Royal Hotel Benalla v Victorian Commission for Gambling Regulation (Occupational and Business Regulation) [2012] VCAT 1972

1. In Proceeding P2083/2012, the Tribunal declares that no permit is required under the Benalla Planning Scheme or the Planning and Environment Act 1987 for the proposal embodied in the applicant's permit application to the Responsible Authority P0068/11.
2. In Proceeding P3620/2011, direct that no permit issue on the ground that no permit is required.
3. In Proceeding B206/2011, the respondent's determination is set aside and there is substituted therefor a determination that the applicant's venue operator's licence for Royal Hotel, 2 Bridge Street, West Benalla ('the premises') be varied so as to increase the number of electronic gaming machines permitted at its venue from 20 to 30 upon the following conditions:
   • (a) The increase does not take effect until 28 days from this day.
   • (b) If the works to the premises as depicted on the plans to be endorsed pursuant to Planning Permit P0065/12 (the works) are not completed by 16 August 2014 (or such later date as agreed in writing by the respondent) this approval will lapse and the maximum number of electronic gaming machines that may be operated at the premises will revert to 20.
   • (c) The venue operator must advise the respondent as soon as the works are completed. If the respondent has not been advised prior to 16 August 2014 (or such later time as agreed in writing by the respondent) that the works have been completed, this approval will lapse and the maximum number of electronic gaming machines that may be operated at the premises will revert to 20.
   • (d) The respondent may, upon request by the venue operator, agree to extend the time that the additional 10 machines may be operated at the premises prior to completion of the works. That request must be made no later than 30 days prior to 16 August 2014. Any request for extension of time must include an explanation as to why the work cannot be completed by 16 August 2014.
   • (e) During the period of 10 years following the installation of the additional machines the venue operator will donate amounts totalling $50,000 per year to community and not-for-profit organisations. This annual amount of $50,000 will include an annual payment of $10,000 to Benalla Hospital and $10,000 to the St Vincent de Paul Food Share organisation. The balance of $30,000 will be distributed annually to community-based not-for-profit organisations.
   • (f) Should the contributions required by the last preceding paragraphs of the conditions not be made in their entirety in any 12 month period, the number of electronic gaming machines that may be operated at the premises will revert to 20.

John Larkins and Jason Kane, Counsel instructed by Wisewould Mahony Lawyers

1. Until about 20 years ago poker machines, or 'electronic gaming machines' as they are now called, were banned in Victoria. On 5 June 1991 the then Attorney-General introduced a bill known as the Gaming Machine Control Bill which would provide for the legalisation and regulation of electronic gaming machines in Victoria. This represented a major shift in the public policy of the State, following a change in the State's premiership. The outgoing Premier was a known opponent of the extension of gambling opportunities. His successor did not share those views. The Attorney-General, Mr Kennan, in moving the Second Reading of the Bill stated, inter alia:

I have pleasure in introducing legislation to provide the statutory base for a new industry in Victoria. With the introduction of electronic gaming machines in hotels and clubs, Victorians will be able to enjoy playing a variety of games in venues within their own State, and the tourism and hospitality industry will be stimulated, providing employment opportunities for many.

Hotels and clubs will no doubt adapt and upgrade their premises to take advantage of machines. This will provide stimulus to the building trades, not just big companies, but local small operations throughout the State.

The government believes that, whatever the potential economic benefits, the people of Victoria want proper assurances that the integrity and probity of the industry are beyond doubt.

The cornerstone of this legislation is the establishment of an Independent Gaming Commission, to be known as the Victorian Gaming Commission, which will regulate the industry and report to Parliament. The commission will be empowered to grant, cancel, suspend, alter and renew licences for all those concerned in the industry. It will have extensive powers of audit and investigation, and will work closely with other law enforcement agencies to ensure that the highest level of probity is maintained. The Bill provides severe penalties for illegal or corrupt behaviour. Staff of the commission will be employed pursuant to the Public Service Act.

A major safeguard against the use of undue influence in the industry is provided by the establishment of two gaming operators, Tattersall Sweep Consultation and the Totalizator Agency Board (TAB). These two operators will own all machines and will be required to establish on-line real-time systems to provide for instantaneous monitoring and reporting of all gaming machines, which must be linked to these systems.

Venue operators, who must be licensed under the Liquor Control Act, cannot own machines but will enter into arrangements with Tattersalls and the TAB to operate them. Venue operators and manufacturers are forbidden to enter into any commercial relationship with each other.

Machines can be obtained by Tattersalls and the TAB only from manufacturers and suppliers who have satisfied the commission that they are fit and proper persons to be placed upon a roll of manufacturers.

The Bill establishes a Community Support Fund which will receive a proportion of turnover invested on gaming machines in hotels. This fund will be applied first for the operational costs and research and development costs of the Victorian Gaming Commission. Of the funds then available, at least 70 per cent will be applied for sport and recreation purposes and families in crisis, with the remainder to be applied for the arts and tourism promotion.

1. The Attorney stated that the machines were required to furnish a return to users of 'not less than 80% of turnover'. Between two and four percent turnover was to be paid to venue operators and between two and four percent were to be retained by the gaming operator, that is Tattersalls and TAB (the Totalisator Agency Board now known as 'Tabcorp'). He said that the rest of the turnover would be paid to the Community Support fund, the Hospitals and Charities Fund and the Mental Hospitals Fund. The Attorney closed by remarking:

The government believes it to be of great importance that the impact on Victoria of the introduction of gaming machines be properly monitored. It has therefore charged the commission with the responsibility of establishing programs to monitor the social impact of gaming as well as the collecting of financial and economic data.

1. The speech is notable for the emphasis it places on economic benefits of the machines, the need to establish firm regulation to maintain probity and the benefits to the community in the support of various 'good causes'. There seems to be no mention of the phenomenon of 'problem gambling'. The matter is touched on only briefly with the reference to the establishment of programs to monitor 'the social impact of gaming'.
2. The regulation of electronic gaming machines is now part of a mammoth statute known as the Gambling Regulation Act 2003. The current reprint of this statute occupies two telephone book size volumes and a full binder in the collection of Reprinted Victorian Acts.
3. The issue of problem gambling which seems to have attracted so little attention in 1991 has now assumed far greater prominence in public discourse. The Commonwealth's Productivity Commission has conducted a number of investigations and reports into the gambling regulation regimes of the States and Territories. It seems to be generally accepted that perhaps 40% of the turnover on electronic gaming machines comes from 'problem gamblers'. In the Productivity Commission's analysis this group is constituted by approximately 1% of the adult population who are classed as problem gamblers and a further approximately 1% who are potential problem gamblers.
4. These proceedings which deal with a proposal by the applicant Royal Hotel Pty Ltd to increase the number of electronic gaming machines in the gaming room at its hotel in Benalla in the State's north from 20 to 30 raise a number of legal and factual issues under the Gambling Regulation Act 2003, the Planning and Environment Act 1987 and the Rural City of Benalla Planning Scheme; nevertheless the focus was primarily on the issue of problem gambling.
5. The applicant holds a Venue Operator's Licence to operate 20 electronic gaming machines at its premises being the Royal Hotel corner Bridge Street and Arundel Street, Benalla, adjacent to the Botanic Gardens. The hotel was built in the 1850s and is apparently on the Register of the National Estate as a Heritage Building. Bridge Street is the local name of the Midland Highway which runs through the Rural City of Benalla as it is officially known. The hotel is across the Broken River from the main business district of the city. The hotel includes a drive-through bottle shop in the car park at the rear. This bottle shop has been leased to and is run by an independent operator. The present buildings include the heritage listed hotel building of two storeys at the front with a one storey extension at the rear. The site has a frontage to Bridge Street West and Arundel Street with a total area of approximately 4,800 sq m.
6. In addition to the gambling room, the hotel includes a public bar, a bistro and a children's play area. It is located in a Business 1 Zone under the Benalla Planning Scheme.
7. Arundel Street runs approximately north-south and Bridge Street runs approximately east-west. The main frontage of the site is on the east side of Arundel Street. Immediately to the north on Arundel Street are residentially zoned properties. Across the road on the eastern side of Arundel Street is a formerly vacant building now occupied by a pump and irrigation suppliers, a vacant building previously operated as a veterinary clinic and dog grooming service, a Government office and St Joseph's Catholic Church. Further to the north on that side of Arundel Street is the Benalla Bowls Club which, as will appear, is also a gaming venue with no fewer than 50 electronic gaming machines.
8. On the south-east corner of Bridge Street and Arundel Street is a drill hall owned by the Commonwealth of Australia and used for a variety of community purposes. Diagonally opposite the hotel on the south-western corner is the Benalla Police Station. Also meeting Bridge Street at its intersection with Arundel Street and running from the south-west to the north-east is Thomas Street. The Police Station is on the corner of Thomas Street and to the south-west is found a group of shops, predominately supplying 'fast food', including a Chinese restaurant, a milk bar, fish and chip shop, a pizza parlour, an Indian restaurant and a picture framing shop. To the south of the intersection on Arundel Street are a butcher shop and a vacant shop formerly used as a homewares/gift shop.
9. From 1997 to the present, some 12 planning permits have been issued for various developments and uses on the site, principally relative to various extensions or renovations and signs. According to Mr Michael Barlow, a planning consultant engaged by the applicant, who gave evidence on its behalf in these proceedings:

It is apparent having regard to the various planning permits and accompanying endorsed plans ... that the extent of the area originally established for the purposes of a gaming room within the hotel has not changed from when it was first introduced in the 1990s through to the current existing arrangement.

He said the area ascribed to the gaming room has varied, as depicted on the several plans between 100 sq m and 115 sq m, with variation accounted for by calculation of 100 to 101 sq m as the floor area available to patrons and machines rising to 110 sq m when the cashier's counter is included and to 115 sq m when a small ancillary office was also included.

1. By Planning Permit Application No. P0068/11, Development Approval No. DA3093/5 under the Benalla Planning Scheme dated 25 May 2011, the applicant sought a permit under the Benalla Planning Scheme for 'building and works to existing hotel building and the installation of an additional 10 electronic gaming machines'. The Benalla Rural City Council issued a notice of refusal to grant a permit dated 9 November 2011 on the following grounds:

(1) The existing venue does not provide for a choice of non-gaming entertainment and recreation activities within the venue which will encourage patrons to use the additional gaming machines more readily and does not provide positive social or economic returns for the community.

(2) The site on which the additional machines will be located is in proximity to areas of high gaming vulnerability making the additional machines readily accessible to 'at risk' members of the community.

(3) The proposed design and layout of the gaming machine area including the new smoking area will encourage gamers to stay for longer periods of time thus increasing potential for social harm.

(4) The proposal is not consistent with the provisions of the Planning and Environment Act 1987 objectives, State Planning Policy and Local Planning Policy Frameworks.

(5) The proposal is inconsistent with Council's Amendment C21 which defines the location and nature of proposed sites considered suitable for additional gaming machines.

(6) The grounds for objection are considered persuasive enough to warrant refusal of the application.

1. The Rural City of Benalla is a rural municipality whose centre is located 192 km north-east of Melbourne. The municipality occupies 2,352 square kilometres with borders to the municipalities of Mansfield, Wangaratta, Strathbogie, Moira and Greater Shepparton. The 1999 Census population for the entire municipality was 13,980 with some 9,420 people living in the urban centre and some 4,560 living in the surrounding rural area. According to projections by the Department of Planning and Community Development for 2002, the population of the municipality has risen to 14,090 within its urban centre including 9,640 persons in the rural surrounds 4,450. There seems to have been no significant population growth between 2006 and 2011 and population growth is below the average for country Victoria.
2. There are three gaming venues in the Rural City of Benalla. The Benalla Bowls Club at 25 Arundel Street, and therefore in close proximity to the Royal Hotel, has 50 electronic gaming machines. The Benalla Golf Club in Mansfield Road has 25. When these numbers are added to the 20 now installed at the Royal Hotel, the total electronic gaming machines in the municipality stands at 95. In the financial year 2010 to 2011, some $2,617,07 was spent at the machines in the Bowls Club. $1,013,144 was spent on the games machines at the golf club and $1,673,986 was spent on the 20 machines at the hotel. This means the total expenditure on electronic gaming machines in the municipality was $5,304,216.
3. As at 30 June, according to Mr Quick, one of the applicant's witnesses, there were 8.38 electronic gaming machines for every thousand adults in the municipality, a figure which exceeds the average for country Victoria of 6.52 electronic gaming machines per 1,000 adults. In 2010 to 2011 the net expenditure per adult (total losses by players) in Benalla was $468 compared with $507 average for rural Victoria generally.
4. The Royal Hotel has previously had as many as 35 electronic gaming machines. In 2006 ten of the then 30 machines were removed and redeployed. As Mr Kennan explained in his Second Reading Speech in 1991, the model adopted in Victoria for electronic gaming machines was to have them owned and operated by two established gaming companies, namely Tattersalls and TabCorp. Under that regime it was open to one of these two operators to make a determination that a machine or machines would be more profitable in one location than in another. It was as a result of such a judgment by TabCorp that, in June 2006, ten machines were removed from the Royal Hotel.
5. The duopoly held by Tattersalls and TabCorp has now been abolished as a result of amendments to the Gaming Regulation Act. Venue operators now own their own machines. They have the responsibility of supplying and repairing the machines but are not at the mercy of the sort of redeployment that affected the Royal Hotel in 2006.
6. On 17 October 2012, the Benalla Rural City Council issued Permit P0065/12 to Royal Hotel for the alterations and additions to the hotel building proposed by the hotel, proposed in association with the increase in the number of gaming machines sought. The works include a first floor addition to the existing children's play area and the addition of a meeting room at the first floor level in the hotel at its Bridge Street frontage. The hotel says that it will proceed with these development works if, and only if, it is successful in these proceedings.

1. The Victorian Commission for Gambling Regulation determined to refuse the application under the Gambling Regulation Act 2003. The Commission constituted by Chairperson, Mr F.B. Thompson and Deputy Chairperson, Mrs J. King concluded their determination at paragraph 58 stating:

Having considered all of the evidence and submissions in this matter, we are not satisfied that in the circumstances of this application the net economic and social impact of approval will not be detrimental to the well-being of the community of the Rural City of Benalla. The application is therefore refused.

1. In Proceeding B206/2011, the applicant seeks a review of that determination.
2. In Proceeding P2083/2012, the applicant seeks a declaration under Section 149A of the Planning and Environment Act 1987 that no permit under that Act is required for its proposal to install 10 additional electronic gaming machines.
3. The applicant in Proceeding P3620/2011 seeks a review of Council's determination to refuse the permit sought in Application P0068/11 if, contrary to what is its now primary contention, a permit is required. The applicant now seeks a permit for the installation of the additional gaming machines if such permit is required. Mr Brewer has been joined as a party in the two planning proceedings seeking to uphold Council's refusal of a planning permit for the additional machines and presumably contending that a planning permit is required for such an increase in gaming machine numbers.
4. The Council supports the determination of the Commission.

1. On the planning issue relative to the hotel's proposal, the Royal Hotel relied on evidence from Mr Michael Barlow, a qualified town planner. Mr Barlow said that:

Having assessed the relevant documentation, I have concluded that the proposal does not require a planning permit for the use and installation of the 10 additional EGMs [that is Electronic Gaming Machines].

1. Mr Barlow said that, until 18 October 2006, there was no requirement under the planning regime for a permit to install or use gaming machines in a licensed hotel in a 'restricted area' if that 'restricted area' did not exceed 25% of the floor area where liquor might be consumed. This changed with the inclusion of what is Clause 52.28-2 of the Benalla Planning Scheme, which required a planning permit for installation or use of gaming machines. Further sub-clauses of the scheme, Clause 52.28-3 and 52.28-4 impose prohibitions on EGMs being located within shopping centres and strip shopping centres. Mr Barlow noted that the permit application in this case sought a permit for the 'installation' of the extra machines, It did not seek a permit for their 'use'. He referred to the Tribunal's decision in McKinnon Hotel Pty Ltd v Glen Eira City Council [2011] 413 and the decision on appeal from that determination in McKinnon Hotel Pty Ltd v Glen Eira City Council [2011] VSC 627 which, he said, determined the matter in favour of the permit applicant in that case based on existing use rights. He said similar existing use rights existed here because the gaming room in question was established prior to the adoption of the current permit requirement on 18 October 2006. It was as of right because the gaming room occupied less than 25% of the floor area where liquor might be consumed. The gaming area remains unchanged, he said. Initially, he said this gaming area accommodated 35 machines and, until June 2006, accommodated 30 machines. No relevant planning permit imposed any conditions or restrictions on the use of the gaming machine. Mr Barlow said:

Given these circumstances and the decision of the Supreme Court it follows that no planning permit is required to install and use the additional machines proposed for the existing gaming venue.

1. Mr Barlow said that, if contrary to his preferred view, a permit was required, planning policy nevertheless favoured its grant.
2. He said the purpose of Clause 52.28 was:
   • To ensure that EGMs are situated in appropriate locations and premises.
   • To ensure social and economic impact of the location of EGMs are considered.
   • To prohibit EGMs in specific shopping complexes and strip shopping centres.
3. The decision guidelines were to be found, he said, at Clause 65 of the scheme which required a responsible authority to consider

- The State Planning Police Framework and the Local Planning Policy Framework, including the Municipal Strategic Statement and Local Planning Policies

- The compatibility of the proposal with adjoining and nearby land uses.

- The capability of the site to accommodate the proposal.

- Whether the gaming premises provide a full range of hotel facilities or services to patrons or a full range of club facilities or services to members and patrons.

1. Mr Barlow referred to the existing numbers of EGMs in Benalla, noting that the 'preponderance' of them were in clubs. He said it was necessary to strike a balance between providing appropriate access to EGMs 'whilst ensuring that the harm from EGMS is effectively managed'. Mr Barlow did not deal with the issue of the supply of additional EGMs to Benalla, confining himself to the matters which he regarded as raised by Clause 52.28 of the Planning Scheme.
2. Mr Barlow noted a prohibition on gaming machines in strip shopping centres which he said was to be found in Clause 52.28-4 of the Planning Scheme. The definition of strip shopping centre in that clause, he said, was as follows:

A strip shopping centre is an area that meets all of the following requirements

• It is zoned for business use;
• It consists of at least two separate buildings and at least two separate and adjoining lots;
• It is an area in which a significant proportion of the buildings are shops;
• It is an area in which a significant proportion of the lots abut a road accessible to the public generally;

But does not include the Capital City Zone in the Melbourne Planning Scheme.

1. Mr Barlow conceded that the subject land was in a Business 1 Zone, meeting the first criterion of the definition and the second criterion likewise was satisfied. He said however that this was not an area in which a significant proportion of the buildings were shops. He said, whilst there were shops on the south-west corner of Bridge Street and Arundel Street, the other corners were non-shop uses. The last criterion as to abutment was also met. Mr Barlow said, in his view, the existence of the small group of shops at the south-east corner of Thomas and Arundel Streets might be defined as a strip shopping centre in its own right, but in his view it could not make the other corners of the major intersection a strip shopping centre because:
   • All of the other corners are occupied by non-retail or non-shop activities (with the exception of the stand-alone drive through bottle shop at the rear of the existing hotel).
   • The currently vacant former pet and dog grooming property is not located within a Business Zone and therefore cannot be said to be a vacant shop.
   • The overall floor area and site area occupied by the other activities at the major intersection are greater than the area occupied by the shop activities.
   • A strip shopping centre is well separated and distinguishable from the other activities in the nearby area.
2. Mr Barlow also referred to proposed Amendment C21 to the Benalla Planning Scheme which he said had been advertised between 10 February 2011 and 11 February 2011 which would

- amend Clause 28.08-5 by providing a link to the Council's Gambling Planning Framework Benalla Rural City 2012 and Local Policy and introduce some strategies relating to the location of electronic gaming machines;

- introduce Clause 22.07 for permit applications to install or use a gaming machine or to use land for gaming;

- introduce Gambling Planning Framework Benalla Rural City 2012 as a reference document and Clause 21.10 and proposed Clause 22.07;

- amend the schedule to Clause 52.28 to nominate locations where EGMs are prohibited.

1. He said the independent Panel considering this amendment reported in June 2012 a recommendation that:

Amendment C21 to the Benalla Planning Scheme should be re-considered by the planning authority having regard to the Panel's findings. The Panel, and all submitters, must be advised whether revisions will be proposed to the amendment and whether any further exhibition will be undertaken.

1. Mr Barlow, in his report of August 2012, said that the Council had not 'at this time considered the recommendation of the interim Panel report'. Mr Barlow quoted at some length from the findings of the Panel, continuing:

In my view it is not possible to consider the Amendment C21 materials as 'seriously entertained' given the Panel commentary. Until such time as a new amendment is exhibited in the community area again given the opportunity of review, I believe the Benalla Rural City has no policy with respect to gaming.

Therefore, he said, the State Planning Policy Framework and Local Policy Framework should be regarded as establishing a 'neutral' setting with respect to the location of gaming machines and gaming venues in Benalla.

1. He said, given the surrounding commercial, residential and recreational uses at this site and the fact that it was neither in an activity centre nor part of a strip shopping centre or a designated shopping centre, the site had the advantage that it was not sensitive to either the:

Off-site amenity impacts that are associated with licensed premises nor the potential for convenience gaming.

Therefore, said Mr Barlow, the proposal was 'compatible with the adjoining and nearby land uses'.

1. Mr Barlow said that, since the machines were to be installed in the existing gaming room, it would not increase in size and it represented approximately 21.5% of the total area of the floor which is publicly accessible licensed floor space. The additional machines could be accommodated 'without compromising any other facilities or services on offer within the hotel'.
2. Mr Barlow said, in his opinion, the hotel offered a range of facilities for its patrons, including the following:
   • a public bar;
   • an on-premises TAB linked to the public bar;
   • a large combined bistro facility with additional outdoor dining opportunities;
   • an outdoor seating area associated with the public bar overlooking the Botanic Gardens;
   • a smaller lounge adjacent to the existing gaming venue;
   • the existing gaming venue.
3. Even with 30 machines, he said, this would remain 'a relatively small venue'. In comparison to other larger venues it would not exhibit the 'anonymity' of a larger venue. Mr Larkins and Mr Kane, on behalf of the hotel, submitted that a contention of Mr Appudurai, on behalf of the Responsible Authority, that the hotel's existing use rights should be confined to the number of EGMs installed as at 18 October 2006, viz. 2006, should be rejected. They said a similar submission was rejected by the Tribunal in Bendigo Stadium Limited v Greater Bendigo City Council [2012] VCAT 1698. They submitted that, whilst the Bendigo Stadium case was not an authority binding the Tribunal, it should nevertheless be followed because the presiding member, Deputy President Dwyer, was 'a very senior legal member of the Tribunal with particular expertise relating to existing use rights' and consistency was important in administrative decision making. They said that this Responsible Authority's rejection of the approach taken by the Tribunal in the Bendigo Stadium case, was a refusal to accept the umpire's decision, therefore, they said, I should determine that no permit was required.

1. Mr Appudurai on behalf of the Council, said that I was required to approach my task in the planning elements of this proceeding in light of Sections 60 and 84B of the Planning and Environment Act 1987 and the leading provisions of the Benalla Planning Scheme, in particular Clauses 11, 52.28 and 65. He said that those provisions, upon their proper construction, required:

Consideration of the appropriateness of the location of additional EGMs at the hotel, in circumstances in which the 'usual' planning considerations are neither prominent nor even an issue at all.

1. He said the amenity impacts created by the installation of additional EGMs were 'neither outwardly tangible nor readily ascertainable, even after they have pervaded the lives of those affected'.
2. He urged me to adopt the analysis by Senior Member Liston in SJ Beaumont Investments Pty Ltd v Warrnambool City Council [2012] 464 at [10], [15] and [28] - [32]. He noted that that determination had been the subject of a remitter to the Tribunal by the Supreme Court but he said this was 'not because of any concern with Mr Liston's interpretation of those tests'. He concluded, 'in the event that the Tribunal is not satisfied under the 'no net detriment' test, it must follow that 'net community benefit' had not been established'.
3. Mr Appudurai relied on the evidence of town planner, Mr Robert Milner. Mr Milner, commenting on the applicant's planning evidence, said:

While I accept that a permit can issue for the installation and use of gaming machines on the site, because in the Fourth Schedule to Clause 52.28 of the Benalla Planning Scheme no strip shopping centres are specified, I nonetheless conclude that the area in which the site is located is by definition a 'strip shopping centre', in the meaning of Clause 52.28, and because of this it is an inappropriate location to site gaming machines.

He said the definition of strip shopping centre was to be found at Clause 52.28-4. He said that the requirement in the definition that the zoned land in the immediate area comprised a significant proportion of shops, was satisfied. He referred to the Tribunal's decision in Melkat Pty Ltd v Campaspe Shire Council [2012] VCAT 657. This reasoning, he said, demonstrated that the popular meaning of the word 'shop' was the appropriate one to employ in this definition rather than any defined meaning in the Scheme. Mr Milner said that on this view the following were to be regarded as shops:

• the Fine Wear shop;
• the butcher's shop;
• the fish and chip shop;
• the pizza shop;
• the artist frame shop; and
• the bottle shop.

As to what is now the pump shop which was vacant at the time that Mr Milner wrote his report, he noted that the building was designed with display windows to both street frontages 'and would be suitable as a shop'. Mr Milner said that there were approximately 60% of the buildings used as, or would be perceived as, shops 'and this constitutes a significant proportion'. He said the fact that they were separated by roads did not alter that situation.

1. Mr Appudurai suggested that I should not accept the reasoning adopted by the Tribunal in McKinnon Hotel v Glen Eira City Council. Mr Appudurai noted that the present planning control at Clause 52.28-2 excludes the requirement for a permit where the premises were an approved venue under the Gambling Regulation Act on 18 October 2006 and 'the maximum number of gaming machines for the approved venue on 18 October 2006 is not exceeded'. He said that this was the sort of restriction bounded in a planning control that Osborn J had in mind in Stonnington City Council v Southern Property Corporation Pty Ltd [2006] VSC 435 at [31]. The effect, said Mr Appudurai, was that the existing use right allowed a continuation of the use of the gaming area as it had been before 18 October 2006, but not for the intensification which the hotel's proposal would entail. This would be the case, he said, for any other variety of intensification of use such as extension of hours of trading, increase in number of patrons etc. The existing use right was circumscribed, he said, by 'all conditions or restrictions which applied to that activity or use; ie both planning and gambling controls'. The effect of that clause in the scheme, said Mr Appudurai 'is that the exemption is both a protection of the existing use rights established and the limitation on the intensification of any such rights'. He continued:

The Council adopts this view for the reason that there could not be any situation, to which Clause 52.28-2 applied, where the activity of gaming (lawfully conducted, as authorised under the Gambling Act) would not have the benefit of existing use rights.

1. Mr Brewer said that he disagreed with Mr Barlow's interpretation. He disagreed with Mr Barlow's opinion that the other three corners were occupied by non-shop uses. He said, what was now the pump shop 'was previously occupied by a kitchen and cabinet display shop at the front and a furniture upholsterer at the rear'. Therefore, he said, in his view, the intersection should be identified as a strip shopping centre.
2. Mr Appudurai noted that the hotel placed reliance on the Tribunal's decision in Club Italia Sporting Club Inc v Brimbank City Council [2011] VCAT 2378 and Hoppers Crossing Club Limited v Wyndham City Council [2012] VCAT 927. In the Club Italia case, he said, 'the Tribunal appears to have declined to entertain any argument seeking to depart from the Tribunal's decision in McKinnon Hotels', therefore, I took him to say this case added nothing to the McKinnon Hotels' case. The Hoppers Crossing Club case was determined in this respect 'founded upon consent of the Council and the club'.
3. Finally, he said that, if these arguments are not accepted, this was not the sort of intensification which the general principal of existing use rights contemplated. He referred to Shire of Perth v O'Keefe [1964] HCA 37; (1964) 110 CLR 529 and City of Nunawading v Harrington [1985] VicRp 64; [1985] VR 641.

1. Clause 52.28-6 of the Benalla Planning Scheme prohibits the use or installation of gaming machines in a 'strip shopping centre'. The definition of strip shopping centre is set out at paragraph [30] above.
2. It will be seen that central to the definition just quoted is the concept of what constitutes a 'shop'. The definition of that land use term for the purposes of the Planning Scheme is as follows:

Land used to sell goods or services, or to hire goods. It includes the selling of bread, pastries, cakes or other products baked on the premises. It does not include food and drink premises, gambling premises, landscape gardening supplies, manufacturing sales, market, motor vehicle, boat, or caravan sales, postal agency, primary produce sales, or trade supplies.

1. This definition excludes 'trade supplies'. The definition of trade supplies is as follows:

Land used to sell by both retail and wholesale, or to hire, materials, tools, equipment, machinery or other goods for use in:

or local government, government departments or public institutions.

This exclusion definition is significant because it appears to extend to the pump shop which is immediately across the road from the hotel. The pump shop appears to be premises used to sell by wholesale or retail or to hire equipment used in landscape gardening or primary production.

1. In accordance with these definitions, Mr Barlow appears to be correct in his statement that, insofar as Mr Brewer contended that the pump shop should be regarded as a 'shop', this cannot be accepted if the definitions in the Planning Scheme are to be applied. Mr Milner, who gave evidence for the Responsible Authority, did not agree with Mr Brewer that the pump shop, even although in premises which are constructed in classic shop style with display windows, should be regarded as a shop.
2. The intersection on which the hotel is situated is a complex one: on one of the corners is a drill hall used for a variety of community purposes. This is clearly not a shop. The hotel is not a shop, whether one applies the scheme definition or some popular view as to what is or is not a shop. Mr Milner would include in the popular definition of shop:
   • the Fine Wear shop;
   • the butcher's shop;
   • the fish and chip shop;
   • the pizza shop;
   • the artist frame shop; and
   • the bottle shop.
3. He excluded from the definition of shop:
   • the Royal Hotel;
   • the Chinese and Indian restaurant; and
   • the vehicle exhaust business.
4. His calculation was therefore that approximately 60% of the buildings 'are used or would be perceived as shop and this constitutes a significant proportion'.
5. If, in accordance with the views expressed by the Tribunal in its determination in Melkat Pty Ltd v Campaspe Shire Council [2012] VCAT 657, it is proper to apply a popular view of what a shop is rather than the definition to be found in the Planning Scheme, I wonder why it would not be appropriate to apply the popular definition of what a strip shopping centre is. Applying the popular view of what a strip shopping centre is, based on the evidence before me and my inspection, I would have not the slightest doubt that this hotel is not situated in a strip shopping centre. Whilst there might be 'strips' of things that are arguably shops in the general vicinity, they are across a very busy intersection and separate and distinct and in no way part of the same group of occupancies as the hotel.
6. The most favourable view of things for those objecting to the hotel's proposal is that the Scheme definition of strip shopping centre applies, but that a popular view rather than the Scheme definition of 'shop' governs. Applying that view, in my opinion the hotel is not to be regarded as in a strip shopping centre. I accept that, if one treats the entire area abutting the complex highway intersection on which the hotel is located as a single area, one might come to the view that a significant proportion of the occupancies in that area are shops. In my view, however, the premises across the highway to the north-east and east are in no sense to be regarded as part of the same area as the area in which the hotel is situated. In my view, the restrictions or prohibition relative to gaming machines in strip shopping centres are simply not engaged.

1. Section 6(3) of the Planning and Environment Act 1987 provides as follows:

(3) Subject to subsections (4) and (4A), nothing in any planning scheme or amendment shall -

(a) prevent the continuance of the use of any land upon which no buildings or works are erected for the purposes for which it was being lawfully used before the coming into operation of the scheme or amendment (as the case may be); or

(b) prevent the use of any building which was erected before that coming into operation for any purpose for which it was lawfully being used immediately before that coming into operation; or

(c) prevent the use of any works constructed before that coming into operation for any purpose for which they were being lawfully used immediately before that coming into operation; or

(d) prevent the use of any building or work for any purpose for which it was being lawfully erected or carried out immediately before that coming into operation; or

(e) require the removal or alteration of any lawfully constructed building or works.

1. It will be seen that this provision specifically preserves and protects existing use rights pertaining to land and precludes planning schemes from taking those existing use rights away. The sub-section extends, not merely to existing use rights which preceded the existence of a Scheme, but also those which precede an amendment to a scheme. The present terms of Clause 52-28-2 requiring a permit in certain circumstances for the installation or use of electronic gaming machines were added by an amendment which took effect in 2006. Any construction of this clause of the Planning Scheme in a manner inconsistent with Section 6(3) of the Planning and Environment Act would render it ultra vires. In accordance with established canons of construction, such a construction should therefore be avoided. Clause 63.01 of the Planning Scheme provides as follows:

An existing use right is established in relation to use of land under this scheme if any of the following apply:

�� The use was lawfully carried out immediately before the approval date.

�� A permit for the use had been granted immediately before the approval date and the use commences before the permit expires.

�� A permit for the use has been granted under Clause 63.08 and the use commences before the permit expires.

�� Proof of continuous use for 15 years is established under Clause 63.11.

�� The use is a lawful continuation by a utility service provider or other private body of a use previously carried on by a Minister, government department or public authority, even where the continuation of the use is no longer for a public purpose.

1. It is common ground, as far as I understand it, that the first dot point requirement has been met and that, as at October 2006, the gaming room at the hotel had been in use as such since the 1990s. The reduction in numbers of machines from 30 to 20 had taken place as recently as June 2006, only a few months before the relevant amendment to the Scheme. Clause 63.02 of the Scheme describes how an existing use right is to be characterised.

If a use of land is being characterised to assess the extent of any existing use right, the use is to be characterised by the purpose of the actual use at the relevant date, subject to any conditions or restrictions applying to the use at that date, and not by the classification in the table to Clause 74 or in Section 1, 2 or 3 of any zone.

1. It will be seen that, in accordance with Clause 63.02 of the Scheme, the characterisation of the existing use right which is preserved by the Planning and Environment Act, Section 6(3) and Clause 63 of the Scheme, is to be by reference to 'the purpose of the actual use at the relevant date' So, in the seminal decision of the High Court of Australia Shire of Perth v O'Keefee [1964] HCA 37; (1964) 110 CLR 529, 535, the Court was considering the extent of an existing use right for premises which had been used for pottery making. Kitto J with whom Menzies and Owen JJ concurred said:

In the case of premises used for pottery making, however, it seems to me to be clear that while changes in methods and designs would be immaterial a use of the premises for making anything other than pottery would be, in a substantial and relevant sense, a use for a different purpose.

1. Accordingly, for preservation of existing use rights, it is the continuity of purpose which is of key importance, not a judgment as to the intensity of the use. So in City of Nunawading v Harrington [1985] VR 642, land which was zoned Residential by a Planning Scheme was in the view of the Full Court of the Supreme Court, Kaye, McGarvie and Marks JJ, lawfully used to bake bread in circumstances where, at the time the new scheme came into effect, no baking was taking place with the premises used as a distribution depot and the bakery equipment being merely maintained. This use, in the view of the Court, was use for the purpose of a bakery, if not as a bakery. That use clearly did intensify when baking operations were resumed. Nevertheless, the existing use right was held to be effective to render the baking operations a legal use. This point was made by Deputy President Dwyer in McKinnon Hotel Pty Ltd v Glen Eira Council [2011] VCAT 413 at [21] where the learned Deputy President stated:

It is now a well-established principle of existing use rights that a use for which existing use rights are established may reasonably intensify over time (provided it is for the same purpose) without losing the protection afforded by s 6(3). In this case, the 'use' of additional gaming machines within the existing gaming room would comprise an intensification of the existing use within such a principle. The new permit requirement in clause 52.28-2, to the extent it introduces a 'use' control over gaming machines, cannot fetter the reasonable intensification of the McKinnon Hotel's existing use rights for the purpose of a hotel that includes the activity of gaming machines within the hotel's existing gaming room. To the extent a permit could conceivably be refused, the permit requirement in clause 52.28-2 would impose a fetter on those existing use rights, and does not therefore apply to the McKinnon Hotel's current proposal.

1. Another example of the preservation of existing use rights, despite an intensification of use, is to be found in the decision of the High Court of Australia in Norman v Gosford Shire Council [1975] HCA 15; (1975) 132 CLR 83. The use in question there was the winning of top soil from a parcel of land. Production continued for some 20 years from 1952 to 1972 with the work done by hand and on a very small scale. A planning ordinance came into force in 1968. From 1972 the value of production expanded almost tenfold with bulldozers used in lieu of the former hand extraction. Mason J (a he then was) with whom Barwick CJ and Jacobs J concurred, said:

[6] To my mind the crux of the matter is that at all times after 1st January 1972, as before, the use to which the land was put was the removal of topsoil and filling for the purpose of sale. The nature of this use was not altered because there was an expansion in production by reason of increased demand or because efficient machines were employed in production in place of manual labour or because excavations made in the course of removal assumed the appearance of "quarry faces" whereas before they wore a different aspect.

[1975] HCA 15; (1975) 132 CLR, 83, 86

1. Mr Appudurai said an existing use right did not extend to an intensification of the use and that the protection of existing use rights created by Section 6(3) of the Planning and Environment Act did not extend to intensification of those uses. He cited no authority in support of this proposition. As I have sought to demonstrate, it is inconsistent with the decision of the Full Court of the Supreme Court of Victoria in Harrington's case and the High court's decision in Norman's case. It is certainly inconsistent with the decision of Mr Dwyer in McKinnon Hotel Pty Ltd, though Mr Appudurai submits I should not follow the learned Deputy President's decision on this point.
2. In the present case, Clause 52.28-2, insofar as it makes a specific exception for the intensification of a use by the installation and use of further machines, seems to create its own special transitional provisions which create a result different from the one the general principles as to existing use rights would yield. In the McKinnon Hotel case Mr Dwyer said at paragraph [22]:

I do not consider that this conclusion makes the exemption in the second dot point of clause 52.28-2 redundant. That exemption reads as a transitional provision, protecting gaming machines already in existence in premises or that may not have the benefit of existing use rights, but not beyond the maximum approved under gaming legislation.

1. I am not entirely clear as to what scenario the learned Deputy President envisages as providing proper work for the 'second dot point' of the clause to do. Given the nature of existing use rights, that is rights which are preserved by reference to their purpose rather than their intensity, in my view, to interpret Clause 52.28-2's second dot point in the way contended for by Mr Appudurai would be offensive to Section 6(3) of the Planning and Environment Act. Whatever its purpose or rationale, this second dot point cannot diminish the existing use rights which are protected by Section 6(3) of the Statute and recognised by Clause 65 of the Scheme.
2. It should also be noted that the restriction in Clause 52-28.2 extends, not merely to the use of electronic gaming machines, but to their installation. In McKinnon Hotel Mr Dwyer concluded that, in circumstances where there were pre-existing use rights for electronic gaming machines, a permit was nevertheless required for the installation of additional machines. At paragraph [39] he remarked:

I would not go so far as the applicant to say that these outcomes are 'absurd', but they do create a planning control of limited utility where existing use rights are established. It is not however for the Tribunal to change this outcome under the guise of statutory interpretation. Rather it is a matter for the regulators.

1. Mr Dwyer's determination which he made, based upon an application for declaration under Section 149A of the Planning and Environment Act 1987, was the subject of an appeal to the Trial Division of the Supreme Court determined by Osborn J [2011] VSC 627. On appeal, His Honour noted that there are occasions where the installation of an item would fall within the concept of 'development' as defined in the Planning and Environment Act. He referred to the installation of automatic teller machines and satellite dishes which might involve building. In the case of installation in the colloquial sense which entailed no more than plugging in an electronic gaming machine, this would not constitute development and it in his view stood outside the control established by Clause 52-28.2 of the Planning Scheme. It would only be in the case of installations which fell within the concept of development that the planning control would require a permit to be obtained in circumstances where there were existing use rights.
2. In Club Italia Sporting Club Inc v Brimbank City Council [20-11] VCAT 2378 Member Dalia Cook applied the reasoning of Mr Dwyer in the McKinnon Hotel case.
3. In Hoppers Crossing Club Limited v Wyndham City Council [2012] VCAT 927 Mr Martin made a declaration under Section 149A of the Planning and Environment Act that the club had an existing right that included:

The use and installation of gaming machines within a restricted area occupying 19% of the gross floor area of the premises where liquor may be consumed.

1. Applying the same reasoning as Mr Dwyer, I reject the invitation to depart from the reasoning in McKinnon Hotel, first, because in my respectful opinion the decision is correct and secondly, because in any event the Tribunal should, in the interests of comity and predictability apply the learned Deputy President's reasoning. Balmford J in Anteden Pty Ltd v Glen Eira City Council [2000] VSC 366; (2000) 16 VAR 334, 344 said at [26]:

The Tribunal should always be conscious of the importance of consistency in decisions of questions of law, which is fundamental to any system aimed at the attainment of justice.

She reversed the determination of a member who failed to follow a previous Tribunal determination, albeit one given in the Planning Division of the Administrative Appeals Tribunal. The determination which Her Honour said should have been followed was given by a judicial member in that instance. Nevertheless, the McKinnon Hotel case was given by a very senior member of the Tribunal, and, in my view, the same considerations indicate that I should follow in any event. Interestingly enough Her Honour was also dealing in the Anteden case with existing use rights and Section 6(3) of the Planning and Environment Act 1987.

1. It follows that, since this proposal entails no more than the operation of additional gaming machines within the established gaming room and no extension beyond that established gaming area, no permit is required.

1. Electronic Gaming Machines are regulated by Chapter 3 of the Gambling Regulation Act. Section 3.1.1 of the statute states the purpose of that Chapter as follows:

(1) The purpose of this Chapter is to establish a system for the regulation, supervision and control of gaming equipment and monitoring equipment with the aims of -

(a) ensuring that gaming on gaming machines is conducted honestly; and

(b) ensuring that the management of gaming equipment and monitoring equipment is free from criminal influence or exploitation; and

(c) regulating the use of gaming machines in casinos and other approved venues where liquor is sold; and

(d) regulating the activities of persons in the gaming machine industry; and

(e) promoting tourism, employment and economic development generally in the State; and

(ii) accommodate those who gamble without harming themselves or others.

(a) provide for the allocation of gaming machine entitlements in order to maximise the financial and social benefits to the Victorian community within the regulatory framework applying to the allocation of entitlements;

(b) promote a competitive gaming industry with the aim of providing financial and social benefits to the Victorian community.

1. It is also appropriate to note the objectives of the Gambling Regulation Act as set out in Section 1.1(2) as follows:

(ii) accommodate those who gamble without harming themselves or others;

(f) to promote tourism, employment and economic development generally in the State.

1. Electronic Gaming Machines are subject to a licensing regime which was administered in this case by the Victorian Commission for Gambling Regulation. As a result of recent amendments, this body has been reconstituted so as now to have a role in liquor licensing as well. The Royal Hotel was already the holder of a venue operator's licence under Chapter 3 of the Gambling Regulation Act. It made application to the Commission for an amendment to its licence pursuant to Section 3.4.17(1)(b) of the Gambling Regulation Act to vary the number of gaming machines at the approved premises, being the hotel in Bridge Street, Benalla from 20 to 30. The considerations which the Commission was required to take into account appear at Section 3.4.20 of the Act. This is a lengthy provision, but only a couple of paragraphs are of central significance in the present proceeding. They are as follows:

(1) Without limiting the matters which the Commission may consider in deciding whether to make a proposed amendment, the Commission must not amend a venue operator's licence unless -

(b) if the proposed amendment will result in an increase in the number of gaming machines permitted in an approved venue, the Commission is satisfied that the regional limit or municipal limit for gaming machines for the region or municipal district in which the approved venue is located will not be exceeded by the making of the amendment; and

(c) if the proposed amendment will result in an increase in the number of gaming machines permitted in an approved venue, the Commission is satisfied that the net economic and social impact of the amendment will not be detrimental to the well-being of the community of the municipal district in which the approved venue is located;

1. Clause 3.4.2(1) empowers this Tribunal to carry out a review of the Commission's determination.

1. The Commission published its determination on 11 November 2011. It found that the City of Benalla was, according to a number of measures, a disadvantaged community. It observed at [48] of its determination 'the possibility of problem gambling and its attendant negative effect on the community is ever present.' In the following paragraph it continued:

The Commission has an obligation to be extremely cautious of the community, or relevant parts of the affected community, exhibit signs of socio-economic difficulty and we note in this context that there is no dispute between the parties in this matter in relation to the assessment and characterisation of the relevant socio-economic factors.

1. At paragraph [53] the Commission observed that the economic benefits urged by Royal Hotel were 'quite modest'. The Commission continued, 'in terms of tipping the socio-economic balance in this application, the Commission does not give these intended improvements [that is, those that are characterised as 'quite modest'] much weight.' Insofar as Royal Hotel had proposed to construct an 80 seat function room, the Commission commented that it was 'not yet at the feasibility stage and it would be premature to factor it in'. Insofar as there was a proposal to make philanthropic contributions to non-profit organisations in Benalla over the years out to 2022, the Commission said that the business could change hands 'and if this were to occur, the new proprietor may well have a totally different view'. In the final paragraph [58] the Commission said:

Having considered all of the evidence and submissions in this matter, we are not satisfied that in the circumstances of this application the net economic and social impact of approval will not be detrimental to the well being of the community of the Rural City of Benalla. The application is therefore refused.

1. The proposal which was before the Commission differed materially from the one that is before me. The proposed annual contributions to community non-profit organisations was of the order of $10,000 in contrast to the $50,000 which is proposed in the proceeding before the Tribunal. Moreover, the renovations to the hotel which are now the subject of a planning permit are far further forward in their formulation than was the proposal for the 80 seat function room considered by the Commission as not being at the feasibility stage.

1. Mr Larkins and Mr Kane contended that the test was whether the net economic and social impact of approving the additional 10 EGMs would be detrimental to the well being of the City of Rural Benalla as a whole. The determination of the application did not turn on whether its success would:
   • Incrementally increase the risk of problem gambling within the City of Rural Benalla or within urban Victoria; or
   • Reduce the gaming expenditure of other gaming venues within the City of Rural Benalla, specifically the Benalla Bowling Club; or
   • Reduce the tax that the State Government receives from the Royal Hotel; or
   • Result in too many functions/meeting rooms within Benalla.
2. What was required, they submitted, was a balancing of factors and this was the process which the Commission had undertaken.
3. They said, the evidence, which had been called on behalf of Royal Hotel, established the success of the application would result in a positive impact on the community viewed as a whole (bearing in mind that it is not necessary for a positive result to be achieved, merely that the impact on the community of the municipality is not negative).
4. They said the Tribunal was not called upon to determine whether the introduction of electronic gaming machines into Victoria was a wise decision. They referred to the Tribunal's determination in Bendigo Stadium Limited v Greater Bendigo City Council [2012] VCAT 1698 at [14].
5. They said it was necessary to bear in mind that electronic gaming machines were legal and that some people in the community enjoyed playing them. This is a recreational pursuit for those people and recreational gamblers enjoy choice and diversity of playing a range of EGMs. They said the demand for modern, family-friendly entertainment, dining and social facilities would continue to increase and the Benalla community would benefit from the modernised hotel with a range of entertainment options. The proposed benefits going along with the hotel's proposal had been revised since the Commission had made its determination. In particular, the present proposal would include the upgrade of the existing children's play room to create more play area with existing rooms on the first floor of the hotel to be converted into a function/meeting room which would be made available to any community group or mothers' group completely free of charge. A permit for these works had now been issued. These building works would cost $480,000. A letter from a builder, indicating willingness to commence work in March 2013, had been put into evidence. The proposed annual donations to community not-for-profit organisations would be increased from $10,000 to $50,000 per year. The hotel, they said, would accept a condition on the approval of the additional EGMs ensuring that the building works are completed.
6. They said that Victoria had a comprehensive legislative framework requiring responsible gambling measures to be introduced in gaming venues. They said the Gambling Regulation Act 2003 required venue operators to implement an improved self-exclusion program and an approved responsible gambling code of conduct.
7. They said that Royal Hotel acknowledged this and was 'acutely aware, that any application for EGMs increases the risk of problem gambling'. They relied on the evidence of Mr Walker to demonstrate that the hotel had an established history of commitment to adhering to legislative guidelines and industry practice in relation to responsible gambling and the operation of EGMs and it implemented measures which ameliorate the potential affects on problem gambling and the risk of problem gambling. The evidence showed they had long-term gaming staff that were familiar with the regular players at the EGM and had engaged Leigh Barrett and Associates to provide on-going responsible gambling professional development for the staff at Royal Hotel. The evidence, they said, showed a relatively low utilisation rate for the machines at the hotel. They relied on the evidence of the hotel's witness, Mr Clyne, that the level of transfer expenditure and the Government's responsible gambling initiatives meant that there would be a relatively modest increase in gaming expenditure in Benalla of approximately 2.27% if the application were approved. Since this was a modest increase, assuming it to be a negative, it did not counterbalance the important benefits that the application would bring to the Rural City of Benalla.
8. The effect of Section 3.4.20(1)(c) was to implement what was described as the 'no net detriment' test. They referred to the Tribunal's decision in Bendigo Stadium v Greater Bendigo City Council and the decision of the Court of Appeal in Macedon Ranges Shire Council v Romsey Hotel Pty Ltd [2008] VSCA 45; (2008) 19 VR 422, 434-5 [42] - [43].
9. They submitted that, in applying the 'no net detriment test', the following matters should be noted: the gaming industry could not stand still 'existing venues should be subject to competition, which drives renewal and higher standards of service'. Competition, they said, was an objective of the Gambling Regulation Act. They said it was difficult to weigh social benefits against economic detriment and therefore the judgment must 'at least in substantial part, be intuitive'. They said that the future could be predicted by reference to the past and Royal Hotel was a:

Well managed hotel that is committed to customer care, contributing to the local community in a meaningful way in implementing best practice in the operation of EGMs.

This record of integrity should weigh as a positive, they said.

1. They expressed the present application was to 'top up' the number of machines rather than to establish a new venue. The analysis therefore should be of the 'incremental impact'.
2. They said that the proposal would cater 'for peak times'. The extra EGMs were not dependent on a claim that they were needed at times other than peak times. Success would entail a relatively modest increase in gaming expenditure and the operators and staff had a long history of adhering to legislative guidelines and industry practices.
3. They referred to the Tribunal's decision given by Morris J (as he then was) in Branbeau Pty Ltd v Victorian Commissioner of Gambling Regulation [2005] VCAT 2606 and the Bendigo Stadium case at [23] - [25].
4. They said that, whilst councils were given an important role under the statute, they did not 'have a licence to dictate the terms of the decision, or to advise arguments simply based upon a moral objection to gambling or gaming machines, or to disregard empirical facts'. They referred to a determination of a predecessor to the Commission in the matter of Werribee Football Club Incorporated (28 March 2001). What was required, they said, was a balancing of considerations. They again referred to the determination of Morris J in the matter of Branbeau. In striking that balance it was appropriate, they said, to consider what would happen in the future. They referred to the Commission's decision in the matter of Club Italia Sporting Club Inc, 15 December 2010, paragraphs [49] - [57].
5. They said the following positive economic benefits would flow from the proposal:

(a) A building program that will improve the facilities of the Hotel.

(b) Increased donations to the community and employment opportunities as a result of this proposal.

(c) A new function/meeting room that will be made available to any community group or mother's group completely free of charge.

(d) Management and staff that has a long and established history with the operation of EGMs.

(e) An increase in complimentary expenditure within the Benalla community due to the building program.

(f) Increased access to gaming facilities for residents and providing greater convenience for those who choose to participate in this legitimate recreational activity.

(g) An increase in donations to local community and sporting clubs.

(h) The creation of construction employment during the renovation of the Hotel and also employment opportunities once the renovation has been completed.

(i) The Royal Hotel is not located within an area that would promote or encourage convenience gaming.

(j) This proposal will not result in an increase in the number of gaming venues in Benalla, so access to gaming venues within the region will not change.

1. They said there were also positive social and economic impacts from the proposal and this was in accordance with the analysis of Morris J. in Branbeau.
   • Increased choice for recreational gamblers;
   • Greater convenience for recreational gamblers;
   • Increase in net economic expenditure within the municipality as a whole;
   • Upgrading of a Club's/Hotel's facilities for the benefit of all patrons, not just patrons who chose to play gaming machines;
   • An increase in support for local sporting and community groups;
   • A return of a large proportion of gaming revenue to the Victorian community in the form of taxation.
2. They noted the evidence of one of Royal Hotel's directors to the effect that the hotel would not be able to carry out the building works or make the contributions without the approval of the additional machines. They said, according to Mr Wood, the Hotel would 'make an undertaking to the Tribunal that it will provide further financial contributions to local community and sporting groups if this application is successful'.
3. As to the matter of problem gambling, they noted that a key objective of the Gambling Regulation Act was to minimise harm caused by problem gambling. They noted that the objective was to minimise, not to prevent or eliminate it completely. They referred to the evidence of the applicant's witness, Mr Quick, to the effect that an increase in gambling does not necessarily mean an increase in problem gambling. The increase, they said, created merely a potential problem.
4. They said, I should accept the evidence of Mr Walker as to the responsible gaming policies of the hotel. The gaming room was relatively small and would not be enlarged, and problem gamblers could not 'hide', being known to the gaming staff.
5. In any event, they said, the hotel provided 'a wide range of entertainment and eating activities'. They referred to the evidence of director Mr Cowle and the gaming room staff, Ms Horan and Ms Hanann, showing the Hotel's commitment to best practice and care for customers, implementing strategies for responsible gambling and alcohol consumption.
6. They said that an increase in the number of EGMs would not attract additional problem gamblers. They referred to the Tribunal's decision in the Bendigo Stadium case at [52]. They said Council, in its opposition to the proposal, has produced no evidence that its success would likely increase problem gambling.
7. They said that access to a greater choice of EGMs was, in itself, a benefit, and this had been accepted by a number of determinations by the Commission and the Tribunal. They referred to Ocean Grove Bowling Club Inc v VCGR [2006] VCAT 1921 [16] and Kilsyth and Mountain District Basketball Association v VCGR [2007] VCAT 2 [40] and Prizac Investments Pty Ltd v Maribyrnong City Council [2010] VCAT 2616 [217].
8. They said, the post-August 2012 regime 'has provided a new set of challenges for EGM operators in Victoria'. They referred to the decision of the Commission in the matter of an application by Italia Sports Club Inc (July 2012) [24].
9. They submitted, I should accept the analysis of applicant's witness Mr Clyne. The market in Victoria for gaming machines was now 'mature', therefore a high proportion of expenditure would be transferred from existing operators rather than the generation of new business. They conceded that prediction on these matters is, at best, an inexact science.
10. They referred to Drayton Manor Pty Ltd v Greater Bendigo City Council [2011] VCAT 626 and Branbeau at [52].
11. They said that the hotel and the Commission were agreed, based on a comparison of the evidence of Mr Clyne and Mr Gill, that the likely increase in gross expenditure at the hotel would be in the range of $328,400. Fifty percent of that would be transferred expenditure and therefore, the net increase in EGM expenditure in the Rural City of Benalla would be in the range of $164,000 to $200,000. Whilst this position was agreed before the Commission, it was not agreed in the hearing before the Tribunal. They said, Mr Clyne's evidence should be accepted. They said, he took a conservative approach and estimated that approximately 60% of the expenditure created by the additional EGMs would be transferred. They said, Mr Gill's disagreement with Mr Clyne's evidence was that there would be a higher level of expenditure at the hotel than Mr Clyne allowed for. Mr Clyne estimated the expenditure at $301,374; Mr Gill at $412,500. Mr Clyne estimated 60% transfer, Mr Gill estimated 50% transfer. The result was that new expenditure according to Mr Clyne's estimate, was $120,550 per annum but $206,250 according to Mr Gill, this represents 2.2% on Mr Clyne's estimate of Benalla's total gaming expenditure or 4% according to Mr Gill's estimate. They said 'therefore the difference in the predictions is approximately 1.7%'. They said it was submitted that:

The Tribunal should be cautious to depart from the findings of the Commission on the issue of expenditure as it is an expert body experienced in considering gaming predictions and the extent of transferred expenditure.

Whichever evidence the Tribunal accepted, they said, the new expenditure for Benalla would be in a relatively small amount. This increase in expenditure should not in itself be regarded as a detriment to the community because 'a person who gambles socially and voluntarily is not incurring a net detriment to the community'. Such a person is enjoying a recreational activity. They said, Mr Quick's evidence in support of the application was that gaming expenditure in Benalla is at $468 per adult compared with an average per adult in country Victoria of $507.

1. They said that competition with the Benalla Bowls Club should not be regarded as a negative. Competition, they said, was intrinsically a good thing. The fostering of competition was one of the objectives laid down in the Gambling Regulation Act. They referred to the finding made by the Commission on 5 July 2005 that the addition of six extra machines for the bowling club was 'a modest increase' and will not have any significant impact on problem gambling. Primarily, they said, Mr Clyne's evidence was that only a small percentage of expenditure would be transferred from the bowls club. This was supported, they said, by Mr Quick.
2. There should be no concerns, they said, about so called convenience gambling. The Royal Hotel was separated and isolated from the Benalla Shopping Centre (it is located in the centre of the city on the other side of the Broken River). They said, the Hotel's location is 'not an area of concentrated activity'. They denied that it was on an ant trail 'where large numbers of pedestrians pass-by each day'. The Hotel, they said, was relatively isolated from commercial and other sensitive land uses and the Business 4 Zone 'prohibits a shop from being established within close proximity of the hotel'. They said, the Hotel was not in a strip shopping centre.
3. They said that conditions could be framed based on those employed in the Club Italia and Bendigo Stadium case, which would secure the promised benefits if the application was successful.

1. Mr Brewer appeared to oppose the hotel's application. He is a retired chief superintendent of police who has lived in the north-east of Victoria since 1981. I have already noted some of his contentions relative to the planning issues and did not accept his view that, in the circumstances, the Hotel should be regarded as situated in a strip shopping centre. As to the issues arising under the Gambling Regulation Act, Mr Brewer said that Benalla had a low socio-economic rating being 37th out of 41 municipalities in Victoria. He said, there was a large housing ministry area 1.25km south-west of the hotel. There was also, between this locale and the Hotel, 'a very high concentration of Government former commission housing homes'. Many of the residents in the housing ministry area, he said, had no motor transport and relied on walking or using taxis to come to the central business district of Benalla for shopping. He said that one could see family groups walking along Bridge Street towards the Hotel and patronising what he described as the strip shopping centre. Some of these residents, he said, patronised the bottle shop and the TAB agency within the Hotel. He continued:

I am strongly of the view that further installation of an additional 10 gaming machines (EGMs) would create problem gaming and that there is no justification for the approval of any more machines let alone the current 10 the Royal Hotel has applied for.

Success of the application would lead to an increase in the numbers of EGMs to 9.10 per 1,000 adults in Benalla. This would place Benalla close to the Government-imposed regional cap and in the same situation, therefore, as Ararat, Warrnambool and Ballarat. There was, he said, no lack of supply of gaming options in Benalla. Availability of machines was relatively high, given below-average expenditure per EGM, according to findings made by the Commission in its November 2012 decision, he said.

1. Contributions to the Government Community Fund by the hotel would be to a state-wide fund with no earmark for any benefit for Benalla, and therefore should not be counted as any community benefit. In contrast, the Benalla Bowls Club of which he is a member, has provided up to 30% of total revenue as a community benefit. The benefit, by way of increased profit would not necessarily stay in Benalla because 'the main shareholder/director and owner of the hotel - does not reside in Benalla'. He said that those who entered the hotel from its north-east corner were required to walk through the gaming area, even if they were on their way to the bistro or other areas of the hotel.
2. He said that those who wished to gamble at clubs such as the bowls club or the golf club were required to sign in. In the hotel there was no such requirement, therefore gaming venues in hotels were more easily accessible. Success of the application would provide a big financial gain for the hotel but a loss for the bowls club. He noted that the hotel's own figures indicate a $468 transfer from other venues. He referred to a report in The Age newspaper of 21 September 2012 stating that gaming expenditure in regional Victoria had fallen some 25% in real terms, according to figures issued by the Victorian Commission for Gambling and Liquor Regulation. Mr Brewer said that in his active life in the community of Benalla:

I have been advised of the opinions that the majority of residents of Benalla are against the installation of any more poker machines (EGMs) within Benalla - whether it be at the Royal Hotel, the bowls club or the golf club'.

1. Council was represented by Mr Appudurai and contended that the Commission's determination should be affirmed. He said that, when regard was had to the evidence of Council's witnesses: Mr Colin Gill on gaming expenditure; Mr Rob Milner on planning and socio-economic impacts and Mr Graham, Chairman of the Benalla Bowls Club, it would be seen that the 'no detriment' test laid down by the Gambling Regulation Act could not be met and that the application for additional gaming machine entitlements should be refused.
2. The Tribunal's functions, said Mr Appudurai, were to reach the correct or preferable decision and to determine the matter de novo. He referred to Transport Accident Commission v Bausch [1998] 4 VR 249, 263 per Tadgell JA. The central question for determination, he said, was whether the 'no net detriment' test under Section 3.4.20(1)(c) of the Gambling Regulation Act was met. He referred to Macedon Ranges Shire Council v Romsey Hotel [2008] VSCA 45; (2008) 19 VR 422, 434-5 [42] and [43] where the Court was dealing with the 'no net detriment' test under Section 3.3.7(1)(c) of the Act. He said that, whilst there was no formal burden of proof lying upon the Hotel in the proceeding, it did have a burden of persuasion. Unless it could point to material which would satisfy the test, none might be found by the Tribunal in the application and the application would fail. He referred to New Theme Pty Ltd v Victorian Casino and Gaming Authority [2002] VSC 80 (Eames JA and O'Bryan A JA). He said it was clear that:
   • The person who seeks the benefit of being able to install new, or an increased number of, EGMs must persuade the decision-maker of the relevant outcome under the applicable section; and
   • In the present case, persuade the Tribunal that the 'no net detriment' test has been satisfied.
3. He said, the Commission had accepted that there was a burden of persuasion in its determination in the matter of Club Italia Sporting Inc (15 December 2010) at [57]. Here, said Mr Appudurai, the Tribunal could not be satisfied that there would be no net detriment.
4. He said:

The overarching objectives of the GR [viz. Gambling Regulation] Act, when considered as a whole, clearly supports such a cautious approach.

1. He said the negative impact on the Bowls Club of this proposal must be given consideration in the application of the test. He said 'nothing advised on behalf of the hotel amounts to any support for the proposition that the 'correct or preferable' decision is one which leads to an approval for the amendment sought'. He referred to the Romsey case [2008] VSCA 45; (2008) 19 VR 422, 437 [52] and [53]. Mr Appudurai said that, in this passage the Court of Appeal stressed that, if this Tribunal were to depart from the Commission, it was incumbent upon it to explain why, and to come to grips with the reasons which led the Commission to its determination. The Commission was an expert body and proper consideration should be given to its determination.
2. Mr Appudurai said a cautious approach was necessary. He characterised the Hotel's case on social impact of increased numbers of EGMs and the effect on problem gambling as 'stabbing in the dark'. The Commission, he said, had reached the correct determination. It had the same evidence before it as was placed before me.
3. The evidence relied on by the Hotel from Mr Quick did not, according to Mr Appudurai, meet or deal with the adverse affect of this proposal upon the Bowls Club.
4. As to the 'benefits' by way of community donations and building works were concerned, Mr Appudurai submitted that the approach by imposition of conditions adopted by the Tribunal in the Bendigo Stadium case was not appropriate. The benefits were to be provided in the future and, according to those conditions, there was a potential forfeiture of the entitlement to operate EGMs if the benefits were not bestowed. This necessarily meant, said Mr Appudurai, that there would be a period before the delivery of the benefits where no benefit at all would be derived, and there remained a possibility that the benefits never would be provided. Therefore, these alleged benefits being in futurity, should not be considered for the purposes of the no net detriment test.
5. He said, on the Hotel's own case, there were no major peaks of demand which required the success of this application. For this application to be successful would, in effect, undo the advantage which had been given to the Bowls Club some years ago when it was allowed to increase its number of EGMs from 44 to the present 50.
6. Mr Appudurai noted that the parties were in agreement as to the characterisation of the Benalla community. There was a statutory cap on the number of EGMs in the municipality at 107 representing 10 machines for each 1,000 of population over the age of 18 which was, he said, a merely 'broad brush' limit. The present level he said was 7.57 not 8.38 as postulated by the hotel's expert, Mr Clyne. Mr Appudurai submitted that Mr Clyne's analysis was not transparent. Mr Clyne's analysis on the level of expenditure that would be transferred from existing venues as distinct from generated anew ought not to be accepted. Problem gambling he said, unlike alcoholism, was not visible. The concerns expressed by the Productivity Commission were valid. They should be given appropriate weight even to the rejection of this application.

1. The Commission was represented by Mr Brown of Counsel. According to Mr Brown, the Tribunal's task was simple. It needed to consider:

(a) What are the likely economic impacts of the proposal;

(b) What are the likely social impacts of the proposal;

(c) As a composite, are the likely economic and social impacts neutral or better; and

(d) If yes to (c), in the exercise of its discretion having regard to the scope, subject matter and purpose of the legislation, is it persuaded that it should approve the application?

1. He referred to the no net detriment test at Section 3.4.20(1)(c) of the Gambling Regulation Act and the Commission's determination in the matter of An application by the Maryborough Highland Society Incorporated [9]. This required striking of a balance between the legality of EGMs and the knowledge that they can cause harm to some communities and members of society.
2. According to Mr Brown, the no net detriment test required a consideration of:

(c) the net effect of those impacts on the well being of the relevant community.

1. He referred to the Court of Appeal's judgment in the Romsey case [2008] VSCA 45; (2008) 19 VR 422, 437. It was necessary, he said, for the social and economic effects of the proposal to be determined and weighed so as to determine the net effect. It was necessary, he said, to consider the marginal impact of the proposal, if implemented. He referred to the determination of Morris J in Branbeau v VCGR [2005] VCAT 2606 [47]. Mr Brown said, the weighing of each benefit or disbenefit must be made 'in light of the scope, subject matter and purpose of the act'.
2. As to the objectives, he noted Section 1.1(2) of the Act which established an objective of minimising harm caused by problem gambling, whilst accommodating those who gamble without harming themselves or others. There was also, according to the same sub-section, an objective of the promotion of tourism, employment and economic development. The same objectives were, he said, to be found at Section 3.1.1 as objectives specifically of the Chapter of the statute dealing with electronic gaming machines. This Chapter had an objective allocating gaming machine entitlements to maximise the financial and social benefits to the Victorian community under an appropriate regulatory framework. There was also a statutory purpose of promoting a competitive gaming industry. He referred to six principles which were stated by the Minister in his Second Reading Speech for the 2003 Act.
   • developing and reinforcing the government's commitment to responsible gambling through measures that assist and protect problem gamblers and those at risk of becoming problem gamblers, their families and the wider community.
   • developing and maintaining the state's commitment to the highest standards of probity for gambling service providers;
   • accepting gambling is a valid activity for many Victorians who are entitled to expect ongoing high standards of service, transparency and accountability from the gambling sector;
   • ensuring that the legitimate financial benefits of gambling (both private and public) are transparent, appropriately recognisable and fairly distributed to the Victorian community;
   • that to the extent possible consistent with the other principles, gaming service providers operate in a competitive environment; and
   • establishing proper consultative processes to ensure that appropriate information is given to, and input is received from, the wide variety of persons interested in gambling including stakeholders, affected parties and, to the widest extent possible, the broader Victorian community.
3. He noted that one of the purposes of amending the statute in 2000 to abolish the duopoly which had previously existed, was to promote a competitive gaming industry. This was a stated purpose of the amendment appearing in the Minister's Second Reading Speech. It was proper to interpret the legislation in light of that. He referred to the Interpretation of Legislation Act 1984, Section 35(b)(ii). Therefore, he said, the task of determining should be approached on the basis that the provision and use of electronic gaming machines were lawful activities which nevertheless caused harm to some people. The benefits of these processes should be spread throughout the community and competition between venues should be promoted. He concluded 'in other words, there should be a precautionary approach to approval, as embodied in the no detriment test'.
4. Mr Brown said the Hotel needed to persuade the Tribunal but:

The standard of satisfaction should not be equated with a curial standard based on probabilities, as the Tribunal needs to assess the future and not the existence of a current or past fact

and 'administrative decision makers should not be distracted by curial standards of proof'. He referred to Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259, 282-3 per Brennan CJ, Toohey, McHugh and Gummow JJ and Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 366-8.

1. Mr Brown noted that there was evidence from two experts as to the likely expenditure and transferred expenditure to be generated by the proposal if implemented. Mr Clyne's estimate was $300,000 and Mr Gill at the upper end was $425,000. Mr Brown noted that Mr Clyne conceded in cross-examination that the figures would have been closer, that is, his estimate would have been higher had he not concentrated on the first year of operation, rather than the normal use of machines for a year. The range of new expenditure, according to Mr Clyne, would be $120,212,500, for Mr Gill at the higher end of his estimate. Mr Brown noted the difficulty in estimating transferred expenditure. He referred to the determination of Deputy President Dwyer and Mr Sibonis in the Bendigo Stadium case at [33] where the learned Tribunal members said:

Future economic predictions are a matter of opinion and they are as much an art as a science.

1. Mr Brown said that the proportion of new expenditure to current expenditure in the municipality was in the range of 2 to 4%. Mr Brown said:

It would be reasonable and appropriate for the Tribunal to proceed on the basis that the likely expenditure for the LGA [that is municipality] will be in the order of $120,212,500.

1. He noted the degree of uncertainty about transferred expenditure and that 'it will likely be very small as a proportion of existing expenditure', therefore, transferred expenditure was 'not a matter that has significant bearing on the issues to be determined by the Tribunal'.
2. He said, the material showed that the municipality suffered 'from high relative economic and social disadvantage'. Its score according to the SEIFA (Socio-economic Indexes for Areas) placed it in the bottom 25% of rural Victorian municipalities. On the other hand, expenditure on gaming machines in Benalla was lower per adult compared to the Victorian average.
3. The issue of accessibility as a factor for problem gambling, said Mr Brown, was 'equivocal'. He referred to the Productivity Commission's comment on page 14.38 of its report that small changes to accessibility would make little difference to the overall accessibility of machines. It noted that at page 14.6 the Commission had said:

Even small changes to already high levels of accessibility apparently still [have] effects.

1. According to Mr Brown, the Tribunal has to determine 'the marginal impact of the proposal on the municipality'. He said, therefore, that evidence called on behalf of the applicant by Mr Stilwell, that Benalla Bowls Club would be better off as a result of the 2009 amendments abolishing the duopoly should be regarded as irrelevant. It was implicit, said Mr Brown, in the evidence of Mr Stillwell that potential revenue for the Bowls Club would drop $140,000 per annum if the proposal were implemented. The Commission regarded Mr Stillwell's assessment of the drop in club income or turnover as preferable to the estimate made by Mr Graham, the club chairman, at $350,000 per annum. Mr Brown continued:

On the other hand, it is a clear purpose of the Act and the option of entitlements to encourage competition between the providers of EGMS and it would be perverse if the net detriment were to act as a shield for community clubs from competition in the industry.

Therefore, he said, whilst an adverse impact on the Bowls Club was a relevant consideration, 'the weight given to this factor should be low in light of the competition aims of the Act'. In his written outline Mr Brown produced a tabular version of likely impact which I set out below:

• $50,000 to be donated to local community groups annually

• Increased economic activity
• Increased complementary expenditure
• Increased employment in construction phase and ongoing in gaming room

• Low weight due to prospect will be of modest size (in terms of net change given the high rate of transfer) and of short duration only.
• Discounted by possibility that some of the increase will come from problem gamblers

• Important factor in light of statutory purposes and benefits of competition

• Possibility of increased incidence and impact of problem gambling

• High relative disadvantage
• Mitigated by:
  • Current exposure/density is high
  • Relatively small venue
  • Appropriate RSG policy
  • Sound operator culture

• Low weight as only a benefit for those who will use the specific facilities to be upgraded at the venue
• Offset by risk of increased problem gambling.

• Increased gaming opportunities for those who enjoy gaming

• Low weight as only a benefit for those who use egms
• Offset by risk of increase problem gambling
• Some risk of convenience gaming
• No evidence from the Council about community attitude
• Many non-gaming venues in the municipality

• Possibility of increased incidence and impact of problem gambling

• High relative disadvantage
• Mitigated by:
  • Current exposure/density is high
  • Relatively small venue
  • Appropriate RSG policy
  • Sound operator culture

1. Mr Brown said, therefore, the Commission had considered that caution should be exercised 'due to the socio-demographic statistics of Benalla' and the possibility of increased problem gambling and further, it found the positive elements of the proposal would not outweigh the negative. The proposed cash contributions were not sufficiently significant and the suggested renovations were either insignificant or not developed to the point where much, if any, weight could be given to them. He stressed the obligation which this Tribunal had, in accordance with the principles as stated by the Court of Appeal in the Romsey case, to give to the Commission's determination and give a clear explanation of any disagreement which it had and why it disagreed.
2. Mr Brown concluded by noting that the renovations proposed 'have greater scope in certainty' and the cash donations have increased in size and certainty.

1. I generally accept the analysis of the issue put by Mr Brown on behalf of the Commission.
2. Whilst there is much to be said for a precautionary approach in these gaming matters, the true precautionary approach would be to continue the ban which existed in Victoria until just over 20 years ago upon electronic gaming machines and their predecessors, the mechanical poker machines. Cynics at the time suggested that the exclusion of these machines from Victoria was dictated in the decision-making of some Governments, not so much by the desire to protect the community from problem gambling, but rather to entrench the share of the gambling dollar available to, for instance, thoroughbred horse racing. Meanwhile, large numbers of Victorian citizens travelled to locations in New South Wales and elsewhere such as Moama to 'play the pokies'. Whatever the virtues of this approach may be, the State has turned aside from it two decades ago. The legislation to which reference has been made requires a balancing of factors. I agree with Mr Appudurai that, in coming to grips or attempting to come to grips with the issue of problem gambling, decision-makers are doing no more than 'stabbing in the dark'. This only goes to show how difficult it is to come by reliable data on these difficult issues. The element of 'stabbing in the dark' is further emphasised by the difficulty in comparing putative benefits and disbenefits against one another. How does one value, for instance, the damage to the lives of some problem gamblers as against a community contribution of say $50,000 or the benefit to the local economy of a major renovation? Problem gambling is a phenomenon that cannot be accurately measured and even if it could, its consequences are impalpable and difficult to subject to a purely economic analysis. It behoves decision-makers at all levels under the Gambling Regulation Act to be cautious; but the truest application of the precautionary principle was abandoned when electronic gaming machines were introduced to the State.
3. I agree with the Commission's submission that the competitive effects of this proposal on the Bowling Club should be given only minimal effect. The passages quoted from the statute show that it is an objective of this regime to generate competition. Mr Appudurai, on behalf of the Council, contended that the competition objective was confined solely to the destruction of the duopoly. In a sense he was correct; but, once the duopoly has been destroyed, the only persons who are left competing with one another are the venue operators. Whilst the statute controls the numbers of electronic gaming machines, it does not evince an intention to provide an immunity from competition to incumbent operators.
4. Mr Graham, the Chairman of the Bowls Club, offered some very sobering assessments as to the consequences of success of this proposal. These conclusions were open to question on a number of bases. The club was setting out to amortise its expenditure on electronic gaming machine entitlements entirely by the expiry of their time period. A very laudable and conservative approach, but the club cannot be regarded as having an absolute guarantee of ability to affect that amortisation.
5. The figures which Mr Clyne postulated as to new expenditure were, in my view, unduly conservative, concentrating as they did on the immediately following year from implementation of the proposal, if adopted. Mr Gill said that there would be an element of 'ramp up' in the later periods. I accept that submission.
6. Too much should not be made of the contrast between the fact-finding role of a court and of a body such as this Tribunal. The Commission's submission might give the impression that Courts deal only in making findings as to present existing facts, whereas an administrative review such as this one, confronts the uncertainties of predicting the future. This is an adequate enough description of this Tribunal's review function but the Courts are frequently required to make projections into the future. The assessment of damages in personal injury matters is the most obvious example. The Court must ask what level of income the uninjured plaintiff might have been able to earn over his or her lifetime but for the accident for which damages are being awarded. The problems become even more acute where, as is sometimes necessary, a court is required to value a 'chance'.
7. What, then, is the likely affect of implementation of the Hotel's proposal. if permitted, upon problem gambling? The Commission raised the to some extent inconsistent views expressed by the Productivity Commission in its report as to the effect of increasing the numbers of gaming machines where gaming machines are already readily accessible. Based on the evidence I have heard and my own observations upon an inspection conducted in the early afternoon of a Thursday, despite Mr Brewer's contention, it is not obvious that there is a large pedestrian passing parade of vulnerable people to be enticed into the hotel. Even if there were, there is no reason to think that the temptation to such passersby would be any greater by reason of an additional 10 gaming machines being placed in the already established gaming room. Whilst it is possible to play these machines without 'signing in' as one is required to do at a club venue, Benalla, on my observation and upon the statistics, is a sufficiently small community that most customers will be known either to the gaming room staff or to others in the gaming room. The sort of anonymity that one might find in the electronic gaming machine room of Crown Casino Melbourne is entirely absent in Benalla. In my view, there is no reason to think that the marginal affect of this proposal, if implemented, will significantly worsen whatever problem gambling already exists in the Rural City.
8. I accept the evidence of Mr Walker, called on behalf of the Hotel, as to the various programs which exist to cope with problem gambling. Doubtless, the elimination of electronic gaming machines would be a far more effective protection to problem gamblers, but for the reasons explained earlier, this is not what the Victorian statute contemplates should occur.
9. Obliged as I am to pay proper regard and give appropriate consideration to the negative views of the Commission in its primary determination, I note, as Mr Brown observed, that the benefits offered as a quid pro quo for approval of this proposal are more significant than those which were found by the Commission to be 'quite modest' and not to outweigh the potential negative. The renovations proposed have moved much further towards potential implementation than they had when the matter was before the Commission. A planning permit has been issued and evidence was placed before me of the availability and willingness of a builder to undertake the work commencing early next year. The philanthropic community donation scheme has been enhanced substantially.
10. The Commission's finding that the 'no net detriment' test had not been met was not, as I read it, a downright determination. Rather, the Commission felt that the matter was relatively finely balanced but ultimately the test was not met. The enhancements which are now offered, in my view, are sufficient to tip the balance favourably to the applicant such that the no net detriment test is met. Though again, this is not a very downright decision but one reached cautiously and only on balance.
11. Mr Appudurai, on behalf of the Council, contended that the benefits which were necessarily thrown into the balance to meet the test ought not be countered because they would be derived only into the future, whilst the intention was to implement the proposal much earlier, leaving a period where the negative elements of the proposal were operating but the promised benefits had not accrued. In my view, this over-simplifies the situation. Whilst Rome was not built in a day; if this proposal goes ahead the Royal Hotel will not be renovated in a day, but if the proposal is approved on condition that the renovation and the other benefits will accrue over time, the very promise of those benefits is, in my view, a benefit in itself. So, for instance, though a bond issued by a solvent party promising to pay a thousand dollars three years hence does not have the same value as the proffer of $1,000 in legal tender forthwith, it does have a value. The difference between the value of the bond and the legal tender 'on the nail' takes account first, of the delay in receipt, the so called 'time value of money' and secondly, any credit risk, that is, any risk that the promise will not be carried out. Here, by appropriate use of condition, a strong likelihood of delivery of the benefits can be created so that one may have greater confidence that the benefits will in fact be bestowed. This means that the promise of benefits has a value, albeit not as great as if those benefits were delivered forthwith and immediately; but the benefits do have sufficient value that, when thrown in the balance, they meet the no net detriment test. I propose, in accordance with the suggestions made by the Hotel, imposing conditions modelled on those imposed by the Tribunal in the Bendigo Stadium case.
12. One of the matters raised by the Commissioner in its determination was the consequence of a sale of the applicant Hotel company's business upon the promised benefit. If the venue operator's licence were an entitlement of the same type as a planning permit or a liquor licence, no problem would arise. In the case of a planning permit, it attaches to the subject land and binds successors in title. Even if a condition did not, in a direct sense, bind a new owner or occupier of premises to which it attached, a provision which operated as a forfeiture or a penal modification in the event that certain requirements were not met, would create an effective incentive to any successor in title to ensure that the relevant benefits were delivered. The venue operator's licence however, in accordance with Section 3.4.15 of the Gambling Regulation Act, is not transferrable. There is a transfer process for gaming machine entitlements under Section 3.4A.3 of the Act published by the Minister in Gazette A43 of 15 March 2012 but that, as I read it, is a state-wide market controlled by the Minister in which gaming machine entitlements are offered for sale, detached from particular premises. Precisely how a situation, where for instance, a hotel company which sells the hotel business, arranges to put the purchaser company in possession of the right to operate electronic gaming machines at the hotel was not examined in the course of the hearing before me. The applicant company, through its counsel, proposed a condition requiring the use of best endeavours to include a provision in any contract of sale for the Hotel which would ensure the performance of the benefits which are proffered by the applicant. In light of Section 3.4.15 referred to above, the entitlement to operate the machines at the hotel cannot simply be transferred without some further approval process by the Commission. In the circumstances, I proceed upon the footing that that further approval process would enable the imposition of corresponding conditions upon any new operator of machines at this venue to ensure that the benefits promised were delivered, or alternatively, that the entitlement to operate the additional machines would be revoked if the benefits were not delivered. In that belief I have not included the transferee condition suggested by the applicant.