Francis Hotel Pty Ltd v Melbourne CC

Francis Hotel Pty Ltd v Melbourne CC - [2012] VCAT 1896 - VCAT 2012 case summary — Zoe

[63]

Francis Hotel and the Council agree that the range of EGM expenditure at this premises is between $2,984,375 and $3,387,200, being the mid-point of the expert evidence report predictions by Mr Whitehouse and Mr Gill. Given this, these witnesses were called to present their evidence in relation to transferred expenditure only.
Mr Whitehouse's opinion is that 80% of the expenditure will be 'transferred', which Ms Porritt described as "money that would have been spent on EGMs in any case but not at this venue". Mr Gill's opinion is the transferred expenditure is more likely to be 60%.
Mr Whitehouse agreed with Mr Rantino during cross-examination that it is important to get a good indicator of transferred expenditure because it can have a significant impact on new expenditure. Mr Rantino used the mid-point of the agreed range of EGM expenditure in this case at $3.2 million to further illustrate this point. He explained 10% of this expenditure is $320,000, which means a transferred expenditure of 80% equates to $640,000 of new expenditure. Mr Whitehouse agreed with Mr Rantino that whether it is 60 or 80% is important to understand, as if it is 60% (as Mr Gill says) the new expenditure doubles to more than $1.2 million.
Remembering that the central city of the City of Melbourne is unique with no cap or regional limit, Ms Porritt submitted we should consider the new expenditure in the context of the total expenditure on EGMs in the City of Melbourne, being $70.3 million for the 2012 financial year. In this context, she calculated that the new expenditure generated by this proposal equates to an increase of between 0.85-0.96% of current expenditure in the City of Melbourne (excluding Crown Casino) on Mr Whitehouse's analysis; or an increase of between 1.67% and 1.93% on Mr Gill's analysis. Ms Porritt described this increase in expenditure as "extremely modest in comparison with what is already occurring in the City of Melbourne".
On the one hand this information is of some relevance and interest, and on the other hand it is unhelpful. An increase in the order of 0.85% to 1.93% may not appear to be much on paper, but in order for this to be helpful in considering the likely economic impacts of approval, one would need to understand what impact the existing level of expenditure is having now on the wellbeing of the community. "The tipping point in terms of detrimental net impact on community wellbeing" as Bell J said in Romsey Hotel[18] is another way of expressing this.
If the existing level of expenditure is not having detrimental impacts on the community wellbeing, a proposed increase in new expenditure may well be acceptable. On the other hand, if the existing level of expenditure is having detrimental impacts or may be close to creating detrimental impacts, such an increase may not be acceptable. For example, new expenditure of $1.2 million may mean other retail or entertainment expenditure is lost, and this may or may not be considered detrimental for the City of Melbourne. It could also mean bills, or rent, or daily travel monies (for example) could not be paid and this may be detrimental. Council suggested other tipping points such as the impact on the character of municipality, the daily uses of the City or impacts on the broader capital city role of the City.
We do not need to make a finding on this or consider whether further information is needed as we find, overall, the evidence presented in this case about transferred expenditure to be lacking in rigour.
Mr Whitehouse's evidence is based on analysis commensurate with what is described as 'the Geotech model'. Mr Whitehouse gave evidence before the Commission, which stated in its decision:
1. Mr Whitehouse gave evidence of predictions he had made as to the likely revenue that would be generated by the installation of EGMs at the premises. Mr Whitehouse stated that such predictions were usually based on the use of a computer model known as 'Geotech', which aims to simulate choices made by consumers with respect to the use of EGMs within a defined area. Using data obtained from EGMs operating at venues within the area, the Geotech model attempts to predict the revenue which may be generated through the installation of EGMs at a new venue. In addition, the model attempts to predict the extent to which the installation of EGMs at a new venue will detract from revenue earned by EGMs at existing venues in the area.
2. The accuracy of evidence based on the use of the Geotech model has been accepted by the Commission in numerous matters. However, Mr Whitehouse advised the Commission that owing to the location of the premises within the central business district of Melbourne and their proximity to Crown Casino, the Geotech model could not accurately predict the revenue that could be earned through the installation of EGMs at the premises. However, Mr Whitehouse gave evidence that while the Geotech model could not be applied directly to determine the likely revenue which could be derived through the installation of EGMs at the premises, the principles which underlie its application in other matters were able to be adapted to this task.
It is our understanding that PVS Australia Pty Ltd ('PVS'), of which Mr Whitehouse is a director, has proprietary rights over the Geotech model. Mr Whitehouse stated it started being used by Tattersalls under his management when he worked there as far back as 1999, and he had been using it "confidently" since about 2007-2008. Mr Whitehouse stated "he still reviews it and updates it annually". As Mr Gill did not have access to the Geotech model, his statement of evidence is effectively a peer review of Mr Whitehouse's analysis. Mr Gill's evidence focuses on the overall expenditure and level of transferred expenditure rather than the veracity of the initial output derived from the Geotech model principles relied upon by Mr Whitehouse.
We have some concern about the rigour of the Geotech model principles as its outputs are limited by the data that is input; and some of the data input is subjective in nature. Mr Whitehouse explained the principles look at a range of things including the venue type (e.g. hotel or club), the number of EGMs, the fitout/quality of venue, access by roads (drive time), spend potential of each CCD, and probability of attracting people from other venues. On the basis of the data input, the transferred expenditure is then predicted.
In this case, Mr Whitehouse and Mr Gill agree the Geotech model cannot be relied upon in the central city because the factors to be considered such as resident population and the number of machines are impacted upon the facts that there is a broader relevant community in the central city and there are many machines at Crown Casino. Mr Whitehouse also emphasised that the competitive nature of the central city venues is distinctive to suburban areas. This means the extent of transferred expenditure "has to be a subjective call" (as put by Mr Whitehouse).
Mr Whitehouse used the factors (or principles) in the Geotech model and one case study in Ringwood to assist him in forming his opinion as to the transferred expenditure. We will deal with each of these aspects separately.

[64]

In regard to the Geotech model principles or factors, we have already expressed some concern about the subjective nature of the data that is input, and this is demonstrated in this case with two examples relating to position and venue attractiveness. Mr Whitehouse stated at paragraph 34 of his witness statement that these factors "will decide the ultimate revenue potential of a venue", and it is our view the subjective nature of these factors demonstrates flaws in relying upon these principles.
First is the affected area within which transferred expenditure is considered. In response to the Council's cross-examination, Mr Whitehouse stated he relied upon the Geotech model to identify "the trade area", which meant the Balaclava Hotel was not included in the trade area but the Dick Whittington was even though they are the same distance away from the proposed venue. Mr Whitehouse said it is the ability to attract that determines the inclusion of the venue such as the number of EGMs, the facilities, and the road network/accessibility. The quality of the venue and its facilities, and its accessibility are subjective data determined by Mr Whitehouse.
Second is the "position" of the Francis Hotel and "limitations" in the layout of the gaming area. These are subjective factors determined by Mr Whitehouse that form part of the Geotech model principles underpinning Mr Whitehouse's analysis. Relying on his own observations, it is Mr Whitehouse's opinion that the Francis Hotel is not in a "prime location". He says it is out of the main precinct of the CBD and is not as close to the retail sector of the CBD and Melbourne Central train station as, for example, The Meeting Place gaming venue situated on the corner of Little Lonsdale and Elizabeth Streets. We are not persuaded by this evidence as our own observations revealed constant pedestrians using the Lonsdale Street footpath outside the Francis Hotel - an observation we made to the parties following a midday, mid-week inspection we undertook during the hearing. The Francis Hotel is also on a direct route between the entertainment precinct of Hardware Lane and the retail core of the central city, including Myer, David Jones and Melbourne Central. It is also well located in terms of public transport with buses, trams and train stations all in close proximity. Lonsdale Street (like Little Bourke Street and Little Lonsdale Street, being the two closest and east-west aligned streets) is an east-west street that provides the opportunity for pedestrians to access the retail core and the train and tram services on or adjacent to Elizabeth Street. In light of this and the number of workers within 750 metres of Francis Hotel, we are not persuaded the Francis Hotel is not in a "prime location". This means the net machine revenue could be higher than that predicted by Mr Whitehouse.
In regard to the layout of the gaming area, Mr Whitehouse states the proposal has "physical constraints" and describes the gaming room as narrow and not particularly spacious. This subjective opinion is Mr Whitehouse's view of the proposed venue in comparison to other venues in the area, and results in a subjective decision to reduce the net machine revenue by 10%. We are not persuaded there is any science to this aspect of the analysis, and it is again subjective. It is also one of several factors in the Geotech model principles that could change over time, including changes to facilities or the venue operator.

[65]

Mr Whitehouse made it clear that his analysis is his opinion as there are limited case studies available and, hence, limited data available about actual transferred expenditure. Mr Gill has used a range of case studies that he has developed to form his opinion about transferred expenditure. What is clear to us is that this analysis overall contains a number of subjective elements and is limited due to the lack of case studies to demonstrate what has actually occurred in terms of transferred expenditure. Mr Whitehouse explained he relied on a Ringwood case study because it was one of only three case studies available; and it was the most appropriate because it is urban and gave the most relevant guide points.
We are persuaded by Mr Gill's evidence that the Ringwood case study is not reliable because it had a nil growth rate which if included would have resulted in a transferred expenditure of 156% and, as Mr Gill said, that "doesn't make sense". We find Mr Gill's analysis of central city venues raises questions about the likelihood of 80% transferred expenditure. The Mail Exchange Hotel graph at paragraph 117 of his witness statement illustrates the opening of the Mail Exchange in the central city did not result in a transferred expenditure of 80% as there was no noticeable drop in EGM expenditure other than at the Golden Nugget, which is the furthest location away. Similarly, the graph at paragraph 121 of Mr Gill's expert report illustrates the Batman's Hill on Collins venue did not appear to be impacted materially by the opening of gaming at the Mail Exchange even though these two venues are located only a block apart. These illustrations suggest to us the transferred expenditure between central city venues could be quite low, and possibly lower than that predicted by either Mr Gill or Mr Whitehouse.
It is somewhat surprising to us that Mr Gill, on the last page of his evidence, estimates up to 60% transferred expenditure having pointed out some flaws in the available case studies; provided examples of actual levels of transferred expenditure of between 1 and 37%; and provided the central city examples mentioned in the previous paragraph . How the 60% estimate has been determined is unclear to us. It seems to us the range of 60% to 80% is often put to the Commission and the Tribunal in gaming cases, and in some instances without specifics as to how the estimate has been derived. We agree with the Tribunal's findings in Bendigo Stadium[19] that there appears to be no real sophistication or rigour to the assessment of transferred expenditure in the gaming industry.
Overall, it is surprising to us how little information is available about actual versus predicted transferred expenditure, particularly when transferred expenditure is a factor of some significance in many gaming decisions. Mr Whitehouse pointed out VCGLR information is restricted and not always available. In Bendigo Stadium, the Tribunal suggested the Commission itself might be able to take a more pro-active role given its access to relevant industry data.[20] What this case demonstrates to us is the need for expert witnesses to have access to data to understand actual transferred expenditure in order to best predict transferred expenditure. As such, we see relevant industry data is an essential ingredient to the assessment of transferred expenditure in the gaming industry.
What our findings means for this case is that we are not persuaded by Mr Whitehouse's evidence because of the subjective nature of key aspects of the analysis undertaken. We find the case studies provide limited assistance given flaws in the various case studies as identified by both experts. Mr Gill's 60% expenditure estimate is unclear given the case study transferred expenditure he relies on ranges from 1 to 37% and the potential low transfer of expenditure in the CBD examples contained in Mr Gill's witness statement. Accordingly, we are unable to conclude that the transferred expenditure is in the range of 60% to 80%. We are therefore unable to agree with the Commission's finding that the "vast majority of revenue derived through electronic gaming at the premises is likely to represent revenue transferred from other venues offering electronic gaming". The worst case scenario is that the new expenditure could be significantly higher than either of the estimates opined by the witnesses. This is relevant to our consideration (later in these reasons) of the likely social impacts of the proposal.

[66]

There is one final matter that arose during the hearing, being the independence of Mr Whitehouse. The Council cross-examined Mr Whitehouse about the involvement of his company PVS with the Francis Hotel and its directors. Mr Whitehouse responded to this by referring to the preparation of a gaming room layout plan. Ms Porritt explained in the Francis Hotel closing submission that "a gaming room layout plan was prepared by PVS and filed with the Commission together with the application and Mr Whitehouse declared his relationship with the Applicant within his evidence". It appears to us Mr Whitehouse's declaration and this information may not be the same.
Mr Whitehouse's evidence statement to the VCGLR in September 2011 contained a statement under the heading "Independence" that "conflict searches" with the partners and employees at PVS revealed no association with the parties that compromise his independence. We note Mr Davis' statement to the VCGLR in September 2011 included the PVS gaming room layout plan, hence it appears to us this plan was in existence already at the time Mr Whitehouse prepared his evidence statement for the VCGLR.
Mr Whitehouse's expert report for this hearing states PVS is contracted to manage gaming machine services after 16 August 2012 to other venues operated by some of the partners in this hotel, being Peter Cook and Stephen Beaumont, but not at this venue. This suggests to us that Mr Whitehouse's company is doing more than drawing a gaming room layout plan, a plan that was already drawn at the time the evidence was filed for the VCGLR hearing.
Whilst we acknowledge Mr Whitehouse's declaration reveals no direct conflict in relation to the management of gaming machines at this venue, it appears Mr Whitehouse's company has a commercial arrangement with two of the partners in this hotel to manage gaming machine services elsewhere. For reasons we have already explained, we are not persuaded by the evidence presented by Francis Hotel or the Council about the extent of transferred expenditure, hence we find the independence of Mr Whitehouse is not a factor that we need to consider further in determining the merits of this proposal.

[69]

The Council submits the community contribution is irrelevant in the planning application, but of relevance (albeit little weight) in the gaming application. In Bright New Bay,[21] the Tribunal expressed concern about including a condition for community contributions on a planning permit given clause 52.28 focuses upon the appropriateness of the location of gaming machines rather than the impact of the machines themselves. In DSL Securities,[22] the Tribunal also found there would not be a sufficient nexus between a community contribution and the permission being granted under clause 52.28 to support such a condition. We agree with Mr Rantino that the effect of s 62(5) of the Planning and Environment Act 1987 is that a condition requiring a payment to a third party is of doubtful validity. Nevertheless, in DSL Securities the Tribunal found a section 173 agreement could be considered where there is a genuine agreement on the part of the permit applicant to enter into one that may otherwise lie outside the normal ambit of conditions in a planning permit. In this case, this is not an option because the gaming and planning applicant, Francis Hotel, is the tenant rather than the owner of the land. The owner of the land is required to be a party to a section 173 agreement, and the owner of the land is not a party to either of these proceedings, and it is unknown as to whether it would consent to being a party to an agreement.
In order for a community contribution to be seen as a "significant benefit" (as put by Francis Hotel) in terms of the gaming approval, we think it would be necessary for it to be a certainty. For the reasons outlined above, it is not a certainty as part of the planning application. There was discussion during the hearing as to whether the community contribution should form a condition of the gaming approval. The Commission advised it could be, but submitted it is not common practice to do so. The parties also expressed some uncertainty as to how and in what form it could be done under the Gambling Regulation Act 2003. The parties all referred to Bell J's observation in Romsey Hotel that it is not appropriate for inclusion in the gaming approval:

[70]

I do not think the commission has power, in any case, to impose a condition with respect to making community donations. Supporting community organisations through donations from gaming machine income is not part of the commission's (or the tribunal's) function. That is the function of the Community Benefit Fund. This subject is not closely connected with the premises or directly associated with them. Moreover, a condition of this kind may be difficult to define and enforce, place the commission in the position of being seen to mandate donations of a particular kind to particular groups and have unforeseen consequences.
The parties agreed this observation is a judicial comment (obiter dictum) and not binding. Since then, the parties were only able to advise us of one case where a condition was imposed in a gaming approval requiring annual reporting to the Commission on the community contributions paid.[23] Mr Rantino pointed out this condition is just requires "reporting" and does not impose a specific amount or specify to whom it should be paid.
In this proceeding, Francis Hotel strongly advocated for us to impose an undertaking pursuant to s 130 of the Victorian Civil and Administrative Tribunal Act 1998. On day 7 of the hearing, the parties referred to a recent Tribunal decision that had imposed an undertaking because a section 173 agreement was not possible because the applicant was the lessee.[24] In general terms, we are not persuaded an undertaking is an appropriate way to deal with community contributions in gaming applications. The Council identified some reasons as to why, with which we agree.
First, the practical ability to enforce an undertaking is questionable. If the applicant, as the person giving the undertaking, failed to pay the contributions, it appears that someone would need to refer an alleged contempt of the undertaking to the Tribunal. The nominated charity may not be aware of any failure. It is not clear whether the nominated charity would have standing to bring a proceeding, in the unlikely practical event that it wished to. The available remedies for a proven contempt do not appear to include making good the payment to the charity. Contempt proceedings appear ill-adapted for the purpose..
Second, an undertaking imposed as a result of a VCAT application raises a fairness issue from a public policy perspective. Gaming approvals that are not contested and do not come before the Tribunal would not be subject to any undertaking. Hence, this approach could lead to two streams of gaming approvals, one more onerous than the other. Furthermore, it places VCAT in a position similar to that foreseen by Bell J in regard to the commission - of being seen to mandate donations of a particular kind to particular groups. This is not the role of the Tribunal.
Third, the practice raises the prospect of payments to third parties being used to justify the grant of a permit, on a net community benefit basis, and this may have unforeseen and undesirable consequences.
In this case, we agree with the Commission's finding that the community contributions are laudable but not determinative.

[77]

The Council commissioned Wallis Consulting Group to undertake a survey of the Melbourne community (both residents and 'city users') regarding their attitudes to EGMs in the City of Melbourne and their specific attitudes toward this proposal. Ms Van Souwe explained 600 randomly-generated people were surveyed by landline telephone, half residents and half (what she described as) 'city users', being people who used city services in the last two months. The survey revealed 25% of residents and 20% of city users knew of the Francis Hotel, which Ms Van Souwe described as "quite high" and meant between a quarter to one fifth of the respondents knew what they were talking about when asked questions specific to the Francis Hotel. Ms Porritt was critical of the order of the questions, but Ms Van Souwe explained the questions were rotated in terms of general wellbeing and wellbeing about this particular proposal to avoid bias in the results. We are persuaded by Ms Van Souwe's evidence that sufficient care was taken during the survey to avoid bias.
This community survey is new material that was not presented to the VCGLR. Ms Chmielewski summarised the results in the following terms:
- The survey found those that visit or work in Melbourne, but do not reside in the City of Melbourne believe that issues regarding EGMs in the Melbourne CBD also influences their lives. It would appear, from the survey, that visitors and workers in the City of Melbourne consider themselves as part of the Melbourne community, and wish to be consulted on issues influencing the city.
- The overwhelming majority of the Melbourne community believe that the Francis Hotel proposal will have a negative impact on the social character of Melbourne.
- The majority of respondents suggested that the installation of gaming machines at the Hotel would have no impact on their personal well-being and happiness. Very few respondents indicated that the proposal would have a positive impact on such measures. A much larger minority of community members believe that the installation of gaming machines at the Francis Hotel will have a negative impact on their happiness and well being. These results suggest that the net impact on personal happiness and well-being amongst members of the Melbourne community would be negative, should the EGMs be installed as proposed.
- The overwhelming majority of the Melbourne community opposes the installation of gaming machines at the Francis Hotel. 76% of respondents opposed the redevelopment of the Francis Hotel, assuming that the redevelopment is contingent upon the installation of EGMs at the venue.
- The survey results suggest that the installation of EGMs at the Francis Hotel would contradict the desire of the Melbourne community. The installation of gaming machines, in light of strong community opposition, can be considered as a negative impact in itself. The survey results also highlight the negative impact that the proposal will have on the social character of the city, and on net levels of happiness and well-being amongst the Melbourne community.[27]
Ms Porritt submitted in the Francis Hotel's closing submission:

[82]

The Commission's decision states Mr Quick agreed with questions put to him that approval of this proposal would result in the creation of a cluster of electronic gaming venues in the area immediately surrounding the Francis Hotel; but he did not agree it would have the effect of making it difficult for a person such as recovering problem gambler to avoid the temptation of electronic gaming. The conclusions in the Commission's decision express concern that approval of this proposal will result in the creation of a cluster of gaming venues in the area bounded by Lonsdale, LaTrobe, Elizabeth and Queen Streets. However, the Commission also stated it was unable to conclude that approval would have any impact on the prevalence of gambling-related harm in the City of Melbourne, whether among the city's residents or among the broader population of city users, due to the existing high density of electronic gaming venues in the central business district and the marginal impact of any one new venue being likely to be small or non-existent.
There was some debate during the hearing about the extent of area and the walking distance within which a cluster can form. Reference was made to planning practice notes about the cumulative impact of licensed premises, and various witnesses talked about sight lines and 400-800 metres being a comfortable walking distance. We are not persuaded practice notes about licensed premises are helpful in considering the implications of a new electronic gaming premises as the matters relevant (and associated impacts) to each type of land use differ. We are also not persuaded premises within sight of each other is a relevant criteria in the central city where there are many routes of pedestrian movement in and out of streets and lanes. Whilst 800 metres may be a comfortable walking distance (particularly in a 'greenfield' situation), we find the central city context is particularly conducive to walking due to the close proximity and integration of the retail core, public transport and other land uses such as offices, education and entertainment facilities.
We agree with the Commission that the approval of this premises will create a "cluster", being a situation where there is an electronic gaming venue on each east-west street between Lonsdale and LaTrobe Streets, between Elizabeth Street and Queen Street. This is a concern given the high proportion of office workers around this premises, many of whom may wish to access public transport or the retail core on a regular basis for reasons other than gaming. In this scenario, such persons would need to traverse a east-west street to reach these services/facilities.
Ms Van Souwe's survey results found:
- 1 in 8 (or 13%) of residents and 1 in 7 (or 14%) of city users had played an EGM in the past year;
- Residents were more likely to play in or around greater Melbourne and especially in the City itself, whereas city users were more likely to play outside of Melbourne with over 6 in 10 playing in venues around Victoria (57%), interstate or overseas (7%); and
- Playing patterns for residents and city users were similar - around a third played just once in the past year, about a half played a few times, 1 in 8 played once a month and 1 in 12 played once a week.
We have already explained that we are not persuaded by the evidence about transferred expenditure, hence it is possible that the new expenditure could be greater than that accepted by the Commission. Based on the case studies of between 1% and 37% transferred expenditure presented by Mr Gill, the new expenditure could possibly be significantly greater than his estimate of 40%. Whilst we agree with the Commission that there are a high number of EGMs in the central city, the creation of a cluster of venues on east-west streets near Elizabeth Street and the potential for new expenditure contribute to an increased risk for problem gamblers, which is a likely negative impact of this proposal.

[83]

Mr Quick acknowledged there is a risk to problem gamblers, but said it is often the case in planning and gaming applications for EGMs that such a risk exists. Further, he said it must be remembered that it is a risk only; and the question is whether that risk is reasonable.
In considering the reasonableness of the risk, factors such as the exposure of the EGMs, the convenience of the EGMs and hence the location of the EGMs must be given due regard. This is where the planning considerations come to the fore and, in this case (for reasons we will explain shortly) the location of the EGMs is not acceptable.
Factors that influenced the Commission's conclusions to allow this approval despite its concern about a cluster included the proposed small number of EGMs and that electronic gaming would be a minor aspect of the overall entertainment offering. Whilst it was put to us that 32 EGMs (or 31 if we accept a modified layout tabled during the hearing) is a small number, we are not persuaded electronic gaming is a minor aspect of the overall entertainment offering at the Francis Hotel.
We note the Commission was persuaded by the evidence of Mr Davis that the venue would have a female friendly sports bar on the ground floor in addition to the gaming room. During our hearing, Mr Davis' evidence about the female friendliness of the ground floor was not persuasive. Mr Beaumont expressed the view (during his evidence) that the female friendly focus was "a little over-sold" and acknowledged it will be more of a sports bar. Hence, he said if we considered the ground floor looked like a gambling or wagering den, the TAB easy bet terminal in the sports bar could be removed and a social gambling situation created.
With the combination of the sports bar and gaming room on the ground floor of the hotel, we find the proposal does present as a gambling venue to persons entering from the street. In combination with the other two venues within 400 metres in LaTrobe and Little Lonsdale Streets, we share the Commission's concern about the formation of a cluster. This in turn contributes to the risk to problem gamblers, which we consider is not a reasonable outcome in this location and constitutes a negative impact upon the social wellbeing of the community in this case.

[87]

Mr Quick advised he stated in his evidence at the Commission's hearing that there is a cluster of machines and venues in the north-east quadrant of the city.[29] We have already explained that the Commission's decision found this proposal would create a cluster of electronic gaming venues, with three (including this proposal) within 400 metres of each other in the area created by LaTrobe, Elizabeth, Lonsdale and Queen Streets. This is a matter that needs to be considered as part of the planning merits of this proposal; and it is also relevant because a policy contained in the MSS in the planning scheme discourages the concentration of gaming venues within the central city.[30]
The advocates put questions to various expert witnesses during the hearing that a cluster could mean different things such as:
- In the central city a cluster is what occurs within one city block;
- In licensed premises matters a cluster would be a distance of 300 metres; or
- A cluster could be a reasonable walking distance of somewhere between 400 and 800 metres.
Ms Porritt suggested a cluster might be formed if the gaming venues are within sight of one another. However, none of the parties or expert witnesses could identify any particular criteria to determine a cluster under the planning scheme or the Planning and Environment Act 1987 or for that matter the Gambling Regulation Act 2003 or through previous decisions of the VCGLR (and its predecessor the VCGR). We find the establishment of a cluster or concentration of gaming venues is a matter of fact to be determined based upon the individual circumstances of a particular proposal.
In this case, it is commonplace for people to walk through the central city or parts thereof. Some of the expert witnesses did place emphasis upon people using Melbourne Central train station and we agree this is a principal public transport destination. However, we are also of the view there are other 'drawcards' to the east of the Francis Hotel, namely other forms of public transport and the retail core, which is to the east beginning along Elizabeth Street, including entries to Melbourne Central and Myer in the next block north of Lonsdale Street[31]. This raises a question about the likely routes that pedestrians may take to reach the station, other public transport and the retail core.
Mr Quick identified that there are 142,600 workers within 750 metres of the Francis Hotel and many of these would use the east-west streets to get to Melbourne Central train station as well as the tram services along Swanston and Elizabeth Streets. At present there is an EGM venue (Celtic Club) on the corner of LaTrobe Street and Queen Street and there is an EGM venue (The Meeting Place) on the corner of Elizabeth and Little Lonsdale Streets. Both are consecutive east-west streets in a southward direction through the CBD that could be used to access the station and Melbourne Central. This proposal is placing a new EGM venue on the next southern east-west street (Lonsdale Street).
It is our opinion that, in this case, a cluster will be created as a result of this proposal as it will create a new venue on the next east-west street leading to the station and Melbourne Central (as a minimum of the available public transport options and the retail core). It is a 'functional' cluster in the sense that a pedestrian heading east towards Elizabeth Street from the area between LaTrobe Street and Lonsdale Street (and vice versa) will be unable to avoid passing close to an EGM venue.
The creation of a cluster is a concern to us given the strategy in the MSS discourages a concentration of gaming venues. Mr McGurn said the terms cluster and concentration are not the same, but in the context of gaming venues we are not persuaded of this. Both terms bring to mind the proximity of venues to one another, and that is the issue here. The creation of three venues (whether a cluster or concentration) is of concern to us because it is a factor that can contribute to the risk for problem gamblers in accessing parts of the city when travelling by foot from west to east. Mr Barrett gave evidence that the venue would not be attractive to problem gamblers because it is not on a main pedestrian route and it is in an office area where convenience gambling is unlikely. We are not persuaded by this. Mr McGurn describes Lonsdale Street as one of the principal streets in the city grid and the planning scheme nominates Lonsdale Street as an 'active street frontage'. The concern about a risk for problem gamblers is heightened by the fact that the gaming room is on the ground floor of the venue. In our opinion, this is an unacceptable outcome in terms of the suitability of the location of gaming venue in the Francis Hotel.

[91]

The proposed layout includes a gaming area along the west side of the ground floor of the building with a fixed window, part obscured (with an emergency door exit) as its frontage to Lonsdale Street. It was explained that there would be a central staired entryway in the centre of the Lonsdale Street frontage that would service all three levels of the hotel. Upon entering at this point, patrons can choose to access the sports bar or gaming area at ground floor, the first floor nightclub or the second floor bar, lounge and beer garden. A new disabled ramp entry to the east of the central entry will provide access to the sports bar.
In response to concerns we expressed during the hearing, Francis Hotel tabled a modified layout of the gaming area on Day 5 of the hearing. This modified layout depicts a "lounge" fronting Lonsdale Street to a depth of 2.5 metres with a gaming area containing 31 EGMs behind an obscure glass 2 metre high wall.
Mr McGurn acknowledges the proposed layout (including the modified layout for 31 EGMs) does not meet the quantitative requirement in DDO1 for structural reasons such as the existing pillars along the street frontage. However, it is his view that the Lonsdale Street frontage is active and improved from the existing situation. During our inspection of the premises at a lunchtime during the hearing, we observed that the west end of Francis Hotel had glass doors that were opened up to the street creating, in our view, a high degree of activation and integration with the pedestrian activity along Lonsdale Street. We appreciate that these doors are not opened up every day (due to weather conditions), but it is our view on the occasions that they are, the existing situation does contribute to the activation of Lonsdale Street in both an appropriate and acceptable manner. As such, we are not persuaded by Mr McGurn's evidence that what is proposed improves the current situation. Rather, in our view, it detracts from the current acceptable situation. We also considered his opinion placed too much weight on the replacement of the solid double-door entry to Lonsdale Street with glazed doors.
We observed on Day 7 of the hearing that the proposed lounge area in front of the gaming area (as depicted in the modified layout) is quite small. Ms Porritt agreed it is at best 12 square metres and conceded it would not accommodate two tables and chairs as depicted on the tabled modified plan. However, she submitted it is "still a reasonable size" and could fit at least 10 people based on the typical licensed premises calculation of 1sqm per person. We are not persuaded the proposed layout or the modified layout provide an acceptable active street frontage. To use the modified layout as the example, we are not satisfied the DDO1 design objectives are achieved:
- A lounge may contribute to city safety by providing internal lighting that spills onto Lonsdale Street, but we are not persuaded that this lounge will provide activity that would also contribute to city safety;
- A very small lounge, not capable of containing two tables and associated chairs will not add interest or vitality to Lonsdale Street;
- A small lounge with limited seating that is accessed through the gaming area is unlikely to be well utilised and does not add interest or vitality to Lonsdale Street;
- A lounge area accessed via a gaming area is not an ideal arrangement for patrons that would otherwise choose not to access a gaming area; and
- A lounge that is only accessible internally and not via Lonsdale Street is not pedestrian oriented.
Mr McGurn accepted Lonsdale Street is one of the principal streets in the city grid albeit in his view not as "high" as Bourke or Collins Streets. Given the location of Francis Hotel between the entertainment and restaurant precinct of Hardware Lane and the retail core generally beginning along Elizabeth Street on a principal street with surrounding office workers and other city users, we are not persuaded this proposal achieves an active street frontage consistent with DDO1's design objectives.

[92]

Earlier we said we were not persuaded electronic gaming was a minor aspect of the overall entertainment offering at the Francis Hotel. It is our view that the entirety of the ground floor presents (to use words used during the hearing) as a gambling den or wagering den. This is because the gaming area is located on the west side of the ground floor and the sports bar is located on the east side.
During the hearing, Mr Davis' evidence about the female friendly sports bar was not persuasive because:
- In response to the Council's cross-examination, Mr Davis said female friendly meant a lot more choice being offered on the hotel's food menu;
- In response to our questions, Mr Davis said it is a 'female friendly theme' rather than the practicalities such as providing only one female toilet in the sports bar area;
- Mr Barrett agreed an accurate description is that the ground floor presents as a gambling package (sports bar and gaming) albeit you will see lounge furniture in the sports bar; and
- Mr Beaumont expressed the view during his evidence that the female friendly focus was "a little over-sold" and acknowledged it will be more of a sports bar.
Mr McGurn did not accept that the gaming room would be prominent to people passing by Francis Hotel on Lonsdale Street, but he did accept that it would be prominent to people coming into the venue. He said the TAB easy bet terminal (TAB EBT) may need to be relocated, but otherwise it looks like a typical hotel. We acknowledge this three storey hotel also offers a nightclub on the middle level and an integrated bar, lounge and outdoor beer garden on the top level. However, these facilities do not overcome our concerns about the layout and appearance of the proposed ground floor.
Mr Beaumont helpfully suggested that if we considered the ground floor looked like a gambling or wagering den, the TAB EBT in the sports bar could be removed and a social gambling situation created. We have considered whether there could be changes made to the ground floor to overcome our concerns, but in our view there is no 'quick fix'. With the combination of the sports bar and gaming room on the ground floor of the hotel, we find the proposal presents as a gambling venue from Lonsdale Street and to persons entering the new central entryway. Before choosing to access one of the upper level offerings at the hotel, patrons will be offered the convenience of the gambling related activities on the ground floor.
We have already explained our concerns about what this means in terms of contributing to a risk for problem gamblers given the ease of access and, hence, the convenience for passers-by. Whilst Mr Barrett identified what he considered to be other venues with higher levels of pedestrian traffic than this venue, we are also cognisant that Mr Barrett explained problem gamblers may access a venue on a route that they are more likely to take for other reasons and if people pass this venue, convenience or impulse gambling is more likely.
Overall, we find the proposed ground floor of Francis Hotel is not an acceptable location for EGMs.

At a glance

Court

Decision date

Source

Judgment (124 paragraphs)

Francis Hotel Pty Ltd v Melbourne CC (includes Summary) (Red Dot) [2012] VCAT 1896 (12 December 2012)

Parties

Legislation Cited (2)

Cases Cited (1)