contained therein. … The fact that the contents of the 21 pages are not now known is of no relevant consequence given that I am prepared to infer that they are likely to have contained material which was adverse, in relevant respect, to the applicant. .. There is a relative paucity of authority dealing with the question of waiver in relation to the operation of the rules of natural justice. There are cases where courts have held that failure to give due notice is immaterial if, in fact, the person affected has had a proper opportunity to be heard. These cases suggest that minor aspects of the rule may be impliedly waived. … None of the authorities referred to by the learned authors suggests that the applicant should be treated as having waived his right to be accorded procedural fairness because his solicitor, through an oversight, failed to read correspondence which had been addressed to him. In cases involving matters which may be compensable in monetary terms, such an oversight by a legal representative may be treated as some form of waiver, or perhaps as disentitling the applicant as a matter of discretion to relief for denial of procedural fairness. The possibility that the applicant may have an effective remedy against his legal representative will provide some justification for that approach.”

In the present case counsel for the plaintiffs before the Licensing Court was aware of the fact that there was confidential material that had not been disclosed to the plaintiffs, in contrast to the facts of Percerep. The plaintiffs had made repeated attempts to access the information before the hearing, all of which were denied. Viewed in this context, it may be concluded that there was no intention on behalf of the plaintiffs to waive an entitlement to natural justice. In Percerep no intention to waive natural justice entitlements was established because the applicants did not know such information existed. In the present case, no intention to waive natural justice can be inferred from the statement made by the counsel for the plaintiffs because the statement must be viewed in the context of the hearing, including the lead up to the hearing. A person cannot waive something that he believes he is not entitled to. Such a waiver is hollow. The statement of plaintiffs’ counsel at the hearing did not represent any intention to renounce an entitlement that the plaintiffs believed that they held. If this Court had decided that the plaintiffs did have an entitlement, the fact that the plaintiffs accepted their non-entitlement at the hearing does not amount to a waiver of the entitlement.

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