Labbozzetta v Director of Liquor & Gaming [1999] NSWSC 96 | Case summary

8 It is unnecessary to set out in detail the balance of the grounds of complaint which the sub section envisages. It is sufficient to say that the grounds contained in the sixteen sub paragraphs of paragraph (a) are plainly designed to comprehend the various forms of misconduct, maladministration or misfeasance that may attend the conduct and operation of a registered club; and that the ground provided by paragraph (e) is intended to leave open the possibility of disciplinary action (even disciplinary action as drastic as cancellation of registration) as a result of misconduct or maladministration of a kind not otherwise specifically anticipated by the legislature. In my view, paragraph (e) is designed to confer on the Director of Liquor and Gaming and the Licensing Court a broad ranging power of supervision and regulation over clubs. It is not, however, unlimited in its application. The kind of conduct comprehended by para (e) must be conduct commensurate with the severe consequences that may, by the application of s. 17(2), follow: Seagulls Rugby League Football Club Limited v Superintendent of Licences (1992) 29 NSWLR 357: Castellorizian Club Limited v Director of Liquor and Gaming (unreported, Court of Appeal, 7 June 1996). 9 Moreover, the ground in para (e) was not intended to duplicate any of the grounds earlier spelled out nor to provide for a ground inconsistent with any of those contained in sub s. (1AA): see Seagulls, per Kirby P, p 369. Para (e) should not be used as the basis for a complaint that would properly come within any of the more specific provisions of s.17. 10 On 1 November 1994 para (1AA(a)(i)) was amended to read: "The requirements specified in section 10(1) are not being met, or have not been met, in relation to the club." (emphasis added) 11 Since this amendment, para (e) would not, by reason of the rule against duplication of the other s.17 grounds laid down in the decision in Seagulls, be available as a foundation for a complaint of past non compliance with any of the requirements of s 10(1). Allegations of past non compliance with any of the provisions of s 10(1) would, since the amendment, be laid as complaints on the ground provided for by s. 17(1AA)(a)(i). However, that was not the case at the time relevant to the present appeal. Sub para (i) was then drafted in such a way as to catch only non-compliance that was current and continuing at the date of hearing of the complaint. 12 Para (e) was deliberately framed as it was to enable a person entitled to make a complaint to do so on the basis of conduct that cannot be shown to contravene any specific provision of the Act, but can be shown to demonstrate a departure from the aims and objectives of the Act, or evidence of disregard for proper management and control of the club. In saying this, I remain conscious that, in order to be brought within para (e), the conduct complained of must be of sufficient seriousness to warrant consideration of the disciplinary remedies the Act envisages. Background 13 The plaintiff was at all material times the president of the club. The club was a registered club under the provisions of the Act and therefore subject to its regulatory, supervisory and disciplinary provisions. It is apparent that a principal focus and activity of the club was, and is, its involvement in and promotion of the sport of soccer. On 19 April 1994, the Director of Liquor and Gaming (hereafter referred to as "the complainant") made a complaint under s. 17(1AA), whereupon the Principal Registrar of the Licensing Court issued a summons calling upon the club to show cause why its certificate of registration should not be cancelled. 14 Eight separate grounds of complaint, each particularised by reference to a series of factual allegations, were identified. The first three grounds of complaint were made in reliance on s. 17(1AA)(a)(i), that is, on the basis that the requirements of s.10(1) were not being met. Ground 4 was made in reliance on s. 17(1AA)(a)(xiv), that is, on the basis that one of the statutory conditions contained in s. 9A was not being adhered to. The remaining grounds, 5, 6, 7 and 8, were all made in reliance on s. 17(1AA)(e), that is, the general provision: "on any other ground that the person issuing the summons is satisfied is not frivolous or vexatious." 15 A hearing took place before Mr Keating, Licensing Magistrate, in October, November and December 1994. The club was a party to the proceedings, nominated as the defendant. The present plaintiff was not a party. However, I was told, without objection or demur, that he was present through the proceedings, instructed counsel on behalf of the club, and gave evidence (as a witness for the complainant, although he was cross-examined by counsel appearing for the complainant). I will at times refer to this hearing as "the club proceedings". On 14 February 1995 the magistrate published a written decision. He rejected grounds 1, 2 and 3, the complaints made under s. 17 (1AA)(a)(i), on the basis that that sub paragraph, being framed (as it then was) in the present tense, required the non compliance alleged to be current as at the date of hearing, and that this had not been established. On the basis of his findings of fact he rejected ground 4, the complaint made under s 17(1AA)(a)(xiv). Having considered the particularised allegations and the evidence and made the necessary findings of fact, he found grounds 5, 6, 7 and 8 made out. It will be necessary to return to his findings of fact and to the manner in which the complainant prosecuted the complaint. 16 The magistrate listed the matter for further hearing to permit the parties to address him in respect of the appropriate disciplinary action under sub s (2). Further, having regard to findings of fact he made in relation to the plaintiff and his evidence, he called upon him, pursuant to s. 17AAA(2)(b), to show cause why he should not be declared ineligible for office in accordance with s 17(2)(f). 17 In a written decision published on 5 June 1995 the magistrate imposed on the club a monetary penalty of $15,000. It is unnecessary to make further reference to this decision. 18 Following a hearing in November 1996 to which the plaintiff was a party and to which I will from to time to time refer as "the show cause hearing", the magistrate, under s 17(2)(f), declared the plaintiff ineligible for office in the club or any other registered club for a period of two years. This decision is the subject of the present appeal, although the appeal depends heavily also upon challenges both to the procedures and findings of the decision of 14 February 1995 (to which the plaintiff was not a party) but which was largely the foundation for the declaration. The grounds of appeal 19 The summons commencing the appeal identifies numerous grounds of appeal, but, in written submissions filed on behalf of the plaintiff, these were reduced to six, and were expressed as follows: "(a) None of the matters relied upon by the Magistrate constituted any other ground" with s 17 (1AA )(e); (b) it was not open to the Magistrate to hold that any of the grounds were established having regard to the evidence and the Magistrate's own findings; (c) in making the declaration, the Magistrate took into account irrelevant considerations; (d) the hearing of the proceedings against Mr Labbozzetta was vitiated by procedural unfairness and a denial of natural justice; (e) the declaration made was not reasonably open on the evidence; (f) the complaint is out of time - see s. 56 of the Justices Act." 20 Since the argument on the appeal was confined to the grounds so reformulated I will treat that reformulation as the final statement of the plaintiff's grounds of appeal. 21 Before moving to the individual grounds of appeal it is convenient to set out, as shortly as possible, something of the facts and circumstances on which the complainant relied, and the facts found and conclusions drawn by the magistrate in the club proceedings. The Club Proceedings. 22 Ground 1 of the complaint (laid under s. 17(1AA)(a)(i)) was that: "The requirements specified in s. 10(1) are not being met in relation to the Defendant Club in that contrary to s. 10(1)(i) Antonio Labbozzetta the President, being a member of the Defendant Club has derived a benefit from the Club that was not offered equally to every full member." 23 Seven particulars were subscribed to this ground of complaint. These included allegations that, during a six month period in 1993, the plaintiff had obtained cash advances, or advances against his American Express card; that, on two occasions in 1993 he had received reimbursement for expenses on food and drink incurred in entertaining guests at Sydney restaurants; and that, in July 1992, he had incurred expenses for food and drink supplied by the club for celebrations for his 25th wedding anniversary, the account for which he paid on 9 June 1993. 24 Ground 2 of the complaint (also under s. 17(1AA)(a)(i)) was that: "The requirements specified in s. 10(1) are not being met in relation to the Defendant Club in that contrary to s. 10(1)(i), a member of the Defendant Club whether or not he is a member of the Governing Body has derived a benefit from the Defendant Club that was not offered equally to every full member." 25 Five particulars were subscribed. Included among them were allegations that, in the 1992/1993 year, the Board of Directors had incurred expenses totalling $118,629.97 for committee meetings, and for entertainment of guests (described in the summons as "general" and "soccer"); that the Board of Directors had exclusive use of a VIP viewing box, supplied at club expense with food and drink, at its soccer stadium; and that the Board of Directors allowed the Board Room to be supplied, at club expense, with cigarettes and tobacco products. 26 Ground 3 (under s 17(1AA)(a)(i)) was that: "The requirements specified in s. 10(1) are not being met in relation to the Defendant Club in that the Defendant Club did not keep, in accordance with s. 10(1)(l) of the Registered Clubs Act 1976, correct accounts and books in respect of the financial affairs of the Defendant Club showing the particulars usually shown in accounts and books of a like nature." 27 Nine particulars were subscribed. These included allegations concerning the documentation relating to the transfer of a soccer player to a Belgian club, and a number of separate allegations concerning financial records kept by the club. 28 Having regard to the terminology of s.17(1AA)(a)(i) as it then stood, framed in and confined to the present tense, the magistrate found none of these complaints made out. 29 He said: "Insofar as grounds 1, 2 and 3 are concerned these grounds are laid pursuant to s. 17(1AA)(a)(i) alleging that the provisions of s. 10 (1)(i) are not being met and I accept Mr Foord's argument that the relevant date for determining whether there is a breach of s. 10 (1)(i) is at the date of hearing. It is not in dispute that the particulars of grounds 1, 2 and 3 refer to breaches which are no longer subsisting at the time of the hearing or at the time of laying of the complaint." (emphasis in original) 30 There is no challenge to the magistrate's interpretation of sub para (i). 31 For different reasons, based on his findings of fact, he found the ground of complaint numbered 4 also not made out, and it is unnecessary to say any more about that ground. 32 However, the particulars relied on to support grounds of complaint 1, 2 and 3 were repeated in identical terms as supporting grounds 5, 6 and 7 respectively. Indeed, in the framing of the grounds of complaint, the complainant borrowed from and relied upon the language of the same sections as had formed the basis for grounds 1 - 3 excluding only the references to non compliance with s.10(1). Thus, ground 5 was framed as follows: "Mr Antonio Labbozzetta the President, being a member of the Defendant Club has derived a benefit from the Club that was not offered equally to every full member." 33 Instead of relying on s. 17(1AA)(a)(i), the complainant relied upon s. 17(1AA)(e) as the statutory foundation for the complaint. That being so, it was unnecessary to allege any breach of or non compliance with any specific provision of the Act. The ground of complaint was, however, otherwise identical to ground 1, and was particularised accordingly. 34 Ground 6 was framed as follows: "A member of the Defendant Club whether or not a member of the Governing Body has derived a benefit from the Defendant Club that was not offered equally to every full member." 35 This ground was laid in reliance on para (e) and was particularised in identical terms to ground 2. 36 Ground 7 was framed as follows: "The Defendant Club did not keep correct accounts and books in respect of the financial affairs of the Defendant Club showing the particulars usually shown in accounts and books of a like nature." 37 This ground was laid under para (e) and was particularised in identical terms to ground 3. 38 It will be observed that, although in grounds 5, 6 and 7 reliance was not placed on non compliance with any provision of s. 10(1), and such non compliance was not a component of the complaints there made, nevertheless the wording of the complaints followed the terminology of grounds 1 - 3, and the wording of s. 17(1AA)(a)(i), omitting only reference to statutory non compliance. The only difference between grounds 1 and 5, 2 and 6, and 3 and 7 is that grounds 1, 2 and 3 were brought under s. 17(1AA)(a)(i) and necessarily relied upon and alleged non-compliance with one of the requirements of s.10(1). These failed because of the construction of paragraph (a)(i) as it then stood. Grounds 5, 6 and 7 were brought under para (e) which was not limited by the need for the complainant to establish conduct which was current at the time of hearing, and which also was not limited by the need to establish non compliance with any provision of s. 10(1). 39 Ground 8 of the complaint was: "The Defendant Club has engaged in business practices or decisions which are not prudent or proper." 40 Seven particulars were subscribed, including allegations that, in breach of the club's constitution, the Board of Directors had approved a building contract in excess of $500,000 without calling for tenders; that the club had entered into a contract for the joint conduct of a soccer academy, the terms of which contract did not adequately protect its position in the event of losses; that the plaintiff, as president, had, at the expense of the club, given gifts to the General Secretary of the Federation of International Football Associations (FIFA); and that the club had supplied liquor off its premises for the plaintiff's 25th wedding anniversary celebration. 41 In summarising the factual allegations particularised I have omitted reference to those which the magistrate did not find proved and which he therefore discarded from further consideration. 42 It seems clear that, in large part, the facts asserted on behalf of the complainant were not in contest. The real issues before the magistrate, and again on appeal, concerned the use that could be made of the largely undisputed facts, given the manner in which the complaint was framed and pursued. 43 I turn now to the individual grounds of appeal. It will be necessary, from time to time, to make more extensive reference to the facts alleged and found proved. The appeal Appeal grounds (a) and (b) 44 The first and second grounds of appeal as reformulated are: "(a) none of the matters relied on by the Magistrate constituted 'any other ground' within s 17 (1AA)(e)" (b) it was not open to the Magistrate to hold that any of the grounds were established having regard to the evidence and the Magistrate's own findings." 45 A number of different arguments in relation to these grounds were advanced. Some of these were specifically directed to the individual allegations particularised. 46 (i) Firstly, it was asserted that all allegations particularised (other than one allegation found not proved and therefore presently immaterial) were in truth complaints about past breaches of s. 10(1), and therefore, by reason of s 17(1AA)(a)(i) as it stood at the relevant time, and the decision in Seagulls, is not available to support a complaint brought under para (e) and excluded from consideration. The argument was the converse of that successfully advanced on behalf of the club (but not the plaintiff) before the magistrate in relation to grounds 1 - 3, of which an essential feature was, at the relevant time, that para (a)(i) was confined to current non compliance with the requirements of s. 10(1). The very reason for the success of the argument as raised by the club in relation to grounds 1 - 3 before the magistrate, now compels the failure of the argument as presently applied. The club was able to persuade the magistrate that concluded instances of non compliance with s 10 (1) did not come within s 17 (1AA)(a)(i). The plaintiff has not challenged that ruling as he would have been entitled to do in present circumstances, and has not argued that, in the present case, it should not be followed. It is axiomatic that, since past instances of non compliance are not comprehended by para (a)(i) of s. 17 (1AA), then the principle against duplicity expounded in Seagulls does not operate to exclude them from para (e). 47 It is true, as I have earlier observed, that in framing grounds 5 - 7, the draftsperson of the summons borrowed not only the language, but also the concepts, of s. 17(1AA). It was not necessary to do so, but neither was it impermissible. In drawing on those concepts, the complainant was not confined to a pure repetition of grounds 1 - 3, and was entitled to expand the conduct relied upon to make out the ground, provided that, in doing so, the allegations did not fall foul of the three limitations in Seagulls - the prohibitions against duplicity, against triviality, and against inconsistency. 48 Accordingly, I reject the argument that, because the grounds may properly be characterised as allegations of past breaches of s 10(1), they did not and could not come within para (e). 49 (ii) Secondly, it was argued that the particulars to ground 5 failed to meet the Seagulls test of seriousness; that is, that each of the grounds the magistrate found to have been made out was too trivial to warrant consideration being given, on that basis, to the disciplinary procedures provided for by the Act. 50 Before moving to the merits of this argument, it is necessary to identify one flaw in the approach taken. In the written submissions filed on behalf of the plaintiff, consistent references were made to, for example, "ground 5 (ii)" or "ground 5 (iii)"; in other words, the plaintiff sought to characterise each allegation particularised as a separate ground of complaint, and then to apply to it the Seagulls triviality test. I am quite satisfied that this is erroneous. The ground of complaint is the general allegation - for example, ground 5 is the allegation that the plaintiff had derived a benefit from the club that was not offered equally to every full member. The complainant sought to prove that ground by establishing, in each case, certain conduct which he particularised. That does not mean that each particular, taken individually, has to meet the Seagulls test; what it means is that, when relevant findings of fact in relation to the various particulars have been made, the total conduct or pattern of conduct disclosed has to be examined with the Seagulls test in mind. A single instance of conduct prohibited by the Act, or otherwise potentially a ground for complaint, may not meet the Seagulls test; repetition, or a sustained pattern of the same conduct, or a pattern of unsatisfactory conduct in a variety of ways, may do so. It would be open, under para (e), for a complainant to allege general maladministration of the club, particularised by a series of disparate instances of alleged breaches of the Act, each too trivial alone to meet the Seagulls test, but together demonstrating a level of disregard for the principles and purposes of the Act sufficient to warrant consideration being given to disciplinary action. 51 I further observe, in this respect, that having regard to the manner in which the summons and complaint were framed, that there were in this case eight separate complaints. However, in considering whether any ground of complaint had been made out, and, if so, what disciplinary action (if any) was appropriate, it was open to the magistrate to take into account the whole of the conduct proved. 52 There is one rider to what I have said. The conduct which may be taken into account in the consideration of whether a ground of complaint has been made out need not, as I have said, be conduct which is, alone, capable of establishing the basis for disciplinary action. It must, however, be conduct which is capable of contributing to the establishment of such a ground, and capable of being a factor in the overall decision that disciplinary action is warranted. It must be some form of misconduct, malfeasance, maladministration, or otherwise conduct that reflects adversely upon the management of the club. It must also be taken in the light always of the Act read as a whole, its aims and objectives, its long title and its detailed provisions concerning the operation and administration of registered clubs. It would not be appropriate, for example, to take into account proven conduct that could in no way reflect adversely upon the club's operation and management. Moreover, in considering a ground of appeal framed as is the ground presently under consideration, care must be taken to avoid the temptation to review the magistrate's findings of fact. The triviality ground of appeal can succeed only if, as a matter of law, the whole of the conduct upon which reliance is placed and which is found to have been proved is incapable of amounting to a ground for disciplinary action. 53 What is involved in the determination of complaints presented as these were is, in fact, a three step process. The first step is to decide which, if any, of the factual allegations asserted in the particulars have been established. In this case, as there was little dispute about the facts, that step presented no real difficulty. Any factual allegations not found proved should be (and, in this case were) discarded from further consideration. The second step is to decide which, if any, of those factual allegations reflect adversely on the club in such a way as to be available to contribute to a finding that the complaint is made out, so as to warrant consideration being given to disciplinary action. This does not, as I have said, require a conclusion that each individual allegation be sufficient to give rise to such a finding; it does require a conclusion that, together with other proven allegations, it may do so. There must be, in the facts proved, some element of malfeasance, maladministration, misconduct, or breach of or non compliance with the express requirements of the Act. 54 With these principles in mind, I turn to the detailed arguments advanced on the second limb of the first ground of appeal. 55 Specific argument about triviality was directed to certain of the factual allegations particularised and held to have been established. Among these were the allegation that the plaintiff had received cash advances from the club, some with and some without the use of his American Express card, and that this facility was not available to club members generally. 56 I do not accept this argument. As I noted earlier, it may well be that a single instance of this conduct would be insufficient to ground a complaint under para (e), but a single instance was not alleged. Six instances of advances to the plaintiff unsupported by his American Express card were alleged. Of these the magistrate found four proved, amounting to $7,500, over a six months period. Advances against his American Express card amounting to $13,500 over the same period were not disputed. 57 These alone, in the light of s. 10(1)(i), were sufficient for the magistrate to find the ground of complaint proved and to consider the disciplinary action provided for by s. 17(2). Moreover, they were not the only matters relied upon in support of the ground. I reject the argument that the particulars to ground 5 were insufficiently serious to establish the ground of complaint. Similar argument was directed to various of the particulars subscribed to grounds 6, 7 and 8 and must be rejected for the same reasons. 58 Two further particulars were that, on two separate occasions in 1993, the plaintiff, as club president, entertained guests at Sydney restaurants, for the cost of which he was reimbursed. It was essential to the allegations, and the magistrate found, that this constituted expenditure made available to the plaintiff and not to all members of the club. The magistrate's findings in relation to these particulars relevantly were as follows: "It is necessary to consider the nature of this luncheon and whether it falls into as it were entertainment such as is there a benefit or advantage. I consider that it must be to the benefit of the President to have lavishly entertained Mr Blatter whether the luncheon related to soccer interests or otherwise. I cannot see why any such luncheon could not have taken place at the Club which has quality dining facilities for such entertainment. I find this expenditure to be of a benefit to Mr Labbozzetta which was not available to all members of the Club." 59 It was firstly argued that the finding that the payment for his meal constituted a benefit to the plaintiff was not open; and secondly, that if it were open, it is too trivial to meet the seriousness test imposed by Seagulls. It is this combined argument that has given me the greatest difficulty in this appeal. It was argued that: "The benefit found was unrelated to personal food or wine consumption by Mr Labbozzetta. It is an intangible benefit." 60 I cannot accept the factual underpinning of this argument. It is plain that the plaintiff joined in the consumption of food and wine and that the costs of his meal, as well as those of his guests, were paid by the club. That there was some benefit to the plaintiff is plain. 61 It is arguable, however, that the finding fails to recognise two important factors. The first is that, in entertaining the guests, the plaintiff was, presumably, discharging his duties as president, and indeed, the magistrate referred to and appeared to accept evidence and submissions to this effect. The second thing the finding appears to overlook is that entertainment of guests is an important part of commerce and business, and, I venture to assume, of the world of sporting and other clubs. To some, entertainment may be a pleasurable part of the task; to others, onerous. However it is regarded by the person involved, it is an integral part of the functions of the head of an organisation which is what the president of a club is. 62 Ultimately, however, I have concluded that whether the payment for the plaintiff's meals constituted a benefit to him was essentially a question of fact and although the magistrate in resolving it may as readily have come to the opposite view, the view he did reach was open to him and is not reviewable on an appeal limited to a question of law. I was not taken to the evidence on which the finding was based and it is not possible, in the circumstances, to conclude that there was no evidence to support the finding. 63 That leads to the next question which is whether it was open to the magistrate to use the finding of fact in his consideration of disciplinary action - that is, whether the finding that payment by the club of the cost of the plaintiff's meal was capable of contributing to a conclusion that consideration of disciplinary action was warranted. 64 The question having been posed, the answer almost dictates itself. Although views may well differ as to the significance of such conduct, taking into account the realities of business and commercial life to which I have already alluded, this question, too, is a question of fact - or, perhaps more accurately, a question of weight but nevertheless, a question for the magistrate unreviewable on appeal. 65 (iii) A third argument was that the payment by the club for the plaintiff's meal was protected by s 10(6). 66 The ground of complaint against which these events were particularised was borrowed from, and based upon, the prohibition in s. 10(1)(i). That prohibition is expanded and explained in s. 10(6), which excludes from s. 10(1)(i) conduct of the kind described in paragraph 4 of these reasons. 67 Plainly, the benefit received by the plaintiff in entertaining guests at club expense does not sit comfortably within any of these exclusions and no suggestion to the contrary was made. The argument that was put was, in effect, that the exclusions represent the philosophy underlying the Act - that the receipt of benefits incidentally in the pursuit of club interests is not to be considered as evidence of non compliance with the requirements of s. 10(1)(i). It may be that s.10(6) was intended to ameliorate the effect of s.10(1)(i), but it has not done so by excluding the kind of benefit the magistrate held that the plaintiff received. I reject this argument. 68 (iv) A fourth attack was that there was no finding of fact that this was not available to club members generally. This can readily be disposed of. The magistrate referred, with apparent acceptance to evidence given by the secretary of the club at the relevant time: "… that cash advances were essentially available to a few members only and that he had instructed House Managers that advances from the strong room were not to occur. [He] indicated that he was aware that advances continued, particularly to Mr Labbozzetta. … [He] gave evidence that he knew of no other member who availed himself of this facility. [This was in relation to the provision of cash advances against the American Express card.] 69 Another argument, in relation to ground 5, was that the finding that particular (vii) had been established was not open on the evidence. The particular was framed in the following way: "The President, A Labbozzetta incurred expenses for food and drink, supplied by the Defendant Club for his 25th wedding anniversary function on 1 July 1992, totalling $2,034. A Labbozzetta paid this account on 9 June 1993." 70 The magistrate's findings in this regard included acceptance of evidence given that the function was a surprise party organised by the plaintiff's daughter. On this basis, it was argued, it was not open to the magistrate to find that the plaintiff "incurred" the expenses. It was pointed out that the complaint was not a complaint that the plaintiff received favourable credit terms, or delayed in making payments of his account, although some findings in that regard appear in the decision. 71 It is appropriate to note what the magistrate found. He said: "The facts are not in dispute. An account in relation to this function was first rendered to Mr Labbozzetta on 2 August 1992 and accounts continued to be rendered up to 31 May 1993. The account was paid on 9 June 1993. This function was a surprise party which was organised by Mr Labbozzetta's daughter. Mr Labbozzetta in his evidence indicated that some 4 months after the function he asked his daughter what was happening to the account and she indicated that she would see that it was paid. In his record of interview Mr Labbozzetta stated that he had assumed that his mother in law would pay. Mr Labbozzetta agreed that the club could have sent him a monthly statement, but that he personally does not look at the accounts or statements because his wife signs the cheques. Mr Labbozzetta could not recall whether his wife ever discussed the outstanding amount with him. Mr Bracher gave evidence that credit was generally stopped for outstanding debtors after 3 - 4 months but that this policy was not applied to all debtors. The policy was not applied in Mr Labbozzetta's case. Mr Sartoretta gave evidence that there had been administrative difficulties in collection of debts by the Club and that there have been recent intensive efforts to bring debtor's accounts under control and to improve methods of collection. I do not accept the conflicting versions which Mr Labbozzetta has put forward and doubt that Mr Labbozzetta had any intention to pay the outstanding account. Accounts rendered to Mr Labbozzetta's residence between 2 August 1992 and 31 May 1993 were ignored. It is of relevance that the account was paid on 9 June 1993 about the same time Mr John Ralston, solicitor, visited the Club to talk to the Board about their obligations under the Registered Clubs Act . According to Mr Foord's submissions Mr Ralston told the directors to cease borrowing money from the Club as they were in breach of the Act. Apparently after Mr Ralston's visit the practice ceased." 72 The essence of the complaint is not that it was the plaintiff who directly incurred the expenses, nor the delay in payment of the account; the essence of the complaint is that the plaintiff received benefits from the club not available to others. Implicit in the magistrate's doubts about the plaintiff's intention to pay the account is a finding that it was anticipated (whether by the plaintiff or others does not matter) that the food and drink would be supplied for the plaintiff's benefit by the club. There is no suggestion that such a benefit would be available to members of the club generally. Accordingly this challenge to the magistrate's finding must be rejected. 73 (v) Particular and extensive argument was addressed to the findings of fact in relation to one of the particulars subscribed to ground 7 of the complaint (which alleged failure to keep correct accounts and books); the second particular was that: "(ii) The Defendant Club transacted the sale of a soccer player, namely Paul Okon-Engstler to Club Brugge of Belgium in July 1991. Records of the Defendant Club reveal an amount of $240,000 was banked on 10 July 1991 in relation to the transfer of this player. This differs substantially from the amount of $515,000 as shown on the official Player Transfer form, dated 8 July 1991 to be paid to the Defendant Club in two instalments being - $400,000 on 9 July 1991 and $115,000 on 30 September 1991." 74 The magistrate's findings in relation to this particular were largely drawn from the written submissions of counsel for the complainant. It seems that the evidence relating to the transfer showed that the club's financial books recorded receipt by it of $240,000 by way of four cheques each in the amount of $50,000 and one in the amount of $40,000; receipt by the transferred player's father of $36,000, and receipt by another person, Mr Moaz, acting as agent, apparently for the club, of $25,000. Other documentation, dated 8 July 1991, painted a different picture. A player transfer form lodged with the Australian Soccer Federation indicated a transfer fee of $515,000 to be paid by Club Brugge, although the document on which this figure appeared had been altered, the original figure having been $575,000. The alteration was initialled by a number of people including the plaintiff. A document on club letterhead, also dated 8 July 1991 and signed by the club secretary, Mr Bracher, and the secretary of Club Brugge, certified that the club had received $40,000 from Club Brugge for the transfer. This figure, too, had been altered from an earlier figure of $430,000, which itself appeared to have been the subject of alteration. There was another document on club letterhead, dated 30 September 1991, in the same form and also signed by the two secretaries which showed that the club had received $115,000 from Club Brugge, this figure also having the appearance of having been altered. Two more documents, one dated 8 July 1991 and another dated 1 July 1992, both certified that Mr Moaz had received $150,000 and $125,000 from the club for commission and expenses related to the transfer. These documents were not signed by anybody representing the club. The secretary, Mr Bracher, gave evidence that he had been asked by the plaintiff to sign these documents but had refused to do so, as had another person whose position in the club was not identified. 75 It will be seen that the documentation relating to the transfer was inconsistent and in a state of considerable confusion. 76 The magistrate noted and rejected an argument put on behalf of the club to the effect that the club failed to keep correct accounts and books. He stated that it was not open to him to find the ground made out, at least in relation to the factual allegation particularised in this way. This was (it was argued) because the books and accounts did accurately reflect the transaction so far as it involved the club. The magistrate held that the "books and accounts" of the club included the transfer form lodged with the Australian Soccer Federation, and the other documents to which reference has been made, and that, since they were inconsistent with one another, some (at least) of them were necessarily incorrect. He made no findings as to what the transaction in fact was, or which (if any) of the documents were correct and which were incorrect. He concluded his findings on this issue as follows: "This particular has generated a great deal of interest in the media following the release of Mr Justice Stewart's report on behalf of the Australian Soccer Federation and it now forms part of the Senate inquiry. I have therefore not attempted to go into any detail as to what were the respective roles of Mr De Nolf, Mr Moaz and Mr Labbozzetta's relationship with them. From the evidence before me I am unable to state whether or not Mr Labbozzetta gained any financial benefit from his role in the transfer. What I am satisfied is, however, that the club's financial records relating to this transaction are totally inadequate and accordingly this ground of complaint is established." 77 The specific bases of appeal in relation to this matter were summarised in the following way: "(a) this is not an available ground of complaint within s. 17(1AA)(e) because: "(i) it is inconsistent with or duplicates 17(1AA(a)(i) and/or (a)(x); (ii) as particularised, it does not constitute a failure to comply with s. 10(1)(l); (iii) it is not a serious matter; (b) the findings and evidence do not, as a matter of law, establish the ground of complaint." 78 Presumably, the first of these bases is intended to be an application of the ground of appeal earlier rejected (see para 48) that, as the requirement to keep correct accounts and books is included in s. 10(1), failure to do so is incorporated in s. 17(1AA)(a)(i) and therefore excluded from para (e). The argument must be rejected for the reasons already given. As at the time of the magistrate's hearing concluded failure to meet the requirements of s. 10(1) was not encompassed by s. 17(1AA)(a)(i). 79 The second argument is misconceived. It proceeds on the basis that the ground of complaint numbered 7 which was laid under para (e), requires proof of non-compliance with s. 10(1)(l). It is true that the ground, as expressed, contains terminology similar to, even drawn from, that paragraph, but ground 7 is not a complaint about non compliance with s. 10 and is not brought under s. 17(1AA)(a)(i). It is quite independent of those sections, and must stand or fall on whether the complainant could establish, by reference to the factual allegations particularised, something unsatisfactory about the conduct of the club sufficient to warrant consideration being given to disciplinary action. In order to do that it was not necessary for the complainant to establish a failure to comply with any specific provision of the Act. The complaint is not confined in the way suggested. 80 The third argument may be equally quickly disposed of, by reference to the facts as I have already outlined them. It is quite plain that what is alleged is inaccuracy in the financial recording of a significant transaction involving substantial sums of money. That allegation alone was capable of being regarded as sufficiently serious to warrant invoking the disciplinary options available, and certainly capable of contributing to a conclusion that that action was warranted. 81 The final argument in relation to this particular was that the findings and the evidence, as a matter of law, did not establish the ground of complaint. The argument appears to be this: (i) that, properly construed, "accounts and books in respect of the financial affairs" of the club (the terminology in the ground of complaint) included banking (and perhaps other) records that showed the receipt by the club of $240,000, but did not include documents such as the Player Transfer Form or the other documents showing receipt of different sums; (ii) that, there being no finding as to which (if any) of the various documents accurately reflected the transaction, it had not been shown that the "accounts and books" (as construed according to (i) above) were "incorrect"; (iii) that, therefore, the ground that the club did not keep "correct" accounts and books had not been made out. 82 It is true that, on the magistrate's findings, and in the absence of a finding as to the true nature of the transaction, establishing the ground depended upon the inconsistency between the various documents, showing that some or all of them were necessarily incorrect. However, the plaintiff's argument depends on the premise that the player transfer form and other documents were not part of the financial accounts and books, and this I do not accept. There is no reason to construe the phrase "accounts and books" as used in this ground of complaint (as distinct from s 10(1)(l), as to which I make no comment) in the way for which the plaintiff contends. It was also argued that a finding that the records were "inadequate" does not amount to a finding that the records were not "correct", the word used in the ground of complaint, but this argument fails as a consequence of my conclusion above. Plainly, some (at least) of the records were incorrect. 83 Another argument was that there was no evidence and no finding as to what particulars were "usually shown in accounts and books of a like nature". It is true that there was no such finding, and, in the absence of the dissent on behalf of the complainant, I accept that there was no such evidence. However, the argument takes an unduly technical and literal approach to the establishment of the ground. It surely does not require specific evidence to establish that financial accounts and books would ordinarily disclose details of a transaction of the kind and size of that here in question. 84 Further argument was directed to the magistrate's adverse findings on the plaintiff's credibility in relation to this allegation. This, since it related to the appeal more generally, will be dealt with below. 85 (vi) The remaining matter to which specific argument was addressed was the sixth particular subscribed to ground 8. In ground 8 it was alleged that the club engaged in imprudent or improper business practices. The sixth particular was an allegation that the plaintiff had, at club expense, given gifts of wine to the value of $440.10 to the general secretary of FIFA. In his findings the magistrate said: "Mr Bracher was directed by Mr Labbozzetta to arrange these gifts without the apparent approval of the Board. Mr Lee noted that the documents authorising the dispatch of wine was signed by the Club's stock controller but does not record who authorised the controller to take this action. Mr Lee agreed that the documents were inadequate. I am satisfied that the decision to supply the gifts to Mr Blatter was not prudent or proper, in all the circumstances and is clearly of no benefit to the members of the Club. Moreover, the supply of the liquor would appear to be contrary to the provisions of s. 44(1) of the Registered Clubs Act . S. 44 (1) states: 'A registered Club shall not supply or dispose of liquor or cause or suffer liquor to be supplied or disposed of except on the defined premises of the Club …' " 86 One basis for the appeal in relation to this particular was that the magistrate relied on what were described as unparticularised contentions that the gift was arranged without Board approval or contrary to the section mentioned, and that it was not permissible for him to do so. I do not accept this argument. A practice may be imprudent or improper for a variety of reasons, including that it contravenes a provision of the Act, or that it is undertaken without appropriate authorisation. It was not necessary for the basis for asserted impropriety or imprudence to be particularised (unless, in some way, the club or the plaintiff were misled about the way in which the complainant sought to establish his case). It was also argued that breaches of club rules are dealt with in s. 17(1AA)(a)(xi), and that what was alleged by the complainant and found proved by the magistrate therefore duplicated that sub paragraph and was, therefore, not within par (e): (Seagulls). This argument is also rejected. The ground for which s. 17(1AA)(xi) provides is that: "a rule of the club referred to in s. 30(1) has been broken or any other rule of the club has been habitually broken," 87 Ground 8 of the complaint as particularised does not allege a breach of any rule of the club referred to in s. 30(1) or otherwise, and the magistrate's decision does not incorporate a finding of any such breach. There was no duplicity. 88 (vii) The final argument in relation to ground 8 is that this allegation is too trivial to meet the Seagulls seriousness test. If the allegation about gift to the secretary of FIFA stood alone I would be inclined to accept the contention. However, it does not stand alone. What has to be looked at in the light of the Seagulls test is the whole of the conduct alleged (and proved). An ill advised and unauthorised gift, apparently otherwise innocuous, may take on a different character when the whole picture of the administration of the club is considered. 89 The specific challenges to the findings in relation to grounds 5, 7 and 8 fail. 90 These conclusions dispose of the first and second grounds of appeal as reformulated. Appeal Ground (c) - Irrelevant Considerations 91 The third ground of appeal is that, in making the declaration, the magistrate took into account irrelevant considerations. These were identified as: "(a) [the magistrate's] own findings as to Mr Labbozzetta's credit in respect of the Okon transfer; (b) the President's Report in the Marconi News October - November 1995; (c) a view without foundation that an assurance that breaches will recur is not reflected in Mr Labbozzetta's written reports; (d) a "finding" that Mr Labbozzetta used the Club as "some form of private bank" and restricted "privileges" to Board members or a select few; (e) that the grounds alleged related in some way to corrupt practices; (f) that the grounds related to a failure to adhere to the requirements of the Act." 92 It is necessary to examine each of these in turn. 93 (a) The Plaintiff's Credit In the club proceedings the magistrate made a number of findings adverse to the plaintiff relevant to his credibility. The plaintiff had been a principal witness called on behalf of the complainant. For example, in relation to ground 5, particular (ii) (cash advances against his American Express card) the magistrate disbelieved the plaintiff's evidence that he was unaware of the cost incurred by the club as a result of the advances. In relation to particular (vii) (expenses for his wedding anniversary function) the magistrate disbelieved what he called "the conflicting versions" put forward by the plaintiff. Importantly, in relation to particular (ii) of ground 7 (the Okon transfer) he rejected the plaintiff's evidence about his level of involvement in the transaction. He described the plaintiff's evidence in this regard as "evasive and untruthful". In the show cause proceedings the magistrate specifically adhered to the view he had expressed about the evidence given to the plaintiff in relation to the Okon transfer. He nevertheless referred to and took into account other evidence in those proceedings relating to the plaintiff's character, reputation, capacity, and diligence as president. 94 In the show cause decision the magistrate returned to the general subject of the plaintiff's credibility. He did this particularly in dealing with the plaintiff's involvement in the Okon transfer allegation, which he held to be: "perhaps more disturbing than the other particulars of complaint found proven because of the opportunity for a large sum of money to be unaccounted for." 95 He held: "In my earlier decision I referred to Mr Labbozzetta's inconsistent evidence relating to this transaction. Whilst I can accept Mr Bannon's submissions looking solely at the failure to maintain adequate records, Mr Labbozzetta's response or lack of response generally in regard to the transaction continues to be of concern. … The reason why so many questions remain unanswered concerning this transaction, is because Mr Labbozzetta, for whatever reason, has failed to answer them." 96 He maintained his view of the plaintiff's evidence as evasive and untruthful, did not accept his asserted inability to recall details of the transaction, and was satisfied that, contrary to his evidence, the plaintiff had played a significant role in the negotiations, and that the progress of the transaction was with his full knowledge or at his specific direction. 97 It will be observed that it was not suggested that the findings concerning the plaintiff's credibility, other than those made in relation to his evidence on the Okon transfer, were irrelevant. The argument was confined to the asserted irrelevance in the show cause proceedings, or the findings on the Okon transfer issue. Counsel repeated the earlier submission that the magistrate incorrectly directed his mind to the adequacy (as distinct from the correctness) of the financial records, and noted that the magistrate avoided a determination of the correct nature of the transaction, opting instead for the conclusion that, since the records are contradictory, some (at least) of them must have been incorrect. In this context counsel submitted that, as the plaintiff had not sought to give evidence that the records were adequate, the findings relating to his credibility in other respects were irrelevant. Moreover, it was argued, in the proceedings in which these findings were made, the plaintiff was not a party, and the level of his involvement was not an issue. The only issues in that hearing concerned the club not the plaintiff. This argument overlooks the fact that, in the show cause proceedings, the plaintiff having had the opportunity to be heard, the magistrate adhered to and reiterated his view of the evidence earlier given by the plaintiff. 98 It was argued that, by reason of the findings against the club, which the plaintiff in the show cause proceedings did not attempt to disturb, the plaintiff's "continuing lack of response" was also irrelevant, there being nothing he could have added on that issue. The present issue, therefore, it was argued, concerns the extent to which the fact that the plaintiff wrongly denied involvement is relevant to the making of a declaration of ineligibility under s 17(2)(f). 99 Arguing that that fact is irrelevant, counsel pointed out: (i) the ground of complaint concerning the Okon transfer did not involve the giving of evidence which was not accepted or was held to be untruthful; and (ii) that the s. 17 regime is protective, not penal (Seagulls; Sydney Aussie Rules) Social Club Limited v Superintendent of Licences (unreported, Grove J, 1 July 1991).

Labbozzetta v Director of Liquor & Gaming

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (13 paragraphs)

Parties

Cases Cited (2)

Cited By (1)