The Freeze
85 Although the 1982 Liquor Act provisions imposing a freeze on poker machines have now been repealed, there can be no doubt that the new gaming legislation remains importantly linked to the repealed legislation. The new scheme of poker machine entitlements and the ability to trade in those entitlements is of course novel. But the initial determination to allocate poker machine entitlements is in a number of respects bound to the freeze. First, s 15(1)(a) provides that, on the commencement of the section, one poker machine entitlement is to be allocated by the Board for each approved poker machine that comprises the frozen number of approved poker machine for a hotel. Thus it may be seen that the very concept that is central to the initial allocation is "the frozen number of approved poker machines".
86 Secondly, the Board in making its determination as to "the frozen number" must take into account, inter alia, "the number of poker machines authorised to be kept in the hotel under the Liquor Act 1982 as at 19 April 2001". Why was the 19 April 2001 selected as a critical date for examination of a count of the number of poker machines authorised to be kept in the hotel?
87 The answer is plainly that the 19 April 2001 was the date when the short term freeze came into operation by virtue of Regulation 46AA. It was also the date that was the commencement date for "the period of the freeze" brought about by the subsequent legislation which replaced the regulation.
88 I should at the outset make it clear that, in my view, the rather complicated situation that arose out of the fact that there was first a regulation promulgated on 19 April 2001, later amended by a further regulation; and then altogether replaced by a legislative provision dating, in effect, back to 19 April 2001 makes no difference to the ultimate outcome in this case. It is true that the condition imposed by the April regulation differed in a number of respects from the condition introduced by the second regulation. It is also true that the legislative replacement of the Regulations utilised slightly different terminology. The important matter, however, is that nothing happened in relation to this hotel licence which, in the ultimate, made any practical difference to the position of the licence between 19 April 2001 and 17 July 2001 when s 182D, E & F came into force. Moreover, the condition introduced by s 182E was grounded in the examination of a situation as it existed "immediately before the period of the freeze". The starting point of the period of the freeze was defined to be a period "commencing on 19 April 2001". For those two reasons, it seems to me that any variation in the statutory condition when one compares the first regulation, the second regulation and the final legislative enactment of it is, in the circumstances of this matter, of no practical or legal consequence. What remains of importance, however, is the form of the statutory condition as it appeared in s 182E of the Liquor Act 1982.
89 An important aspect of the plaintiff's argument focused in fact upon the terminology in s 15(3)(a) and, for that matter, (b) of the same sub-section. The focus was on the expression "authorised to be kept in the hotel". The plaintiff argued both in oral and written submissions that the section was not concerned with an examination of the number of machines that were in fact kept in the hotel at the relevant date. Nor was it concerned with the number of poker machines that were being used and operated in the hotel as at that date. Rather, the focus was simply on the question as to whether there was or was not, an authorisation that permitted the relevant number of poker machines to be kept in the hotel as at 19 April 2001. The plaintiff's argument was that both annexure "A" to Exhibit "A" and Exhibit "B" were such authorisations. It will be necessary to examine each of those contentions in detail. For present purposes, however, it seems to me that it may be said that the plaintiff's submissions in this regard beg the question.
90 The concept of the interim freeze created by the repealed legislation is the cornerstone of the method adopted under the new legislation to determine the numbers that will yield or tend towards yielding the poker machine entitlement under s 15 of the Gaming Machine Act 2001.
91 One asks therefore - as at 19 April 2001, how many poker machines were authorised to be kept at the hotel at 252 Sussex Street, Sydney pursuant to Hotelier's Licence 106246? The answer to that question depends on the impact of the regulatory and legislative changes ("the freeze") introduced in 2001.
92 There can be no doubt for the reasons already indicated that, absent the freeze, the hotel in this case was authorised to keep 20 gaming machines. They were identified in Annexure A to Exhibit "A". None of the defendant's arguments as originally formulated altered this situation.
93 But the authorisation was in the form of a condition or conditions imposed under s 161 of the Liquor Act 1982. The condition was capable of variation alteration or revocation.
94 In my view, so far as this hotel was concerned, the freeze effectively revoked the authorisations which had been granted between September 2000 and March 2001. Importantly, as a result of the freeze, the revocation occurred on 19 April 2001. That has important consequences for an understanding of the correct view of s 15 of the Gaming Machines Act 2001.
95 Sections 182D and 182E of the Liquor Act 1982 plainly cemented the short term freeze which had been introduced by 19 April 2001 regulation. First, it extended the freeze indefinitely while confirming its commencement date as at 19 April 2001. Secondly, it prohibited the Court or the Board, during the period of the freeze, from determining an application for additional gaming devices (s 182D(3)). Thirdly, it prohibited a hotelier from making an application for additional gaming machines during the period of the freeze (s 182E(2)).
96 The phrase "application for additional gaming devices" was defined in s 182(d)(1)). It is highly relevant to note that the prohibited application was couched in specific terms. What was prohibited was an application by a hotelier "to impose vary or revoke a condition of the hotelier's licence so as to authorise the acquisition keeping or the use or operation of more approved gaming devices than were lawfully kept in the hotel and used or operated in the hotel immediately before the period of the freeze". The prohibited application might have been couched in terms of "more approved gaming devices than were lawfully authorised to be kept in the hotel" but in fact it was expressed more widely. It is also significant to note that the original form of the statutory condition introduced in the first regulation was substantially altered and widened in its operation in both the second form of the regulation and the July legislation. The condition in its wider form, corresponded with the language of s 182D(1).
97 Fourthly, s 182E imposed a condition on each and every hotelier's license. Although the condition in these precise terms was not imposed until 17 July 2001 it operated in a retrospective fashion in two respects. These emerge from the concluding phrase "immediately before the period of the freeze".
98 The first temporal connotation resided in the phrase "the period of the freeze". It was defined to mean the period "commencing on 19 April 2001" and ending on the date appointed by proclamation. The second temporal connotation resided in the words "immediately before". An assessment of the operation of the condition required a factual evaluation to ascertain "the maximum number" of approved gaming devices that were "lawfully acquired kept in the hotel and used or operated in the hotel". The evaluation had to be made "immediately before" 19 April 2001.
99 Once the maximum number was ascertained, the condition operated to prohibit the acquisition and keeping in the hotel of an approved gaming device so as to exceed that maximum. It also prohibited the hotelier from permitting the use or operation of any approved gaming device so as to exceed that maximum.
100 In the present case, it is quite clear that there were no gaming devices that "were lawfully acquired, kept in the hotel and used or operated in the hotel" immediately before the period commencing on 19 April 2001. It may be conceded for the purposes of the argument that the evidence is capable of establishing that 20 gaming devices had been "lawfully acquired". But they had never been kept in the hotel or used or operated in the hotel at the relevant time. It was in fact physically impossible that they could have been so kept and used or operated in the hotel at that time, or indeed at any time following the purchase of the hotelier's licence at Susses Street.
101 It will be observed from this analysis of ss 182D and 182E that the freeze prohibited the making and determination of applications, during the freeze period, that would have authorised "the acquisition keeping or the use or operation of more approved gaming devices than were lawfully acquired kept in the hotel and used or operated in the hotel immediately before the freeze" (s 182D(1); s 182E(2) and (3)). By way of contrast, the statutory condition in s 182E(1) did not in terms directly impact upon the authorisations that may have existed but did so indirectly in the event that the factual situation demonstrated that, immediately before the period of the freeze, there was a disparity between the authorised number and the number of machines answering the description in the statutory condition. The indirect effect was substantial since, in the circumstances, the hotel was thereby prohibited from acquiring keeping and using or operating the disparate number of machines. What was the situation however when a authorisation had been granted, a machine acquired but had never been kept in the hotel and never used or operated in the hotel?
102 It seems to me to be the clear general intention reflected in s 182D and s182E that any such disparity was to reduce effectively the number of authorised machines able to be acquired, kept, used or operated in the particular hotel. Further, where a machine had been lawfully acquired before the freeze but was not kept in the hotel and used or operated in the hotel immediately before the period of the freeze, it was henceforth not authorised to be kept at the hotel. In addition, it was no longer authorised to be used or operated in the hotel. This appears so from the language of s 182D itself, the language of s 161 (the authorising section) and the method of authorisation adopted by the legislation (that is, by imposition of a condition or conditions). There is no need for me to repeat the language of s 182D. But what is important is that it reflected precisely the language of s 161(1) of the Liquor Act 1982 ("authorising the licensee to acquire and keep in the hotel and to permit the use and operation of "gaming machines"). The third matter is the method of imposing a statutory condition on all licences. This was an apt and effective method of displacing or altering the impact of an earlier condition imposed on individual licences on individual occasions. Indeed, the plaintiff in its written submissions conceded that it would be necessary to read the two conditions side by side on the licence following the introduction of the freeze. I cannot accept, however, as the plaintiff argued that the statutory condition merely coexisted with the earlier condition. In my view it substantially affected the substance of the existing condition and in the case of this hotel it displaced the earlier authorisations.
103 The legislative intention to which I have referred was a sensible one. It prevented, as Mr Lyons rightly pointed out in his letter of 24 October 2001, the stockpiling of machines against dormant licences. The New South Wales Government would have been well aware that there were a number of dormant licences held in New South Wales and that each of these was capable of utilisation so as to generate an entitlement to gaming devices. The proposed freeze could be watered down by shrewd and alert entrepreneurs.
104 Before dealing with the final arguments, it is necessary to say something about the status of Exhibit "B".