Clemett v NSW Lotteries Corporation Pty Ltd

Contractual and regulatory framework 6The game of Oz Lotto is a public lottery conducted by NSW Lotteries under licence under the Public Lotteries Act 1996. The Act requires the licensee to make rules for the conduct of the public lottery and provides for the approval and publication of such rules. The rules, once approved and published, "take effect" under s 23 of the Act. The significance of that section was considered by Barrett J, as his Honour then was, in Reinhold v New South Wales Lotteries Corporation [2008] NSWSC 5 at [28] as follows: By force of s 23 of the Act, the Rules have "effect". Given its source, that "effect" is supplied by the Act itself but its nature is not specified. Unlike its counterpart in Victoria, the New South Wales Act does not cause the rules to form part of each player's contract: see Abdelrehim v Tattersall's Ltd [2007] VCAT 756 and the reference, at [25], to s 7(5) of the Public Lotteries Act 2000 (Vic). But I am satisfied that, despite the absence [of] any such explicit reference, the contract arising upon purchase of an Oz Lotto ticket incorporates the provisions of the Oz Lotto Rules. 7His Honour held that the combined effect of the Public Lotteries Act, the defendant's licence, the Oz Lotto Rules and the Newsagents' agency agreement was that, upon purchase of a ticket, there arose a contract between the player, NSW Lotteries and the newsagent under which the rights and obligations of the parties were those specified by the Oz Lotto Rules. I am satisfied that it is appropriate to proceed on that basis in the present case. 8Barrett J further noted that such a contract is one of a special kind, since it is not one freely negotiated between the parties. Any question as to the proper interpretation of such a contract is a question as to "the proper interpretation of a rule passed pursuant to a rule-making power contained in an Act of Parliament": Brown v Petranker (1991) 22 NSWLR 717 at 722D per Clarke JA, Handley JA and Waddell A-JA agreeing at 729E. 9The rules provide that a completed entry form "shall be accepted by an agent and processed on a computer linked terminal and evidenced by the issue of a ticket to the subscriber": rule 6(c). The rules relating to the determination of prizes and the procedures for claiming prizes all contemplate the submission or surrender of a winning ticket: see for example rules 12(b), 12(c), 14(d), 14(e) and 14(h). 10It was submitted on behalf of NSW Lotteries in the present case that, in the absence of a ticket, NSW Lotteries has no legal or contractual obligation to pay a prize. That was said to be the combined effect of rules 14(f) and 14(i). 11Rule 14(f) deals with the position of a subscriber who claims to be entitled to a first or second division prize "whose ticket is not shown as a winning ticket on a computer linked terminal". It may be doubted whether that rule is apt to govern Mr Clemett's claim. The rule assumes the existence of a ticket that is able to be presented for checking on a computer linked terminal. Mr Clemett is not a person who holds a ticket which, when processed through a computer linked terminal, is not shown as a winning ticket. Rather, leaving aside his alternative arguments considered below, he is a person who claims that, if he still held his ticket (that is, had it not been lost), that ticket, when processed through a computer linked terminal, would show as a winning ticket. 12It may nonetheless be acknowledged that the rules contemplate the presentation of a ticket as a predicate to receiving a prize and that, in the absence of a ticket, payment of a prize is stated to be within the absolute discretion of the General Manager: rule 14 (i). 13However, in view of the factual conclusions I have reached, it is not necessary in these proceedings to determine whether the construction of the rules contended for on behalf of NSW Lotteries is correct. I would prefer to leave open for another day the question whether, on the proper interpretation of the Oz Lotto Rules, a subscriber who is unable to present his or her ticket may nonetheless establish a contractual entitlement to receive a prize if that ticket would have shown as a winning ticket on a computer linked terminal. It is not difficult to imagine circumstances in which a respectable argument could be mounted on that basis. For example, if a subscriber was able to establish that a winning ticket had been destroyed in a fire and was able to produce a photograph of it or other credible evidence to confirm the authenticity of the claim, it may be that the rules would not, on their proper construction, ascribe the fate of such a claim to the absolute discretion of the General Manager.

Did Mr Clemett play the winning numbers? 14The winning numbers for Oz Lotto Draw 188 were 10, 24, 28, 34, 37 and 45. The critical question in the present case is the factual issue whether Mr Clemett has established on the balance of probabilities that he completed and entered an entry form for that draw which included a game panel containing those six numbers. I am not satisfied that he did. 15An important consideration in the conclusion I have reached is the inherent unlikelihood that a person could, after the lapse of almost 4 years and with nothing to prompt memory in the intervening period, recall the 6 numbers between 1 and 45 entered in a particular game panel, let alone the exact composition of numbers in each of 12 game panels. It must be acknowledged that Mr Clemett was unhesitating in his evidence at the hearing before me as to the numbers he played in September 1997. He gave a careful and elaborate account of the way in which he completed his entry form, setting it out on a large whiteboard which became exhibit A (at T16-21). 16Mr Clemett was equally unfaltering in his recollection of the amount of the unclaimed prize and its precise composition as being a one third share of the first division prize together with six third division prizes (T21). The significance of that evidence is considered below. 17I do not discount the possibility that Mr Clemett now genuinely believes that he submitted an entry form in the terms set out in exhibit A. He appears to have persuaded himself over a period of years that he is the rightful claimant to the unpaid prize from Oz Lotto Draw 188. In my assessment, his fixation on that as an immutable fact has prompted him, over the years, to bend all of the surrounding evidence to meet it. 18I am not persuaded that Mr Clemett's account of the entry he thinks he submitted in Oz Lotto Draw 188 is reliable. In particular, I am not persuaded that he submitted an entry form with the six winning numbers in a single game panel. His reasons for remembering the numbers he entered have changed over time. His claimed recollection of each of the six winning numbers was unconvincing. He does not claim to have played the same numbers repeatedly on other occasions. 19Mr Clemett said that he began that day with 4 numbers in mind, which were 4, 7, 10 and 45. He explained that the 10th is his birthday and that it is in the 4th month, April (he had previously attributed the choice of the number 4 to an address where his mother lived). The number 7 related to an address of his. He appeared to explain the number 45 only on the basis that it is "the end number". He accepted that it was not a number of any particular significance to him (T34.22). 20Mr Clemett demonstrated that he began completing his entry form by putting the number 10 (the date of his birthday) in every panel. In order to make sense of Mr Clemett's evidence at that point, it is necessary to understand that, moving crosswise, the game panels appear on exhibit A in the order 1, 3, 5, 7, 9 and 11 in the first row and then 2, 4, 6, 8, 10 and 12 in the second row. Mr Clemett said that, based on his "4, 7, 10 combination", he decided to put the six numbers he genuinely thought would win in what he described as "the seventh game on that entry form", being panel 4 (T17.17). Panel 4 is in fact the eighth panel, counting crosswise, but that is the panel Mr Clemett was referring to at that point of his evidence. He put "the end number 45" in panel 4. He then decided that he would select 2 numbers in the 20 to 30 range and 2 numbers in the 30 to 40 range. He chose 34 and 37 and put those numbers in panel 4. By this point in his evidence, panel 4 had the numbers 10, 34, 37 and 45 (T17.26). 21Mr Clemett said he then added the numbers 1, 2, 1 and 2 across the first 4 panels in the top row (1, 3, 5 and 7) so that he had number 1 in panel 1, number 2 in panel 3 (the transcript says panel 2 but he in fact put the number in panel 3), number 1 in panel 5 and number 2 in panel 7. 22Mr Clemett said he then decided to fill out the numbers in panel 1 (which by this point had the numbers 1 and 10). He put 45 and then 24, 28 and 37 (evidently drawn from his decision to have 2 numbers in the 20 to 30 range and 2 numbers in the 30 to 40 range). 23Mr Clemett said that, at that point, Mr Shelley came to chase him up because he was taking so long. Although it is not expressly recorded in the transcript, he was at that point describing his completion of panel 4. He added the number 24. He then asked Mr Shelley "what will be the 6th number that I will put in this game panel?" He asked Mr Shelley the date and, after checking a newspaper (they were in a newsagency), Mr Shelley said it was the 18th. Mr Clemett then said "Ahh, it follows, doesn't it, 34, 37, 24. I won't put 27, I'll put 28, okay" (T18.3). It seems likely that Mr Clemett intended that explanation to extend to his use of the number 28 in other panels as well, although that is not quite how the evidence came out. He did not use the number 27 in any panel. 24The suggestion was that, notwithstanding his preference for the numbers 4 and 7, Mr Clemett chose 28 instead of 27 as the second number between 20 and 30 because the date that day included an 8. The difficulty is that, as was ably established in cross-examination by Mr Hogan-Doran, who appeared for NSW Lotteries, Mr Clemett's final version of events was that the ticket was purchased on the 19th, not the 18th. Accordingly, that evidence not merely undermined his claim to remember choosing all six winning numbers but in fact tended to demonstrate with some force the likelihood of error in that account. 25Mr Clemett gave evidence that he submitted the 12 completed game panels as a 5-week multi-entry for which he paid a price of $61.75. Mr Shelley paid part of the price and also bought a $2 lottery ticket. They received a combined receipt for $63.75. Importantly, Mr Clemett stated that, when he submitted his entry, he was issued with a ticket. He says that he checked the ticket before leaving the newsagency. He specifically recalled that the numbers on the ticket representing game panel 4 (allegedly the winning panel) corresponded with game panel 4 on his entry form (T26.4). He says he was confident at that time that the winning numbers were those he had entered in game panel 4. 26As already noted, Mr Clemett called evidence from Mr Shelley to corroborate his claim. Mr Shelley's evidence revealed that he is a god-fearing man (see T57). He felt bad for having suggested to Mr Clemett to buy the ticket in the first place. He had a "terrible, dark, shuddering" feeling after they bought it as to what would happen to Mr Clemett if he won $10 million. Mr Shelley suggested to me that, if the ticket Mr Clemett bought that day is "not there", NSW Lotteries should pay an ex gratia or discretionary payment of at least $1 million to get the matter out of court (T57). 27Mr Shelley did recall a specific conversation about two of the six numbers that Mr Clemett played. Mr Shelley recalled saying, as to 24 and 34, "do you think they will come up in the same draw?" (at T58.11). It may be observed that the chance of those two numbers coming up in the same draw is exactly the same as the chance of any other combination of two numbers between 1 and 45 coming up in the same draw. In any event, Mr Shelley was not otherwise prepared, on oath, to say more than that he recalled "some of the numbers, not all the numbers" that Mr Clemett had played (T58.7). 28Mr Clemett's frustration in the face of that evidence was palpable. He attempted, in re-examination, to remind Mr Shelley of the version of events they had discussed on the several occasions when they were at the library together (apparently in preparation for this claim)(T59-60). 29As noted on behalf of NSW Lotteries, the only reliable information provided by Mr Clemett to support his claim is information which is publicly known. It is publicly known that the relevant lottery was Oz Lotto Draw 188 drawn on 23 September 1997; that the winning numbers were 10, 24, 28, 34, 37 and 45 and that the ticket for the unclaimed prize was purchased at Greenfield Newsagency. 30Mr Clemett's recollection of the other details of his entry has not been consistent throughout the lengthy period of his dealings with NSW Lotteries. In his first letter claiming the prize, he said that he did not know the outcome of the draw until he saw his long term newspaper account manager on the television (presumably a reference to the segment on A Current Affair). The letter provided considerable detail of the transaction, including an explanation as to why the winning numbers were "rivetted" on Mr Clemett's brain. As already noted, those numbers are publicly known. 31Other details of the winning ticket, notably those which are not publicly known, are evidently not rivetted on Mr Clemett's brain. He has, over a period of many years, engaged in lengthy correspondence with NSW Lotteries and, in doing so, has frequently changed his version of the relevant events. The inconsistencies are summarised in the evidence relied upon by NSW Lotteries (at pages 64 to 71 of exhibit 1). Those inconsistencies alone warrant the conclusion that Mr Clemett's evidence in these proceedings as to the games he entered is unreliable and does not establish any entitlement to the unclaimed prize on the balance of probabilities. 32Mr Clemett committed himself to a final version for the purpose of these proceedings. His final version of the entry he says he submitted was recorded in a document marked MFI 1. The numbers in that document were the same as those reproduced in exhibit A. The information in MFI 1 was referred by Garling J to an independent referee, Mr Bret Walker of Senior Counsel, for comparison with the details of the unclaimed winning entry held by NSW Lotteries (which for obvious reasons are confidential). 33Mr Walker's report to the Court establishes that none of the information provided by Mr Clemett in MFI 1 matches the winning entry. Specifically, contrary to the information provided by Mr Clemett, the winning entry did not contain 12 completed games, was not a 5-week multi-entry, was not purchased for the price of $61.75 or within 10% of that amount and did not contain the winning numbers in panel 4. Putting the matter beyond doubt, the report states that none of the game panels Mr Clemett asserts he entered is identical to any of the games on the winning entry (a circumstance apparently explained by the possibility of submitting a systems entry in accordance with rule 9 of the Oz Lotto Rules). Mr Walker's report has been adopted by the Court: Clemett v NSW Lotteries Corporation Pty Ltd [2013] NSWSC 506 per Garling J. 34The Walker report provides cogent support for the conclusion that Mr Clemett's evidence in these proceedings as to the games he entered is unreliable and does not establish any entitlement to the unclaimed prize. The report establishes to my satisfaction that Mr Clemett did not enter a game that matches the missing winning entry identified by NSW Lotteries. 35Mr Clemett nonetheless claims that his was a winning entry. His arguments were not expressed with great clarity. In response to the difficult obstacle of the Walker report and its adoption by the Court, Mr Clemett was left to explain how he can succeed when his entry does not match the identified winning ticket. He explained that the winning entry submitted by him was altered by the newsagent before being finally processed on a computer linked terminal. Alternatively (or at the same time), he contended that the details of the winning entry relied upon by NSW Lotteries and submitted to Mr Walker for the purpose of his report must be wrong. Each of those further claims entails its own difficulties.

The suggestion of interference by the newsagent 36As already noted, Mr Clemett's evidence included a clear account of his having been issued with a ticket which he checked before leaving the newsagency. He specifically recalled confirming that panel 4 as entered by him appeared on the ticket. On that basis, it might readily be concluded that Mr Clemett's entry was duly processed on a computer linked terminal as contemplated by the rules of the game (and, accordingly, that it was not a winning entry). 37Mr Clemett asserts, however, that the vendor recorded the ticket number on a separate piece of paper, allowing the newsagent somehow to suspend the entry and call it up later to change the details after Mr Clemett left the shop. It was suggested by Mr Clemett that the newsagent's purpose in doing so was to recover a debt of $50 owed to him by Mr Clemett. Mr Clemett postulated that the newsagent replaced his entry with one which attracted a lower price, pocketing the difference. 38Those allegations were made after the publication of the decision of Barrett J in Reinhold, a case in which the plaintiff was successful in a claim for $2,000,000 after the newsagent who processed his entry accidentally cancelled the winning ticket so that, although it had been duly submitted and paid for by the plaintiff, it did not show up as a winning ticket. Mr Clemett wrote to the Attorney General shortly after the publication of that decision asserting that it has "many parallels" with his own claim (page 401 of exhibit 1). 39Whatever parallels may be perceived between Mr Reinhold's claim and Mr Clemett's, there is an important difference. Mr Reinhold was able to present a ticket with the winning numbers. The difficulty arose when he presented it for scanning at the newsagency and the computer recorded that no prize was applicable, due to the fact that the ticket had been recorded as cancelled before the draw (owing to the interference of the newsagent). 40Mr Clemett's position is the reverse. He does not have a ticket and, more importantly, he does not suggest that the interference of the newsagent resulted in the cancellation of the winning ticket. On the contrary, it is an important premise of his claim that his entry was processed so as to show that a prize was applicable. His case is quite specific in that respect. He says that the combination of games submitted by him and in fact processed on a computer linked terminal produced prizes in the sum of $3,348,326.14. 41That flows from the fact that Mr Clemett has come forward claiming to have purchased the ticket that has been identified by NSW Lotteries as the winning ticket sold by Greenfield Newsagency. His claim in these proceedings is for the amount of $3,348,326.14, being the sum of the unclaimed first division prize referable to that ticket (a third of $10 million) plus six amounts of $2,498.80 for third division prizes in the same draw. 42Mr Clemett contends that the sum of $3,348,326.14 is in fact the total unpaid prize money referable to the single missing winning ticket from Oz Lotto Draw 188. That fact was not proved in evidence. Mr Hogan-Doran confirmed that the amount of $3,348,326.14 was publicly revealed but was not able to say whether that amount was particular to the winning ticket or whether it was the total unclaimed prize pool for the draw (T115). Either way, the coincidence between that amount and the numbers allegedly entered by Mr Clemett tends to undermine his claim. 43If the publicly-revealed unclaimed prize pool of $3,348,326.14 includes amounts not referable to the missing winning ticket, that fact would tend to disprove Mr Clemett's claim since, on his evidence, his numbers won the whole of that amount. That is because, in addition to having the six winning numbers in panel 4, Mr Clemett's putative entry had five of the six winning numbers in each of game panels 1, 3, 7, 9, 10 and 12. His numbers would accordingly have earned a one third share of the first division prize plus six third division prizes. 44If, on the other hand, the publicly-revealed amount of $3,348,326.14 in fact represents the sum of prizes referable to the single identified winning ticket, then Mr Clemett's argument becomes extremely convoluted. As already noted, his claim is consistent with the publicly-revealed amount in that the numbers put forward by him in exhibit A, had they been entered in Oz Lotto Draw 188, would have won that sum. Mr Clemett placed some reliance on that consistency as a factor bolstering his claim that his entry was the winning entry. 45However, the claim on that basis implicitly assumes that the numbers Mr Clemett entered (or at least the seven winning panels, panel 4 winning the first division prize and panels 1, 3, 7, 9, 10 and 12 each winning a third division prize) were accepted by the newsagent and processed on a computer linked terminal so as to produce an entry in the draw. It is only on that premise that one can reason, as Mr Clemett does, by reference to the consistency between his figures and the publicly-known prize total of $3,348,326.14 referable to the winning ticket. How else could NSW Lotteries have come up with that amount? Mr Clemett confirmed that is his argument (at T105). It was not his contention that the newsagent changed or cancelled his entry so as to defeat the issue of the winning ticket. His case is that the entry was changed electronically but that its winning features (in no fewer than 7 separate game panels) remained in tact. 46The problem is that the Walker report establishes that the identified winning ticket is not the entry submitted by Mr Clemett and did not contain those seven winning panels. Each of Mr Clemett's panels contained the number 10. The Walker report establishes that only 2 of the panels in the winning ticket had any numbers in common with Mr Clemett's entry. 47In any event, there was no evidence to support the contention that the newsagent interfered with Mr Clemett's entry after he left the newsagency. The fraudulent conduct alleged against the newsagent was a matter of surmise based on ambiguous observations made by Mr Clemett. Further, there was no evidence to suggest that it is possible for an entry to be altered electronically in the manner suggested by Mr Clemett after a ticket has been issued. The evidence established that no relevant kind of ticket was cancelled during the relevant times. As already noted, Mr Clemett says he checked his ticket and was satisfied that the line entry for panel 4 matched his entry form. I am not satisfied that there was any interference with Mr Clemett's entry on the part of the newsagent.

Provenance of the record of the winning entry 48It remains to consider the third limb of Mr Clemett's case, which is that the record produced to Mr Walker must not be an accurate record of the winning ticket. The principal basis for that contention was the very fact that the entry examined by Mr Walker did not include Mr Clemett's seven winning panels. Mr Clemett submitted that, if those seven primary number groups were not in tact in the entry processed by the newsagent, the total unclaimed prize money would not have amounted to $3,348,326.14 (T105). That assumes that Mr Clemett's entry is the only configuration of games and numbers capable of attracting prizes in that sum. Another logical possibility is that Mr Clemett did not submit the entry he claims to have submitted. 49The import of Mr Clemett's argument is that his recollection of the entry he submitted to the newsagent is correct and that the explanation for the inconsistencies between his recollection and the record examined by Mr Walker is that, for reasons that are entirely unexplained by any evidence, the records held by NSW Lotteries once accurately reflected at least the winning part of his entry (enabling NSW Lotteries accurately to identify the total prize winnings of seven panels) but have since become corrupted such that they now show the publicly available information correctly (the fact that the winning numbers came up) but are otherwise inaccurate. 50Mr Clemett made much in that context of the fact that the electronic record can no longer be produced. NSW Lotteries relies upon a paper print-out of that record. A change in computer systems has had the result that the electronic record itself is no longer available for inspection. That is a matter that was adequately explained in the evidence. I have not been persuaded that there is any doubt as to the integrity of the paper record relied upon by NSW Lotteries in this case. 51The more likely explanation, in my assessment of the evidence, is that Mr Clemett's purported recollection of having entered Oz Lotto Draw 188 with the numbers in exhibit A is wrong. I have not been persuaded by his evidence that he submitted a winning entry in that draw or that he has any entitlement to the prize claimed. 52For those reasons, I make the following orders: (1)That the proceedings be dismissed. (2)That the plaintiff pay the defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 April 2014