QHA_March 2018_Electronic_s

LEGAL MATTERS with Curt Schatz
INTERIM AUTHORITIES -
WHAT YOU NEED TO KNOW
QHA REVIEW | 32
We have recently acted for a number of hotel landlords
who, due to no fault on their part, have found
themselves in difficulty because their tenant is unable
to continue trading the hotel business, endangering
the value of the landlord’s asset. The Liquor Act 1992
provides relief to landlords and other affected parties
such as mortgagees or secured creditors through the
interim authority mechanism, which can allow a venue
to continue to trade for a set period of time until a new
licensee is approved to hold the licences.
As the name suggests, an interim authority can be
granted by the OLGR to allow a premises to continue
to trade under a liquor licence on an interim basis for a
designated period of time, usually three months, until
the authority expires.
The circumstances in which a landlord, mortgagee, or
owner of a financial interest in the premises may apply
to the Commissioner for an interim authority include:
1. a licensee ceasing to conduct business on the
premises (i.e. due to abandonment, termination of
lease or insolvency);
2. the Commissioner ordering cancellation of the
licence but the order having yet to take effect; or
3. the Commissioner suspending the licence.
As these situations generally arise due to issues relating
to termination of the lease of a venue or a liquidation
event, some of the more common scenarios where
interim authorities are needed include:
LEASES
• Where a lease of a premises comes to an end and
there is no new tenant to immediately take over the
premises. If the landlord has not yet finalised the
transfer of the liquor licence to itself, often it will be
beneficial for the landlord or its nominee to apply
for an interim authority to trade under the licence so
that the venue can continue operating;
• Where a tenant of a premises ceases trade and
leaves immediately with no notice to the landlord.
Similar to the situation above, it might be beneficial
for the landlord to apply for an interim authority to
continue to operate the business until a new tenant
can be found; and
• Where the landlord has terminated a lease due to
default of a tenant and the landlord re-enters into
possession of the premises.
INSOLVENCY
Where an external administrator is appointed to the
licensee due to insolvency (i.e. liquidator, administrator,
receivers and managers, mortgagee in possession) are
appointed over the licensee or the premises. This is
a common situation where an interim authority will be
requested by the external administrator to continue to
conduct the business of the licensee.
An interim authority is intended to be merely an interim
step to the full transfer of a liquor licence, so while
these authorities may be extended if sufficient reasons
exist, they cannot continue indefinitely, and a full licence
transfer application must be lodged.
The process for applying for an interim authority has
a number of requirements to be met and sufficient
evidence must be provided showing appropriate
circumstances exist before the interim authority may be
granted.
For licensed venues that also have gaming machines,
it is also important to note that the holder of an interim
authority also needs to apply for special authorisation if
it wishes to operate the gaming machines.
It is also important for landlords to note that simply
obtaining an interim authority and special authorisation
after a tenant vacates or is evicted does not necessarily
give the landlord control over the operating authorities.
There is a real risk in these circumstances that a
former tenant may still be able to surrender any or all
of the operating authorities into the pool for sale. It is
critical that a landlord has sufficient protection under its
lease terms and acts quickly in these circumstances
to preserve any operating authorities attached to the
gaming machine licence for the premises.
Should you have any queries or require any further
information in relation to interim authorities please
contact myself at Mullins Lawyers on (07) 3224 0230.