Gnych v Polish Club Ltd [2015] HCA 23: Liquor Licensing Requirements

Today (17 June 2015), the High Court unanimously allowed an appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales.  The High Court held that a lease granted in contravention of s 92(1)(d) of the Liquor Act 2007 (NSW) ("the Liquor Act") was not void and unenforceable.

Background to the Case

The Gnyches operated a restaurant in part of the Polish Club’s premises, although there was no written lease. After the Polish Club gave the Gnyches notice to leave, the Gnyches asserted that they had a five year lease under the Retail Leases Act 1994 (NSW). Although this claim was successful at trial, the Polish Club  appealed on the basis that any lease was contrary to ss 92(1)(c) and 92(1)(d) of the Liquor Act, which prohibit grants of leases over licensed premises in some circumstances, and s41J of the Registered Clubs Act 1976 (NSW), which prescribes a process for the disposal of a registered club’s core property.

The NSW Court of Appeal held that s 92(1)(d) (which requires the approval of the Independent Gaming and Liquor Authority for leases in premises where alcohol was not served), but not the other statutory provisions, rendered any lease between the Gnyches and the Polish Club unenforceable.

The High Court Appeal

The High Court allowed the appeal, holding that on the proper construction of the Liquor Act the breach of s 92(1)(d) did not automatically render the lease void and unenforceable.

The Court (French CJ, Kiefel, Keane & Nettle JJ, Gageler J agreeing) held that s92(1)(d) is directed to the conduct of the licensee, rather than the relationship between the licensee and a third party ([43]). Although the Polish Club breached s92(1)(d) when it gave the Gnyches possession of the restaurant area of the premises, that did not affect the lease. The provision of a statutory penalty for this breach meant that there was no need to prevent the lease, and the Court of Appeal erred in holding otherwise.

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Gnych v Polish Club Ltd [2015] HCA 23