As seen in the March 2021 edition of Queensland Hotels Association’s QHA Review.
In the last year or so, there has been a notable rise in the use of “interim authorities” and “special authorisations” (together referred to as Interim Authorisations) allowing new licensees to sell liquor and conduct gaming at venues, even before the new licensee has been approved for the transfer of a liquor licence or the grant of a gaming licence.
Historically, Interim Authorisations were used only as a stop-gap measure to enable a venue to temporarily continue trade, thereby preserving the value of the underlying business until a new operator could be approved to permanently take over the liquor and gaming licences. For example, this might become necessary:
- after the death of an individual licensee;
- where the liquor and gaming licences for a premises are held by a tenant, and the landlord wishes to continue trading the premises after retaking possession from the tenant, for example because the lease has expired, or the tenant has abandoned the premises, or the landlord has terminated the lease due to a breach by the tenant; or
- where a liquidator or administrator is appointed to manage the affairs of a company licensee.
Since the original intention was that Interim Authorisations would be granted to deal with emergency situations such as the above, OLGR typically takes between one to three working days to process and grant an Interim Authorisation if all relevant requirements are satisfied.
Interim Authorisations are still available in the above traditional emergency situations. Increasingly however, parties are being encouraged to settle sales and purchases of pubs, hotels and other licensed venues, on the basis that the Buyer can operate the venue under an Interim Authorisation, before the usual liquor licence transfer and gaming licence applications are approved by OLGR in full.
This is a risky strategy for a buyer, for two reasons. First, there is a chance that OLGR will not approve the buyer’s full liquor and gaming applications, in which case the buyer would be stuck with a pub business which they cannot legally operate. And second, if the buyer is reliant on external finance to complete the purchase, then banks and third-party lenders will not advance funding to complete the purchase until the full liquor and gaming approvals have issued.
On the other hand, it is clearly not in the seller’s interests to allow the buyer to trade the business under an Interim Authorisation, while delaying settlement until the full OLGR approvals have issued. The obvious risks to the seller in those circumstances are that the buyer may cause physical damage to the premises and/ or harm to the reputation and goodwill of the business through poor management, before reneging on the sale, failing to pay the purchase price, and leaving the seller to deal with the fallout.
In short, Interim Authorisations can be an enormously helpful tool when used for the correct purposes. However, parties should exercise great caution before choosing to settle the sale or purchase of a venue without full liquor and gaming approvals issued by OLGR.
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, then please contact myself on (07) 3224 0230.
1 Strictly speaking, “interim authorities” are issued under the Liquor Act 1992 (Liquor Act) to allow the sale of alcohol, whereas “special authorisations” are granted under the Gaming Machine Act 1991 (Gaming Act) to allow the conduct of gaming. Nevertheless, the term “interim authority” is often used colloquially to include special authorisations for gaming. To avoid confusion, I use the term Interim Authorisations when referring to both.