Victorian Civil and Administrative Tribunal|2010-03-19|Before: Mr J

CK & Sons Pty Ltd v Bayside CC [2010] VCAT 505 (19 March 2010)

Application under section 77 of the Planning and Environment Act 1987; Bayside Planning Scheme; Residential 1 Zone; Proposal to install ten additional gaming machines in existing hotel with existing gaming room; Matters to be considered in determining the merits; Locational aspects require planning approval; Locational social and economic considerations reasonable & appropriate to allow additional machines.

The decision of the Responsible Authority is set aside.
In permit application 2008/553/1 a permit is granted and directed to be issued for the land at 215 New Street, Brighton. The permit allows the installation and use of ten additional gaming machines at the Marine Hotel in accordance with the following condition:
1. This permit will expire if the installation of the new electronic gaming machines is not completed within four (4) years of the date of this permit.

The Responsible Authority may extend the periods referred to if a request is made in writing before the permit expires, or within three (3) months afterwards.

Ms S Brennan, Barrister instructed by Williams Winter solicitors

The Marine Hotel is located on the corner of New and Park Streets in Brighton. The hotel has existed since around 1859 and has had gaming machines since 1993 in a gaming lounge that operates 9am to 3am, 7 days per week. The hotel also contains a car park with access from New Street, a bistro for around 240 people, a function room for 60 people, two bar areas for 90 people and an outdoor seating area and drive through bottle shop.

The hotel is located on the corner of a roundabout that has five roads accessing it. The hotel is also located approximately 350 metres west of the Church Street shopping centre. There are residential properties directly to the west and residential streets to the north and south of the site.

To add ten gaming machines to the existing gaming lounge, bringing the total number of gaming machines to 50.

Beretta's Langwarrin Pty Ltd v Frankston CC [2009] VCAT 74

Prizac Investments Pty Ltd and Others v Maribyrnong CC and Others (Red Dot) [2009] VCAT 2616

Branbeau Pty Ltd v Victorian Commission for Gaming Regulation [2005] VCAT 2606

This is an application to review the decision by Bayside City Council ('the Council') to refuse to grant a permit for the installation and use of ten additional gaming machines at Marine Hotel in an existing gaming lounge containing 40 gaming machines. The Council's grounds of refusal are:
1. Net community benefit to the wider Bayside community has not been provided. The proposed increase in electronic gaming machines will result in a negative impact on the Bayside community.
2. The increase in electronic gaming machines cannot be supported, as the use is not compatible with adjoining or nearby land uses. There are a number of major educational and community facilities and residential areas in close proximity.
3. The proposal fails to meet the tests and requirements of the Bayside Electronic Gaming Machines Policy 2008.
As background, I note the Council received five objections when the planning application was advertised that raised issues associated with traffic, noise, parking, increased litter and property damage, increased risk to problem gamblers and an imbalance between restaurant uses and gaming machines. However, none of these objectors sought to be a party to this application for review and hence the submissions received in this hearing have been from the applicant and the Council only. I note the Council does not share the concerns raised about traffic, noise, parking, or increased litter and property damage.
I was advised the applicant has sought to amend its Venue Operators Licence through the Victorian Commission for Gaming Regulation to allow ten additional gaming machines. The Council informed the VCGR in October 2008 that it opposed the application as it would have a negative impact on the health and well being of the Bayside community. To date, the VCGR has not set down a date for its enquiry.

Planning permission is required under a particular provision in the planning scheme being Clause 52.28 Gaming, to install or use a gaming machine.
As part of the Council's submission, Mr Kane submitted that it was appropriate to have regard to the purpose of the Residential 1 Zone that provides for non-residential uses that serve a local community need. He submitted gaming machines do not serve a local community need, which therefore supports the Council's grounds of refusal that the proposal is inappropriate in this section of Bayside's community. I agree with Ms Brennan's submission that the starting point for considering this application is an acknowledgment that the hotel already exists and is already used for gaming. Hence, this case is not about the appropriateness of this location for a gaming activity per se, but rather whether this location is appropriate for the inclusion of an additional ten gaming machines.
The purpose of Clause 52.28 is:

To ensure that gaming machines are situated in appropriate locations and premises.

To ensure the social and economic impacts of the location of gaming machines are considered.

To prohibit gaming machines in specified shopping complexes and strip shopping centres.

The last purpose is not relevant as the parties agreed this hotel is essentially in a standalone location, separated from the Church Street strip shopping centre. The other two purposes focus upon, firstly, whether it is an appropriate location and, secondly, the social and economic impacts of the location. This 'location theme' is continued in the decision guidelines of clause 52.28 that require consideration of[1] the following:
- The State Planning Policy Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and Local Planning Policies.
- The compatibility of the proposal with adjoining and nearby land uses.
- The capability of the site to accommodate the proposal.
- Whether the gaming premises provides a full range of hotel facilities or services to patrons or a full range of club facilities or services to member and patrons.

Before dealing with the purpose and decision guidelines of clause 52.28, I wish to deal with the last ground of refusal by the Council relating to its adopted Bayside Electronic Gaming Machines Policy.
I agree with Ms Brennan that this policy should be given little weight because it is not contained in the planning scheme as either a reference or incorporated document; and it has not been through a public consultation or review process[2].
I also agree with Ms Brennan that the focus of the policy appears to be more related to new planning applications for new premises, rather than how to deal with additional gaming machines at existing premises. Hence, I do not find its content to be of any particular assistance or value in this case. Instead, I have relied upon the purpose and decision guidelines of clause 52.28 to make my decision.

There was no dispute between the parties that the Marine Hotel does provide a full range of hotel facilities and services to its patrons, including that the gaming lounge is a relatively small component of the overall facility and the number of patrons that it can cater for. Mr Kane described the hotel as a well-run and well-managed facility.
In regard to the State and Local Planning Policy Frameworks, Mr Kane submitted the planning scheme is effectively "policy neutral" as there is no specific reference to electronic gaming machines or gaming in either the Municipal Strategic Statement or the Local Planning Policy Framework. Ms Brennan pointed out, there is one reference to gaming machines in Clause 21.06 relating to activity centres, which includes a strategy:

Restrict the establishment of gaming machines in shopping centres.

However, as this site is not located in a shopping centre and is located outside of the Church Street strip shopping centre, there remains essentially a "policy neutral" position in the planning policies of the planning scheme.
Having regard to the remaining two decision guidelines, I find:
- The Marine Hotel is capable of accommodating 10 additional gaming machines, and their inclusion will not require any changes to the existing internal configuration of the hotel facilities and services currently available; and
- The Marine Hotel is well run and well managed and there was no suggestion by the Council that there are any amenity issues, or parking or traffic issues associated with the operation of the hotel, including its gaming lounge.
Therefore, I find the additional ten gaming machines, as part of the Marine Hotel and its facilities and services, is compatible with the adjoining and nearby land uses. As such, having regard to the purpose of clause 52.28, I also find the Marine Hotel is an appropriate location for an additional ten gaming machines.

The Council relied upon the Tribunal decision in Beretta's Langwarrin Pty Ltd v Frankston CC[3] that the State planning policy regarding net community benefit at Clause 11 requires an applicant to demonstrate more than just the absence of any net community detriment. Beretta's found the applicant must demonstrate that a proposal will lead to a net community benefit and go beyond a break-even situation. Ms Brennan disagreed with this submission and relied upon the recent findings of the Tribunal in Prizac Investments Pty Ltd and Others v Maribyrnong CC and Others[4] that clause 11 does not set out a particular test, rather it sets out policy considerations as guidance and does not require the applicant, in planning terms, to demonstrate the proposal will lead to a net community benefit. Prizac went on to state:
1. We acknowledge the different roles and responsibilities under the gaming application and planning application. Whilst the gaming legislation mandates no net community detriment and constrains the exercise of power by the VCGR if this is not found, the Planning and Environment Act is more general in seeking to balance the present and future interests of all Victorians.
2. Under Clause 11 it is the State Government's expectation that planning and responsible authorities will endeavour to integrate the range of policies relevant to the issues to be determined and balance conflicting objectives in favour of net community benefit and sustainable development. We accept Mr Townsend's submission that Clause 11, itself, is not a prohibition on the grant of a permit in the absence of net community benefit. Rather he claimed, policies are meant to guide the decision making, not dictate outcomes. We acknowledge a proposal does not necessarily fail if an applicant cannot demonstrate a net benefit, particularly in a case where there may be a neutral outcome.
Essentially, Mr Kane and Ms Brennan agreed the Bayside Planning Scheme is policy neutral in regards to the installation and use of gaming machines. Ms Brennan submitted there is a net benefit in this case, but I am of the opinion it is not necessary to demonstrate a net benefit as it is not a test and the absence of any clear net community benefit, if that was the case here, is not sufficient reason to refuse to grant a permit in any event.
Mr Kane submitted the real positive benefit of this proposal is to gamblers rather than the broader Bayside community as more gaming machines are provided to them. I am not persuaded by this and I find there were aspects to the Council's submission that really overstep the role of the planning permit. The emphasis of clause 52.28 is the "location" of the gaming machines, and a consideration is the social and economic impacts of the location. This locational analysis is different to the analysis the Victorian Commission for Gaming Regulation must undertake to approve a proposal, namely that the net economic and social benefit of approval will not be detrimental to the municipal district community's well being.

The Council expressed concern the Marine Hotel is located in close proximity to a number of major educational and community facilities that involve primarily persons aged less than 18 years. Mr Kane explained the Council is of the view activities at such facilities create opportunities for major community congregation and, hence, the Council is concerned such congregations could lead to "convenience gambling". Mr Kane acknowledged there is no evidence or research that demonstrates any link between community activities and convenience gambling. Ms Brennan and Ms Thomas both disagreed with this submission and, again, stated there is no evidence or research about convenience gambling being an issue where a gaming venue is in proximity to venues for persons aged under 18. Ms Thomas pointed out that liquor licenses prohibit persons under the age of 18 within the gaming room and indeed, there are restrictions on persons aged under 18 drinking within licensed premises generally. Therefore, I am not persuaded that this concern of the Council is sufficient reason to refuse this application.

The main concern of the Council and hence the majority of the applicant's submission focused on whether the increase in the number of gaming machines will result in a negative impact on the Bayside community. This ground of refusal is derived from the purpose "to ensure the social and economic impacts of the location of gaming machines are considered". The key to this purpose is that it is about the location of the machines. What the purpose and decision guidelines do not require is consideration of the social and economic impacts of the machines themselves. It appears to me that the Council is wanting to have that argument now, at the planning permit stage, as well as in due course at the enquiry of the VCGR. I note the explanatory report of Amendment VC39 that introduced the current provisions of cl 52.28 states:

The Amendment does not affect the ability of a Responsible Authority to make submission to the Victorian Commission for Gambling Regulation on the 'economic and social impact of the proposal for approval on the well-being of the community' under section 3.3.6 of the Gambling Regulation Act 2003[5].

The Explanatory Report for Amendment VC39 states the normal assessment of an application will apply to a permit application for a gaming machine as a result of the amendment, enabling the Responsible Authority to consider significant social and economic effects (using s 60 (1A)(a) of the Planning and Environment Act 1987) for all gaming machine proposals. This section of the Act states before deciding on an application, the Responsible Authority, if the circumstances appear to so require, may consider any significant social and economic effects of the use or development for which the application is made.
In this case, the use of gaming machines already exists. All that is sought is planning permission to install and use an additional 10 gaming machines and clause 52.28 states the social and economic impacts of the location must be considered. I reiterate it is not the social and economic impacts of the gaming machines themselves.
Mr Kane submitted the only justification for lodging this planning application for additional gaming machines appears to be because at peak times gaming patrons may leave the premises to go elsewhere if they cannot access their preferred game or gaming machine. There is nothing in the clause 52.28 decision guidelines that require a justification for lodging a planning application. Like any development and use proposal, an individual has the right to lodge a planning application and I am not persuaded it is necessary for there to become an obvious justification as to why they are required. As such, the Council's criticisms of the hotel for undertaking a survey to show the usage levels of the machines is not of concern to me because the usage level of the machine is not a matter that I am required to consider. Rather, it is the location of the gaming machines and whether there location is appropriate having regard to the purpose and decision guidelines of cl 52.28.

What the hotel's survey did demonstrate is that the majority of the patrons come from Brighton, Brighton East, Sandringham, Hampton, Elwood, Caulfield and Beaumaris. Ms Thomas summarised the origins of the gaming patrons as being 77% from the City of Bayside with the remainder primarily coming from Glen Eira and Port Phillip local government areas. Ms Thomas gave evidence the City of Bayside is ranked 2 of 80 local government areas in Victoria (in descending order with one being the least disadvantaged). She also gave evidence the socio-economic characteristics of the 5km radius around the venue indicate the area has an extremely positive social and economic profile relative to Melbourne as a whole. Residents are generally likely to have higher individual and household incomes and higher levels of household ownership.
The Council suggested there are some low income and disadvantaged households within Hampton East and Highett, but the survey of gaming patrons indicates 2.29% came from these areas, and I am not persuaded this percentage is sufficient to raise any locational concerns with the additional gaming machines.
In Branbeau Pty Ltd v Victorian Commission for Gaming Regulation [2005] VCAT 2606, the former president of the Tribunal, Justice Morris (as he was then), postulated theories that appear to have widespread acceptance. Firstly, that problem gambling is more likely to emerge if gaming machines are located in poorer communities compared with richer communities. Secondly, that it is desirable to avoid concentrating gaming machines in poorer areas. Ms Thomas' evidence demonstrates that the socio-economic characteristics of the Bayside community that frequent and/or live around this venue are very well advantaged (as opposed to disadvantaged). The Council submission explained there are currently 225 gaming machines in Bayside, of which Marine Hotel is currently the third largest, and with the additional ten gaming machines will become the second largest behind Milano's Hotel in The Esplanade, Brighton. Ms Thomas explained from 2010, municipal limits will apply to all uncapped local government areas limiting the number of gaming machines to no more than ten per 1,000 adults. Bayside is an uncapped area and consequently will be bound by this ratio, which means Bayside can have a maximum of 726 machines. Clearly, the existing 225 machines, or 235 machines with this proposal is well below the maximum permissible of 726 machines.
As such, I find the social and economic impacts associated with the location of these additional ten gaming machines are reasonable and appropriate having regard to the socio-economic characteristics of the municipality and the immediately surrounding area, the gaming patrons survey of where they reside, and the existing density of gaming machines within the municipality as a whole.

I am satisfied the proposed additional 10 gaming machines in the Marine Hotel are appropriately located and should be approved.
The Council provided draft permit conditions which included a requirement for the applicant to provide an annual contribution in the sum of $50,000, the majority of which must be distributed to a community project or like community groups. Mr Kane explained the idea for imposing this condition came from the Beretta's decision, where the applicant agreed to a similar condition. However, he stated the community project referenced in the condition has not yet been determined by the Council, and it was unclear whether the Council wants to have an ongoing involvement in the allocation of the money.
Ms Thomas gave evidence the Marine Hotel already provides community contributions to a variety of local community groups, kindergartens and schools. Given the existing commitment of the Marine Hotel to its community contributions, I am not persuaded it is appropriate to impose this permit condition. Also, having regard to the purpose and decision guidelines which are focused upon the appropriateness of the location of the gaming machines, I am again not persuaded it is appropriate to impose a condition which relates to the social and economic impacts of the machines themselves in my opinion, rather than the location.
Mr Kane agreed the proposed condition 1 requiring the layout to be in accordance with endorsed plans is not required because there are no plans to be endorsed as there are no changes required to the existing layout and operation of the hotel.
Accordingly, a permit is granted subject to a condition that the permit will expire if the gaming machines are not installed within four years of the date of the permit.

[1] In addition to the decision guidelines of Clause 65

[2] Such as as part of a planning scheme amendment process

[5] Refer to page 2 of Amendment BC39 Explanatory Report.

Gambling Regulation Act 2003

CK & Sons Pty Ltd v Bayside CC [2010] VCAT 505

At a glance

Court

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Before

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Judgment (35 paragraphs)

CK & Sons Pty Ltd v Bayside CC [2010] VCAT 505 (19 March 2010)

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Legislation Cited (1)