McHugh Holdings Pty Limited v Peter Ashton & Anor

Supreme Court of NSW|2007-03-01|Before: Malpass J

CITATION : McHugh Holdings Pty Limited v Peter Ashton & Anor [2007] NSWSC 118

DECISION : The decisions made by the Tribunal are set aside. The matter is remitted back to the Liquor Administration Board of New South Wales for re-determination. I make no order as to costs.

CATCHWORDS : Approval of Social Impact Assessment - power exercisable upon satisfaction of threshold requirements - this satisfaction involves a fact finding process and not the exercise of a discretion - self-exclusion scheme and utility.

Gaming Machines Act 2001(NSW) LEGISLATION CITED : Liquor Act 1982 (NSW) Supreme Court Act 1970 (NSW)

CASES CITED : Craig v State of South Australia (1995) 184 CLR 163

McHugh Holdings Pty Limited PARTIES : Peter Fredrick Ashton The Liqour Administration Board of New South Wales

COUNSEL : Mr K. Smark (Pl) Ms R. Pepper (Attorney General appearing as amicus curiae)

SOLICITORS : Bruce Stewart Dimarco Solicitors (Pl) Crown Solicitor (Def's)

LOWER COURT JURISDICTION : Liquor Administration Board of New South Wales

1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

30104/06 McHugh Holdings Pty Limited v Ashton & Anor

JUDGMENT 1 HIS HONOUR: The plaintiff is the owner of the Columbian Hotel (which is located at Darlinghurst). The plaintiff was desirous of keeping, using and operating fifteen additional approved gaming machines in the hotel. In September 2002, a Class 2 Social Impact Assessment was lodged for approval by the second defendant pursuant to section 37 of the Gaming Machines Act 2001 (NSW) (the Act). A delay and legislative changes saw the lodging of a supplementary Social Impact Assessment (the Assessment) in November 2004. 2 The Liquor Administration Board of New South Wales is constituted by provisions of the Liquor Act 1982 (NSW). It has functions under the Act. One of the functions is the determination of a Social Impact Assessment pursuant to s37. 3 The objects of the Act are set forth in s3 (gambling harm minimisation and responsible gambling conduct are primary objects). 4 Part 2 of the Act limits the number of gaming machines that may be allocated to hotels and registered clubs (the maximum number of approved gaming machines that the Board may authorise to be kept in any one hotel is thirty). The plaintiff has fifteen gaming machines. It was seeking to have a maximum allocation. 5 The Assessment was the subject of the application for the additional fifteen gaming machines. The Act provides that such an application cannot be granted unless the Board has approved the Assessment. 6 Section 37 contains the following:- "(3) The Board may approve the social impact assessment only if the Board is satisfied that: (a) the social impact assessment complies with the requirements of this Division and the regulations in relation to the social impact assessment, and (b) the social impact assessment has demonstrated that the gambling activities involving approved gaming machines in the hotel or club concerned will be conducted in a responsible manner, and (c) in the case of an application involving a new hotel or new club - there is no school, place of public worship or hospital in the immediate vicinity of the hotel or club, and (d) in the case of a class 2 social impact assessment - the overall economic and social impact of granting the application will not be detrimental to the local community." 7 The assessment was reviewed (by Dr Judith Stubbs of Judith Stubbs & Associates). This took place in May 2005. The reviewer did not recommend approval. In November 2005, a reply was made to the review.

8 A delegation of functions of the Board was made to Mr Ashton (pursuant to s75 of the Liquor act (1982) (NSW). On 30 March 2006, Mr Ashton made a determination in respect of the Assessment. It was not approved. 9 On 2 May 2006, the plaintiff made further application. It sought either a re-determination of the determination or a review of the determination (in respect of an application for fewer than fifteen gaming machines). The alternative applications were both unsuccessful. 10 In August 2006, the plaintiff filed a summons in this Court. Mr Ashton is named as the first defendant and the Board is named as the second defendant. The summons seeks relief pursuant to s69 of the Supreme Court Act 1970 (NSW). 11 Each of the defendants has filed a submitting appearance. The Attorney General has appeared as amicus curiae. 12 The proceedings were heard on 23 February 2007. There have been written submissions supplemented by oral argument. 13 The challenge is made to all decisions. Apart from a general challenge to the approach adopted by the delegate in the performance of the statutory task (which was described as misdirection), at least three other specific matters have been identified. Firstly, it is said that he erred in taking what Mr Ashton described as a precautionary approach. Secondly, it is said that he erred in taking into account what has been described as the "Self-Exclusion Register". Thirdly, it is said that he erred in failing to take tourism into account. 14 Sub-section (3) of section 37 of the Act empowers the Board to approve the Social Impact Assessment ("may approve"). It may approve only if it is satisfied as to the relevant matters of (a), (b), (c) and (d) thereof. These provisions may be seen as threshold requirements to the exercise of the power. The power has been said to be discretionary in nature. 15 There were a number of matters which did not seem to be in dispute (or at least in any real dispute). I shall mention certain of them. The hotel was relatively new and a gay venue. The revenue provided by the existing gaming machines was only sufficient for the hotel to approximately break even after allowing for all its outgoings. The underlying reason for the application was to make the hotel profitable. The local community was regarded as being postcode 2010 and that approximately one-third of the patrons came from the local community. The hotel is located in a tourist and visitor area of the city of Sydney. That problem gamblers are a source of negative social and economic impact. That an increase in gaming machines is accompanied by an increase in problem gamblers. 16 In addressing the application, the delegate concentrated on the provisions of (d) of s37(3). Presumably, this was because the other relevant threshold requirements had been taken to have been satisfied. 17 The decision contains the following:- "The Board must consider the negative social and economic impact on the local community and the social and economic benefit to the local community that would or might result from the granting of the application."

I put to one side the question of whether or not this correctly expresses the task that the delegate was then engaged in. 18 The negative social impact and economic impact in this particular case was identified as the increase in problem gamblers and an increase in the social and economic problems for them which may flow on to those around them. The social or economic benefits that would or might result from the granting of the application were said to be in the main "qualitative". 19 The decision concludes as follows:- "There is no material before the Board to indicate this hotel holds any unique position in the community or has some feature not offered by other hotels in the local community. There are 208 hotels in the City of Sydney LGA and approximately 3,300 EGM's in those hotels. Nor is there material that indicates this is the only gay venue in the local community or that it offers something to its gay patrons not available elsewhere and especially worthy of being maintained as a social benefit for the gay members of the local community and larger community. Due to the high level of disagreement between the applicant and the reviewer the Board does not accept any particular quantification as to the economic detriment to the local community. As stated previously however the Board finds that the additional EGM's sought will create additional problem gamblers at this hotel who will in turn create an unqualifiable economic and social detriment to the local community. As noted there are already 43 persons on a self-exclusion register at the hotel. There is little quantified material in the SIA to show economic benefit or detriment to the local community. Do the unquantified benefits tilt the scales in favour of granting the application? Those benefits both social and economic are said to be an expansion of what exists already created by the increased revenue stream from the additional 15 EGM's. The cost caused to the local community is that caused by the additional problem gamblers. In the opinion of the Board the unquantified social and economic benefits together with the small quantifiable benefits are insufficient to outweigh the unquantified economic and social detriment to the local community. The lack of quantifiable benefits and detriments identified by the SIA causes the Board to take a precautionary approach to the approval of the additional 15 EGM's. The Board cannot find the overall economic and social impact of granting the application will not be detrimental to the local community. The Social Impact Assessment is not approved." 20 At the outset it needs to be observed that the provisions of the Act do not contemplate the taking of a precautionary approach (whatever that may mean). Sub-section (3)(d) imposes a task of fact finding. 21 It was said by the delegate that it was the lack of quantifiable benefits and detriments identified by the assessment that caused the taking of the precautionary approach to the question of approval. The word "precaution" has various dictionary meanings (including a measure taken beforehand to prevent problems and to guard against). The word "precautionary" is the adjectival form. What was intended to be conveyed by the expression "precautionary approach" is unclear. Fortunately, the question does not have to be pursued. 22 The language used in the decision reveals that the delegate, in dealing with the threshold requirement expressed in s37(3)(d), saw himself as being engaged in a balancing process (exercising a discretion) and in dealing with the question of approval. It seems to me that in so doing there was a confused approach which brought about misdirection. 23 In my view, sub-section(3)(d) involves the making of two findings. Firstly, a determination has to be made as to the overall economic and social impact of the granting of the application. Secondly, a finding has to be made as to whether such overall impact will be detrimental to the local community. If the Board is satisfied that it will not be detrimental then the threshold requirement will have been met. 24 It needs to be borne in mind that in dealing with sub-section (3)(d) the delegate was engaged in the task of determining whether or not a threshold requirement had been satisfied. He was not then engaged in any exercise of the power to approve the assessment. As has been earlier said, the power may only be exercised when the relevant threshold requirements have been satisfied. 25 There was a finding that the additional gaming machines would create additional problem gamblers at this hotel and that this would inturn create an unquantifiable economic and social detriment to the local community. 26 In the making of the finding concerning problem gamblers, it seems that there has been an overlooking of what had been earlier said and of the matter that only one-third of the patrons were members of the local community. 27 These findings appear to be inconsistent with what was earlier said in the decision. It had been earlier said as follows:- "The Board is asked in the balancing exercise to place emphasis on the favourable socio demographics, the dispersal of patrons outside the local community due to the location of the hotel in a tourist/visitor area to find that there would be little social impact on the local community from the granting of the application. The Board accepts that they are matters favourable to the applicant. "

In the circumstances of this case, it could be expected that the majority of the patrons (tourists or area visitors) may use the hotel on one occasion (or at the most, a few) and will not be members of the local community.

28 What constitutes jurisdictional error by an administrative tribunal has been identified in, inter alia Craig v State of South Australia (1995) 184 CLR 163 at 179. In this case, I am satisfied that such error has been demonstrated. There has been, inter alia, misdirection as to the task that was required to be performed by the delegate under the Act. I am satisfied that the plaintiff is entitled to relief.

29 What has been earlier said suffices to determine these proceedings. However, because they were raised during argument, I shall briefly refer to certain other matters. 30 The decision contains two references to what is described therein as a self-exclusion register. At page 3 of the decision the following appears:- "The applicant accepts there are problem gamblers at the premises (there are 42 persons on a self-exclusion register)".

At page 5 thereof, the following appears:- "As noted there are already 43 persons on a self-exclusion register at the hotel". 31 This material excited competing submissions. Section 49 of the Act provides for self-exclusion of patrons from hotels and clubs. It refers to a "self-exclusion scheme" which is defined to mean a scheme in which a person is prevented, at his her own request, from entering or remaining on any area of a hotel or registered club that is nominated by that person. 32 There is a basis for contending that there has been misconception as to that scheme. The plaintiff contends that the persons named on the register were treated by the delegate as being problem drinkers at the hotel. What is said in the decision gives support for that contention. The intent of the scheme is to prevent those persons from entering or remaining in any nominated area. A person may be self-excluded also from other hotels. There is nothing to suggest that the self-exclusion had not been effective. In this case, the presence of the name of any of those persons on a register would not be probative of their presence as a problem gambler in the hotel and to so treat this material would be erroneous. In the circumstances, I need take this matter no further. 33 The question of whether or not any relief granted by this Court would be of utility was briefly touched upon in argument. In my view, in the circumstances of this case, I am not satisfied that there is a lack of utility. 34 There were other matters which provoked argument (including the questions of partial approval of the assessment and of whether the law was functus officio). By reason of what has been earlier said, it is also unnecessary to pursue any of these matters. 35 The decisions made by the Tribunal are set aside. The matter is remitted back to the Liquor Administration Board of New South Wales for re-determination. I make no order as to costs. **********

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Liquor Act 1982(NSW)

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