As featured in the QHA Review
An ‘interim authority’ (for liquor) and ‘special authorisation’ (for gaming) (together referred to as “Interim Authorisations“) allow new operators to sell liquor and conduct gaming prior to the finalisation of liquor licence transfers or grant of a gaming licence.
Interim Authorisations were historically granted as a temporary solution to emergency situations to allow venues to continue to trade, thereby retaining the business goodwill whilst a transfer was in progress. By way of example, such emergency situations included:
- Death of an individual licensee;
- Where a landlord or mortgagee retakes possession of business premises, whether on the basis that a lease has expired, the tenant has defaulted or abandoned the business premises and wishes to continue to trade and preserve the business; or
- Where a liquidator or administrator has been appointed to a company licensee and wishes to continue to trade the business as part of the administration or liquidation process.
Whilst Interim Authorisations are still available for the above circumstances, there has been a gradual transition to allow Interim Authorisations to parties intending to settle the sale and purchases of pubs, hotels, and other licensed venues, pending approval of liquor licence transfer and grant of a gaming licence.
In order to be able to apply for Interim Authorisation, the new operator must be in possession of the licensed premises and have an application for transfer of liquor licence and gaming licence lodged for approval. Office of Liquor and Gaming Regulation (OLGR) approval for Interim Authorisations can take up to two to three days, on the basis that all other conditions are satisfied for the Interim Authorisations. The OLGR has very specific requirements for statutory declarations and other evidence that must be supplied to support an application for Interim Authorisation, so it is important that applicants have assistance from experienced advisors to ensure such applications proceed smoothly, particularly where they are time sensitive.
Whilst Interim Authorisations are beneficial to facilitating the finalisation of pub and hotel transactions, there are risks associated with purchasing a business subject to Interim Authorisations. Some risks include:
- the Buyer not being able to obtain a transfer of the liquor licence or a gaming licence and therefore owning a pub or hotel business it cannot fully legally operate in; and/or
- the Buyer not being able to obtain external financing for the purchase, as generally, banks and third-party lenders are hesitant to advance funds where a liquor and gaming licence has not been approved.
Furthermore, Interim Authorisations are typically issued for a period of up to three months. Where required, an extension may be requested on the grounds that the new operator still has liquor and gaming licence applications in progress. However, Interim Authorisations are not indefinite and cannot be used as a permanent substitute for a full liquor or gaming licence.
Despite the above risks, Interim Authorisations can be highly beneficial in circumstances where the parties require a more immediate sale/purchase, or in the emergency situations outlined above. It is important for both a seller and a buyer to consider whether Interim Authorisation is required and appropriate before agreeing to finalise a transaction on that basis. Where Interim Authorisations are appropriate, it is also important in the case of a sale to ensure that the contract is properly drafted to provide specific rights and obligations for both parties in connection with the Interim Authorisations.
Should you have any queries or require any further information in relation to interim authorities to sell liquor and/or special authorisations to conduct gaming, please contact me on (07) 3224 0230.
