Club managers more likely to face personal liability under three strikes regime

Key Points

• The 3 strikes regime has changed.
• For a club to receive a strike the CEO personally must be charged with the prescribed offence.
• Licensing Police are now more likely to charge CEOs personally.
• CEOs should review the Club’s policies and procedures.
• CEOs should seek urgent legal advice if they or the Club receive a penalty notice or Court attendance notice for a prescribed offence.

The silly season is here and clubs have to be vigilant against the risk of committung an offence under the Luquor Act 2007 (the Act). However, this season may be the riskiest for Club CEOs yet.

Commencing October 2017, the NSW Government heavily amended the 3 strikes regime under the Act.  Generally, the changes were viewed by the hospitality industry as an improvement for licenced venues.  Strikes are now discretionary (not automatic), can be removed by application and, for hotels, strikes are imposed against the manager (and not the hotel).

There was also a general view that clubs would not be adversely affected by the change and, for the most part, this is true.

Clubs, being seen as “community owned”, have always been different to privately owned hotels. Importantly, it is the registered club itself that is the “licensee”.  That is, it is the registered club itself that holds the club’s liquor licence under the Act (and is therefore the licensee). The CEO/secretary of the club is not the licensee but has duties as if he/she is the licensee.

Many of the offences that can be committed under the Act are offences by the “licensee”.  For example, section 73(1)(b) of the Act provides “A licensee must not permit… intoxication…on the licensed premises”.  The reference to “licensee” for the offence of permitting intoxication is a reference to the club itself (and not the CEO/secretary).

Of course, permitting intoxication is a serious offence with a potential penalty of an $11,000 fine and significant increases in risk based licensing fees (previously up to $33,000 over 3 years).

Furthermore, if a club permitted intoxication it would also incur a strike against its licence.

Well… it did, but not anymore.

You’re probably thinking “of course it doesn’t – the first paragraph of this article said strikes are no longer automatic”.  You’d be correct, but that is not my point.

Previously, section 144D of the Act provided that a strike was incurred if “a relevant person in relation to the licence commits a prescribed offence”.  The Act defined a “relevant person” to include the licensee (remember, that’s the Club) or manager.

Section 144I now provides “A … strike is incurred on a club licence if the manager of the club premises commits a prescribed offence.”

Notice the difference?  For a strike to be incurred “the manager” must now commit the offence.  The Act does define “manager”, but the definition does not include the “licensee” (i.e. the club itself).

So, if your club is issued with a penalty notice or court attendance notice for permitting intoxication (naming the club as the offender) there is no ability for the Authority to issue a strike against the Club (on that basis alone).

Good news? Not in our view.

In our experience, licensing police are well aware of the three strikes regime.  Under the 2017 amendment, charging a club with an offence can no longer lead to a strike.  So what’s the problem?

The problem is section 91(2) of the Act which provides:

“If an element of an offence under this Act … is an act or omission by a licensee, the manager of the licensed premises is … responsible for the offence as though that person were also the licensee and is liable for the offence accordingly.”

That is, if the club permits intoxication the CEO of the Club is also liable for the offence and can be charged (and be personally liable for the penalty).

In our experience, charging a CEO under section 91 of the Act for permitting intoxication has been rare.  However, now, if licensing police think that the imposition of a strike is important/of benefit they must charge the CEO.

There is ordinarily a defence available to managers of club premises under section 149A of the Act that:

 
1. the manager had taken all reasonable precautions to avoid the commission of the offence; and

 

2. the manager did not know and could not be expected to know the offence was committed.

However, this defence is specifically not available for a CEO charged with an offence of “permit intoxication”.

There have been (at the time of writing) six published decisions of the Authority issuing first strikes under the Act since the new regime commenced on 1 October 2017.  None of these have been against clubs.

However, we are aware of a club that received (and paid) a penalty notice issued to the club for permitting intoxication.  Accordingly, the club (and not the CEO) “committed” the offence. Liquor & Gaming NSW then made an application to the Authority to issue a first strike (which, under section 144I, the Authority has no power to do).  The Authority is now considering the issue.

We would hope that the Authority’s consideration of the issue will lead to a change in the legislation.

However, once the Authority makes a determination we anticipate that licensing police will soon become aware that the only way for a club to receive a strike for permitting intoxication is to charge the CEO (unless the legislation is changed).

Accordingly, club CEOs need to be especially vigilant to avoid the risk of their club permitting intoxication (or committing any other prescribed offence).  CEOs need to ensure that their club’s systems and procedures are firmly in place and if the club does receive a penalty notice seek urgent legal advice as to what defences may be available.

Merry Christmas.

Further Information and Contact Details
Please contact any member of the Clubs team if you want to discuss this article or have any questions on 8251 777 or by email:

This Newsletter is produced by Pigott Stinson. It is intended to provide general information only. The contents of this Newsletter do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this Newsletter. Liability limited by a scheme approved under Professional Standards Legislation.