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New changes to the Liquor Act 2007, commencing today, have the potential to have a significant impact across a range of industry players – from licensees and financiers, and even those outside the industry, such as the parents of minors.  Several areas of the Act have been subject to amendment, including changes to the prescribed premises provisions.  We focus on some of the key changes below.

Harsh penalties for service to minors

Automatic suspension and cancellation of licence for second and third offences

A form of 3 strikes regime is imposed for the offence of supplying liquor to minors on licensed premises.  The regime is much harsher than the current 3 strikes regime because the consequences of the second and third strike are automatic, and the first strike could result in suspension of the licence for up to 28 days.

Similar to the 3 strikes regime, before any sanctions are imposed, there must first be an offence – which is established by a court conviction, payment of a penalty notice, or the issuance of a penalty notice enforcement order.

Where the first offence occurs, the Secretary of NSW Trade and Investment may order suspension of the licence for up to 28 days.  However, the Secretary must first allow the licensee a reasonable opportunity to make submissions in relation to the proposed suspension and must take into account the compliance history of the licensee before making the decision whether or not to suspend the licence, and for how long.

Where a second offence occurs at least 28 days after, but within 12 months of, the first offence, the licence will automatically be suspended for 28 days, with the suspension taking effect on the day notified by the Secretary to the licensee in writing.

Where a third offence occurs within the same 12 month period, but at least 28 days after the second offence, the licence will automatically be cancelled, with the cancellation taking effect on the day notified by the Secretary to the licensee in writing.

Suspension of the licence for one offence would be a very harsh penalty, and one which we imagine would be unlikely to be imposed in most circumstances.  However, where a licensee has a particularly poor compliance history, some form of suspension is likely to occur. 

It is important to note that the action taken on the first offence requires consultation with the licensee and a decision of the Secretary, which makes it an appealable decision.  This is to be contrasted to the action taken on the second and third offences, which do not involve consultation with the licensee or a decision of the Secretary – there is therefore no ability to make submissions as to why the penalties should not be imposed, and no right of appeal against the 28 day suspension (in the case of a second offence) or permanent cancellation (in the case of the third offence) of the licence.

Although the consequences of the first offence are unlikely to be particularly harsh for many licensees, because the consequences of the second and third offence are so harsh, licensees must not be complacent in relation to the first offence, and, in particular, should elect to challenge any penalty infringement notice for such an offence in court.

Responsible adults of minors must exercise responsible supervision

It has long been an offence for anyone other than a parent or guardian (or a person authorised by a parent or guardian) to supply liquor to minors.  Under the changes commencing today, a parent or guardian will also be guilty of an offence unless the supply to the minor “is consistent with the responsible supervision of the minor”.  Matters that are considered to be relevant in determining whether the supply of liquor is consistent with the responsible supervision of a minor include:

  1. the age of the minor,
  2. whether the person supplying the liquor to the minor is intoxicated,
  3. whether the minor is consuming the liquor with food,
  4. whether the person supplying the liquor is responsibly supervising theminor’s consumption of the liquor,
  5. the quantity and type of liquor supplied and the period of time overwhich it is supplied,
  6. such other matters as may be prescribed by the regulations.

Intoxication reforms

The Liquor Act previously provided, as defence to a charge of permitting intoxication, that the licensee, and the licensee’s employees or agents, took the steps set out in section 73(5) or all other reasonable steps to prevent intoxication on the licensed premises.  The catch all “or all other reasonable steps" has been removed by the amendments, and instead the only defence to a charge of intoxication will be that the steps set out in section 73(5), or the Secretary’s guidelines, were followed.

Guidelines are expected to be issued by the Secretary shortly.  Licensees will need to review their management plans and training to ensure that these guidelines are followed.

Change to primary purpose test

A small, but potentially significant, change to the primary purpose test for on-premises licence has been introduced.  The primary purpose of a business conducted under an on-premises licence must now be something other than the sale or supply of liquor at all times

Although this change is described as merely a “clarification” by the government, it could have important operational consequences for many on-premises licences, particularly those premises designated as restaurant licences that essentially morph into small bars later in the evening.  The licensing police will now have far stronger grounds to argue that this type of operation is contrary to the licence, as a licensee will need to be able to point to some purpose other than the sale of liquor that can be said to be the primary purpose of the business at those hours.

Changes to licence transfers

Where an owner in possession licence transfer application is not made within 28 days of dispossession of the licensee, a licence will now be suspended until such time as a new licensee is installed. 

This will be an important change for landlords and financiers, particularly where a business is to be sold as a going concern, as the continued operation of the licence, and the premises, will be required.  In this case, landlords and financiers must keep in mind that a replacement licensee should be found as a matter of priority, and within 28 days of the former licensee leaving.

A “streamlined” process for other licence transfers has been introduced, which will essentially allow for a simple notice to be sent to the Authority to inform it of a change in licensee, where the new licensee is an experienced licence in the particular type of venue.  This is similar to the existing approved manager regime, where a change in manager can occur simply by notice to the Authority.  This will save time and money for larger industry players, who routinely move licensees between venues.

Reforms for producers of beer and spirits

Producers of beer and spirits will now be entitled to essentially the same treatment as wine producers under the Act, which will enable them to apply for an authorisation on their producer/wholesaler licences to sell liquor for consumption on their licensed premises if they wish to operate a restaurant, bar, or accommodation facility.  They will also be able to conduct tasting and to sell their products at producer markets and industry shows.