When a licence is granted, it is granted to a specified entity (the licensee). The licence allows only the licensee to sell liquor and at a specified place (the licensed premises).
The Liquor Control Act 1988 provides the flexibility whereby licensees may seek to enter into an arrangement or agreement with a third party relating to the conduct of the business under the licence.
Parties to such agreements should be aware that the provisions of the Act override the terms of any management agreement. An application of this nature will not be approved where any terms of an agreement are contrary to the Act or seeks to contract out of the Act.
The licensee’s duties and obligations remain the same even with the creation of a profit sharing or management agreement. The licensee always has responsibility for the conduct of the business under the licence and must ensure the business carried on under the licence is personally supervised and managed by natural persons.
Furthermore, the agreement must not contradict section 37(5) of the Act. This means that the licensee must retain exclusive possession of the whole of the licensed premises and can not lease out a portion of the licensed area to a third party.
Applications that can not be granted
Agreements that seek to allow a company or manager to sell liquor on behalf of the licensee will not be approved.
Under Section 34 of the Act applications can not be granted if the applicant is:
- bankrupt or has assigned his/her estate for the benefit of his/her creditors (unless special circumstances apply);
- incapable of managing his/her affairs because of mental disorder;
- under sentence of imprisonment;
- under receivership or official management, or is in liquidation (companies only);
- disqualified from holding a licence, or holds a licence which has been suspended, as a result of previous disciplinary proceedings;
- a juvenile (for instance less than 18 years of age); and
- a Commonwealth or State public servant (including employees of Crown instrumentalities), unless the licensing authority is satisfied that there is no conflict of interest between the applicant’s employment and the operation of the licence.
- a person not deemed fit and proper.
Similarly, each person directly or indirectly interested in the application or in the business, or profits or proceeds of the business, to be carried on under the licence must be a fit and proper person to be so interested. Prior to any approval being granted the licensing authority will need to be satisfied that all persons seeking to be involved are fit and proper.
Applications of this nature will only be granted if the licensing authority is of the opinion that it would be in the public interest to approve of such an agreement or arrangement. In submissions for approval, applicants are required to address the public interest issue as to why it is in the public interest that such an agreement should be approved. The onus is on applicants to ensure that agreements or arrangements comply with the requirements of the Act.
Any approval given by the licensing authority does not authorise any person, other than the licensee, to conduct the business under a licence, and does not in any way abrogate the licensee from its obligations and responsibilities under the Act.