Moorebank Sports Club Ltd v Liquor Administration Board

Gaming Machines Act 2001 Gaming Machines Regulation 2002 LEGISLATION CITED : Liquor Act 1982 Liquor Act 2007 Registered Clubs Act 1976 Supreme Court Act 1970

Craig v South Australia (1995) 184 CLR 163 CASES CITED : McHugh Holdings Pty Ltd v Peter Ashton & Anor [2007] NSWSC 118 SFGB v Minister for Immigration and Multicultual and Indigenous Affairs [2003] FCAFC 231 SZDTZ v Minister for Immigration and Citizenship [2007] FCA 1824

PARTIES : Moorebank Sports Club Limited (Plaintiff) Liquor Administration Board (Defendant)

COUNSEL : A Hatzis (Plaintiff) SB Lloyd (amicus curiae for Attorney-General)

SOLICITORS : Thomson Playford Lawyers (Plaintiff) IV Knight (Defendant)

LOWER COURT JURISDICTION : Liquor Administration Board

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30083/08 Moorebank Sports Club Limited v Liquor Administration Board

JUDGMENT 1 HIS HONOUR: The plaintiff is a registered club (a holder of a certificate of registration under the provisions of the Registered Clubs Act 1976). The club premises are located at Moorebank in the Liverpool Local Government Area. 2 It has a present entitlement to 80 gaming machines on the club premises. It is seeking to redevelop the club premises. The proposed works are described in a social impact assessment (SIA) that has been filed with the defendant. The plaintiff seeks approval for an additional 60 gaming machines so as to assist with the funding of the proposed redevelopment. 3 The defendant was a statutory authority constituted pursuant to s 72 of the Liquor Act 1982. It has been abolished by the Liquor Act 2007 (which came into effect on 1 July 2008). By reason of transitional provisions contained in that Act, the abolishment is of no significance for present purposes. 4 The plaintiff sought approval for the additional gaming machines. Jurisdiction to determine relevant applications was conferred upon the defendant. Under the Gaming Machines Act 2001 ("the Act"), such an application cannot be granted unless the defendant has approved the social impact assessment lodged in connection with it. 5 Other relevant provisions of the Act may also be found in s 37 and are as follows: "(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.

(4) For the purposes of sub-section (3)(d), the local community comprises, subject to the regulations, the people in the area or group from which the persons utilising the services and facilities of the hotel or club premises concerned are likely to be drawn.

(5) The regulations may make provision for or with respect to the manner in which the approval of a social impact assessment is to operate.

(6) The Board may partly approve a social impact assessment provided in connection with an application to which this Division applies, in which case the Board may authorise the applicant to keep less approved gaming machines than the number applied for." 6 There are regulations (the Gaming Machines Regulation 2002 - "the Regulation"). For present purposes, what is relevant are those regulations that were in force as at 2 October 2007. 7 In this case, the relevant provision is clause 35 which is headed "Class 2 Social Impact Assessment". It stipulates, inter alia, what must be included in such a social impact assessment. Sub-clause (4) thereof has relevance to "the local community". Sub-clause (6)(a) thereof is in the following terms: "(6) In determining a class 2 social impact assessment in accordance with section 37 (3) (d) of the Act, the Authority is to take into consideration: (a) the information provided under this clause …" 8 By letter dated 20 November 2007, the plaintiff was advised of refusal to approve the SIA. The letter enclosed a copy of the Board Decision which was dated 30 October 2007. The Board member who determined the application was Mr Lucas. 9 By Summons, the plaintiff has commenced proceedings in this Court. The plaintiff seeks judicial review of the decision (s 69 of the Supreme Court Act 1970). The section provides a discretionary remedy. There are five avenues of challenge. In respect to each of them, jurisdictional error is alleged (Craig v South Australia (1995) 184 CLR 163 at pp. 171 - 180). 10 The five alleged errors (which are addressed in written submission prepared by counsel for the plaintiff) are as follows: "First error: No determination of the 'local community'

Second error: Factual finding - based on no evidence - that there is a 'high density' of gaming machines

Third error: Factual finding based on no evidence - that there is higher than average per capita expenditure on gaming machines

Fourth error: Misconstruing the requirements of the legislation

Fifth error: Applying a different test to that required by the statute" 11 The proceedings were heard on 19 August 2008. Mr Hatzis appeared for the plaintiff. There were submitting appearances. Without objection, Mr Lloyd (who was briefed by the Attorney-General) was given leave to appear on an amicus curiae basis. 12 Before proceeding further, it is convenient to briefly address the matter of the structure of the Board Decision. It is a document that has thrown up competing views as to what was done by the Board member. 13 It commences with reference to, inter alia, the application, the relevant legislation, material placed before it (the SIA review report, letters and response) and what it saw as the issue for determination. Thereafter, the material is presented under what may be described as major headings. These heading are "The Proposal", "The Local Community", "Socio-Demographic Characteristics", "Gaming Characteristics", "Benefits", "Impact", "Submissions" and "Conclusion".

14 Satisfaction appears to have been intended to be expressed for each of the threshold requirements set forth in (a), (b) and (c) of sub-section (3). The only issue presented for determination was expressed in the following terms: "The issue for determination is whether the SIA satisfied the Board that the overall economic and social impact of granting the application will not be detrimental to the local community." 15 This expression appears to have in mind the threshold requirement set forth in sub-section (3)(d). 16 It may be helpful to observe at this stage that discretionary considerations were not, by this expression, seen to raise issues for determination. 17 What appears under the heading "The Local Community" concludes with the following: "The Board accepts the predominance of Liverpool LGA as comprising the local community for the purposes of the Gaming Machines Act and Regulations." 18 What appears under the heading "Socio-Demographic Characteristics" looks to a review of gaming research by Judith Stubbs & Associates which was provided to the Board in another application. The review was seen as providing socio-demographic characteristics of the local community that were important indicators on the question of whether there was likely to be a propensity for problem gamblers to be present or created. It concludes with the unedifying following comment: "Clearly, there are matters of concern." 19 What appears under the heading "Gaming Characteristics" looks to a submission made to the IPART inquiry into gambling by Stubbs and Storer. It was titled "Indicators of Gaming Problems: Some Policy Implications". The indicators of problem gambling identified in that submission were considered by the Board member to be of some guidance. It concluded with the following: "If these indicators of problem gambling are a true measure then the application should not be granted. Conclusions on the Gaming Characteristics. The four gaming characteristics identified above are not favourable to the applicant. Further, the indicators of problem gaming are not favourable to the applicant. Considered in isolation from any other factor the Board concludes that the gaming characteristics do give rise for concern about a propensity for problem gambling being created by the grant of approved gaming machines." 20 What appears under the heading "Benefits" commences with the following: "The SIA must demonstrate the social and economic benefit to the local community that would or might result from the granting of the application." 21 What appears under the heading of "Benefits" concludes with the following: "The Board has considered the claimed benefits arising from the SIA proposal. The Board accepts the benefit to the community of recreational egm play, increased community physical activities such as facility maintenance and the increase in taxation. The Board considers these benefits substantiated to the community. The Board considers the remaining claimed benefits to be marginal benefit to the community at best. The majority of these claimed benefits are disregarded on the basis that they are not substantiated or quantified within the SIA." 22 What appears under the heading "Impact" commences with the following: "The SIA must demonstrate an identification of the negative social and economic impact on the local community that would or might result from the granting of the application to which the social impact assessment relates." 23 The following conclusion is expressed therein: "The grant of this application will lead to an increase in problem gamblers of between 124 and 205 persons. On the basis of the additional 7 persons per problems gambler being adversely effected, this will mean an additional 868 and 1435 persons as a result of this proposal. The economic cost will be between $1,404.000.00 and $4,557,150.00 as a result of the problem gamblers. Further an additional 868 and 1435 persons would be affected." 24 Before proceeding further, it is timely to make observations as to the material appearing under the headings of "Benefits" and "Impact" which assert matters that must be demonstrated by the SIA, whereas the real question is that set forth in sub-section (3)(d). It is of that requirement that the applicant must satisfy the Board. Also, there appears to be comment that overlooks or misunderstands the prescription for "the local community". 25 The matters identified under the two headings are matters in respect of which information must be included in a Social Impact Assessment. It may be further observed that the Board Decision appears to clearly express that compliance with the requirements of the Act and the Regulation had been demonstrated to a state that satisfied the Board. 26 What appears under the heading "Conclusion", is as follows: "Whilst it was held by Associate Justice Malpass in the recent decision of McHugh Holdings Pty Ltd v Peter Ashton & Anor NSWSC 118 that the determination of the Board is not a balancing exercise, once the SIA meets the legislative criteria, the Board, in order to approve the SIA must be satisfied that the quantifiable and unquantifiable economic and social benefits to the community outweigh the quantifiable and unquantifiable economic and social costs to the community in order to approve any SIA. The applicant must demonstrate that the overall economic and social impact of granting the application will not be detrimental to the local community. The Board is satisfied that the SIA meets the prerequisite level as required by the Gaming Machines Act 2001 and its regulations. In McHugh Holdings (cited above) the Court Determined that if the SIA satisfied the mandatory requirements, then the Board should consider the criteria in either granting or refusing the SIA. The Board is satisfied that the SIA fulfils the mandatory requirements. The Board has considered the SIA prepared by CMP Lawler. The Board has considered the review from Alison Ziller. The Board has also considered the SIA and response to the review dated 20 September 2007. The Board is concerned on the number of quantifiable problem gamblers arising from this SIA. If the SIA was to be granted, then there would clearly be both quantifiable and unquantifiable costs to the community. Further, the Board is not persuaded that the quantifiable and unquantifiable economic and social benefits outweigh the quantifiable and unquantifiable economic and social costs. The Board must consider the costs to the community of granting the SIA in its entirety. The Board when considering the material for deliberation within the SIA, Review and response to Review, is not persuaded that the SIA should be approved on the basis that clearly there will be costs that exceed the benefits to the community as apposed to members of the club. The SIA is refused." 27 Before proceeding further, it is timely to observe that there is material contained therein which does not coincide with what was intended to be expressed in the judgment of McHugh Holdings Pty Ltd v Peter Ashton & Anor [2007] NSWSC 118. Indeed, certain of it represents a misunderstanding of what was said therein and the relevant statutory provisions. This misdirection infects what was decided therein. 28 In McHugh, the following was observed:

"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." 29 A determination of the questions of whether or not the threshold requirements have been satisfied involves a fact-finding process (as opposed to a balancing process) and does not involve a discretionary exercise. The exercise of any discretion involves a proper taking into account of the relevant discretionary considerations. I should add that it was not in issue in these proceedings that the Board had a discretion. 30 One aspect of the issue identified by the Board involved the matter of "the local community". A finding as to it has to be made for the purposes of sub-section (3)(d). The issue upon which the Board has to be satisfied is one of the prescribed overall impact not being detrimental to it. 31 In the SIA, the plaintiff presented "the local community" as comprising the people residing within an area having a radius of about two kilometres from the club premises. It was referred to therein as "the Moorebank PCA". The Board appointed reviewer (Ms Ziller) prepared a review of the SIA. It is said on behalf of the plaintiff that this review, whilst being critical of the alleged local community, failed to posit any alternative. It was also said that it tended to favour an area that was larger than the Moorebank PCA but smaller than the Liverpool LGA. The plaintiff further said that the Board member noted what was said in the Ziller report and then came to a conclusion accepting the predominance of Liverpool LGA as comprising the relevant local community. This leads the plaintiff to the submission that there was a failure to exercise the jurisdiction conferred by the statute (there was a failure to identify the area that this predominance of Liverpool LGA represented). 32 For the purposes of sub-section (3)(d), subject to the regulations, sub-section 4 prescribes "the local community" as comprising the people in the area or group from which the person utilising the services and facilities of the hotel or club premises concerned are likely to be drawn. Clause 35(4) of the Gaming Machines Regulation ("the Regulation") is said by the plaintiff to expand that prescription to include other people in the area or who belong to a group (those likely to derive social or economic benefit or likely to suffer social or economic detriment if the application is granted). 33 The significance of the written submissions made on this first error would seem to have a dependency on what is the correct analysis of the Board Decision. How the Board member came to his conclusion on the question of "the local community" is not free from mystery. What was meant by "the predominance of Liverpool LGA" also is lacking in clarity. In any event, it seems to me to that a finding in such terms lacks the character and the precision that is required by the relevant provisions. Later observations made in the Board Decision suggest misconception as to the prescription. This misconception and the vagueness of the finding infects other findings that appear to have been material to the determination. 34 A consideration of the question of the satisfaction of sub-section (3)(d) requires a clear and precise finding as to what comprises "the local community". The effect of the statute and the Regulation is to require a finding as to "people in an area or group". The finding as to those matters requires the Board to address the features of the prescription (arising from both the Act and the Regulation). Regard has to be had to such people or groups from which persons utilising the services and facilities of the plaintiff are likely to be drawn. Regard must also be had to those affected by (a) and (b) of clause 35(4). In my view, this cannot be said to have been done in this case. 35 The second and third errors allege factual findings based on no evidence. There was brief debate on the question of the circumstances in which such an error would be treated as jurisdictional error. The Court was referred to certain decided cases (inter alia, SFGB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 231 at paragraph 19; SZDTZ v Minister for Immigration and Citizenship [2007] FCA 1824 at paragraph 18). For present purposes, it is unnecessary to dwell on these alleged errors. It suffices to say that findings made concerning high density of gaming machines and higher than average per capita expenditure on gaming machines were contrary to the evidence and appear to have been determinative. 36 The fourth error concerns what was said to be the major and economic benefit to be gained from approval of the SIA (the expansion of the plaintiff's facilities at a total cost of $10 million). It is said by the plaintiff that the Board did not regard the provision of enhanced facilities as a benefit to the local community (but treated them merely as a benefit to the plaintiff) and in so doing committed an error in applying the statutory test. Stress was placed on what was said to be error concerning a finding of lack of nexus between the community and the club. 37 After mentioning that fourth error, I move to the final alleged error. What is said in support of this error is as follows: "After reviewing the available evidence, the Board member applied the following test: 'In order to approve the SIA (the Board) must be satisfied that the quantifiable and unquantifiable economic and social benefits to the community outweigh the quantifiable and unquantifiable economic and social costs to the community in order to approve any SIA.' That is patently not the statutory test set out in sec. 37(3)(d). The test propounded by the Board member creates a higher barrier for applicants to overcome than that which is required by sec. 37(3)(d). The statute requires an applicant to demonstrate that the 'overall economic and social impact of granting the application will not be detrimental to the local community'. Under the statutory test, if all factors are equally balanced, then the negative test ('will not be detrimental') may be satisfied. However, under the test as propounded by the Board member, an applicant would need to demonstrate the economic and social benefits positively outweigh the social and economic detriment. That is too high a test and one which is not warranted by the statute. In undertaking that approach, the Board has applied a wrong test." 38 At this stage, I will put to one side the alleged fourth and fifth errors and first look to the crucial question of how the Board came to its ultimate decision. The written submissions made on behalf of the plaintiff proceeded on the basis that the Board had not been satisfied of the threshold requirement set forth in (3)(d). At the commencement of the hearing, I invited the attention of counsel to the possibility that a different view of what had been done by the Board may be entertained. Counsel then conceded that what was put to him may be a fair construction of what was said in the Board Decision. At this stage, without objection, the plaintiff was given leave to make any necessary amendments to process and to put alternative submissions. 39 Although the position is highly debatable, it seems to me to be the better view that the written submissions misconceive what was done by the Board. The language appearing under the heading "Conclusion" suggests to me a finding that it was satisfied that all four threshold requirements had been made out. This would seem to be the effect of what was said concerning "the prerequisite level" as required by the Act and the Regulation and the words "the mandatory requirements". It would also seem to be the view of the Board that the reaching of this stage required it to do other things, including to be satisfied that the quantifiable and unquantifiable economic and social benefits to the community outweigh the quantifiable and unquantifiable economic and social costs to the community in order to approve any SIA and to "consider the criteria in either granting or refusing the SIA". This may have been intended to suggest that it should then undergo the process of discretionary consideration. Whatever was intended, what was said does not follow from any observation made in McHugh and seems to involve misunderstanding of the provisions of the Act and the Regulation and the task that it was required to perform. 40 It may be added that there is uncertainty as to what was meant by the word "criteria". I shall return to that question shortly. 41 After expressing its satisfaction that the SIA had fulfilled the mandatory requirements, the Board expressed its concern regarding the number of quantifiable problem gamblers and a view that if the SIA was to be granted, then there would clearly be both quantifiable and unquantifiable costs to the community. The Board member then proceeded to observe that he had not been persuaded that the quantifiable and unquantifiable economic and social benefits outweighed the quantifiable and unquantifiable economic and social costs. He proceeded to further observe that the Board must consider the cost to the community of granting the SIA in its entirety. This observation was followed by a further observation that the Board was not persuaded that the SIA should be approved on the basis that clearly there will be costs that exceed the benefits to the community as opposed to members of the club. 42 It may be that these observations relate to the earlier expressed "criteria" and represent a purported discretionary exercise and produce the result that the application was refused for discretionary reasons. If this be the case, then there was a misunderstanding of the discretionary process. 43 If this was not the case and the Board was still engaged in the task of being satisfied concerning the threshold requirements set forth in sub-section (3)(d) then it would seem to have applied the wrong test. 44 The satisfaction of this threshold requirement involves findings as to "the overall economic and social impact of granting the application" and that such overall impact will not be detrimental to "the local community". The statutory requirement does not use the word "outweigh" and the matter of which it had to be satisfied was not one of benefits outweighing economic and social costs. 45 Whatever be the case, confusion has been generated and there has been misdirection in the approach to the determination of the application and any exercise of discretion has miscarried. 46 Whatever may have been contemplated by "criteria" (and this may have been intended to be a reference to one of the threshold requirements), it would seem to involve at least certain of the considerations that were dealt with in finding that the mandatory requirements had been made out. If that be the case, there would seem to be inconsistency between the findings that have been made and the taking into account of irrelevant material. 47 In the circumstances, I am satisfied that there has been jurisdictional error which justifies the disturbing of the Decision of the Board. 48 There remains one further matter. In the written submissions, council for the plaintiff has said as follows: "By letter dated 3 July, 2008, the Plaintiff's solicitors wrote to the Defendant's solicitors, inviting the Defendant to agree to redetermine the Plaintiff's application for SIA approval. By letter dated 16 July, 2008, the Defendant's solicitors informed the Plaintiff's solicitors that Board member Lucas had 'indicated that, having considered the matter at length, he would not change his original decision of 30 October, 2007'. In the circumstances where that Board member appears to have closed his mind to the possibility of changing his original decision, a fair-minded member of the public might reasonably apprehend that Board member Lucas might not resolve the issues before him with a fair and unprejudiced mind: Ebner v Official Trustee (2000) 205 CLR 337 at [6]. The matter ought be redetermined, according to law, either by the full Board or by a different, fair-minded delegate. The appropriate order in the circumstances is that the matter be remitted to the Defendant to be determined according to law and that the previous Board member, Lucas, be disqualified from determining the application." 49 Oral submissions were made on this question. They threw up questions of construction of what was conveyed by the contents of the letter dated 16 July 2008. Assuming that there is jurisdiction to do what is sought by the plaintiff, I bear in mind that the relief available to the plaintiff is of a discretionary nature. 50 It seems to me that the appropriate course is for the matter to be remitted back to the Board and that any necessary application for disqualification may be made by the plaintiff to the Board itself. 51 The Board Decision made on 30 October 2007 is set aside. The matter is remitted back to the Board to be determined according to law. I make no order as to costs. The exhibit may be returned. **********

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