With licensees in Queensland reportedly feeling the financial effect of the Queensland Government’s enhanced “lockout laws”, it is timely to remind those with a financial interest in a licensed venue of their rights in the event that the licensee experiences financial difficulties or declares bankruptcy.
Powers of receivers, administrators and liquidators
Under the Liquor Act 1992 (Qld) (Liquor Act), if a licensee is declared bankrupt or goes into receivership, administration or liquidation, persons who are entitled to administer the affairs of the licensee, or who are appointed to manage, or wind up, the affairs of the licensee, may seek approval from the Commissioner of the Office of Liquor and Gaming Regulation (OLGR) for an “interim authority” to conduct the business of the licensee on the licensed premises.
Powers for landlords, franchisors and mortgagees
Landlords, franchisors and mortgagees of licensed premises (or other entities or persons that hold a financial interest in the trading of licensed premises) have the ability to seek an interim authority to conduct the business of a licensee on the licensed premises if:
- The licensee ceases to conduct the business on the relevant premises;
- A lessee or sublessee of the right to sell liquor ceases to conduct business on the relevant premises;
- A licensee who holds the licence as a member of a partnership ceases to be a member of the partnership;
- The OLGR has ordered the cancellation of the licence, but the order is yet to take effect; or
- The licensee’s licence is otherwise suspended under the Liquor Act.
Benefits of obtaining an interim authority
It is important to note that a liquor licence attaches to the premises to which it relates, so that it cannot be “taken” by the licensee if they leave the licensed premises. In the event that a licensee abandons licensed premises or ceases to operate the business at the licensed premises, the granting of an interim authority allows a person with a financial interest in either the business or the premises to continue to conduct the business with the benefit of the liquor licence. It also streamlines the process for handing over the licensed premises to an incoming purchaser, mortgagor or tenant, as the holder of an interim authority can apply to transfer the licence to a third party.
In the alternative, where a licensee ceases to operate or abandons its premises and an interim authority for the license is not granted, the right to sell liquor from the premises is typically lost. The premises will be deemed unlicensed and the liquor licence will either lapse or be cancelled. Once lapsed or cancelled, a liquor licence cannot be ‘revived’. Any third party wishing to re-commence the business including the sale of liquor from the premises would need to make an application for a new liquor licence and be subject to a fresh assessment by the OLGR that typically involves application fees, police checks, evidence of planning approval, advertising and potentially third party objections. Approval of a new licence can take between 3 and 6 months (sometimes longer), and may result in conditions that are different and possibly more restrictive than those that attached to the licence that has lapsed or been cancelled.
Obligation to give particulars of your financial interest
All landlords, lessees and mortgagees of licensed premises, and any secured creditors whose interest is likely to be affected by cancellation of a liquor licence, are required to register their financial interest in the liquor licence with the OLGR within 28 days of their interest in the licence taking effect.
We recommend that all persons with a financial interest in a licensed premise (including franchisors) comply with this obligation as they will then be given notice of any disciplinary action the OLGR may take against the licensee which could lead to cancellation of the licence, or even closure of the business.
This article was written by Kelly Alcorn, Partner and Holly Stephanos (née Whitcroft), Associate.