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[2020] FCA 1295
appellant. The court held that the applicants had shown the Commissioner's assessments for the sample periods were excessive. The parties were ordered to provide draft forms of order giving effect to the...
The Federal Court (Davies J) held that commissions and win/loss rebates payable under 'junket' arrangements are integral parts of the single gambling outcome for GST purposes and thus are to be included under Division 126 of the GST Act either as part of the casino's consideration for gambling supplies or as monetary prizes the casino is liable to pay, depending on whether the casino's position is a net win or net loss. The Promotion and Junket Program Agreements are relevant and not illusory; contractual labelling does not displace the statutory test. The sample assessments by the Commissioner were found to be excessive.
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Crown Melbourne Limited and Burswood Nominees Limited (the casinos) operated VIP 'junket' programs in which overseas junket tour operators organised groups of high‑value players to gamble at the casinos. The contractual architecture comprised Promotion Agreements (longer‑term, non‑exclusive promotional arrangements) and, for each voyage, Junket Program Agreements and settlement sheets that set out the mechanics for measuring turnover, notional ordinary wins/losses, commissions, rebates and other adjustments (see [33]–[42], [28]–[32]).
9 cited instruments linked from this judgment.
The Commissioner audited and issued GST assessments that excluded turnover commissions and win/loss rebates from the casinos' Division 126 global GST calculation for selected tax periods, effectively treating those amounts as consideration for separate supplies by the junket operators (ie marketing/arrangement services) rather than as part of the gambling outcome. The casinos objected; the Commissioner disallowed the objections; the casinos appealed under s 14ZZ of the Taxation Administration Act 1953 (TAA). Davies J heard the matter and, for sample periods (February 2012 for Burswood and June 2015 for Crown), held the Commissioner’s assessments to be excessive and that Division 126 applied to include commissions and rebates as part of the gambling outcome for GST purposes (see [43]–[46], [75]).
The legal issue was statutory characterisation under Division 126 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). Division 126 prescribes a global accounting system for gambling supplies where the casino’s global GST amount for a tax period is (Total amounts wagered − Total monetary prizes) × 1/11 (s 126‑10). The key statutory definitions are 'consideration' (ss 9‑15/9‑17) and 'monetary prize' (s 195‑1) which, read in context, determine whether particular payments should be included in the 'total amounts wagered' or 'total monetary prizes' components (see [5]–[11], [52]–[55]).
Davies J’s approach involved three principal steps:
Contractual matrix analysis: he examined the Promotion Agreement, the Junket Program Agreement and the settlement sheets to see how the parties had structured rights and obligations and how settlement outcomes were computed ([56]–[66]). He rejected the applicants' contention that the Promotion Agreement was an 'illusory contract' and held it contained enforceable obligations (eg appointment, obligations in cl 4.2, confidentiality, termination rights), and that clause 6.1 (commission) was not invalid merely because the precise percentage was to be agreed before a junket ([58]–[61]).
Functional and statutory characterisation: Davies J emphasised that contractual labels are not decisive for GST. The statutory inquiry requires a connection between payment and supply, not a purely contractual test, per the High Court in Qantas ([71]). The court concluded that when gambling occurs under a junket, the resultant monetary reckoning recorded on settlement sheets is a single, integrated outcome. Commissions and rebates are inseverable components of that outcome and therefore fall within Division 126 as either consideration for the casino's gambling supplies or as monetary prizes the casino is liable to pay ([68]–[71]).
Practical construction: On the wording of the Promotion Agreement and the Junket Program Agreement, 'commission' was an umbrella concept that could encompass rebates and discounts on loss; the settlement mechanism showed that the parties intended these integers to be aggregated into a single amount payable by or to the casino at the end of the program ([65]).
Accordingly, the court treated commissions and rebates as falling within Division 126 in the sample periods and held the Commissioner’s exclusions to produce excessive assessments ([70]–[75]).
Before this decision, the law recognised Division 126 as a special global accounting system for gambling supplies intended to simplify GST administration in the gambling context (see [6]). There was scope for argument about whether amounts paid under complex commercial arrangements (eg marketing or promotional payments to intermediaries) were to be treated as consideration for gambling supplies or as consideration for separate services. The High Court’s decision in Qantas was already instructive in recognising that 'for' in 'consideration for' requires a connection and is not strictly a contract law concept ([54], [71]).
After Davies J’s ruling, the authoritative statement from this Federal Court judgment is that where the arrangements manifest an integrated settlement mechanism for gambling (as in junket programs), turnover commissions and win/loss rebates that operate as inseverable elements of the single settlement are properly captured by Division 126. That reduces the capacity to characterise such amounts as separate consideration for marketing services when they function as inputs to the gambling measurement and settlement (see holdings at [68]–[71], [75]).
Practically, this decision signals to taxpayers and the Commissioner that the locus of the inquiry is functional/statutory characterisation in the gambling supply context rather than simply contractual labels between the casino and intermediaries. It also confirms that Promotion Agreements of the type in evidence are not mere unenforceable memoranda or 'illusory' arrangements (see [58]–[61]).
"There are two supplies: (1) the services provided by the junket tour operator in arranging the junket; and (2) the gambling supplies provided by the applicants ... which are the relevant supplies for the purposes of Div 126." ([68])
"I accept that the accounting for the outcome of the applicants' gambling supplies is one integrated and indivisible transaction of which the commission and rebates ... are inseverable components." ([70])
"It is therefore not determinative that ... the casino contracts directly with the junket tour operator and not the individual players. What is relevant for the purposes of Div 126 is that the applicants' gambling supplies are made to the participating junket players, with the adjustments for commission and rebates reckoned upon the gambling supplies actually made..." ([71])
"Accordingly, the applicants have shown the assessments for the sample periods ... were excessive." ([75])
This decision is triggered where:
If these features exist, Davies J indicates that Division 126 is likely to apply to include such payments within either 'total amounts wagered' or 'total monetary prizes', depending on whether the casino is net payer or payee.
The judgment speaks for itself at first instance. The reasons cite High Court authority (eg Qantas, Lend Lease) and intermediate appellate and first instance authorities in applying statutory construction principles. The judgment does not record subsequent appellate treatment or citation history. Practitioners should check legal citators and subsequent decisions to see whether this reasoning has been followed, distinguished or appealed in higher courts, because this decision was at first instance and addresses facts and contracts of a particular commercial form (see [75]). As of the judgment there is no further material in the judgment itself about later treatment.
Scope beyond the facts: The decision turns heavily on the integrated settlement mechanics shown in the Promotion Agreements, Junket Program Agreements and settlement sheets. Where commercial arrangements differ (eg where commissions are paid independently and are immediately claimable irrespective of gambling outcomes, or where separate invoices and payment flows exist), the outcome may differ. The decision therefore leaves open borderline cases where severability of payments is clearer.
Evidence of intermediary-client arrangements: Davies J rejected reliance on speculative inferences about how junket operators charge their clients when there is no evidence ([72]). This leaves open how the outcome would be affected if there was cogent evidence that the junket operator’s remuneration was in substance paid by and derived from the players (and not fungible with gambling settlement mechanics).
Temporal and jurisdictional distinctions: The ruling applied the statutory definitions and ancillary provisions as they stood in the sample periods. Legislative amendments or differing statutory definitions (eg changes to definitions after the relevant periods) could affect application.
Administrative and compliance consequences: The decision affects the GST treatment and potentially withholding obligations. The court noted withholding tax rules are not evidence about characterisation and cannot fill evidentiary gaps ([72]). How the Commissioner will apply the decision administratively in audits across a range of junket contractual models remains to be seen.
Appeal and higher court clarification: As a first instance decision, questions about the correct interpretive approach in marginal cases or the breadth of 'inseverability' for GST purposes could be authoritatively settled only on appeal or by higher courts.
Practical takeaways for practitioners: examine the written agreements and settlement mechanisms closely; identify whether commissions and rebates are merely labels for independent supplies or are structurally embedded in a single settlement outcome; assemble direct evidence about payment flows between players, junket operators and casinos; and monitor subsequent authority for refinements or limitations of this decision.
Counsel for the Applicants: Mr M L Robertson QC with Mr B L Jones
Solicitor for the Applicants: Minter Ellison Lawyers
Counsel for the Respondent: Mr D Thomas SC with Ms M Ellicott
Solicitor for the Respondent: Australian Government Solicitor
BETWEEN: CROWN MELBOURNE LIMITED Applicant
AND: COMMISSIONER OF TAXATION Respondent
JUDGE: DAVIES J DATE OF ORDER: 10 September 2020
BETWEEN: BURSWOOD NOMINEES LIMITED AS TRUSTEE FOR THE BURSWOOD PROPERTY TRUST Applicant
AND: COMMISSIONER OF TAXATION Respondent
JUDGE: DAVIES J DATE OF ORDER: 10 September 2020
Introduction 1 These proceedings are brought under s 14ZZ of the Taxation Administration Act 1953 (Cth) (TAA) and are related appeals by the applicants challenging goods and services tax (GST) assessments. The applicants are the owners and operators of casinos in Melbourne and Perth (casinos or casino) and make "gambling supplies", as that expression is defined in s 126-35(1)(b) of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act). The GST on those "gambling supplies" is determined in accordance with the special rules contained in Div 126 of Pt 4-4, Ch 4 of the GST Act, under which the GST is payable on the "global GST amount" for each of the applicants for a tax period: s 126-10 of the GST Act. These proceedings concern the GST treatment of commissions and rebates in junket program agreements between the applicants and junket tour operators. In issue is whether the commissions and rebates are to be taken into account in calculating the applicants' respective global GST amounts (as contended by the applicants), or whether, properly characterised, the commissions and rebates are the consideration for the supply by junket tour operators to the applicants of the services of marketing, promoting and arranging junkets to the casinos, to which the basic rules for the GST contained in Ch 2 of the GST Act apply (as contended by the Commissioner).
Relevant legislation 2 Division 126 of the GST Act contains special rules for the calculation of GST on "gambling supplies". These rules override the provisions of Ch 2 (except for s 29-25, which is not relevant in this case), which contain the basic rules, but only to the extent of any inconsistency: s 45-5 of the GST Act.
The basic rules in Chapter 2 of the GST Act 3 Subdivision 9-C of Ch 2 sets out how to calculate the amount of GST on taxable supplies for a particular tax period. The sum of all the GST for which an entity is liable on the taxable supplies attributable to a particular tax period is then taken into account, along with any input tax credits, in determining that entity's entitlement to receive a refund or its liability to pay an amount of GST in respect of that tax period: s 17-5 of the GST Act. 4 Section 7-1 of the GST Act is identified as a "central provision". It relevantly states that GST is payable "on *taxable supplies". Division 9 is headed "Taxable supplies". Until 25 February 2015, s 9-5 of the GST Act defined "taxable supply" to mean: 9-5 Taxable supplies You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with Australia; and (d) you are *registered, or *required to be registered. However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed. On 25 February 2015, the word "Australia" in sub-s (c) was replaced with "the indirect tax zone": Treasury Legislation Amendment (Repeal Day) Act 2015 (Cth), Sch 4, Pt 4, s 31. 5 "Consideration" for a supply or acquisition is relevantly defined to mean "any consideration, within the meaning given by sections 9-15 and 9-17, in connection with the supply or acquisition". Section 9-17 is not presently relevant. Section 9-15 relevantly provides: 9-15 Consideration (1) Consideration includes: (a) any payment, or any act or forbearance, in connection with a supply of anything; and (b) any payment, or any act or forbearance, in response to or for the inducement of a supply of anything. (2) It does not matter whether the payment, act or forbearance was voluntary, or whether it was by the *recipient of the supply. …
The special rules in Division 126 of the GST Act 6 Division 126 was introduced to reduce the administrative complexity that entities which make gambling supplies would have faced in applying the basic rules regarding accounting for GST. Paragraph 6.203 of the Explanatory Memorandum to the A New Tax System (Goods and Services Tax) Bill 1998 (Cth) explained: However, determining individual bets or ticket sales (wagers) and prizes and then applying GST and input tax credits would be difficult. For example, a casino operator would have to apply GST on every spin of the roulette wheel for every player for every square on the table. For this reason, the GST on gambling is applied to the margin of the person providing the gambling opportunity (for example, the casino operator). Applying the margin to gambling activities achieves the same result as applying GST to individual wagers and allowing input tax credits in relation to prizes paid out. 7 A "gambling supply" is defined in s 126-35(1)(b) relevantly to mean a taxable supply involving the acceptance of a bet (however described) relating to the outcome of a "gambling event". A "gambling event" is defined in s 126-35(2) to mean: (a) the conducting of a lottery or raffle, or similar undertakings; or (b) a race, game, or sporting event, or any other event, for which there is an outcome. 8 In the case of an entity that makes a "gambling supply", sub-s 126-5(1) prescribes a special rule for the calculation of its net amount as follows: 126-5 Global accounting system for gambling supplies (1) If you are liable for the GST on a *gambling supply, your net amount for the tax period to which the GST on the supply is attributable is as follows: Global GST amount + Other GST - Input tax credits where: global GST amount is your *global GST amount for the tax period. input tax credits is the sum of all of the input tax credits to which you are entitled on the *creditable acquisitions and *creditable importations that are attributable to the tax period. other GST is the sum of all of the GST for which you are liable on the *taxable supplies that are attributable to the tax period, other than *gambling supplies. For the basic rules on what is attributable to a particular period, see Division 29. (2) However, the *net amount worked out under subsection (1) for the tax period: (a) may be increased or decreased if you have any *adjustments for the tax period; and (b) may be increased or decreased under Subdivision 21-A of the *Wine Tax Act; and (c) may be increased or decreased under Subdivision 13-A of the A New Tax System (Luxury Car Tax) Act 1999. (3) This section has effect despite section 17-5 (which is about net amounts). (Notes omitted) Prior to 1 July 2012, sub-s 126-5(2) did not include the references in paras (b) and (c) to the A New Tax System (Wine Equalisation Tax) Act 1999 (Cth) and the A New Tax System (Luxury Car Tax) Act 1999 (Cth). These amendments do not impact on the interpretation of the statutory scheme for the purposes of the present case. 9 Section 126-10 (as it was in the income years in question) defined "global GST amounts" as follows: 126-10 Global GST amounts (1) Your global GST amount for a tax period is as follows: [Total amount wagered -Total monetary prizes] x 1/11 where: total amounts wagered is the sum of the *consideration for all of your *gambling supplies that are attributable to that tax period. total monetary prizes is the sum of: (a) the *monetary prizes you are liable to pay, during the tax period, on the outcome of gambling events (whether or not any of those gambling events, or the *gambling supplies to which the monetary prizes relate, take place during the period); and (b) any amounts of *money you are liable to pay, during the tax period, under agreements between you and *recipients of your gambling supplies, to repay to them a proportion of their losses relating to those supplies (whether or not the supplies take place during the tax period). For the basic rules on what is attributable to a particular period, see Division 29. (2) However, your global GST amount is zero for any tax period in which total monetary prizes exceeds total amounts wagered. (3) In working out the total monetary prizes for a tax period, disregard any *monetary prizes you are liable to pay, during the tax period, that relate to supplies that are *GST-free. (4) Your global GST amount for a tax period may be affected by sections 126-15 and 126-20. 10 The word "consideration" in the definition of "total amounts wagered" has the meaning given in ss 9-15 and 9-17. 11 The expression "monetary prize", as defined in s 195-1 in the income years in question, meant: (a) any prize, or part of a prize, in the form of *money; or (b) if the prize is given at a casino - any prize, or part of a prize, in the form of *money or in the form of gambling chips that may be redeemed for *money.
Factual context 12 Evidence about the casino operations at the casino in Melbourne (Crown Melbourne) and the casino in Perth (Crown Perth) was given by Ken Barton, who at the time of affirming his affidavits was the Chief Financial Officer of Crown Resorts Limited (which is effectively the parent company of both applicants) and a director of Crown Melbourne Limited (Crown), the applicant in proceeding NSD1885/2018. Mr Barton is now the Chief Executive Officer of both applicants. Mr Barton's evidence was not challenged by the Commissioner, save that rulings were made under s 136 of the Evidence Act 1995 (Cth) limiting the use to be made of parts of that evidence to the understanding Mr Barton has of the processes and operations he describes in his affidavits. Mr Barton gave the following evidence about those processes and operations.
The operations 13 Crown owns and operates the casino at Crown Melbourne and Burswood Nominees Limited (as trustee for the Burswood Property Trust) (Burswood), the applicant in proceeding NSD1886/2018, owns and operates the casino at Crown Perth. The main source of revenue of both applicants is from making gambling supplies and the profit they make depends on the volume of wagers made and the outcome of gambling events. In all games offered by the casinos the odds for each game are slightly in favour of the casino. Two of the most popular games that the casinos offer are roulette and baccarat. In roulette, the casino will have one or two house numbers "0" and "00" in addition to the numbers 1 through to 36 on the roulette wheel. A patron who places a winning bet on a number will be paid at the odds of 36 to 1 and a patron who places a bet on "red or black" or "even or odd" (or some other combination involving the numbers 1 to 36) will lose if the house number comes up. This gives mathematical odds in favour of the casino of 2.7% or 5.26% for one or two house numbers respectively. That is, for every $100 wagered, the casino can expect to receive a gross margin of $2.70 or $5.26 for one or two house numbers respectively. In baccarat, the casino has a theoretical win rate of 1.35% (that is, for every $100 wagered, it can expect to receive a gross win of $1.35). 14 The casinos' gross profit over time depends on the volume of bets placed. Accordingly, the casinos seek to attract as much betting volume as possible. The applicants compete with other casinos for international VIP gambling volume and in order to do this, they offer special gambling terms (which reduce the theoretical win rate for the casinos) and a range of complimentary allowances and incidental benefits to VIP patrons (premium players or "high-rollers") and "junket tour operators". The special gambling terms may include turnover commissions (based on the volume of wagers multiplied by an agreed rate) and win and loss rebates (based on the actual wins and losses on the gambling that takes place, reduced by multiplying the win or loss by an agreed rate). As the turnover commission and rebate entitlements can only be determined at the end of the gambling period, it is only at the end of the gambling period that there is a settlement of what is owed by, or to, the casino. Mr Barton described the commission and rebate entitlements as "notional amounts", which are "all merely part of the calculation of the single gross amount owed by or to the Casino at the end of the agreed gambling period, or when the premium player or the [junket tour operator] has decided to stop gambling early". According to Mr Barton, "[n]one of these notional amounts can ever be claimed for separate payment during or at the conclusion of the gambling activities. A premium player or a [junket tour operator] can only claim payment of a single amount that is calculated by reference to these integers in the formula". The computation of that single amount also includes such other adjustments as may be relevant, such as for complimentary or other benefits. 15 Mr Barton elaborated on the processes and procedures as follows.
Individual VIP players 16 The casinos have special areas where wealthy (generally foreign) patrons, also known as premium players or "high-rollers", can attend to play roulette and baccarat and receive a premium or "VIP" experience. The VIP experience includes the offering of a selection of special gambling terms and a range of complimentary allowances and incidental benefits. 17 When a VIP player wants to gamble at the casino, the player will negotiate directly with casino personnel with respect to the range of special gambling terms the casino is willing to offer to them at the time. A VIP player can select one of two types of programs, either a commission based program or a (loss) rebate based program, each with different special gambling terms. The special gambling terms are recorded in a document called "Table Games Premium Player Program Agreement (International)" (Premium Player Program Agreement) or similarly named document which is signed by casino personnel and the VIP player. 18 Mr Barton described a commission based program as one where: … the Casinos offer to provide a notional credit based solely on gambling volume (the total value of all bets placed) against the "ordinary" gross win or loss produced by that volume to give rise to what is referred to as a net win or net loss. That incentive is often called volume "Commission". 19 Mr Barton elaborated as follows: If a VIP player selects a "Commission" based program … the gambling result, that is, the total amount to be paid by the VIP player to Crown or by Crown to the VIP player upon settlement at the end of the program … will be calculated having regard to the volume of bets placed (ie turnover) multiplied by the "commission rate" stipulated in the Premium Player Program Agreement. The Program and calculation of the amount payable to the individual VIP player is referred to as a "Commission" based program. The Casino does not use the word "commission" in the sense of a payment for any services rendered by the VIP player. It is the word the Casino chooses to use in offering special gambling terms to the VIP player. It is used specifically to represent a notional percentage credit for volume and is also used generally (interchangeably with final rebate) to describe the difference between the notional ordinary win or loss and the actual win or loss. 20 Mr Barton described a (loss) rebate based program as one where: … the total amount to be paid by the VIP player to the Casino upon settlement at the end of the program will be calculated having regard to the VIP player's notional ordinary gambling loss over the course of the program multiplied by the "rebate percentage". If the result of the VIP player's gambling is notional a win at the end of the program, no rebate amount will be taken into account in the calculation of the amount to be paid to the VIP player at the conclusion of the program. 21 Mr Barton deposed that whether a commission based program is selected or a loss rebate based program is selected, there is no requirement under the terms of the Premium Player Program Agreement for the VIP player to place a bet at the casino. However, if the VIP player does not place a bet, he or she will not be able to take advantage of the commission component, rebate component or complimentary allowance component of the Premium Player Program Agreement as these are computed on the basis of the amount of the VIP player's gambling turnover or gambling loss.
Junket tour operators 22 The term "junket" is widely used in the casino industry to refer to a group of players who attend a casino together as a group for a set period of time, playing on special gambling terms and receiving VIP treatment. The businesses that arrange the junkets for participating players are referred to as "junket tour operators" and the participating players are the clients of the junket tour operators. 23 When a junket tour operator has a group of players who wish to attend Crown Melbourne or Crown Perth, the junket tour operator will negotiate the special gambling terms and VIP treatment that the casino is willing to offer at the time, with the casino concerned. Those negotiations occur prior to the commencement of the junket. Once negotiated, the casino and junket tour operator enter into a "Table Games Junket Program Agreement" (Junket Program Agreement) containing the terms and conditions governing the junket. The junket tour operator will indicate on the Junket Program Agreement the names of the players who will participate in the junket. Some junket tour operators participate as players in the junkets they have organised and, in other cases, they do not. If a junket tour operator does not accompany the junket players, the junket tour operator must appoint an agent to deal with the casino on their behalf. Each junket is allocated a set of special gambling chips, which are unique to that junket, to be used by the junket participants for the duration of the program. These special gambling chips help the casino to track the turnover and notional gambling win and loss of each junket. 24 Where the casino enters into a Junket Program Agreement with a junket tour operator, all dealings in relation to the provision of funds, the provision of credit and issuing and cashing of chips are exclusively between the casino and the junket tour operator (or their agent). The casino's credit and identification checks are of the junket tour operator, not of the individual players, and the amount of credit the casino is willing to provide to the junket tour operator is based on those credit checks. In some cases, the casino may also perform credit checks on the participants in a junket to ensure that the junket tour operator will not face collection issues from junket participants that may, in turn, cause the casino to have issues collecting from the junket tour operator. At the conclusion of the junket, the casino will calculate the amount owing by the junket tour operator to the casino or by the casino to the junket tour operator. The casino does not pay any amounts to the players participating in the junket. Mr Barton deposed that the junket tour operator will have its own payment arrangements with the players but Crown and Burswood do not know what those arrangements are. 25 The casinos will usually offer slightly more advantageous special gambling terms to a junket tour operator than to a player who would individually qualify as a VIP player. The main reason for this is a junket of players is likely to have more turnover than an individual VIP player, and the greater the number of players who place bets, the greater the casino's return is likely to be statistically, as over time the casino's theoretical gambling revenue is determined by the volume of bets placed. 26 There are several types of special gambling terms or programs which a junket tour operator can select. Like the special gambling terms available for individual VIP players, these programs include commission based programs and rebate based programs. There is also an additional program offered to junkets which is not available to individual VIP players called a hybrid program, involving both volume commissions and win/loss rebates, which can either be based on the gross wins or losses or the net wins or losses. If based on the gross wins or losses, the rebate is calculated independently of the commission. If based on the net wins or losses, the rebate is calculated by the gross wins or losses adjusted by the commission calculated for the junket. Mr Barton explained that if a junket tour operator selects a hybrid program, the total amount to be paid by the junket tour operator to the casino or by the casino to the junket tour operator upon settlement at the end of the program will be calculated having regard both to the volume of bets placed (ie turnover) of all junket participants and the overall gambling win or loss of all junket participants. 27 Mr Barton deposed that whether a commission based program, a rebate based program or hybrid program is selected, there is no requirement for the junket participants to place a bet at the casino under the terms of the Junket Program Agreement. If the junket participants do not place a bet, the junket tour operator will not be able to take advantage of the commission component, the rebate component or (where applicable) the complimentary allowance component of the Junket Program Agreement (as it is calculated on the basis of the amount of the total gambling turnover or ordinary gambling win or loss of all junket participants). They may still however receive incidental benefits.
Settlement sheet 28 The casinos monitor the total turnover and ordinary gambling win or loss of each junket using a casino management system called "SYCO". The information recorded in SYCO can be used to determine the complimentary privileges and other incidental benefits which will be provided and to plan what areas of the VIP rooms and salons should be set aside for each junket. 29 For the junket overall, the information recorded in SYCO and calculated by SYCO includes: (a) the special gambling chips taken out from the "cage" by the junket tour operator. The cage is the counter at which all transactions involving the exchange by patrons of gambling chips for cash are conducted at the casino; (b) the special gambling chips returned to the cage by the junket tour operator; (c) the actual ordinary gambling win or loss of the junket participants; (d) the theoretical ordinary gambling win or loss of the junket participants based upon the casino's historical records and statistics; (e) the turnover of the junket; (f) the gaming hours of all junket participants; (g) actual room, food, beverage and travel expenses incurred by the junket; and (h) the period of time over which the gambling took place. 30 For each junket participant, the information recorded in SYCO includes: (a) the notional ordinary gambling win or loss; (b) the actual turnover of the junket participant; and (c) the arrival and departure dates of the junket participant. 31 At the conclusion of the junket, the casino will calculate the commission and rebates applicable to the junket program selected using the information contained in SYCO and record it on a settlement sheet. The settlement sheet records a number of different integers which form the basis of this calculation and give rise to a single amount owing by, or to, the casino for the junket. These include: (a) the notional ordinary gambling win or loss which comprises the value of the special gambling chips the junket tour operator or their representative obtained from the cage, less the special gaming chips returned to the cage; (b) the agreed reduction to the notional ordinary gambling win or loss for rebate programs; (c) the agreed percentage of the actual amount of chips wagered for "commission" based programs; and (d) the agreed reduction to the notional ordinary gambling wins or losses after, or in addition to, applying the agreed percentage of the actual amount of chips gambled for net hybrid programs and gross hybrid programs respectively. 32 In some cases a "partial" settlement could occur whilst the junket is still in progress. In this instance, a separate settlement sheet is provided for the partial settlement in advance of "full settlement".
Junket Program Agreement 33 In evidence is an example of a Junket Program Agreement between Burswood and a junket tour operator dated June 2015, as well as similar agreements between Burswood and other junket tour operators. Also in evidence are examples of Junket Program Agreements between Crown and junket tour operators, using much the same template. There was no dispute that the example Junket Program Agreements were representative of the agreements applicable during the relevant tax periods. 34 Relevant provisions of the template agreement, as recorded in the June 2015 example agreement, include: Terms & Conditions 1. Interpretation … Junket has the same meaning as in the Casino Control Act 1984 (WA); … 2. Program Qualification This program will only apply to gaming tables in International Gaming Facility (IGF) at Crown Perth. Commission programs apply to Baccarat and Roulette only. 3. Commission Subject to the terms of this Agreement, Crown Perth will pay the Junket Operator commission in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Program's total turnover as recorded by Crown Perth personnel at the time of settlement. 4. Rebate on Gross Win / Loss a) Subject to the terms of this Agreement, Crown Perth will pay the Junket Operator a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Junket Operator's gross loss as recorded by Crown Perth personnel at the time of settlement. b) Subject to the terms of this Agreement, the Junket Operator will pay Crown Perth a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Junket Operator's gross win as recorded by Crown Perth personnel at the time of settlement. c) No partial settlements are permitted on Rebate on Gross Win / Loss programs. 5. Rebate on Net Win / Loss a) Subject to the terms of this Agreement, Crown Perth will pay the Junket Operator a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Junket Operator's net loss as recorded by Crown Perth at the time of settlement. b) Subject to the terms of this Agreement, the Junket Operator will pay Crown Perth a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Junket Operator's net win as recorded by Crown Perth at the time of settlement. c) No partial settlements are permitted on Rebate on Net Win / Loss programs. 6. Discount on Loss a) Subject to the terms of this Agreement, Crown Perth will pay the Junket Operator a set percentage in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Junket Operator's gross loss as recorded by Crown Perth at the time of settlement. b) No partial settlements are permitted on discount on loss programs. 7. Early Settlement Discount Where payment on cheque cashing / credit facilities is received in full and in cleared funds within 20 business days from the draw down date, where applicable, the commission rate will be increased to the rate applicable to cash Front Money as described in the Reference Schedule. 8. Complimentary Privileges a) Providing the junket achieves a minimum of A$3,000,000 / HKD$21,000,000 in Non Negotiable chip turnover, or A$6,000,000 / HKD$42,000,000 in commission based play chip turnover, Crown Perth will provide a Complimentary Allowance as specified in the Reference Schedule to cover in-house room and food & beverage costs incurred by the Junket Operator. The allowance for complimentaries cannot be redeemed for cash or cash equivalent. The allowance cannot be used for gratuities, retail products (including tours) or other items taken away from Crown Perth outlets. Expenditure incurred in excess of the allowance is the responsibility of the operator. b) Crown Perth will provide complimentary airport transfers to the Junket Operator and the players involved in the Program. 9. Front Money a) Subject to clause 9 (b), the Junket Operator must provide Front Money to Crown Perth of at least A$500,000 / HKD $3,500,000. b) Unless otherwise pre-arranged, Front Money must be cash or cash equivalent, which must be cleared funds. c) A copy of any bank draft, intended as Front Money, must be forwarded to Crown Perth at least 48 banking hours prior to the commencement of the junket, to enable verification and clearance. 10. Settlement Transactions a) All commission payable to the Junket Operator upon settlement will be telegraphically transferred to the overseas bank account nominated by the Junket Operator. b) Crown Perth Cheques & telegraphic transfers will not be processed until settlement, unless otherwise agreed by Crown Perth Executive Management. c) All proceeds of settlement must be utilised to redeem CCF, credit facility, foreign currency (cash or drafts), telegraphic transfer, bank cheques and any other value items held by Crown Perth as Front Money. d) If the Junket Operator departs Crown Perth without settling in accordance with this Agreement, Crown Perth will have full authorisation to complete the settlement on the Junket Operator's behalf and distribute funds as mentioned in clause 10 (c). Any additional funds will be placed in the Junket Operator's deposit account awaiting further instructions from the Junket Operator. … 12. Administration The Junket Operator must provide the names, passport numbers, room requirements, and any other information required by Crown Perth to VIP Services at least 48 hours prior to the group's arrival. … 15. Binding Agreement The Junket Operator acknowledges and accepts that under the Gaming and Betting (Contracts and Securities) Act 1985, funds advanced for the purpose of lawful gaming is recoverable in court and is given for lawful consideration. Non-Exclusive Overseas Gaming Promotion Agreement The terms and conditions of the current Non-Exclusive Overseas Gaming Promotion Agreement between the Junket Operator and Crown Perth, dated 20/11/2012, are hereby incorporated into and form part of this agreement. In the event of any inconsistency arising, this Junket Program agreement will prevail. 35 Section 25A(3) of the Casino Control Act 1984 (WA) (WA Casino Control Act) defined the term "junket" to mean: …any arrangement for the promotion of gaming in a licensed casino by groups of persons, usually involving - (a) payment by the casino licensee of a commission to the person who conducts the junket, and (b) arrangements for the provision of transport, accommodation, food, drink and entertainment for the participants in the arrangements, some or all of which are paid by the casino licensee or otherwise provided on a complimentary basis. 36 Section 3 of the Casino Control Act 1991 (Vic), which is the statute referred to in the Crown examples of Junket Program Agreements, defined the term "junket" at the relevant times to mean: … any arrangement whereby a person or a group of people is introduced to a casino operator by a junket organiser or promoter who receives a commission based on the turnover of play in the casino attributable to the persons introduced by the organiser or promoter or otherwise calculated by reference to such play.
Promotion Agreement 37 Also in evidence are examples of signed agreements based on the casinos' template "Non-Exclusive Overseas Gaming Promotion Agreement" (Promotion Agreement). The evidence was that the Promotion Agreements are entered into only once between the junket tour operator and the casino and before any junkets take place. The evidence also was that it is possible that a Promotion Agreement may be signed many years before the junket tour operator arranges a junket to the casino, and that a junket tour operator may sign the agreement but never send a junket to the casino. In contrast, a Junket Program Agreement is negotiated and signed each time a junket takes place and is sent to the operations team in preparation for the commencement of the junket. 38 Mr Barton deposed that the operations team would "almost never see the Promotion Agreement signed by a [junket tour operator]". His understanding from various discussions with casino personnel was that the Promotion Agreements serve the general purpose of increasing the practical likelihood a junket tour operator would consider arranging groups of VIP players to come to the casinos, based on a sense of engagement from the junket tour operator created by signing a written document. According to Mr Barton, the document is also intended to give a junket tour operator a level of confidence as to what special gambling terms may generally be offered by the casino, which the casino treats as a non-binding memorandum of understanding. His evidence also was that it was his understanding that no junket tour operator had ever claimed from the casinos any entitlement to money under a Promotion Agreement nor, he deposed, would the casinos entertain any such claim. 39 Mr Barton deposed that Burswood did not enter into Promotion Agreements with junket tour operators before 5 June 2010, as prior to that time junket tour operators were required under the Casino Control Regulations 1999 (WA) to make a formal application to, and obtain approval from, the Gaming and Wagering Commission of Western Australia (Gaming Commission) to be a junket tour operator and operate junkets at Crown Perth. From 5 June 2010, there was no longer any legislative requirement for junket tour operators to obtain approval from the Gaming Commission to operate junkets. From this time onwards Burswood started entering into Promotion Agreements with junket tour operators, but if a junket tour operator had previously obtained approval form the Gaming Commission to conduct junkets at Crown Perth, it was not Burswood's practice to require the junket tour operator to sign a Promotion Agreement. 40 Examples of Promotion Agreements based on the casinos' template Promotion Agreement that were in evidence contained the following terms. Again, there was no dispute between the parties that the examples in evidence were representative of Promotion Agreements with junket tour operators on foot during the relevant tax periods. 41 The recitals to the agreement state (where the "Operator" refers to the junket tour operator): A. The Operator carries on a prominent and reputable business of marketing, promoting and arranging Junkets to various gaming establishments around the world including Australia. The Operator withes [sic] to include the Burswood Entertainment Complex as one such destination. B. The Operator desires to increase commission revenues by the inclusion of Burswood to which Junkets can be promoted and arranged to visit and Burswood wishes to increase gaming revenues by receiving into its casino premises high net worth players arranged by the Operator. C. Following representations and negotiations between Burswood and the Operator (together "the Parties"), the Parties have agreed that the Operator will, for reward, market, promote and arrange Junkets of one or more persons to the Burswood Entertainment Complex upon the terms and conditions set out in this agreement. D. The Parties now wish to document the aforementioned terms and conditions previously agreed between themselves. 42 Relevant clauses include: 2. APPOINTMENT Subject to the terms and conditions of this agreement, Burswood appoints the Operator on a non-exclusive basis to market, promote and arrange Junkets to the Casino and the Operator accepts the appointment on a non-exclusive basis. 3. TERM This agreement will commence on the date of this agreement and, subject to clause 11, may be terminated by either party upon twenty one (21) days notice [sic] in writing to the other party. 4. OPERATOR'S OBLIGATIONS 4.1 The Operator is an independent contractor and is not an agent, employee or legal representative of Burswood. The Operator is not authorised to do business in the name of Burswood or to bind Burswood in any way. 4.2 At the Operator's own expense and prior to the Junket Players arriving in Australia, the Operator will undertake the following activities in the Territory and not in Australia in relation to the marketing, promotion and arrangement of Junkets. (a) actively develop markets for, advertise, solicit and promote participation in Junkets by gaming patrons, residing in the Territory, who have substantial personal financial resources, enjoy or are known to enjoy gaming; (b) attend to all passport, visa and immigration requirements of Junket Players so as to assist their prompt and trouble free travel to Australia; (c) in respect of Accompanied Junkets, attend to collection of Front Money and transfer of Front Money to Burswood by telegraphic transfer or other mutually acceptable means of funds transfer; (d) to the extent necessary to fulfil its obligations under this agreement, develop and maintain active, trained staff at the Operator's own expense; (e) attend to Junket Players' travel itineraries, purchase of air fares, confirmation of flights, confirmations to Burswood of anticipated arrival and departure dates/times, confirmation of Junket Player numbers and any special requirements of a Junket Player; (f) attend to prior arrangement of airport transfers, departure taxes, accommodation (inclusive of hotel services) for Junket Players. 4.3 The Operator and Burswood's overseas representative(s) may meet periodically and at that meeting the Operator will advise Burswood of its promotional activities including details of key potential Junket Players and full information on the state of the market for Junkets. 4.4 The Operator will observe all directions and instructions given by Burswood in relation to the marketing, promotion and arrangement of Junkets to the Casino and, in the absence of any such directions or instructions in relation to any particular matter, will act in a manner which is most beneficial to interest [sic] of both Parties. 4.5 The Operator assumes full responsibility for claims arising in connection with the marketing, promotion and arrangement of Junkets by the Operator, and will defend and hold Burswood harmless from any and all claims, demands, suits or liabilities arising out of any acts or omissions of the Operator, its employees, appointees, legal representatives and agents whether based upon breach of contract, negligence, strict liability or otherwise, and including claims arising from the Operator's breach of any of the provisions of this agreement. 4.6 The Operator will notify Burswood immediately of all and any complaints made by a Junket Player and will promptly and diligently investigate and report on the complaint to Burswood. Bruswood [sic] will be entitled to investigate any such complaint either in conjunction with the Operator or independently if it so decides. Any action to be taken in respect of any complaints will first be agreed between the Parties. 4.7 The Operator acknowledges that by completing a Junket Program Agreement or a Letter of Introduction before the arrival of each Junket, he/she has nominated the Junket as being either: (a) an Accompanied Junket; or (b) an Unaccompanied Junket. 4.8 In respect of an Unaccompanied Junket, nothing stated in, or performed pursuant to, this agreement, will relieve the Operator of ensuring Burswood has received accurate details of Junket Player's [sic] names and arrival details prior to arrival of the player(s), save for service in writing by the Operator of those details. 4.9 The Front Money in respect of an Accompanied Junket will not be less than A$500,000 per Junket; or such other minimum amount as may be determined from time to time in accordance with clause 13.2. 4.10 For the avoidance of doubt between the Parties, it is acknowledged that: (a) the Operator and Junket Players are free to negotiate and conclude separate arrangements between themselves but in so doing the Operator can not [sic] and will not represent or bind Burswood in those separate arrangements; (b) any separate arrangements made between the Operator and Junket Players in respect of other matters will not impact Burswood's obligations in respect of the Operator and vice versa; and (c) the Operator's obligations under clause 4 of this agreement will be performed entirely outside Australia. 5. BURSWOOD'S OBLIGATIONS Burswood will provide the following services to Junkets: (a) Upon request from the Operator: (i) airport transfers upon arrival and departure; (ii) re-confirmation of departing flight(s) (iii) hotel room reservations and confirmations on behalf of the Junket; The cost(s) of which may, by prior mutual agreement, be recoverable against the Operator on a reasonable and equitable basis; (b) Upon request but at no additional cost; (i) confirmation of Front Monies received; (ii) remittance by telegraphic transfer or electronic funds transfer to the nominated overseas bank account of: - the Operator - the commission; and - the junket player/s - surplus Front Money and gaming winnings (as appropriate) (c) Burswood will extend all due hospitality, care and personal attention as is commensurate with a Junket Player's status and play rating; (d) Burswood will ensure conduct and rules of the Games played at the Casino are consistently applied at all times for all Junket Players; and (e) Burswood will provide any other services specific to a particular Junket or Junket Player as agreed with the Operator. 6. COMMISSION 6.1 In consideration of the matters referred to in clause 4.2, Burswood will pay the Operator a commission in respect of each Junket arranged by the Operator. The amount of commission payable by Burswood to the Operator will be calculated as a percentage of net Turnover (or mutually acceptable derivative thereof) of a Junket. If the Operator (or an agent) elects to accompany a particular Junket he/she will not be paid any additional amount by Burswood. The aforementioned percentage will be negotiated between the Parties and agreed before the Junket arrives at the Casino and will be largely (though not entirely) dependant [sic] upon whether the Junket is to be an: (a) Accompanied Junket - in respect of which any rebates payable to the players, will be paid by the Junket Operator and not by Burswood; or (b) Unaccompanied Junket - in respect of which the Junket Operator receives a payment as agreed in the Letter of Introduction and this payment is separate and distinct from any agreement between Burswood and the introduced player(s). 6.2 Burswood will take into account the following factors in determining the commission percentage of a Junket: (a) the type of Junket program; (b) amount of Front Money to be provided; (c) number of players; (d) complimentary services to be supplied at expense of Burswood; (e) Whether the Junket is Accompanied or Unaccompanied; (f) Any other factors mutually agreed between the Parties. 6.3 Calculation of the commission in relation to each Junket will be based solely upon records kept by Burswood in respect of the Turnover of each Junket and confirmed on the relevant Settlement Sheet. 6.4 In relation to each Accompanied junket, Burswood will deliver to the Operator for signing in the Territory, a junket Program Agreement detailing, amongst other things, the percentage of commission to be used. The Junket Program Agreement will be given by the Operator to Crown before the intended arrival of the Junket at the Casino. 6.5 In relation to each Unaccompanied Junket, Burswood will deliver to the Operator for signing in the Territory, a completed Letter of Introduction for Table Players detailing, amongst other things, the commission rate. The Letter of Introduction will be given by the Operator to Crown before the intended arrival of the player(s) to Burswood. 6.6 It is acknowledged by the parties that where the commission calculated pursuant to clause 6 of this agreement represents a repayment by Burswood of a portion of the participating players losses [sic], whether theoretical or actual, the commission will be paid according to the specific details agreed in the Junket Program Agreement or the Letter of Introduction. 6.7 Commission will be paid in a foreign currency and will be paid overseas by remission by telegraphic transfer or electronic funds transfer to the nominated bank account of the Operator. 6.8 If the Parties fail to agree on the calculation of commission in relation to any Junket within twenty one (21) days of commencing a Junket, this agreement may be immediately terminated by either party. … 9. CONFIDENTIALITY 9 .1 The Operator agrees to hold in confidence and to use only for the purposes of this agreement any and all Confidential Information disclosed by Burswood, under this agreement. The Operator will limit disclosure of such information only to those employees of the Operator who are required to have access to it for the performance of their duties. The Operator acknowledges that all Confidential Information disclosed by Burswood prior to the effective date of this agreement will be deemed to have been disclosed pursuant to the provisions of this clause. 9.2 The provisions of clause 9.1 will not apply to any information which the Operator can prove: (a) was in the public domain when it was given to the Operator; (b) after being given to the Operator becomes part of the public domain except through disclosure contrary to this agreement; or (c) was lawfully received from another person having the unrestricted legal right to disclose that information without requiring the maintenance of confidentiality. 9.3 The foregoing obligations concerning confidentiality and limitation of use of confidential information will survive the expiration or termination of this agreement. … 11. TERMINATION 11.1 Notwithstanding clause 3, either party may terminate this agreement in writing without further notice should the other party be in material breach of any of the provisions of this agreement and have failed to remedy such breach within fourteen (14) days of receipt of notice from the party not in default requiring the breach to be remedied. 11.2 If the Operator enters or is placed in receivership or provisional liquidation or liquidation (except for the purposes of amalgamation or reconstruction) or an application is made for the winding up of the Operator, or if the Operator becomes insolvent, makes an assignment for the benefit or its creditors [sic], or if an encumbrancer takes possession of any of the Operator's assets, Burswood may, at its sole discretion, terminate this agreement forthwith by written notice. 11.3 Burswood will terminate this agreement forthwith by written notice if the Gaming and Wagering Commission formally advise [sic] Burswood not to have any further dealings with the Junket Operator.
The assessments 43 The assessments, the subject of the objection decisions disallowed by the Commissioner and appealed by the applicants pursuant to s 14ZZ of the TAA, were for the following monthly tax periods: (a) Crown: 1 July 2010 to 31 July 2015 (inclusive); (b) Burswood: 1 October 2007 to 30 June 2010 and 1 July 2011 to 31 July 2012 (inclusive). 44 At all relevant times, Crown was the representative member of the Crown Melbourne Limited GST Group pursuant to Div 48 of the GST Act. During the periods 1 July 2010 to 30 June 2011 and 1 August 2012 to 30 November 2015, Burswood was a member of that GST group. 45 For each of the tax periods, the applicants lodged business activity statements which took turnover commission and win/loss rebates into account when calculating their global GST amounts under s 126-10 of the GST Act. By the assessments, the Commissioner excluded the amounts of commission and win/loss rebates from the calculation of the applicants' global GST amounts attributable to those tax periods on the basis that such commissions and rebates do not come within Div 126 of the GST Act either as "consideration" for or in connection with the applicants' gambling supplies or "monetary prizes" that the applicants are liable to pay on the outcome of gambling events and therefore are not to be included the computation of the GST global amounts of the applicants. 46 By agreement of the parties, the question of whether the challenged assessments were excessive was limited at this stage of the proceedings to the sample periods of February 2012 (for Burswood) and June 2015 (for Crown).
Submissions 47 The applicants argued that the Promotion Agreement and the Junket Program Agreement have no contractual force of themselves but are "mere documents" to which the casino and junket tour operator are signatories, which describe some of the "optional terms" that may become contractual rights and obligations of the relevant applicant, the junket players and the junket tour operator if a gambling option is selected and the nominated junket players choose to gamble at the casino with the special chips set aside for the junket. It was submitted if no junket player gambles, the junket program never commences and nothing is payable. There is "but an Applicant's standing offer to gamble, partly recorded in writing with options as to terms that modify the ordinary terms; there is no contract giving rise to any rights and obligations for which any monetary consideration is payable by any party". In particular, it was submitted, if there is no gambling, those services previously provided by the junket tour operators outside Australia as set out in cl 4.2 of the Promotion Agreement, no matter how beneficial to the applicants, do not give rise to any obligations on the part of the applicants to reward those past services. Likewise, the applicants would have no recourse for breach of contract if the junket tour operator has done nothing. 48 On the applicants' case, it is the act of gambling which gives rise to contractual relations and the "gambling contract" that is formed at that point in time is one to which the casino, the junket players and the junket tour operator are all parties in accordance with the principles in Clarke v Earl of Dunraven & Mount-Earl [1897] AC 59 (The Satanita case). It was argued that those contractual relations constitute a single, integrated and indivisible gambling transaction to which the junket players, the junket tour operator and the relevant applicant are all parties. In the applicants' submission, there is one monetary outcome from the applicants' gambling supplies, which is either an amount paid by the casino to the junket tour operator or an amount paid by the junket tour operator to the casino, determined by the collective results of the "gross" or "ordinary" gambling wins or losses of the junket players, as adjusted by any commission and/or rebates applying under the particular Junket Program Agreement. It was submitted that in the computation of the one monetary outcome, the amounts of commission and/or rebates are an inseverable and integral part of the agreed consideration (or monetary prize) for the applicants' gambling supplies to the junket players, not severable or distinct payment obligations or entitlements referrable to non-gambling supplies. It was argued by reference to the decisions in Commissioner of State Revenue (Vic) v Lend Lease [2014] HCA 51; 254 CLR 142 (Lend Lease) and Commissioner of Stamp Duties (NSW) v Perpetual Trustee Co Ltd [1929] HCA 27; 43 CLR 247 that it was wrong to disaggregate, as the Commissioner did, the integers that make up the one monetary outcome of the gambling transaction into four components, viz, the "ordinary" gambling outcome (win or loss by reference to the special non-negotiable chips), the commission, the loss rebate and the win rebate. The error of the Commissioner's approach was said to be exposed in the case of a junket program where the gambling option selected by the junket tour operator is a rebate on a gross win or loss. An example given was junket program no. 54901, in which the junket tour operator selected a program with a gross win/loss rebate of 72.5%. The ordinary gambling outcome was a "gross win" by the junket tour operator of $749,545. It was argued that because a win/loss rebate of 72.5% was applicable, the amount Burswood was liable to pay on the outcome of the gambling event (ie "the monetary prize" it was liable to pay) was not the gross win amount of $749,545 but the sum of $206,125, being $749,545 less 72.5% ($543,420), whereas, it was argued, the gambling outcome on the Commissioner's analysis was a loss to Burswood of $749,545, with the amount of $543,420 constituting the amount payable by the junket tour operator to Burswood for the services it provided to Burswood under cl 4.2 of the Promotion Agreement. It was submitted, however, that there were no independent debts by way of agreement, simply a contractual liability to pay an amount of $206,125 on the outcome of the gambling events. It was further submitted that even if there were severable amounts, that did not alter the fact that only Burswood's gambling supply moved the payments of those amounts so that the outcome for GST purposes would be unaffected. In that case, it was said, the applicants' global GST amount would still be reduced by $543,420. 49 In further support, it was argued there is no material difference for GST purposes between gambling under a Junket Program Agreement and an individual player gambling under Premium Player Program Agreement, which also results in a single monetary outcome based on the overall gambling win or loss adjusted by the agreed commission and/or rebates which, for GST purposes, is dealt with under Div 126. In either case, it was argued, the single monetary outcome is determined solely by reference to the actual gambling conducted and, it was said, is plainly referrable to the applicants' gambling supplies. It was argued a fortiori in the case of a junket, as in the case of the Premium Player Program Agreement, a net amount (before adjustment for non-gambling amounts) which is in favour of the casino is "consideration for or in connection with" the applicants' gambling supplies and to be included in "total amounts wagered". A net amount (before adjustment for non-gambling amounts) in favour of the junket tour operator is a monetary prize the casino is liable to pay and to be included in "total monetary prizes" for the purposes of the applicants' global GST amount calculation. 50 Further, it was argued that the junket tour operators, under their arrangements with their clients, would "obviously charge their clients for procuring those benefits and organising their travel arrangements, finance, etc". It was submitted that "[t]hose fees are commensurate with services they provide to their clients, which is measurable for reasonableness by reference to the special gambling terms their clients could obtain from the Applicants directly as VIP players". It was submitted: That the foreign [junket tour operators] only receive a relatively small remuneration commensurate with their services and that the VIP players benefit almost wholly from the special gambling terms is not only commercially rational, it is recognised by Parliament. Subsection 12-315(3) of Schedule 1 to the Taxation Administration Act 1953 provides that before the Governor-General may make a regulation prescribing payments for withholding, the Minister must be satisfied that the payment is of a kind that could reasonably be related to the assessable income of foreign residents. As with other non-residents who derive their income from Australian sources and paid by a resident, Parliament imposed a withholding tax to be remitted by the resident casino. Parliament recognised that a [junket tour operator] may not be actually paid a fee by the casino for services and obtain its rewards from its clients, secured by its handling of the gambling funds. The Minister imposed a withholding tax rate of only 3% on amounts actually paid by casinos to [junket tour operators] attributable to turnover commissions and loss rebates, even if the casinos were not obliged to pay the [junket tour operator] a reward for any services. Accordingly, if a monetary prize is paid by a casino to a [junket tour operator] where turnover commissions and rebates are taken into account in determining that prize, a 3% withholding tax must be remitted. This is a proxy for the income tax that would be payable by the [junket tour operator] on its own Australian-sourced earnings from its clients, being a relatively small amount commensurate with its services to those clients in Australia. (italics and underlining in the original; footnotes omitted) 51 On the Commissioner's case, the commissions and rebates, properly characterised based on the contractual arrangements in place between the junket tour operators and the applicants, do not fall within the statutory concepts of "total amounts wagered" or "total monetary prizes" contained in Div 126 of the GST Act. Rather, it was argued, the commissions and rebates are, as a matter of contract, the "consideration for" the supply by junket tour operators of their services in marketing, promoting and arranging junkets. It was argued that the Commissioner's characterisation, unlike the applicants' position, is consistent with the express terms of the contractual arrangements in existence between the applicants and junket tour operators in the form of the Promotion Agreement and the Junket Program Agreement, which contemplate the payment of such commissions and rebates "in consideration" for the services provided by the junket tour operators under the Promotion Agreement. It was further argued that the applicants' case also erroneously relies upon: (1) the drawing of inferences as to the arrangements in place between junket tour operators and the individual junket players as, it was argued, there was no evidentiary foundation for drawing such inferences; and (2) purported equivalence with the treatment of VIP players who contract directly with the casinos given, it was argued, the individual junket participants are not the contractual counterparties either to the Promotion Agreement or the Junket Program Agreement and do not receive the payments.
Consideration 52 The application of Div 126 of the GST Act to the turnover commission and win/loss rebates depends on whether they satisfy the criterion of "consideration for" gambling supplies or "monetary prizes that [the applicants] are liable to pay" on the outcome of gambling events. The expressions "consideration" and "monetary prizes" both have statutory meanings for the purpose of Div 126 of the GST Act. 53 The word "consideration" has the same meaning in the context of s 126-10 as the definition in s 9-15(1), where the term "consideration" is defined to include "any payment, or any act or forbearance, in connection with a supply of anything" (s 9-15(1)(a)) and "any payment, or any act or forbearance, in response to or for the inducement of a supply of anything" (s 9-15(1)(b)). Moreover, the payment, act or forbearance may be voluntary and need not be by the recipient of the supply (s 9-15(2)). 54 The construction of the statutory phrase "in connection with a supply" in the context of the definition of "consideration" for the purposes of the GST Act has been the subject of judicial consideration. The phrase does not require a connection that is contractual (Commissioner of Taxation v Qantas Airways Limited [2012] HCA 41; 247 CLR 286 (Qantas) at 292 [14] per Gummow, Hayne, Kiefel and Bell JJ) but the nature and degree of the connection must be such that it can be said that the consideration is "for" the supply. In AP Group Limited v Commissioner of Taxation [2013] FCAFC 105; 214 FCR 301 Edmonds and Jagot JJ (with whom Bromberg J agreed at 321 [74]) explained at 310 [33]: … The consideration must be "in connection with" the supply but the supply must also be "for" the consideration. "For", in this context, means "in order to obtain" (Macquarie Dictionary Online, item 3, Oxford Dictionary Online, item 9(a)). The word "for" thus functions in the statutory description to identify the character of the connection which is required. It ensures that not every connection between the giving of consideration and the provision satisfy the first condition of making a taxable supply. If it were otherwise, any form of connection of any character between the making of a supply and the payment of consideration would suffice… The same reasoning is apt with respect to the use of the word "for" in the phrase "*consideration for all of your *gambling supplies", which informs the nature and degree of the connection required in the context of s 126-10 of the GST Act. 55 The expression "monetary prizes" (as it was in the tax periods in question) meant, with respect to a prize given at a casino, "any prize, or part of a prize, in the form of *money; or… gambling chips that may be redeemed for *money": s 195-1 of the GST Act. The GST Act does not contain a definition of "prize". In ordinary meaning, a "prize" includes "a thing, especially an amount of money … that can be won in a game of chance": Oxford Dictionary of English, 3rd ed., item 1, point 2. As well, to come within the definition of "total monetary prizes" in s 126-10(1), it must be a monetary prize that the casino is "liable to pay, during the tax period, on the outcome of gambling events". Plainly, an amount of money which is payable by the casino on a winning wager would be a monetary prize for the purposes of Div 126. 56 In the present case, the question of whether commission and rebates are to be dealt with under Div 126 is "an inquiry that begins in the agreements the parties made": Lend Lease at 160 [51]. There are four sets of transactional documents that are relevant to consider: (1) the Promotion Agreement; (2) the Junket Program Agreement; (3) the settlement sheet; and (4) the applicants' standard rules for the games played by the junket players. 57 The starting point is the Promotion Agreement between the casino and the junket tour operator. That agreement expressly stipulates in cl 6.1 that "in consideration of the matters referred to in clause 4.2" the casino will pay the junket tour operator a "commission" to be "calculated as a percentage of net Turnover (or mutually acceptable derivative thereof) of a Junket", which is to be negotiated between the casino and the junket tour operator "before the Junket arrives at the Casino". The matters referred to in cl 4.2 are "activities" to be undertaken by the junket tour operator at its own expense "in relation to the marketing, promotion and arrangement of Junkets" and "prior to the Junket Players arriving in Australia". It is also provided in cls 6.4 and 6.5 that before the arrival of the junket players, the casino is to deliver a Junket Program Agreement to the junket tour operator (if an accompanied junket) or a letter of introduction (if the junket is unaccompanied) detailing the percentage of commission to be used on that junket. 58 An initial question is whether, as the applicants contended, the Promotion Agreement is "entirely irrelevant" because, as the applicants submitted, the Promotion Agreement does not have contractual force. The applicants described the Promotion Agreement as an in-principle agreement to set the expected terms upon which gambling may take place in the future with unspecified VIP players, and as an "illusory" contract in the sense described by Windeyer J in Placer Development Limited v The Commonwealth of Australia [1969] HCA 29; 121 CLR 353 (Placer Development) at 369, namely a bilateral transaction having some semblance to a contract but which is not, in truth, a contract because it is not capable of creating legally enforceable rights and obligations. It was argued that the Promotion Agreement does not create any legally enforceable right in the junket tour operator to sue for the commission in respect of the activities undertaken under cl 4.2 because cl 6.1 provides for the percentage to fix the amount of commission to be paid to the junket tour operator to be "negotiated between the Parties". 59 Placer Development sets out the principles of an "illusory contract". As explained by Kitto J at 356: … wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which action can brought at all. To like effect, Taylor and Owen JJ said at 359-60: But a promise to pay an unspecified amount of money is not enforceable where it expressly appears that the amount to be paid is to rest in the discretion of the promisor and the deficiency is not remedied by a subsequent provision that the promisor will, in his discretion, fix the amount of the payment. Those passages do not support the applicants. The fact that cl 6.1 is not immediately enforceable because there is yet to be agreement as to the percentage of commission payable is not inconsistent with a concluded contract. As Williams J observed in York Air Conditioning and Refrigeration (A/sia) Proprietary Limited v The Commonwealth [1949] HCA 23; 80 CLR 11 at 29, "there is no reason why the parties to a contract should not agree that the determination of some of the incidents of the contract should be left to the decision of a third party or to one of themselves". Moreover, cl 6.1 expressly provides that the percentage is to be negotiated between the parties before the junket arrives at the casino and, by cls 6.4 and 6.5, the casino is obliged, before the junket arrives at the casino, to deliver a Junket Program Agreement or a letter of introduction to the junket tour operator for signing by the junket tour operator detailing the percentage to be used in calculating the commission. 60 Furthermore, the following provisions of the Promotion Agreement are also not mere "promissory expressions reserving an option as to the performance" (Placer Development at 356 per Kitto J, citing Leake on Contracts, 3rd ed.), but enforceable rights and obligations which immediately arise: (a) clause 2, which provides for the appointment of the junket tour operator on a non-exclusive basis to market, promote and arrange junkets to the casino and the junket tour operator's acceptance of that appointment; (b) clause 4.2, which sets out the obligations on the junket tour operator and pursuant to which the junket tour operator agrees to undertake certain activities with respect to the marketing, promotion and arrangement of junkets, including "actively develop markets for, advertise, solicit and promote participation in junkets"; (c) clause 4.4, which requires the junket tour operator to "observe all directions and instructions given by [the casino] in relation to the marketing, promotion and arrangement of Junkets"; (d) clause 4.5, under which the junket tour operator assumes full responsibility for claims arising in connection with the marketing, promotion and arrangement of junkets, and indemnifies the casino in respect of such claims; (e) clause 4.6, which requires the junket tour operator to notify the casino of complaints made by a junket player; (f) clause 9, which imposes obligations of confidentiality on the junket tour operator; and (g) clause 11, which provides for the termination of the agreement by one party should the other party be in material breach, or the termination by the casino if the junket tour operator is placed in liquidation or if the Gaming Commission formally advises the casino to cease dealings with the junket tour operator. 61 Accordingly, I reject the contention that the Promotion Agreement is an illusory contract. 62 The Commissioner, however, did accept that cl 6.1 is not enforceable unless and until there is gambling by one or more junket players. Unless and until there is gambling, there is merely "an agreed consequence to future action" and cl 6.1 has no operation: Port Jackson Stevedoring Proprietary Limited v Salmond & Spraggon (Australia) Proprietary Limited [1978] HCA 8; 139 CLR 231 (Port Jackson Stevedoring) at 244 per Barwick CJ. However, it was argued, once there is gambling, there is an agreed consequence arising from that conduct, namely, at that point in time a junket tour operator could sue for payment of the "commission": Port Jackson Stevedoring at 244 per Barwick CJ. 63 Like the Promotion Agreement, the Junket Program Agreement is also between the casino and the junket tour operator. Further, by the express terms of the Junket Program Agreement, where a Promotion Agreement has been entered into between the casino and the junket tour operator, the "terms and conditions" of the Promotion Agreement are incorporated into the Junket Program Agreement, subject to the proviso that in the event of any inconsistency arising, the Junket Program Agreement will prevail. Accordingly, both agreements should be read as a single integrated document and, save as to any inconsistency, should be read harmoniously. 64 The Junket Program Agreement makes provision for commission and rebates to be paid, depending on the type of junket program selected by the junket tour operator. The program options in the reference schedule to the Junket Program Agreement in the above example are: (1) "Commission"; (2) "Commission and Rebate on Net Win / Loss"; (3) "Rebate on Gross Win / Loss"; and (4) "Commission and Discount on Loss". The payments required under the terms of the Junket Program Agreement are: (a) with a commission based program, the payment by the casino to the junket tour operator of a "commission in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the Program's total turnover as recorded by [the casino's] personnel at the time of settlement" - the "Program" being defined to mean the junket to be conducted at the casino with the program number described in the reference schedule; (b) with a rebate on gross win/loss program, the payment: (i) by the casino to the junket tour operator of "a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the [junket tour operator's] gross loss as recorded by [the casino's] personnel at the time of settlement"; or (ii) by the junket tour operator to the casino of "a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the [junket tour operator's] gross win as recorded by [the casino's] personnel at the time of settlement"; (c) with a rebate on a net win/loss program, the payment (i) by the casino to the junket tour operator of "a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the [junket tour operator's] net loss as recorded by [the casino] at the time of settlement"; or (ii) by the junket tour operator to the casino of "a rebate in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the [junket tour operator's] net win as recorded by [the casino's] personnel at the time of settlement"; and (d) with a discount on loss program, the payment by the casino to the junket tour operator of "a set percentage in the amount that is equal to the percentage selected in the Reference Schedule multiplied by the [junket tour operator's] gross loss as recorded by [the casino] at the time of settlement." 65 The first thing to note is that the amount to be paid as "commission" is calculated in the same way under the Junket Program Agreement as it is under the Promotion Agreement - that is, as a percentage of the turnover of the particular junket. I accept the Commissioner's submission that on a textual analysis, the word "commission" as used in cl 6.1 of the Promotion Agreement also captures the rebates and discounts on loss to be paid pursuant to the Junket Program Agreement. First, the Promotion Agreement, in express terms, recognises that an agreed percentage of turnover or "any mutually agreeable derivative" will constitute the "commission" payable to the junket tour operator for the marketing, promotion and arrangement of a junket which is conducted at the casino. Secondly, the other provisions of cl 6 appear to contemplate that "commission" may take the form of a rebate - eg cl 6.6, which provides that "where the commission calculated pursuant to clause 6 of [the Promotion Agreement] represents a repayment by Burswood of a portion of the participating players losses [sic], whether theoretical or actual, the commission will be paid…". Thirdly, the junket tour operator's selection of a rebate or discount on loss program and agreed applicable percentage evidences a mutual intention to adopt those terms as an "acceptable derivative" to be paid by way of consideration. Sub-clause 10(a) of the Junket Program Agreement also supports this construction. Clause 10 is headed "settlement transactions" and sub-cl (a) provides that "[a]ll commission payable" to the junket tour operator upon settlement will be telegraphically transferred to the overseas bank account nominated by the junket tour operator. A construction of the word "commission" as the umbrella term for the payment obligations of the casino to the junket tour operator is both textually open and gives commercial sense to sub-cl 10(a): Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640 at 656-7 [35] per French CJ, Hayne, Crennan and Kiefel JJ. On that construction, the services provided by the junket tour operator to the casino in arranging the junket are the consideration for the commission, rebates and discounts on loss which the casino "will pay". 66 I do not think that the position is any different where a Promotion Agreement has not been executed and so does not form part of the terms and conditions of the Junket Program Agreement (which is only the case for junket tour operators with whom Crown Perth established a relationship prior to 5 June 2010, because previously the Gaming Commission approved junket tour operators). First, the Junket Program Agreement should not be construed any differently. Secondly, such a construction makes commercial sense given that the contract - being the Junket Program Agreement - is made between the junket tour operator and the casino and is a contract which governs the terms and conditions of a junket which the junket tour operator has arranged to be conducted at the casino: Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; 256 CLR 104 at 116-7 [46]-[51] per French CJ, Nettle and Gordon JJ. 67 The alternative contention was put by the applicants that even if the Promotion Agreement does have contractual force, cl 6.1 is unenforceable because the services provided by the junket tour operator under cl 4.2 are rendered before the contractual relationship comes into existence and so, the argument went, those services are unsupported by consideration. I also reject that contention. The fact that the junket tour operator provides its services before the obligation to pay the consideration crystallises does not mean that cl 6.1, when it becomes enforceable, is not valuable consideration for those services. As the authorities make clear, a subsequent promise to pay for previously provided services by their recipient is supported by consideration in the form of the provision of the services, which is not past consideration but valuable executed consideration if an act is done at a time when the parties intend that payment will be made: Re Casey's Patents; Stewart v Casey [1892] 1 Ch 104 at 115-6 per Bowen LJ; Pao On v Lau Yiu Long [1980] AC 614 at 629; Huntingdale Village Pty Ltd (receivers and managers appointed) v Corrs Chambers Westgarth [2018] WASCA 90 at [81]-[84] per Martin CJ (Mitchell and Beech JJA agreeing at [148]). 68 Contrary to the Commissioner's contention however, that contractual analysis does not of itself provide the answer to the correct treatment of commission and rebates for GST purposes and whether the special rules contained in Div 126 of the GST Act apply. On the facts, there are two supplies: (1) the services provided by the junket tour operator in arranging the junket; and (2) the gambling supplies provided by the applicants under the junket arrangement, which are the relevant supplies for the purposes of Div 126. The Commissioner's contractual analysis fails to address the relevant transaction, which is the provision of gambling supplies by the applicants and the characterisation of commission and rebates in that context for the purposes of the application of the special GST rules. There are three responses to the Commissioner's case. 69 First, I accept the applicants' submission that a contractual relationship exists as between the applicants, the junket tour operator and the junket players with respect to the conduct of a junket at the casino upon gambling taking place. When there is gambling, the effect of the gambling is that the junket players agree to be bound by the rules that apply to the gambling: The Satanita case. Those rules are to be found in the standard rules set by the casino, as modified by the terms of the junket program selected by the junket tour operator and recorded in the Junket Program Agreement with respect to any gambling that takes place. As matter of contract law, the terms agreed by the casino with the junket tour operator with respect to the conduct of a junket at the casino constitute an offer by the casino to make gambling supplies to junket participants on the terms agreed, and the commencement of gambling by the junket players constitutes acceptance of that offer. Under those terms, there is an amount either paid by or to the junket tour operator at the conclusion of the junket, to be calculated by the collective wins and losses of the junket players and then adjusted by the commission and/or rebates to be paid under the special terms that apply to the particular junket. 70 Secondly, I accept that the accounting for the outcome of the applicants' gambling supplies is one integrated and indivisible transaction of which the commission and rebates to be paid to the junket tour operator by the casino and the rebates to be paid by the junket tour operator to the casino are inseverable components, such that it can be said that commission and rebates are not separate and distinct amounts to be disintegrated from the collective win/loss results. Rather, they are amounts which are required to be taken into account as stipulated by the Junket Program Agreement in settling what is to be paid and by whom as the result of the gambling, as evidenced by the settlement sheets, and either form part of the "consideration for" the applicants' gambling supplies or the "monetary prize" which the applicants are liable to pay on the outcome of the gambling under the junket arrangement, depending on whether it is a net win to the casino or a net loss to the casino: cf Lend Lease. 71 Thirdly, and importantly, the High Court in Qantas rejected a strictly contractual approach to the application of the GST Act. It was held in relation to s 9-5(a) of the GST Act that the word "for" in the phrase "the supply for *consideration" was not used to adopt contractual principles but required "a connection or relationship between the supply and the consideration": Qantas at 292 [14] per Gummow, Hayne, Kiefel and Bell JJ. In that case, the majority found that fares received from prospective passengers who failed to take the flights for which reservation and payment were made were still "consideration for" a taxable supply by the airline, even though the airline supplied "something less than" actual air travel. Their Honours held that it was sufficient that there was "at least a promise to use best endeavours to carry the passenger and baggage, having regard to the circumstances of the business operations of the airline": Qantas at 299 [33] per Gummow, Hayne, Kiefel and Bell JJ. It is therefore not determinative that, in the case of a junket, the casino contracts directly with the junket tour operator and not the individual players. What is relevant for the purposes of Div 126 is that the applicants' gambling supplies are made to the participating junket players, with the adjustments for commission and rebates reckoned upon the gambling supplies actually made and by reference to the outcome of the gambling events. The operation of Div 126 does not depend on the characterisation of the commission and rebates as "consideration" as a matter of strict contractual principle: Qantas. Equally so, the definition of "monetary prize" is apt to apply where an amount is payable by the casino to the junket tour operator on the reckoning of collective gambling wins and losses adjusted by commission and rebates. 72 This conclusion makes it unnecessary to deal with the applicants' other arguments, save to make two points. First, there was no evidence at all to substantiate the contention advanced by the applicants (detailed at [50] above) that junket tour operators only receive a relatively small remuneration commensurate with their services and that the individual players benefit almost wholly from the special gambling terms. Nor can the withholding tax provisions be relied on to fill the gap in such evidence. Secondly, the terms on which individual VIP players engage directly with the casinos are irrelevant to the proper characterisation of payments which the casinos make to or are paid by junket tour operators under the arrangements applying to junkets. 73 Finally, the applicants argued that the Commissioner's contention that a commission was not a monetary prize as defined in s 195-1 was contrary to his public ruling in GSTR 2002/3 at [189]-[192]. The Commissioner had submitted that a commission is not a monetary prize because it is calculated on the basis of participation, ie by reference to total turnover of a junket program, rather than to a win or loss on baccarat or roulette. The relevant paragraphs of the GSTR provide: GST treatment of points awarded as prizes by providers of gambling supplies 189. A common practice in the gambling industry is for points to be awarded to players to encourage their further participation in gambling events or to facilitate the purchase of products or services sold in the club, hotel or casino. 190. These points have a monetary value. For example, 30 points may be worth $15. Points may be issued in the following circumstances: • as a prize or part of the prize on a gambling event or a competition (for example, points are awarded for a win on a gaming machine or a player's success in a card game at a casino); • on the basis of participation rather than for a win on a gaming machine or a card game at a casino (for example, points awarded on the basis of the number of games played, time or money spent playing on gaming machines, or the time spent at gaming tables); or • on the purchase of meals, beverages and other non-gambling services supplied by the entity. 191. We consider that participation in a gambling event has its own outcome. Points awarded for participation, or on a result, are points awarded on the outcome of the gambling event. 192. When points are awarded for a winning bet, or for participation, and the points are redeemed for money (or redeemable gambling chips if paid by a casino), the money (or chips) is a monetary prize. This monetary prize is included in the total monetary prizes for the purposes of calculating the global GST amounts in section 126-10. 74 As the Commissioner correctly pointed out, these paragraphs concern an entirely different factual context, namely the awarding by a club, hotel or casino of points that have a specified value to individual players. There is nothing inconsistent between the Commissioner's submission in this case and GSTR 2002/3.
Conclusion 75 Accordingly, the applicants have shown the assessments for the sample periods of February 2012 (for Burswood) and June 2015 (for Crown) were excessive. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.
Crown Melbourne Limited
Commissioner of Taxation
The court held that the applicants had shown the Commissioner's assessments for the sample periods were excessive. The parties were ordered to provide draft forms of order giving effect to the reasons within 14 days (see Orders and [75]).