Pakenham Racing Club Inc v Cardinia SC [2017] VCAT 72

1. In application P1286/2016 the decision of the responsible authority is set aside.
2. Planning permit T130036 is amended and an amended permit is directed to be issued for the land at 3 Niki Place, Officer. The conditions in the permit are amended as follows:
   • (a) For condition 9, substitute:

By no later than 20 March 2017, the owner must enter into two agreements with the Responsible Authority under section 173 of the Planning and Environment Act 1987 and make application to the Registrar of Titles to have the agreements registered on the relevant titles under section 181 of the Act. The agreements must provide as follows:

(a) The first agreement must relate to the subject land of this permit and must require the owner of that land to make annual payments totalling $75,000 (indexed to CPI) in cash donations to local sporting groups or clubs, local charities, local community organisations and local responsible gambling service providers, to the satisfaction of the Responsible Authority, but excluding any payments to the Pakenham Football Club. The first year in respect of which such payments are required starts on 17 June 2016.

(b) The second agreement must relate to the land on which the Cardinia Club is located (known as 71 Racecourse Road, Pakenham) and must require the owner of that land to make annual payments totalling $75,000 (indexed to CPI) in cash donations to local sporting groups or clubs, local charities, local community organisations and local responsible gambling service providers, to the satisfaction of the Responsible Authority, but excluding any payments to the Pakenham Football Club. The first year in respect of which such payments are required starts on the date of the installation of any electronic gaming machines in the premises which results in more than 83 electronic gaming machines after the date an amended permit relating to Club Officer at 3 Niki Place, Officer, has been issued following the final orders of the Victorian Civil and Administrative Tribunal in proceeding no. P1286/2016.

(b) Omit condition 10.

Ms Sarah Porritt of Counsel, instructed by Ms Alison Elverd, Bazzani Scully Priddle Lawyers

• Mr John Mitchell, Pakenham resident, member of the Pakenham Racing Club, former director of the Casey Cardinia Foundation, patron of both the Cardinia Club and Club Officer
• Mr Michael Hodge, Chief Executive Office, Pakenham Racing Club Inc
• Ms Marlene Burhop, Pakenham resident, member of the Pakenham Racing Club, patron of both the Cardinia Club and Club Officer
• Mr Timothy Stillwell, chartered accountant, ShineWing Australia Pty Ltd
• Ms Colleen Peterson, town planner, Ratio Consultants Pty Ltd

Amendment of permit relating to installation and use of 60 electronic gaming machines at Club Officer at Officer to delete requirements in conditions 9(b) and 10 to remove 22 electronic gaming machines at Club Cardinia at Pakenham, so that a maximum of 105 electronic gaming machines may be installed and used at Club Cardinia

Application under section 77 of the Planning and Environment Act 1987 to review the Council's refusal to amend a permit

Development Contributions Plan Overlay Schedule 2 (DCPO2)

Clauses 10, 17.01, 21.06, 22.03, 37.07, 45.01, 52.27, 52.28 & 65

The Club Officer land is located on the southern end of Niki Place and at the western corner of the Princes Freeway off-ramp and Cardinia Road in Officer.

The Cardinia Club land is about 7.5 km to the east of Club Officer (by the most direct road route) and is located on the west side of Racecourse Road, Pakenham, adjacent to the former Pakenham Racecourse. The Club comprises a single-storey brick building about 35 years old with parking for 172 cars in the front and at the rear of the building. Inside the building is a gaming room with 83 gaming machines, a bistro with seating for 190 plus 80 in an alfresco courtyard, a large sports bar, a lounge, a boardroom available for function hire, and a children's play area. The gaming room is open from 8 am to 3 am every day.

On the morning of the hearing held on 18 October 2016, the Tribunal inspected Club Officer, the Cardinia Club, Castello's Cardinia Hotel, the Pakenham Hotel, the former Pakenham Sports Club and the Pakenham Racing Club at Tynong, accompanied by the parties

1. The Pakenham Racing Club Inc (the Racing Club) operates gaming venues at 3 Niki Place, Officer (known as Club Officer) and at 71 Racecourse Road, Pakenham (known as the Cardinia Club). These two venues financially support the operation and further development of the Racing Club's new racecourse at Tynong.
2. The Racing Club recently constructed Club Officer. It opened in June 2016. On 1 October 2013, Cardinia Shire Council issued a permit under the Cardinia Planning Scheme (the scheme) to construct and use Club Officer (the Club Officer permit) as a gaming venue for a maximum of 60 electronic gaming machines (EGMs). The background to the issue of the permit and the conditions included in the permit are relevant to this proceeding.
3. In 2013, the Racing Club applied to the Council for a permit under the scheme to construct Club Officer and install and use 60 EGMs. At the time, the Racing Club operated the Cardinia Club with 105 EGMs and another gaming venue, now closed, known as the Pakenham Sports Club (the Sports Club) at the Council-owned Pakenham Reserve with 38 EGMs. The application made it clear that the 60 EGMs would comprise the 38 EGMs relocated from the Sports Club and 22 relocated from the Cardinia Club.
4. Conditions 9(b) and 10 of the Club Officer permit had the effect of requiring the number of EGMs at the Cardinia Club to be reduced from 105 to 83.
5. Condition 9(b) provides:

Before the installation and use of the gaming machines start, the owner must enter into an agreement with the Responsible Authority under section 173 of the Planning and Environment Act 1987, and make application to the Registrar of Title to have the agreement registered on Title to the land under section 181 of the Act, which provides for the following:

1. ...
2. The VCGLR permit for gaming machines at 71 Racecourse Road, Pakenham must be amended, to reduce the number electronic gaming machines permissible at the premises to a maximum of 83. This amendment must be approved and in force within three (3) months of the installation of the electronic gaming machines at Bridge Road, Officer.

Within one (1) month of the electronic gaming machines being installed, the permit holder must apply to the Responsible Authority to amend planning permits for the following:

1. Planning Permit T950144 (71 Racecourse Road, Pakenham) - Condition 6 amended to read 'The number of Gaming Machines must not exceed 83 without the permission of the Responsible Authority'.
2. Planning Permit T980029 (71 Racecourse Road, Pakenham) - Condition 4b amended to read 'Without the further written permission of the Responsible Authority the maximum number of gaming machines permitted to operate on the premises shall be 83'.

1. The Club Officer permit also required the closure of the Sports Club.[2]
2. On 27 November 2013, the Victorian Commission for Gaming and Liquor Regulation (the VCGLR) granted a licence for 60 EGMs at Club Officer.[3]
3. When Club Officer opened in June 2016, the Racing Club closed the Sports Club and removed 22 EGMs from the Cardinia Club. The Cardinia Club now has 83 EGMs.[4] Club Officer now has 60 EGMs.
4. The Racing Club has not entered the agreement referred to in condition 9(b).[5] The Racing Club has not applied to amend the Cardinia Club permits referred to in condition 10.

1. The Racing Club now wants to install 22 more EGMs at the Cardinia Club so that it has the same maximum number of EGMs that were able to be used and installed before Club Officer opened ie 105 EGMs (the proposal).
2. To realise this objective, the Racing Club applied to the Council to amend the Club Officer permit to delete conditions 9(b) and 10.
3. The Racing Club did not apply to amend any of the Cardinia Club permits. It did not need to do so because the effect of the Cardinia Club permits still authorises the installation and use of 105 EGMs.[6] This is the case because the Racing Club did not and has not applied to amend conditions 4(b) & 6 of the Cardinia Club permit, as required by condition 10 of the Club Officer permit.
4. The Council adopted its officer's recommendation to refuse the application. The Racing Club has applied to the Tribunal to review that decision (the application).

1. This application is to review the Council's decision under the Planning and Environment Act 1987 (the PE Act). It is not a proceeding to review any decision of the VCGLR under the Gaming Regulation Act 2003 (the GR Act). In gaming cases, the relevant test is whether the net economic and social impacts of the proposal will not be detrimental to the well-being of the community of the municipal district in which the premises are located. This test does not apply in this proceeding.
2. The Racing Club does not require permission from the VCGLR under the GR Act to install an additional 22 EGMs at the Cardinia Club, but may require permission to modify the gaming machines area in that venue.[7]
3. In planning cases, the relevant considerations are different from those under gaming cases. They are largely defined by the relevant planning scheme. The relevant State standard provision focuses on whether the relevant location is suitable for gaming machines and whether the social and economic impacts of the location of the EGMs are acceptable.[8] Hence, the assessment is on impacts arising from the location of the EGMs.
4. In this scheme, we must also have regard to local EGMs policy which has its own version of a net community benefit test. We will come to that later. Nonetheless, we agree with observations in Kingfish Victoria[9] that the emphasis on social and economic impacts is narrower in planning cases than in gaming cases.
5. Ultimately, after taking into account the relevant considerations, we must find that the amendments would result in an acceptable planning outcome.[10] As part of that task, we must seek to integrate the relevant policies and balance conflicting objectives in favour of net community benefit and sustainable development.[11]
6. Our task is not straightforward. The application is unusual because it is seeking to reinstate 22 EGMs at the Cardinia Club that were removed pursuant to conditions in the Club Officer permit. The Club Officer permit is unusual because it seeks, by permit condition, to constrain the use of the Cardinia Club.
7. The Racing Club submitted that we must confine our assessment to whether the amendments make Club Officer an unacceptable location for gaming machines or, alternatively, whether the use of Club Officer for 60 EGMs would be acceptable if the Cardinia Club is permitted to operate with 105 EGMs. We agree with the Racing Club that we must not approach our task as if the application were to simply top up the Cardinia Club with 22 EGMs.
8. The Council submitted that we must confine our assessment to whether the Club Officer permit should still be required to be subject to conditions 9(a) and 10 and should still require the Cardinia Club to enter an agreement to enforce an ongoing reduction of 22 EGMs at the Cardinia Club and a total of 83 EGMs.
9. While the different formulations are not significantly different, we prefer the Council's formulation, subject to its inclusion of the locational focus, considering the acceptable planning outcome, and carrying out the policy integration tasks to which we have referred.

IS THERE A DEAL TO WHICH THE RACING CLUB SHOULD BE HELD?

1. Should the Racing Club be held to the permanent removal of 22 EGMs from Club Cardinia because it offered to remove these EGMs as part of its Club Officer application and because it failed to apply to review conditions 9(b) and 10 to give effect to this offer?
2. Is there an agreement between the Racing Club and the Council? Should the Tribunal not decide the application in a manner inconsistent with the agreement? Even if there is no agreement, is there (as the Council submits) a principle underpinning the Club Officer permit that should continue to be observed?
3. We give no weight to Mr Hodge's evidence that the Racing Club's offer to remove 22 EGMs was not permanent. Mr Hodge's evidence was that he had an agreement with senior officers of the Council before the Club Officer permit was granted that additional EGMs (but not as many as 22 EGMs) could be installed at the Cardinia Club after Club Officer opened. There is no evidence of such an agreement and, even if there was, it was informal and could not bind the Council.
4. An application can be made to amend a condition even if the condition is not reviewed by the Tribunal. The PE Act does not bar such an application. The issue is what weight should be given to a failure to review a condition in deciding whether an amendment to the condition is an acceptable planning outcome having regard to the relevant considerations.
5. The Racing Club's application was not analogous to the circumstances in King David School[12] in which the Tribunal allowed only in part the permit holder's application to amend the conditions. Unlike in that case, the Club Officer permit was not granted following a mediated or other type of agreement with the Council or other parties in the context of Tribunal proceedings. This proceeding is not a case in which the Racing Club is attempting to win back objectives that were not originally supported by the Tribunal.
6. In this proceeding, the Council is not a party that could or did compromise its rights. It is not as a party pursuing an individual agenda. It is better understood to be a decision maker deciding a matter under law.
7. The Racing Club is not barred by statute from applying to amend any conditions in the Club Officer permit. It is not barred by case law from applying to delete conditions 9(b) and 10 on the grounds that the deletions would transform the permit. Clearly, the permitted use of Club Officer would remain exactly the same if the application was granted.
8. The Racing Club is not seeking to amend the conditions very soon after the grant of the permit as was the case in King David School. The Club Officer permit was granted over three years ago and Club Officer has since been constructed and is now operating as a gaming venue. In King David School, the Tribunal observed that there should be a change of circumstances or other sufficient reason accompanying an application to make 'substantive changes to key permit conditions upon which an original Tribunal decision was predicated'.[13]
9. We give little weight to the Racing Club's failure to review the conditions. Mr Hodge's evidence is that, while the Racing Club was disappointed with the conditions, 'the sounder commercial decision' was not to appeal and to focus on constructing Club Officer.
10. In conclusion, there is no deal, agreement or other arrangement to which the Racing Club should be held that militates against the requested amendments of the Club Officer permit.

1. The Tribunal's observation in King David School that there should be a change of circumstances or sufficient reason for the amendments do not apply in this proceeding because we are considering an application under s 72 and not s 87A of the PE Act and because the amendments do not affect conditions on which a Tribunal decision was based. Nonetheless, it is relevant to consider an applicant's stated reasons for an application to amend a permit, even though there is no legislative requirement to provide reasons or changed circumstances.
2. In summary, the change of circumstance upon which the Racing Club relies is a significantly lower income from the Cardinia Club than anticipated, due to State taxation changes implemented after construction of Club Officer started. The effect of these legislative changes and resulting lower than anticipated income is to make servicing the Racing Club's debt more difficult and to make proceeding with the further development of the facilities at Tynong more difficult.
3. According to Mr Hodge's sworn evidence, the Racing Club has invested around $110 m in establishing the new racing facilities at Tynong over the past three years. We inspected those facilities. They include a 2,400 metres long turf track and a 2,000 metres long synthetic track (both fully lit), a grandstand and events centre, and undercover horse stalls. It runs about 50 race meetings per year. A number of meetings at other courses have been recently transferred to Tynong, during wet weather, to use the synthetic track.
4. The Racing Club plans to upgrade its training facilities, currently used by about 120 horses, to enable use by up to 600 horses.[14] It is developing 34 lots adjoining the racetrack to accommodate trainers and their horses. No other Victorian racetrack offers such lots. At the moment, horses training must use the grass racing track and this imposes operational limitations. The Racing Club now plans to construct an 1,800 metres long grass training track adjoining the synthetic race track. This will attract more training activities and make the lots more attractive for purchase by trainers. The Tynong master plan has additional area for a further 36 such lots in the future.
5. Mr Hodge states the Racing Club is in default with its lenders and needed Racing Victoria to bring forward its purchase of three lots to assist with cash flow. A new grass training track will cost about $3.6 m. Racing Victoria supports this project but requires the Racing Club to contribute $540,000. The Racing Club does not have the capacity to make this contribution because of its cash flow problems and, hence, the grass training track project is in doubt.
6. Mr Hodge states that, back in 2013, it was a sound decision by the Racing Club to transfer 22 EGMs from the Cardinia Club to the then-proposed Club Officer because those EGMs were not heavily used and provided little income. He stated the State Government changed gaming machine taxation arrangements in April 2014 but the deleterious impact on the Racing Club only became apparent in late 2015. In response to questions, his evidence was that the changes caught the Racing Club by surprise. We do not find that the Racing Club knew the impact of the changes before it decided to proceed to build Club Officer.
7. Mr Stillwell is a chartered accountant with extensive consultant experience working with the gaming industry. He set out the new tax rates from 1 May 2014, the critical one being that for a club venue the rate increased from 42.5% to 46.7% (an increase we estimate of about 10%) for average monthly gaming expenditure (or player loss) per EGM of between $2,666 and $12,550. In his opinion, if 22 EGMs are reinstated at the Cardinia Club, State gaming tax will fall by about $182,000 per year in relation to 105 EGMs at the Cardinia Club. He explained the new tax arrangements usually had the effect of reducing total tax if the number of EGMs at a venue increases, based on the usual outcome that the average monthly gaming expenditure per EGM falls when additional EGMs are installed.
8. However, the reduction in tax payable at the Cardinia Club would be partly offset by additional tax, estimated by him to be $74,000 per year, for the 60 EGMs at Club Officer. The additional tax is payable because EGMs at Club Officer will have lower monthly expenditure due to transferred expenditure to the Cardinia Club. The net reduced tax payable across both venues would be about $108,000 per year.
9. State tax is one expense in operating either venue. Mr Stillwell's evidence includes estimated additional income and overall expenses at both venues if 22 EGMs are reinstated at the Cardinia Club. The estimated net additional income at the Cardinia Club is about $318,000 per year and estimated net reduction in income at Club Officer is about $70,000 per year. Accordingly, Mr Stillwell estimates the Racing Club's financial position would be improved by about $250,000 per year if the 22 EGMs are reinstated. The Racing Club adopts this estimate.
10. Mr Hodge's evidence is that, if the Racing Club's financial position is improved as estimated by Mr Stillwell, the Racing Club would be in a good position to persuade Racing Victoria to accept making the Racing Club's contribution to the grass training track project in instalments over three years so that no material additional debt is required and so that the project could proceed.
11. We accept that the State taxation changes have, since the Racing Club committed to establishing Club Officer, have had a material impact on the Racing Club. We accept the opinion of Mr Stillwell that, if the Racing Club had not decided to transfer 22 EGMs from the Cardinia Club to Club Officer as part of its application to establish Club Officer, it would now be in a better financial position to the extent of about $250,000 per year across both venues based, in part, on lower taxes of about $108,000 per year.
12. Mr Hodge also stated that net machine revenue for each of the 60 EGMs is currently below the equivalent figure for each of the 22 EGMs removed from the Cardinia Club. However, this is not a change in circumstances to which we ascribe any real weight.

1. In conclusion, a permit holder is not confined to changes in planning law (including changes to planning controls), changes to planning policies, changes to the physical context, or changes to identity of persons with interests in the relevant matter as a change in circumstances or reason for a request to amend a planning permit. The tax changes and the resulting changes to the Racing Club's financial position are relevant changes in circumstances or reasons for the application. We reiterate that reasons or changed circumstances are a threshold matter and separate from the merits of the application. We now turn to the merits.

1. The scheme's provisions relating to gaming require us to consider whether the location of the Cardinia Club for the 22 additional EGMs is appropriate.[15]
2. One of the purposes of clause 52.28 of the scheme is 'to ensure gaming machines are situated in appropriate locations and premises'. This requires us to consider whether the proposed 22 EGMs at the Cardinia Club are in an appropriate location and in appropriate premises. It also requires consideration of whether the 22 EGMs are compatible with adjoining and nearby land uses, whether the site can accommodate 22 EGMs, and whether the Cardinia Club provides a full range of club facilities to members and patrons.
3. The objective of the policy in clause 21.06-4 is to minimise the risk of problem gambling and convenience gambling through the appropriate location of gaming machines. The Council does not press that the Cardinia Club is a convenience gambling venue or would become one if 22 EGMs were added. The Council's submission is that adding 22 EGMs to the Cardinia Club is contrary to one of the objectives of the gaming policy at clause 22.03-2 to 'discourage new gaming machines in vulnerable or disadvantaged areas'.
4. The clause is unclear about what is a vulnerable area but infer it is a reference to vulnerability to problem gambling, having regard to the clause as a whole. We address problem gambling under social impacts later in these reasons.
5. The policy in clause 22.03-2 provides that EGMs should be located in appropriate areas, on appropriate sites and in appropriate venues. The proposal responds well to almost all of these policies.
6. For example, in relation to appropriate areas, the area around the Cardinia Club has choices of non-gaming entertainment, does not exceed the specified EGM density cap (for growth areas), is removed from convenience activities, is not close to prohibited shopping areas, is not in an area connecting core retail areas, and is not within 400 metres of 50 or more social housing dwellings.[16] In relation to appropriate sites, the site does not requiring passing for everyday activities and is not near shops and other high pedestrian locations. In relation to appropriate venues, the Cardinia Club has existing EGMs (ie is not a new venue), offers a range of non-gambling activities, is well managed, promotes responsible gaming practices, and does not detrimentally affect surrounding amenity.
7. There are two specific policy items where the proposal may not respond as well.
8. The first policy item is that EGMs should make a 'positive contribution to the redistribution of gaming machines away from relatively disadvantaged areas' as defined by the latest SEIFA indexes.[17] Both Ms Peterson and Ms Rosen included opinions about how the proposal responds to this policy.
9. We are unsure if the additional 22 EGMs at the Cardinia Club is properly characterised as a 'redistribution' because the EGMs will be sourced from outside the Cardinia Shire. Even if it is, the total contribution made to this policy by the Club Officer permit needs to be considered. Condition 11 of the Club Officer permit required the Racing Club to apply to cancel all relevant planning permits allowing EGMs at the Sports Club within one month of EGMs being installed at Club Officer. We have inferred from the submissions that this condition was met.
10. We were informed the 38 EGMs at the Sports Club were removed at or before the opening of Club Officer in June 2016. If we accept that the Sports Club is in a 'relatively disadvantaged area', the removal of the 38 EGMs is a positive contribution, even if 22 EGMs are subsequently added at the Cardinia Club. The Racing Club submitted the 38 EGMs were removed in advance of any timetable set by the Council. The Council did not dispute this at the hearing.
11. As an aside, the removal of the 38 EGMs from the Sports Club also goes to the issue, addressed earlier in these reasons, of whether there is an agreement about the permanent removal of the 22 EGMs from the Cardinia Club. As the removal of the 38 EGMs from the Sports Club is, we find, a positive response to the policy, it is unclear whether the Council would have refused to grant the Club Officer permit if it only came with the Racing Club's offer to remove the 38 EGMs from the Sports Club. There is no certainty that a permit would have been refused given the greater sensitivity of the Sports Club's location.

1. Ms Peterson and Ms Rosen agree that the Cardinia Club is in a statistical area with a SEIFA score that is equal to the lowest 20% of suburbs in Victoria. Most of the areas within a 2.5 km radius of the Cardinia Club are in the lowest 30%. It is on the boundary of an area with a higher score of being in the highest 40%. The two other gaming venues in Pakenham (ie Castello's Cardinia Hotel and the Pakenham Hotel) are in areas with SEIFA score equal to the lowest 10%. Club Officer is in an area with a SEIFA score equal to the top 20%. The Cardinia Shire overall has a SEIFA score equal to the top 20% of suburbs.
2. The second policy item is that EGMs should be located in venues that limit play to times when alternative entertainment and recreation is available.[18] At the Cardinia Club, the bistro generally closes at 9 pm and so there is a six hour period after that when the gaming room is or could be open.
3. We find that neither of these two particular policies necessarily leads to the refusal of the application. Each is a policy and not a mandatory requirement. As has often been stated by the Tribunal, policy needs to be applied flexibly having regard to the particular circumstances.
4. We are reminded the clause 22.02 policy was introduced in March 2016, at least 18 years after permits were issued for a maximum of 105 EGMs at the Cardinia Club and after those EGMs were installed. We hesitate to apply the policy with a strong retrospective operation. The two policies are among many more policies for which the proposal responds in a positive way.
5. We need to take a balanced approach to policy responses.
6. The first policy relating to encouraging redistribution of EGMs away from particular areas would carry more weight if the addition of EGMs into such areas were prohibited by the Government using the powers to cap the number of EGMs in particular areas under the GR Act. We give some weight to the recent approval under the GR Act of additional EGMs at one of two hotels in Pakenham, both of which are located in areas with a SEIFA score lower than the area in which the Cardinia Club is located.
7. In relation to the second policy, we infer the lounge could be used after 9 pm and the boardroom could be used for private functions after 9 pm. In other words, after 9 pm there could often be other activities taking place at the Cardinia Club. It is unclear if the sports bar at the Cardinia Club is open past 9 pm.
8. Finally, the removal of conditions 9(b) and 10 from the Club Officer permit does not result in Club Officer being located in an inappropriate location or area or venue having regard to existing policy. As well, the 22 additional EGMs would not result in the municipal cap under the GR Act for Cardinia Shire being exceeded. No regional cap under the GR Act applies to the area in which the Cardinia Club is located. The density of EGMs per 1,000 adults is relatively low in the Cardinia Shire.
9. In conclusion, the location of the Cardinia Club for an additional 22 EGMs is an appropriate one having regard to the relevant scheme considerations.

1. Clause 52.28 of the scheme requires consideration of the social impact of the location of the proposed additional 22 EGMs at the Cardinia Club.
2. The two most relevant social impacts are potential for problem gambling and contributions to community organisations.[19]

1. An objective of gaming policy at clause 22.03-2 is 'to achieve positive social, economic and environmental outcomes in the location and relocation of gaming machines and avoid exacerbating the risk of problem gambling'.
2. Ms Peterson acknowledges that in the primary catchment of a 2.5 km radius from the Cardinia Club there is potential 'for a community ... that generally shares characteristics with those that are overrepresented as problem gamblers'. In holding that opinion, she relies on what she describes as a mixed socioeconomic status, having regard to 'general' indicators such as home ownership, median household income, education and mortgage stress relevant to the metropolitan average. She also relies on indicators relevant to problem gamblers in which, as the main examples, personal income and household income are lower than the metropolitan average.
3. Ms Peterson also acknowledges that there is a risk for some existing problem gambling at the Cardinia Club. In holding that opinion, she relies on the relatively high net machine revenue (NMR) at the Cardinia Club,[20] and the relatively low EGM utilisation rate.
4. In relation to utilisation rates, Mr Stillwell's evidence is that when between 50% and 70% of EGMs in a venue are being used, additional expenditure is foregone due to limited capacity and limited access to a preferred EGM. He adopted a mid-point of 60% and this is known as the peak utilisation rate.
5. The Racing Club carried out a utilisation survey every hour that the 83 EGMs Cardinia Club gaming room was open every day in the two weeks starting 15 August 2016. This was a total of 280 hours. Ms Peterson adopted a peak utilisation rate of 70% and found that only one hour of the total of 280 hours (0.3% of the hours) could be characterised as 'peak utilisation', being 8 pm to 9 pm on the first Thursday. We prefer to adopt Mr Stillwell's more conservative rate of a 60% peak utilisation. Taking this approach, 16 of the 280 hours (5.7% of the hours) could be characterised as peak utilisation.[21] We observe seven of those hours occur between 1 pm and 8 pm on the second Thursday.
6. We accept Mr Stillwell's opinion that the Cardinia Club currently has a 'low to moderate' utilisation rate.[22] We do so even taking into account potential for under reporting of use of an EGM in a non-independent survey, possible errors in counting, and uncertainty about whether an EGM 'reserved' by a temporarily absent patron is being used or not.
7. Despite Ms Peterson's opinion about some risk for some existing problem gambling at the Cardinia Club, our assessment must be about whether the proposal will increase that risk of problem gambling.
8. After considering the data and the opinions of the two experts, we find there is a low risk of any increase in problem gambling as a result of the proposal for the following main reasons.
9. First, we share the Tribunal's view in Pink Hills Hotel[23] that lower than average personal and household income has a doubtful relationship to problem gambling. Even if the relationship is a factor, albeit a weak factor, the Council's policy calls for consideration of potential risk in an area with a 5 km radius from the location of the EGMs. The demographic profile in this wider area has above average personal and household income and, hence, the risk must be lower taking the Council's preferred area into account.
10. Second, although the Cardinia Club has a daily NMR nearly 50% above the metropolitan club average, our inspection showed us that the Cardinia Club has more of the ambience of a family-oriented hotel venue. It does not have the ambience or characteristics of a mature clientele at a bowling, RSL or golf club venue. Hence, the more comparable daily NMR is that of a metropolitan hotel and the Cardinia Club has a NMR about 25% below that NMR. Hence, in relation to NMR at the Cardinia Club, we prefer Ms Peterson's opinion that the NMR is 'not high' to Ms Rosen's evidence that the NMR is 'very high'.[24]
11. Third, the proposal is to 'reinstate' 22 EGMs at the Cardinia Club. The potential for increased problem gambling is lower than if the EGMs were to be located in a new venue because there is existing access to EGMs at this and other nearby venues. According to the Council, 105 EGMs were installed and used at the Cardinia Club about 18 years before 22 of those EGMs were removed in June 2016. There is no evidence before us that the operation of 105 EGMs in that time resulted in any problem gambling outcomes. The VCGLR has concluded that the Racing Club 'has a good record of compliance with both gaming and liquor matters'.[25]
12. Fourth, a low to moderate EGM utilisation rate (including the low rate in the early hours of the morning) means the additional 22 EGMs will not have a significant impact on access to EGMs at any time. Therefore, to the extent that increased access to EGMs is a factor in increased risk of problem gambling, the resultant risk is low.
13. Fifth, Mr Stillwell's evidence is that the proposal will result in a relatively small increase in EGM revenue at the Cardinia Club and that, as a majority of the increase is from transferred expenditure from nearby venues including Club Officer, EGM spending in the municipal district will rise only between 0.6% and 0.8%.[26] As the potential for problem gambling losses would be a relatively small part of that increase, the overall risk is low.
14. Sixth, the Cardinia Club has approval under the GR Act for 105 EGMs. We infer that the net economic and social impacts of reinstating a total of 105 EGMs, including the impact of problem gambling from that number of EGMs, will not be detrimental to the well-being of the Cardinia Shire community.

1. Condition 9(a) of the Club Officer permit requires the Racing Club to enter an agreement to provide for:

An annual payment of $75,000 per annum (indexed to CPI) in cash donations to local community groups, charities and sporting clubs, to the satisfaction of the Responsible Authority.

1. The Racing Club does not seek to review this condition in the application. No agreement has yet been entered into.
2. No cash contributions are required to be made under permits that have been issued for the Cardinia Club. Nonetheless, the Racing Club makes voluntary contributions to community organisations. Ms Peterson's evidence is that in 2015 the Racing Club made what it described as 'community grants' of about $150,000, comprising about $100,000 to the Pakenham Football Club and between $200 and $20,000 to at least 18 community organisations including schools, churches and sporting clubs.
3. In response to questions, Mr Hodge conceded the annual contribution to the Pakenham Football Club is not voluntary because it is a 10 year obligation under the Racing Club's purchase of the Sports Club venue.
4. The Racing Club now proposes to accept an amended obligation to make a contribution in respect of the existing 60 EGMs at Club Officer and accept a new obligation in respect of the additional 22 EGMs at the Cardinia Club. It proposes to contribute $75,000 each year in respect of Club Officer and $75,000 each year in respect of the Cardinia Club (once any one of the additional 22 EGMs is installed) and to not include any contributions to the Pakenham Football Club in these figures.
5. The Racing Club's acceptance of these amended and new obligations is significant. At the moment, the obligation under the Club Officer permit could be met (with the consent of the Council) by continuing contributions only to the Pakenham Football Club. As proposed, there will be an obligation to contribute $150,000 to non-Pakenham Football Club community organisations (being 'local sporting groups, charities and sporting clubs') as soon as one or more of the 22 EGMs are installed at the Cardinia Club, in addition to the amended contributions in relation to Club Officer.
6. In the context of a gaming review, a community contribution may be considered a benefit.[27] The Tribunal has previously held that a condition requiring an agreement to make community contributions that is not opposed by the owner of the relevant land may be included in a permit.[28] Based on figures tendered at the hearing, the contribution per machines is relatively high.
7. The Racing Club's proposed community contributions are a material social benefit. Nonetheless, we find that drafting of the types of recipient organisations could be improved. We are not sure there is a useful distinction between a local sporting club and a local sporting group. The qualification of 'local' is uncertain, as drafted, for each of the three types. We consider there is no reason to exclude a local responsible gambling service provider.[29]
8. Ms Peterson's list of bodies funded in 2015 included show societies, religious organisations, local festivals, social and mental health bodies such as 'men's shed' groups, and agricultural organisations. We make no findings on whether each of these types of organisation is either a community organisation or is suitable. We simply find that the breadth of possible recipient groups could be wider, keeping in mind that the identity of recipients in any one year must be approved by the Council.
9. We will therefore specify the possible recipients in the condition as 'local sporting groups or clubs, local charities, local community organisations and local responsible gambling service providers'.

1. Having regard to the need to consider the social impacts of the location of the additional EGMs at the Cardinia Club, we find the risk of adverse problem gambling impacts is relatively insignificant and the impact of additional community contributions is materially positive. Accordingly, the overall social impact does not warrant refusal of the application.
2. The removal of conditions 9(b) and 10 from the Club Officer permit does not result in Club Officer having any different social impacts than it already has.

1. For most proposals to install EGMs, the potential positive economic impacts are those arising from new non-transferred gaming expenditure (other than that attributed to problem gambling), new jobs, new supply contracts and new investment in buildings and works.
2. Under these measures, we find the economic impact of the proposal is relatively insignificant.
3. It is expected the additional 22 EGMs will be sourced from locations outside the Cardinia Shire. Mr Stillwell's evidence is that new non-transferred gaming expenditure of 22 new EGMs at the Cardinia Club will be about $140,000 per year. There are unlikely to be any new jobs in the Cardinia Club gaming venue and no job losses at Club Officer.[30] There is no evidence of any significant new supply contracts associated with the additional EGMs. There is no material investment in buildings and works because the additional 22 EGMs can be accommodated in the existing gaming room.
4. The Racing Club asked us to take into account the economic benefits of the Racing Club generally to Pakenham and the Cardinia Shire, particularly in the investment of about $110 m at Tynong and the creation of about 180 jobs many of which are filled by Cardinia Shire residents. It also asked us to take into account the investment in the grass training track which will be made possible by the income from the 22 additional EGMs and the multiplier effects of additional training facilities.
5. We decline to take those benefits into account for several reasons. First, they are too indirect to the additional EGMs. There are many factors that might lead to the grass training track proceeding or not proceeding irrespective of the 22 EGMs at the Cardinia Club, such as positive or adverse changes to the Racing Club's overall financial performance or positive or adverse changes to the financing of the project and the Racing Club's required contribution to it. Second, there is no valid mechanism within this proceeding to require development of the grass training track. Third, Mr Hodge conceded that, if the application was refused, the Racing Club would consider other ways of proceeding with the grass training track proposal.
6. In conclusion, and having regard to the need to consider the economic impacts of the location of the additional EGMs at the Cardinia Club, we find those impacts to be insignificant.
7. The removal of conditions 9(b) and 10 from the Club Officer permit does not result in Club Officer having any different economic impacts than it already has other than the loss of transferred expenditure. There is no evidence that Club Officer will not be able to continue to viably operate its 60 EGMs.

1. The Council's grounds of refusal included an incorrect understanding that the Racing Club needed to demonstrate the application would result in a net community benefit. The Council accepts this understanding is incorrect. The net community benefit provision in clause 10 is not a prohibition to the grant of a permit if there is no net benefit, but is a policy to guide the exercise of discretion as to whether EGMs should be permitted or not.[31]
2. Our findings in relation to location of the Cardinia Club and the social and economic impacts of the additional 22 EGMs leads to our overall conclusion that the proposal responds appropriately to the clause 10 policy for balancing conflicting objectives and that the proposal is an acceptable (if not perfect) planning outcome.

1. The without prejudice conditions agreed by the Racing Club and the Council incorporate one unusual feature about which we have given further consideration. Those conditions include an obligation for the owner of the Cardinia Club to enter an agreement to secure community contributions for any one or more of the 22 additional EGMs if and when installed at the Cardinia Club. The impact and effect of the community contributions has been important to our overall findings about the proposal.
2. In ordinary circumstances, a condition of one permit to use or develop land A that the owner of land B (in this case, some kilometres distant) enter an agreement to make cash contribution in respect of the use or development of land B would raise possible concerns about the validity and reasonableness of such a condition.
3. Having regard to the various policies and provisions in the scheme to which we have referred in these reasons, we find the condition is not prohibited by statute,[32] is reasonably capable of being related to the implementation of planning policy,[33] and is therefore not invalid.
4. We also find the condition is not unreasonable because there is there is a clear nexus between the existing condition 9(b) and the amendment to condition 9(b) that we propose to make and because the obligation falls on the same owner. If the Racing Club was not the owner of the Cardinia Club land we would be unable to make this finding. The condition is not inconsistent with any other conditions on permits issued for the Cardinia Club.
5. The Council and the Racing Club did not oppose the condition requiring the agreement to be entered into within one month. We consider two months is a more realistic period to resolve possible drafting issues.

1. As we stated earlier in these reasons, this is an unusual case. The Tribunal's task is to review the Council's refusal to amend conditions on the Club Officer permit that impose an obligation to remove 22 EGMs at the Cardinia Club venue. The 22 EGMs have been removed.
2. The conditions include an obligation, before the EGMs at Club Officer are installed, to enter a registered agreement to apply to the VCGLR to amend relevant approvals under the GR Act for the Cardinia Club to reduce the maximum number of EGMs by 22. They also include an obligation to apply to the Council, no later than one month after the EGMs at Club Officer are installed, to amend relevant permits under PE Act to reduce the number of EGMs by 22 at the Cardinia Club to a maximum of 83.
3. We have not before seen obligations of this kind.[34] This has led to some complications in the assessment of the application, including clarifying what are relevant considerations and what are valid conditions. Nonetheless, our ultimate finding is that the proposal is an acceptable planning outcome.
4. For all the above reasons, we will allow the application. We will amend the Club Officer permit by deleting conditions 9(b) and 10 and amending the balance of condition 9, including condition 9(a).

[1] We have considered the submissions of all the parties that appeared, all the written and oral evidence, all the exhibits tendered by the parties, and all the statements of grounds filed. We do not recite or refer to all of the contents of those documents in these reasons.

[2] Condition 5 of the Club Officer permit.

[3] The decision makes it clear that the VCGLR understood the EGMs at Club Officer would be those relocated from the Cardinia Club and the Sports Club. The VCGLR did not impose a condition requiring removal of 22 EGMs from the Cardinia Club.

[4] The VCGLR's data shows that the number of EGMs at the Cardinia Club has now been reduced to 83.

[5] We were informed of various action taken by the Racing Club and the Council in relation to a draft agreement. Both consider the other largely at fault for the agreement being unresolved. It is unnecessary to make any finding about where fault lies.

[6] The complex history of permits issued under the Planning and Environment Act 1987 in relation to the Cardinia Club is illustrated in Pakenham Racing Club Inc v Cardinia SC [203] VCAT 712.

[7] The Racing Club has 165 EGM entitlements. 143 of these entitlements are attached - 83 to the Cardinia Club and 60 to Club Officer. 22 of these entitlements are unattached. The Cardinia Club is licensed for 105 EGMs with 83 permitted and installed. To install 22 more EGMs at the Cardinia Club would require VCGLR approval to modify a gaming machines area in an approved venue. The VCGLR would need to decide if any change to the EGM area would be suitable for the management and operation of the extra machines. Based on the submissions and our inspections, we find that no change to the EGM area is anticipated or would be required.

[8] Cardinia Planning Scheme cl 52.28.

[9] Melbourne CC v Kingfish Victoria Pty Ltd [2013] VCAT 1130 [40]-[41].

[10] Rozen v Macedon Ranges Shire Council [2011] VSC 583 [171]-[172]; Tulcany Pty Ltd v Knox CC [2003] VCAT 1627.

[11] Cardinia Planning Scheme cl 10; Prizac Investments Pty Ltd & George Adams Pty Ltd v Maribyrnong CC [2009] VCAT 2616 [138]-[140].

[12] The King David School v Stonnington CC [2011] VCAT 520.

[13] The King David School v Stonnington CC [2011] VCAT 520 [17].

[14] The possibility of 600 horses training at the racetrack is based on the Racing Club's estimate that up to 12 horses could be accommodated on each lot set aside for trainers.

[15] Cardinia Planning Scheme cl 52.28, cl 21.06 & cl 22.03.

[16] Ms Rosen agreed proximity to social housing was not in issue: statement of evidence [209]. Nonetheless, the Council asked us to take into account that there is a caravan park relatively close and to the north of the Cardinia Club and that some cabins and vans in the park are permanently occupied by disadvantaged people. There was no evidence as to whether the number of cabins or van might exceed 50. The submission was not put, correctly in our view, with great strength because such occupation, if it exists, cannot be characterised as social housing dwellings.

[17] Cardinia Planning Scheme cl 22.03-3, 'Appropriate areas', dot point 3.

[18] Cardinia Planning Scheme cl 22.03-3, 'Appropriate venues', dot point 3.

[19] We agree with the observations of the Tribunal in Bakers Arms Hotel Pty Ltd v Maribyrnong CC [2014] VCAT 1192 [65] that contributions are largely a social benefit.

[20] The daily NMR of $288 is for the year ending 30 June 2016 and for the 103 EGMs that were installed for almost the whole of that period. This NMR is higher than the two hotel gaming venues in Pakenham ($275 and $197), lower than the metropolitan hotel NMR ($372), and above the metropolitan club NMR ($201) for the same period.

[21] Mr Stillwell, statement of evidence [8.23].

[22] Mt Stillwell oral evidence was that he has found rates of about 15% in other venues, which he considers 'high'.

[23] Pink Hills Hotel Pty Ltd v Yarra Ranges SC [2013] VCAT 954 [94]-[95].

[24] Ms Bonnie Rosen, statement of evidence, [168].

[25] VCGLR, Decision for approval of premises under GR Act in relation to Club Officer, 27 November 2103 [9].

[26] Both Mr Stillwell and Ms Rosen agree that gross EGM expenditure in venues in Cardinia Shire in FY2016 was about $25 m. Hence, the gross increase will be about $140,000.

[27] Mount Alexander SC v Victorian Commission for Gambling and Liquor Regulation [2013] VCAT 101 [101]-[109].

[28] DSL Securities v Cardinia SC [2011] VCAT 1842 [100]-[104].

[29] The Racing Club cautioned against only specifying local responsible gambling service providers on the grounds that none might exist in any one year, thus precluding the making of any contributions. Provided the condition specifies such providers as one type of possible recipient body, the difficulty does not arise.

[30] Some of the application materials, not repeated or relied on at the hearing, referred to the possibility of some staff from the closed Sports Club being transferred to the Cardinia Club if the additional 22 EGMs are installed.

[31] Prizac Investments Pty Ltd & George Adams Pty Ltd v Maribyrnong CC [2009] VCAT 2616 [140].

[32] It does not fall within any of the specified prohibited types of conditions in s 62 of the Planning and Environment Act 1987.

[33] Allen Commercial Constructions Pty Ltd v North Sydney Municipal Council [1970] HCA 42.

[34] The Council now accepts, with the benefit of hindsight, that a better mechanism would have been a condition on the Club Officer permit to the effect that the permit does not come into effect until the relevant Cardinia Club permits are amended, in accordance with s 62(2)(b) of the Planning and Environment Act 1987.