Injunctions to restrain breach of negative covenants relating to licensed premises may be refused where the relevant licensing legislation confers on the licensing tribunal a discretion to override the covenant in the public interest.
Later decisions that cite Dalgety Wine Estates Pty Ltd v Rizzon
Decisions cited by Dalgety Wine Estates Pty Ltd v Rizzon
DALGETY WINE ESTATES PTY. LTD. v. RIZZON [1979] HCA 41; (1979) 141 CLR 552
Injunctions - Licensing (S.A.)
High Court of Australia
Barwick C.J.(1), Gibbs(2), Stephen(3), Mason(4) and Murphy(5) JJ.
CATCHWORDS
Injunctions - Contract - Negative stipulation - Breach - Discretion of court - Licensing - Covenant not to apply for removal of licence - Removal of liquor licence - Without lessor's consent - Licensing Court required to consider whether removal in breach of covenant - Discretion any power to permit removal notwithstanding breach - Relevance of statutory procedure to judicial discretion whether to grant injunction.Licensing (S.A.) - Licensed premises - Lease - Removal of licence - Application to Licensing Court - Court required to consider whether removal breach of covenant - Discretionary power to permit removal notwithstanding breach - Licensing Act, 1967 (S.A.), ss. 57 (1) (d), 61 (1).
HEARING
Melbourne, 1979, May 8, 9.DECISION
Sept. 20.2. There is no reason, in my opinion, why the grant of jurisdiction to the Licensing Court should be held to limit in any respect the jurisdiction of the Supreme Court to enforce contractual obligations of the parties with respect to the licence granted by the Licensing Court under the provisions of the Licensing Act, 1967 (S.A.), as amended. The ability of the Licensing Court to consider those contractual obligations when exercising in the public interest the discretion given to it with respect to the renewal of licences does not warrant, in my opinion, the conclusion that the jurisdiction of the Supreme Court to enforce the contractual obligation is in any way impaired. (at p555)
GIBBS J. This is an application for special leave to appeal from a judgment of the Full Court of South Australia. The applicant, Dalgety Wine Estates Pty. Ltd., is a company which carries on business in South Australia as a wine producer and merchant. The respondents carry on the business of a grocery and liquor store in premises at 75-77 Glen Osmond Road, Eastwood, in South Australia ("the subject premises"), and are the holders of a retail storekeeper's licence issued under the Licensing Act, 1967 (S.A.), as amended ("the Act") in respect of those premises. The subject premises were on 30th June 1969 leased by their owners, Giordano Rossetto and Lorenzo Comazzetto, to the applicant for a term of three years commencing on 5th January 1968. The lease reserved a yearly rental, payable monthly, and entitled the applicant to two renewals of the term, each for three years. The term of the lease was twice renewed, but finally expired on 5th January 1977. Since that time, according to the statement of facts contained in the judgment of the Full Court, no new lease has been executed, and the applicant has paid no rent, but claims to have some form of tenure, apparently as the result of an oral arrangement with the owners. (at p556)
2. By an underlease dated 30th June 1969 the applicant leased the subject
premises to the respondents for a term commencing on 30th
June 1969 and
expiring on 4th October 1970, and gave the respondents the right to two
renewals, each of three years. The underlease
contained in condition 1 certain
covenants by the lessees (the respondents) including the following:
"(iii) The lessees will observe all the provisions of the Licensing Act
1967-1968 and any amendment thereof and will manage
and control the premises
or cause the same to be so managed and controlled that neither the lessee nor
any other person or persons
lawfully in the occupation of the said premises or
any part thereof shall do omit permit or suffer any act matter or thing which
may be an offence against the said Act or whereby the licence necessary for
keeping open the said premises for the sale of liquor
pursuant to a
Storekeepers Australian Wine Licence or any other licence granted in respect
of the said premises pursuant to the Licensing
Act 1967-68 may be or become
liable to be forfeited or the renewal thereof withheld and whereby such
licence or goodwill or the trade
of the premises as such licensed house may be
prejudicially affected.
. . .said term at the proper times for that purpose apply for and endeavour to obtain at the lessees' expense and in the lessees' name unless otherwise agreed all such licences as are or may be necessary for carrying on the trade or business of a vendor of liquor by the bottle and keep the same open as a Retail Liquor Store.
(v) The lessees will from time to time during the continuance of the
3. The subject premises had, at least since 1949, been the subject of a
storekeeper's Australian wine licence under the Licensing
Act, 1932 (S.A.), as
amended, or a retail storekeeper's licence under the Act. From 1960 to 1962
the applicant itself was the licensee,
and since 1963 the respondents have
held the licence, at first in conjunction with another person or other
persons, but since 1969
by themselves. The applicant, as lessee under a lease
granted by the owners in 1963, had granted to the respondents an underlease
of
the subject premises on 7th March 1963 which contained covenants in
substantially the same terms as those of cll. (iii), (vi)
and (vii) of
condition 1 of the underlease of 30th June 1969. However, condition 1 (v) of
the earlier underlease differed from condition
1 (v) of the later in that
instead of the words "of a vendor of liquor by the bottle and keep the same
open as a Retail Liquor Store"
the following words appeared:
"of a vendor of Australian wines by the bottle in or upon the said
premises and keep the same open as a Storekeeper's Australian
Wine Store and
the lessees will not make any attempt or application to remove the said
licence from the said premises without the
written consent of the lessor first
had and obtained." (at p557)
4. On or about 8th September 1976 the respondents made application to the
Licensing Court for the removal of the licence to other
premises in Glen
Osmond Road. The term of the underlease of the subject premises, having been
twice renewed, expired on 4th October
1976. However, on that day, the
respondents tendered to the applicant, and the applicant accepted, a cheque
for $195.00, being a
month's rent paid in advance. On the following day, 5th
October 1976, the applicant banked the cheque and gave to the respondents
a
notice to quit. The respondents dispute the validity of the notice. (at p557)
5. The respondents' application to the Licensing Court was listed for hearing on 28th October 1976. However, on 27th October 1976 the applicant commenced the present proceedings in the Supreme Court, claiming an order that the respondents specifically perform the covenants contained in the underlease, certain declarations, an injunction restraining the respondents from further proceeding with the application to the Licensing Court or from making any such further application and directing them to withdraw the application, damages and costs. The application to the Licensing Court was adjourned by that court to await the result of the present proceedings. (at p558)
6. The action was tried by White A.J., as he then was, who gave judgment for the respondents. On appeal, the Full Court held that the applicant was entitled to nominal damages, and accordingly allowed the appeal and ordered that judgment be entered for the applicant for $5.00. All other claims by the applicant (except the claim for costs) were, however, dismissed so that, in substance, the decision of White A.J. was affirmed by the Full Court (1978) 19 SASR 543 . (at p558)
7. The starting-point of the argument for the applicant is that the application by the respondents for the removal of the licence was a breach by the respondents of the covenants, express or implied, contained in the underlease. White A.J. appears to have assumed that the respondents were in breach of their covenants, for the only question which he discussed was whether it would be a proper exercise of his discretion to grant a declaration and an injunction, or whether the Licensing Court should be allowed to decide the matter. The Full Court held that the application for removal did amount to a breach, and for that reason awarded nominal damages. Although the judgment of the Full Court at one point suggests that their Honours thought that the applicant was forced to rely on an implied negative covenant, it appears that it was finally held that the application for removal by the respondents was a breach of condition 1 (iii) of the underlease. The Court further held that the application was not a breach of condition 1 (vii), because it was conceivable that prior to the expiration of the lease the licence could have reverted to the original premises. Before us, counsel for the respondents did not submit that it was wrong to hold that the application for removal constituted a breach of a covenant of the underlease, and for that reason it is perhaps unnecessary to discuss fully the meaning and effect of the underlease. I must, however, say that I find it difficult to accept that the application for removal was a breach of condition 1 (iii). By that condition the respondents covenanted, inter alia, to manage and control the premises so that the respondents should not do, omit, permit or suffer any act, matter, or thing whereby the licence might be prejudicially affected. This covenant would appear, at least at first impression, to apply only to acts done in the course of managing and controlling the premises, and an application made to the Licensing Court for removal of the licence could hardly be said to be in contravention of such a covenant. Nevertheless, there is no room to doubt that the making of the application for removal was a breach of the covenants in the underlease. By condition 1 (vi), the respondents were required at the expiration or other sooner determination of the lease, or before that time if requested, to do everything necessary to enable the applicant or any other person authorized by the applicant to obtain a renewal, transfer or removal of the licence. By condition 1 (vii) the respondents undertook at all times during the term to manage and conduct the "said trade or business of the said licensed premises". The "trade or business" previously mentioned (in condition 1(v)) was that of a vendor of liquor by the bottle, which expression was apparently intended to mean the same as the trade or business of a retail liquor store. The removal of the licence to other premises would make it impossible for the respondents to comply with their obligation at all times during the term to manage and conduct the said trade or business on the subject premises - it would have been unlawful to sell liquor on the premises without a licence: s. 11 of the Act. Further, the removal of the licence would put it beyond the power of the respondents to do all such things as should be necessary to enable the applicant or other person authorized by the applicant to obtain a renewal, transfer, or removal of the licence, as they were obliged to do at (or, if requested, before) the expiration or other sooner determination of the lease. The covenants in condition 1 (vi) and 1 (vii) would be futile if the respondents were able to remove the licence to other premises. (at p559)
8. In O'Keefe v. Williams [1910] HCA 40; (1910) 11 CLR 171, at p 191 Griffith C.J. said: "Every contract between subject and subject involves an obligation, implied if not expressed, that neither party shall do anything to destroy the efficiency of the bargain which he has made." Such an obligation is implied, if it is not expressed, because without it the contract will not work; in other words, the rule stated by Griffith C.J. is only one aspect of the general principle (which it is unnecessary to state fully) that a term will be implied in a contract where it is necessary to do so in order to "give such business efficacy to the transaction as must have been intended at all events by both parties who are business men . . ." (The Moorcock (1889) 14 PD 64, at p 68 ). In the present case the earlier underlease contained, in condition 1 (v), an express covenant by the lessees not to attempt or apply to remove the licence, but I do not regard the omission of those express words from the later underlease as an indication that the parties intended that the respondents should be free to remove the licence. It may have been thought that changes in the licensing legislation required changes to be made in the words of condition 1 (v) when the later underlease was executed, and it is clear that in the drafting of the new clause certain words which ought to have been retained were inadvertently omitted, namely, the words "in or upon the same premises". It is possible that the concluding words of the clause were also omitted by inadvertence, but whether or not that is so, in my opinion, upon the proper construction of the underlease, it is necessary to imply a covenant that the respondents will not remove the licence from the subject premises. (at p560)
9. The stipulation implied in the underlease was clearly negative in
substance - it imposed on the respondents the duty to refrain
from taking
action to remove the licence. To make and pursue the application to the
Licensing Court was a breach of that covenant.
In J. C. Williamson Ltd. v.
Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282, at p 299 , Dixon J. said:
"If, however, a clear legal duty is imposed by contract to refrain from
some act, then, prima facie, an injunction should go
to restrain the doing of
that act. It appears to be of little importance now whether the duty is
imposed by a term of the contract
expressed in negative or affirmative
language."
It is sometimes said, in reliance upon a dictum of Lord Cairns L.C., in
Doherty v. Allman (1878) 3 App Cas 709, at pp 719-720 , that
the court has no
discretion to withhold the grant of an injunction to restrain the breach of a
negative covenant. That appears to
be an over-statement, but, in the present
case, where it was accepted by both parties that the Court had a discretion to
exercise,
it is unnecessary to pursue that question. The principal argument
advanced on behalf of the applicant was that there was no ground
on which an
injunction could properly be refused. On behalf of the respondents, it was
contended that it was not shown that the Full
Court fell into error in
upholding the exercise of discretion by the learned trial judge and that, in
any case, the circumstances
are not such as to warrant the granting of special
leave to appeal. (at p560)
10. The question whether an injunction was correctly refused as a matter of
discretion cannot be discussed without first referring
to certain of the
provisions of the Act. The licence authorized the persons thereby licensed
(the respondents) to sell liquor in
the premises therein specified (the
subject premises) at certain times; the liquor was required to be taken away
and not drunk on
the premises (s. 22). If not previously forfeited, the
licence remained in force for a period of twelve months and fourteen days
after the date on which it was granted (s. 34 (2) (b)), but the licensees
could apply for its renewal (s. 44). By s. 56 (1), any
person holding the
licence "may apply to the court to remove his business to other suitable and
convenient premises". Although the
sub-section refers to the removal of the
business, the context provided by ss. 56 (2) (a), 57, and 58 indicates that
the removal
of the "business" includes, if it does not mean, the removal of
the licence. Section 40, which provides, inter alia, that every application
for the removal of any licence shall be made to and considered by the court,
is consistent with this conclusion. Objection may be
made to the removal of
the licence by the Superintendent of Licensed Premises, or by any other person
who has given notice in writing
of the objection stating the nature and
grounds thereof (s. 46). It is provided by s. 57 (1) that the objections to a
removal of
which notice may be given are, in addition to the grounds of
removal specified in s. 48 (which states the objections that may be
made to
the grant or renewal of licences), the following:
"(a) That the licensing of the premises to which it is proposed to
remove the licence is not required for the accommodation
of the public:
(b) That the said premises are in the vicinity of a church or other
place of public worship, or a hospital, recognized youth
centre, or school,
and would, if licensed, be the cause of inconvenience or annoyance to persons
using or frequenting such church,
place of worship, hospital, centre or
school:
(c) That the quiet of the locality in which the said premises are
situated will be disturbed, if a licence is granted for the
sale of liquor in
those premises:
(d) That the lease under which the holder of the licence occupies his
premises contains a covenant or prohibition against removing
the licence to
any other premises without the consent of the lessor, and that such consent
has not been obtained."
Not all of the objections which are specified in s. 48 would appear to be
entirely appropriate to the case of a removal; some deal
with the suitability
of the applicant, some with the suitability of the site and others are in
effect the same as that provided by
s. 57 (1) (a). By s. 61 (1) it is
provided, inter alia, that the Licensing Court -
"shall hear, inquire into, and determine the application (for the grant,
renewal, transfer or removal of a licence) . . . and
all such objections (if
any) on the merits, and shall grant or refuse the application with or without
conditions upon any ground
or for any reason whatsoever which, entirely in the
exercise of its discretion, it deems sufficient".
Section 9 of the Act allowed an appeal to the Full Court of the Supreme Court
from any decision of the Licensing Court, but by an
amendment which took
effect on 2nd December 1976 the appeal now lies only if the proceedings are
before the full bench or the judge
or acting judge of the Licensing Court, and
unless the Full Court grants leave to appeal on a question of fact, or a
question involving
elements both of law and of fact, the appeal shall be
confined to questions of law (s. 9 (1), (1a)). (at p562)
11. The principal reason given by the Full Court for holding that the Supreme
Court should not interfere by injunction to restrain
the respondents from
pursuing their application to the Licensing Court was that the Licensing Court
is the tribunal specially constituted
by Parliament to decide when and where,
in the interests of the public, licences should be removed. This was, in
substance, also
the reason given by White A.J. Their Honours, in the Full
Court, further added (1978) 19 SASR, at p 556 :
"We are strongly influenced, in coming to this conclusion, by the
tenuous nature of the interest which the plaintiff has in
the premises and the
uncertainty as to whether the licence will remain where it is even if we
interfere. We think that on the evidence
the plaintiff is a person who has
very little interest in the existing premises and which in reality seeks to
control the licence
as a matter of contract."
It is convenient to deal immediately with these additional considerations
which, will all respect, seem to me to provide no justification
or support for
the view that an injunction should be withheld. Once it is concluded that the
attempted removal was a breach by the
respondents of a contractual obligation
to refrain from removing the licence from the premises, it seems quite
immaterial to the
applicant's title to relief what interest the applicant has
in the subject premises, or whether those premises will continue to be
the
premises specified in the licence or whether the applicant is seeking to
control the licence as a matter of contract. The underlease
itself makes it
clear that, as between the applicant and the respondents, the licence is to be
at the disposal of the applicant,
and, if the applicant requires it, is to be
transferred to such person as the applicant nominates or removed to other
premises. The
Act does not require the holder of a licence to have any
particular interest in the premises in respect of which the licence is
granted,
and it permits a licence granted in respect of particular premises to
be removed by the Licensing Court to other premises. In these
circumstances,
even if the applicant's interest in the land is tenuous and doubtful, and it
is uncertain whether the licence "will
remain where it is", it does not follow
that the grant of an injunction would be futile or of no real benefit to the
applicant. Indeed,
the nature of the applicant's interest in the subject
premises, and its intentions with regard to the licence, appear to be
unimportant
- the nature of the respondents' interest is equally unimportant.
In any case, it is mere speculation to say that the applicant will
cease to
have any right to possession of the subject premises, and will wish to remove
the licence, but, on the other hand, it is
clear that contractual rights of
this kind in respect of a licence are likely to be of considerable value to a
wine producer and
merchant. As to the final matter mentioned by their Honours,
it is a little difficult to understand how it can be said that it is
an
obstacle to relief in an action based on contract that the applicant is
seeking to control the subject matter of the proceedings
"as a matter of
contract". It was not submitted that contractual provisions such as those
found in the underlease are contrary to
public policy, and there is nothing in
the Act which invalidates contractual provisions of that kind. Similar
provisions have been
considered by the courts on a number of occasions, and it
has not been held that they are objectionable; on the contrary, they have
been
enforced by injunction: see Slatter v. Railway Commissioners (N.S.W.) [1931] HCA 13; (1931)
45 CLR 68 ; Metropolitan Theatres
Ltd. v. Harris
(1935) 35 SR (NSW) 228 ;
Griffin v. Clark (1940) 40 SR (NSW) 409 ; and see
also Ex parte Berry; Re
Kessell (1936)
36 SR (NSW) 485
. (at p563)
12. The question remains whether the fact that the Licensing Court had jurisdiction to determine whether or not the application for removal should be granted provided a valid reason for refusing relief to the applicant in the present proceedings. White A.J. appears to have regarded this as a case in which the legislature has provided an alternative statutory procedure for determining the questions which the applicant attempted to put in issue in the Supreme Court. He referred to a passage from Whitmore and Aronson: Review of Administrative Action (1978), p. 350, where the learned authors say: "Of course, no-one has ever denied that the courts should generally refrain from using an injunction application to supplant the existing procedures and tribunal. . . ." He said that "if relief were granted the whole of the licensing system would be by-passed". With all respect, the conclusion reached by White A.J. was incorrect. It is clear that the present case is not one of that kind to which Walsh J. referred in Forster v. Jododex Australia Pty. Ltd. [1972] HCA 61; (1972) 127 CLR 421, at p 427 , i.e. it was not a case in which a special tribunal has been appointed by a statute "to determine disputes concerning the granting of rights or privileges which are dependent entirely upon the statute". The right which the applicant seeks to enforce is not a right given by the Act. It depends entirely on contract. The remedy sought - an injunction to restrain a breach of a negative covenant - is not within the power of the Licensing Court to grant. The issues which arise - whether there is a negative covenant and if so whether an injunction should be granted to restrain the respondents from acting in breach of it - are different from those upon which the decision of the Licensing Court would depend. (at p564)
13. It is true that if the application for removal is heard in the Licensing Court it will be necessary for that court to decide whether an objection to the application exists under s. 57 (1) (d) of the Act. I need not spend time in discussing the words of s. 57 (1) (d), or in considering whether that paragraph extends to implied covenants, and to covenants which go further than prohibiting removal of a licence without consent and absolutely forbid such removal. I need not discuss whether the respondents still occupy the subject premises under the underlease or whether the underlease contains a covenant of the kind to which s. 57 (1) (d) refers. I shall assume that the issue which would arise in the Licensing Court under s. 57 (1) (d) is the same as one of the issues which arose in the Supreme Court. However, even if the ground of objection were established, the Licensing Court might still exercise its discretion to grant the application. The Licensing Court has already expressed the view that its discretion should not be fettered by contractual arrangements between the licensee and others: see Re Hamood (1970-1971) SA Licensing Reports 218, at p 226 , cited by White A.J. I do not decide that the Licensing Court is entitled to exercise its discretion in that way, but the possibility that it may do so indicates that the contractual rights of the applicant will not necessarily be given effect in the Licensing Court. Assuming that, notwithstanding the amendment that took effect on 2nd December 1976, there now is an unlimited right of appeal from a decision of the Licensing Court in a case of the present kind, its existence does not make the Licensing Court a more appropriate forum than the Supreme Court for the determination and enforcement of contractual rights. There is nothing in the nature of the issue which, I assume, is common to the proceedings in the Supreme Court and those in the Licensing Court which makes it the sort of question which the Licensing Court is peculiarly fitted to decide. The Act contains no indication of an intention to fetter the power of the ordinary courts to enforce contracts. If the Supreme Court grants an injunction to enforce a covenant by a licensee that he will not remove the licence, it is exercising its own ordinary jurisdiction, and cannot be said to encroach upon or supplant the jurisdiction of the Licensing Court. (at p565)
14. It was said that it is in the public interest that the application for removal should be heard in the Licensing Court, for the very reason that that court is required to reach its decision in the light of the public interest and can, in that interest, override the ordinary right of a party to a contract to enforce the duties owed to him by the other party to the contract. However, although the Licensing Court obviously must consider the public interest, it can only do so if an application is made to it by a party having the right to apply. If the Licensing Court considers that a licence is required in one locality but not in another, it cannot act of its own motion to procure the removal of a licence from the latter to the former locality. It is only when the Licensing Court obtains jurisdiction because an application is made to it, that it can give effect to its view of the public interest. There seems no reason, in those circumstances, why the Supreme Court should not restrain a licensee from applying to the Licensing Court, if the making of an application is in breach of his contractual duty. The decision of this Court in Slatter v. Railway Commissioners (N.S.W.) [1931] HCA 13; (1931) 45 CLR 68 supports the view that the grant of an injunction is appropriate in such a case. (at p565)
15. For these reasons I consider that there was no ground on which the Supreme Court could properly exercise its discretion by refusing relief to the applicant. The appropriate relief was an injunction, not damages. If an injunction is granted, declaratory relief will be unnecessary. (at p565)
16. The case involves questions of general importance which warrant the grant of special leave to appeal. (at p565)
17. I would grant special leave to appeal and would allow the appeal. I would set aside the orders of the Supreme Court and substitute an order for the grant of an injunction to restrain the respondents from further pursuing the application to the Licensing Court. (at p565)
STEPHEN J. The circumstances of this application appear in other judgments. Assuming, as I do, that this is a proper case for the grant of special leave, the critical issue for determination is a short one. It arises in the context of a refusal by the Supreme Court of South Australia, in its discretion, to enjoin breach of the respondents of a negative covenant in, or to be implied from the terms of, an underlease. (at p566)
2. The breach consisted of the making of an application to the South Australian Licensing Court for the removal from premises in an Adelaide suburb to other nearby premises of a liquor licence held by the respondents. Given that breach and the possession by the Court of a discretion despite the negative nature of the covenant, the question is whether this Court should interfere in the exercise of that discretion. (at p566)
3. I have had the advantage of reading the judgment prepared by Mason J. I agree with his conclusions and with the reasons leading to them. However, because there is one matter which, to my mind, is more cogent than all the others in establishing that the Supreme Court was correct in refusing the application for an injunction I will identify it and state, as briefly as may be, my approach to it. (at p566)
4. It turns upon the terms of s. 57 (1) (d) of the Licensing Act 1967-1976
(S.A.). Section 57 (1) describes particular grounds of
objection which may be
taken to applications for removal of a liquor licence. The ground appearing in
par. (d) reads:
"(d) That the lease under which the holder of the licence occupies his
premises contains a covenant or prohibition against
removing the licence to
any other premises without the consent of the lessor, and that such consent
has not been obtained." (at p566)
5. The specific inclusion in the legislation of this ground I regard as of
considerable significance. It differs in kind from the
other four specific
grounds of objection which precede it in s. 57 (1). They each describe a
particular set of circumstances opposed
to the interests of the public or of a
section of it and each of them involves abstract and relative standards: for
instance, the
extent of the public's need, or the extent of public
inconvenience or annoyance. By way of contrast, ground (d) is neither directly
concerned with the public interest nor does it involve abstractions; to make
it good requires no more than proof of breach of the
covenant or prohibition
to which it refers. (at p566)
6. It is s. 61 (1) which gives to s. 57 (1) its significance. Section 61 (1) confers upon the Licensing Court the widest of possible discretions in arriving at its decisions upon, inter alia, licence removal applications. If the two sections be read together it becomes clear that the legislation contemplates that the Court may in its discretion accede to an application despite the making good by an objector of any one or more of the grounds of objection which he relies upon. The terms of s. 61 (1) are themselves enough to produce this result but the very nature of the first four grounds in s. 57 (1) also serves to make this consequence inevitable: the public interest is a many-faceted subject-matter and proof of the circumstances referred to in any one of those grounds of objection could scarcely be thought, of itself, to be decisive of the overall public interest. (at p567)
7. What follows from this is that the legislation must be taken to contemplate that the Court, although satisfied that an objector has established the factual circumstance referred to in any of the grounds, including ground (d), may nevertheless, in appropriate circumstances, see fit to grant a removal application. Having regard to the obvious concern for the public interest which pervades this legislation, this is scarcely surprising. On the contrary, what would be surprising would be to find that proven breach of, for example, a covenant against removal of a licence should compel the Court to refuse the application, regardless of all questions of the public interest. (at p567)
8. The legislative intent must be taken to be that even licensees whose applications for removal are in breach of a negative covenant into which they have entered may have their licences removed if the Licensing Court, in all the circumstances of the case, thinks fit. That Court, as the specialist tribunal charged with responsibility in the field of liquor licensing, is to be free to exercise the very wide discretionary powers with which s. 61 (1) has armed it, paying regard, inter alia, to relevant breaches of covenant but not being obliged to regard them as factors determining the fate of the application. (at p567)
9. In the present case I am not called upon to say whether there are any circumstances in which the Supreme Court should, as a matter of discretion and on the ground that the making of the application is in breach of covenant, enjoin an applicant for removal from making application to the Licensing Court. It is enough to conclude that there exists in this case no special circumstances which would justify intervention by injunction. The Supreme Court was correct in refusing to enjoin the respondents. (at p567)
10. For the Supreme Court to grant an injunction would have the effect of withdrawing from consideration by the Licensing Court a subjectmatter, the removal of licences, which the legislature has exclusively conferred upon it. To grant such an injunction because the applicant for removal was in breach of covenant would be to go even further, fixing upon a circumstance as ground for grant of the injunction which was a circumstance specifically adverted to by the legislature and determined by it to be the proper subject of consideration by the Licensing Court. (at p567)
11. The view which I take does place a particular restraint upon the exercise by the Supreme Court of its general equitable jurisdiction, otherwise available for the protection by injunction of contractual relationships threatened by breach. But this is not the case of a true dilemma, of a choice having to be made between two courts, one or other of which must be denied the opportunity for exercise of jurisdiction. The South Australian legislature has, after express advertence to the question, clearly entrusted the question of breach of covenant, as it may affect the transfer of a licence, to the Licensing Court, whereas the relevant jurisdiction of the Supreme Court has not, of course, been the subject of any such express legislative advertence. More than that, the relevant jurisdiction of the Supreme Court is discretionary in nature, there being very numerous and varied circumstances in which the Supreme Court will think it appropriate to withhold from a plaintiff the remedy of injunctive relief. All that has occurred in this case is that the Supreme Court has concluded that this is another such case. There is no question of the exercise of any of the Court's jurisdiction being denied to it, rather it is its own restraint in affording a remedy in the particular circumstances of the case that is being affirmed. (at p568)
12. The appellant, entitled to the benefit of the covenant, is of course to be deprived of its equitable remedy by way of injunction in defence of its contractual rights. But the consequence will not be that those contractual rights will be ignored by the law. On the contrary s. 57 (1) (d) ensures that regard will be had to them since it makes their disregard by the respondents a distinct ground of objection open to the appellant. Because the rights in question relate to licensed premises and to dealings in a liquor licence, a species of monopoly property regulated by the licensing legislation, the appellant can scarcely complain that the court established under that legislation is to adjudicate upon them. (at p568)
13. It may be said that because any injunction would be directed to the respondents and not to the Licensing Court itself this disposes of the objection that to issue an injunction is to interfere with the exercise by that specialist court of jurisdiction which the legislature has entrusted to it. Whatever weight this submission, which relies upon form rather than effect, might otherwise bear, it is answered by the terms of s. 56 (1) of the Licensing Act, which provides that a licensee is entitled to make application to the Licensing Court for removal of his licence. (at p568)
14. As I have earlier said, I would grant special leave to appeal and would dismiss the appeal. (at p568)
MASON J. After hearing the questions at issue fully debated in argument on this application for special leave to appeal, I am left with the firm impression that the primary judge was right in refusing interlocutory relief and in giving judgment for the respondents in the action and that the Full Court of the Supreme Court of South Australia was correct in dismissing the appeal. (at p569)
2. The essence of the applicant's claim was that it was entitled to an injunction to restrain a breach by the respondents of a covenant contained in a subsisting lease to the respondents of premises at 75-77 Glen Osmond Road, Eastwood. In this Court it was not disputed that, by virtue of the acceptance on 4th October 1976 of one month's rent tendered by the respondents, a periodic tenancy came into existence between the applicant and the respondents on the expiration of an underlease of the premises dated 30th June 1969 which was expressed to expire on 4th October 1976. Nor was it disputed that the covenants contained in cll. 1 (v) and (vi) of the underlease continued to form part of the terms and conditions of the periodic tenancy. It was common ground that the action of the respondents in applying on 8th September 1976 to the Licensing Court for a removal of the retail storekeeper's licence held in their names under the Licensing Act, 1967 (S.A.), as amended ("the Act") from the premises 75-77 Glen Osmond Road to premises situated about 100 metres away from those premises was a breach of an implied negative stipulation contained in cl. 1 (vi). In any event, it could not be contested that there is implicit in cl. 1 (vi) a negative stipulation that the lessees would not do any act which would prevent or disable the lessor or any person authorized by the lessor from obtaining the renewal of the licence or a new licence or a transfer of any licence then existing and in force in relation to the premises. (at p569)
3. Whether the Supreme Court could or should have granted an injunction to restrain a breach of that implied negative stipulation depends very much on the provisions of the Act. At the heart of this case is the question whether enforcement of the stipulation would constitute an interference with the exercise of jurisdiction by the Licensing Court that is inconsistent with the policy and purpose that underlies the conferment of that jurisdiction on that Court. (at p569)
4. The Act gives to the Licensing Court jurisdiction to hear and determine licensing matters, the jurisdiction to be exercised by the Full Bench or a single member of the Court, provided that all applications for new licences, the forfeiture, removal and suspension of licences, the imposition of conditions with respect to licences and the variation and revocation of such conditions shall be heard and determined by the Full Bench (s. 6 (1) (a)). An appeal lies to the Full Court of the Supreme Court from every direction, determination, order or decision given by the Full Bench of the Licensing Court (s. 9 (1)). Except as allowed by the Act, no person shall sell or permit to be sold within the State any liquor without being licensed so to do (s. 11). The Act makes provision for sixteen classes of licence, including a retail storekeeper's licence (s. 14 (1)). A retail storekeeper's licence authorizes the holder to sell liquor at the premises therein specified on any day except Sunday, Christmas Day and Good Friday between 9 a.m. and 6 p.m. (s. 22 (1)). Every application for a licence or for the transfer or removal of a licence shall be made to and considered by the Licensing Court (s. 40). Notice is to be given of the making of an application and provision is made for the lodging of objections (ss. 43 to 46). (at p570)
5. The applicant for a licence other than a packet licence or a vigneron's licence in respect of premises not previously licensed or for the removal of a licence must satisfy the Court that the licensing of the premises is required for the needs of the public (s. 47 (a)), that owners or occupiers of premises in the locality will not be unreasonably affected (s. 47 (b)), that the premises will not be situated in a zone which excludes premises of the relevant kind (s. 47 (c)), that the site is suitable for the premises and that the applicant has complied with all the requirements of the Act (s. 47 (d)) and, in the case of an application in relation to a new or expanding community, that the licence would not unreasonably restrict the grant of a full publican's licence in the locality (s. 47 (e)). (at p570)
6. The Act prescribes the grounds of objection which may be taken to applications. They vary according to the nature of the application. Removal of licences is dealt with in Div. VII (ss. 56 to 58 inclusive). Section 56 provides that the holder of a licence may apply to the Court for its removal to other suitable premises. Section 57 provides that, in addition to the grounds of objection specified in s. 48, certain additional grounds of objection may be taken. Section 48 (1) sets out the grounds of objection which may be taken to the grant or renewal of any licence except a packet licence or a vigneron's licence. Apart from the objections set out in pars. (e), (f) and (g), they relate to the suitability of the applicant and of the premises. Paragraphs (e) and (f) relate to the needs of the public. Section 48 (2) sets out additional grounds of objection which may be taken to applications in relation to premises in respect of which a licence of the class sought has not previously been granted. They include further grounds relating to the suitability of the applicant and the premises; they also include a number of grounds which relate to other considerations of public and community interest. (at p571)
7. The grounds of objection to a removal application specified in s. 57 are
in addition to those mentioned in s. 48 (1) and (2).
They are as follows:
"(a) That the licensing of the premises to which it is proposed to
remove the licence is not required for the accommodation
of the public;
(ab) That the needs of the public that are being, or are capable of
being, met at the premises to which the licence presently
relates would be
unduly prejudiced by the removal of the licence;
(b) That the said premises are in the vicinity of a church or other
place of public worship, or a hospital or school, and would,
if licensed, be
the cause of inconvenience or annoyance to persons using or frequenting such
church, place of worship, hospital or
school;
(c) That the quiet of the locality in which the said premises are
situated will be disturbed, if a licence is granted for the
sale of liquor in
those premises;
(d) That the lease under which the holder of the licence occupies his
premises contains a covenant or prohibition against removing
the licence to
any other premises without the consent of the lessor, and that such consent
has not been obtained." (at p571)
8. The Licensing Court is directed to hear, inquire into and determine
applications and objections (s. 59 (3)). No licence shall
be renewed nor shall
any application be granted as a matter of course and upon the hearing of an
application, whether objection is
taken or not, the Court shall hear, inquire
into and determine the application and all objections on the merits "and shall
grant
or refuse the application with or without conditions upon any ground or
for any reason whatsoever which, entirely in the exercise
of its discretion,
it deems sufficient" (s. 61 (1)). (at p571)
9. From this brief summary it will be seen that the Act constitutes the Licensing Court with an exclusive jurisdiction, subject to an appeal to the Supreme Court, to grant or refuse applications relating to licences under the Act. In deciding whether to grant or refuse applications the Court is required to consider a wide variety of factors relating to the public and community interest. If the Act did no more than this there might be a case for saying that the exercise of the Licensing Court's jurisdiction is subject to the enforcement by the Supreme Court of a covenant by a licensee with his landlord that he will not apply for removal of a licence relating to the leased premises without the consent of the landlord. (at p571)
10. However, it is evident from what I have already said that the Act does more than this. First, it confers a right on a licensee to apply to the Licensing Court for removal of his licence. Next, by making the existence of a covenant of the kind mentioned in s. 57 (d) and the absence of the landlord's consent a ground of objection, it contemplates that the Licensing Court in the course of exercising its jurisdiction on a removal application will decide whether there is a covenant and whether removal will constitute a breach of it. (at p572)
11. The question, then, to be decided is whether the ground of objection mentioned in s. 57 (d), if made out, is a bar to the making of an order for removal or whether the Licensing Court has a discretion to make an order for removal, notwithstanding that the ground of objection is established. If there had been no general provision in the Act conferring an overriding discretion on the Licensing Court, the very fact that the matters referred to in s. 57 (d) constitute a ground of objection suggests that, if made out, they would be a bar to the grant of an application for removal. This suggestion gains some support from the character of the other additional grounds of objection set forth in s. 57. Grounds (a) and (ab) are such that, if made out, the application would ordinarily fail. Grounds (b) and (c) are, I think, in much the same category. (at p572)
12. However, s. 61 (1) does confer an overriding discretion on the Court. It is cast in the widest of terms - "upon any ground or for any reason whatsoever which, entirely in the exercise of its discretion, it (the Court) deems sufficient". As I read the provision, it gives the Court a discretion to grant an application, notwithstanding that a ground of objection is made out. It is a discretion which will be exercised by the Licensing Court in the public interest. (at p572)
13. Consequently, if the respondents' application is heard and determined in the Licensing Court, that Court has a discretion to grant the application, even if it finds that an objection based on s. 57 (d) is made out by the applicant. Now, it is to be expected that in the ordinary course of things the Licensing Court would respect contractual arrangements made by licensee and landlord relating to the removal of a licence. Certainly, there is nothing in the Act to indicate that the making of such arrangements is inconsistent with the statutory policy and purpose or to suggest that great weight should not be given to such arrangements. Nevertheless, in case of collision between private right and public interest the Licensing Court will, in the exercise of its discretion, give paramount weight to the protection and advancement of the public interest. (at p572)
14. It was not suggested in argument that the covenant was either invalid or unenforceable by reason of inconsistency with provisions of the Act or the policy which underlies it (Hyman v. Hyman (1929) AC 601 ; Lieberman v. Morris [1944] HCA 13; (1944) 69 CLR 69 ). Certainly, s. 57 (d) proceeds on the footing that a covenant of the kind referred to is valid. It may be assumed also that the section proceeds on the footing that the covenant is enforceable. (at p573)
15. The final questions, then, are whether the Supreme Court had a discretion to refuse an injunction to restrain a breach of the negative covenant and, if so, whether in the circumstances of this case the Court should have exercised its discretion against the applicant. (at p573)
16. Lord Cairns L.C. in Doherty v. Allman (1878) 3 App Cas 709, at pp 719-720 said that a court of equity has no discretion to exercise when an injunction is sought to enforce a negative covenant in a contract. His Lordship drew a distinction between "a negative covenant" and a covenant which is affirmative only. The distinction so drawn was, I think, not one deriving from the language or form in which a covenant happened to be expressed, but one arising from the substance of the obligation imposed by the covenant (see, e.g., Wolverhampton and Walsall Railway Co. v. London and North-Western Railway Co. (1873) 16 Eq 433, at p 440 , per Lord Selborne L.C.). (at p573)
17. There has been general agreement that Lord Cairns' statement that a court of equity has no discretion to refuse an injunction restraining a breach of a negative covenant is not accurate. In Doherty v. Allman (1878) 3 App Cas, at pp 729-732 itself Lord Blackburn, who, like Lord Selborne L.C. in the Wolverhampton Case, was inclined to repudiate the notion that a distinction should be made between negative and affirmative words, considered that there were cases in which a court of equity would refuse to enforce a negative covenant on discretionary grounds. (at p573)
18. However, there has been general disagreement as to how Lord Cairns' statement should be reformed if it is to accurately express the true principle. The reason for this is that it is quite impossible to formulate an illuminating statement of principle which is capable of universal application. There is no limit to the number and to the kind of negative stipulations, express or implied, which the courts may be asked to enforce. It is not surprising, therefore, that it has emerged from a long line of judicial decisions that the attitudes of the courts to the enforcement of negative stipulations have varied according to the nature of the stipulation, the nature of the contract in which it is found, the effect which enforcemnt will have on the relationship of the parties under the contract and the character of the order required to enforce the stipulation. (at p574)
19. Thus, the courts have frequently refused injunctions to restrain a breach of a negative stipulattion in a contract for the sale of chattels or goods, in a contract for personal service and in a contract the enforcement of which would require the court to supervise the performance of the contract. Although these instances clearly demonstrate that the courts have a general discretion to refuse relief by way of injunction, even in cases where the court's consideration does not extend beyond the private rights of the parties to a contract, they are quite remote from the present case. Here the injunction is sought to restrain a party from maintaining proceedings in a court which has exclusive jurisdiction to entertain the proceedings. (at p574)
20. The issue is whether the Supreme Court should have exercised its discretion so as to prevent the respondents in breach of their covenant from invoking the jurisdiction of the Licensing Court in a matter in which jurisdiction was conferred upon it by the Act. I would answer this question in the negative. There are a variety of considerations which persuade me to this conclusion. (at p574)
21. First, a superior court should hesitate before granting an injunction restraining a party from commencing or maintaining proceedings in a court or tribunal which has been specially constituted by statute with a jurisdiction to entertain and determine proceedings of that kind, the more so when the proceedings relate to rights or privileges which depend for their existence on the statute (Forster v. Jododex Australia Pty. Ltd. (1972) 127 CLR, at pp 427, 438-439 ). The Act creates the licence and regulates what may be done with it by way of transfer or removal. And, as we have seen, the Act has constituted the Licensing Court with an exclusive jurisdiction in licensing matters. Secondly, the Licensing Court is specifically directed to determine the grounds of objection. Accordingly, the Licensing Court in the exercise of its jurisdiction must decide, once the ground of objection mentioned in s. 57 (d) is taken, whether there is a covenant of the kind in question and whether the landlord has failed to give its consent, these being the two issues which the Supreme Court was asked to determine in the proceedings for relief by way of injunction. Thirdly, these issues may not be decisive in the proceedings in the Licensing Court because it has an overriding discretion to grant an application for removal despite the existence of a breach of covenant. Fourthly, the grant of an injunction would effectively deprive the Licensing Court of the opportunity of exercising that overriding discretion, notwithstanding that the discretion had been given to the Licensing Court so as to enable it to determine applications in the public interest. Indeed, the effect of granting an injunction would be to set private rights above the public interest, for an injunction would effectively prevent the Licensing Court from deciding whether, despite the existence of a covenant, considerations of public interest outweigh the desirability of enforcing private rights. Finally, there is an appeal from the Licensing Court to the Supreme Court. The existence of this appeal enables the Supreme Court to correct any mistake which the Licensing Court may make. All these factors indicate that the Supreme Court was correct in exercising its discretion against intervention. (at p575)
22. The observations of Jordan C.J. in Ex parte Berry; Re Kessell (1936) 36 SR (NSW) 485, at pp 492-493 , give no support to the applicant. There the Chief Justice drew a distinction between the jurisdiction of general courts over questions relating to private rights and the special jurisdiction of the licensing tribunal under the Liquor Act, 1912 (N.S.W.) over licensing matters, indicating that general courts could not "encroach upon the jurisdiction of the licensing tribunals". In this case, however, the Licensing Court as well as the Supreme Court has jurisdiction to decide whether there has been a breach of covenant. But the Licensing Court alone has jurisdiction to decide whether the licence should be removed. To grant an injunction having the effect of preventing the Licensing Court from exercising its overriding discretion to grant or refuse the application would be to encroach on its jurisdiction, indeed to prevent it from exercising its jurisdiction. (at p575)
23. Nor does the decision of this Court in Forster v. Jododex Australia Pty. Ltd. [1972] HCA 61; (1972) 127 CLR 421 assist the applicant. In that case there was a difficult and important question of statutory interpretation which was susceptible of determination in proceedings for declaratory relief, notwithstanding that it was a question which the mining warden would ordinarily determine in the course of exercising his jurisdiction under the Mining Act, 1906 (N.S.W.), as amended. There was no appeal from a decision of the mining warden in proceedings of the relevant kind. The effect of the declaration was merely to declare the legal rights of the parties. The making of the declaration did not prevent the mining warden from exercising his jurisdiction under the statute; indeed, it facilitated his exercise of jurisdiction. (at p575)
24. I am mindful that the existence of a negative covenant distinguishes this
case from Forster v. Jododex Australia Pty. Ltd. and
from cases in which the
injunction has been sought as a public law remedy. Traditionally it has been
thought that the negative covenant
constitutes a strong foundation for relief
by way of injunction, at least in cases in which the court is concerned only
with private
rights. Slatter v. Railway Commissioners (N.S.W.) [1931] HCA 13; (1931) 45 CLR
68 , where an injunction was granted to restrain
a lessee from proceeding
with
an application under the Liquor Act,
1912 (N.S.W.) for the transfer of a
licence to other premises,
in breach of covenant, was
such a case. The Court
took the view that
the Act safeguarded the interests of the owner of the
licence.
On this point Gavan Duffy
C.J., Starke and Dixon JJ. said (1931) 45
CLR, at p 79 :
"The contractual rights given to the landlord to ensure that the licence
is not destroyed or removed to other premises, but
is kept on foot and
transferred to a person chosen by the landlord, do no more than safeguard the
interests of the owner which secs.
37 (2), 38, 39 (4), 128 (2) and (3) and 130
of the Liquor Acts recognize." (at p576)
25. For the reasons which I have already given, the Supreme Court was right
to refuse the injunction as a matter of discretion.
(at p576)
26. In view of the importance of the questions argued, I would grant the application for special leave to appeal and dismiss the appeal. (at p576)
MURPHY J. The appeal should be dismissed for the reasons given by Mason J. (at p576)
2. Although not argued, there is, in my opinion, a real question whether the effect of the statutory provisions is to render the covenant unenforceable. (at p576)
ORDER
Application for special leave granted. Appeal dismissed. Appellant to pay respondents' costs.