Tourist Accommodation Pty Ltd v Independent Liquor and Gaming Authority

Regulatory scheme

1. The GM Act is the principal means by which gaming machines in New South Wales are regulated. Its objects are set out in s 3 which provides that: "(1) The objects of this Act are as follows - (a) to minimise harm associated with the misuse and abuse of gambling activities, (b) to foster responsible conduct in relation to gambling, (c) to facilitate the balanced development, in the public interest, of the gaming industry, (d) to ensure the integrity of the gaming industry, (e) to provide for an on-going reduction in the number of gaming machines in the State by means of the tradeable gaming machine entitlement scheme. (2) The Authority, the Minister, the Secretary, the Commissioner of Police and all other persons having functions under this Act are required to have due regard to the need for gambling harm minimisation and the fostering of responsible conduct in relation to gambling when exercising functions under this Act. (3) In particular, due regard is to be had to the need for gambling harm minimisation when considering for the purposes of this Act what is or is not in the public interest."
2. The Authority, which is constituted by s 6 of the Gaming and Liquor Administration Act 2007 (NSW), is responsible for the administration of the GM Act.
3. Broadly, s 14 of the GM Act establishes that there is to be a maximum number of gaming machine entitlements available across the state. Part 3, Div 2 of the GM Act then sets up the "Tradeable gaming machine entitlement scheme" whereby gaming machine entitlements held by hotels or clubs are transferable between other venues. Sections 19 and 20 of the GM Act regulate this scheme, principally by providing that all transfers must be approved by the Authority and that where approved, the Authority is to decrease, by the number of entitlements transferred, the GMT for the venue from which the entitlements are transferred.
4. Section 32 of the GM Act concerns GMTs. It provides that the Authority may set a GMT, which is the maximum number of gaming machines that can be kept at premises, in relation to each hotel and club (s 32(1)-(2)). For new hotels and clubs, the GMT can be set at zero but may be increased or varied by the Authority (s 32(4)-(5)). As such, although it might have been otherwise, the default GMT for new hotels was zero.
5. Applications for a GMT increase are governed by s 34 of the GM Act: "34 Application to increase gaming machine threshold (1) A hotelier or club may apply to the Authority to increase the gaming machine threshold for the hotel or the premises of the club (a threshold increase application). (2) The hotel or club premises to which a threshold increase application relates is referred to in this Division as the relevant venue. (3) A threshold increase application must comply with the requirements of this Division and the regulations. (4) The Authority may approve a threshold increase application only if the Authority is satisfied that the requirements of this Division and the regulations have been complied with in relation to the application. (4A) The Authority must determine a threshold increase application within the time required by the regulations. (5) If the application is approved, the Authority may increase the gaming machine threshold for the relevant venue in accordance with the Authority's approval. (6) Nothing in this Division requires the Authority, if it approves a threshold increase application, to increase the relevant venue's gaming machine threshold by the number to which the application relates. (7) Without limiting subsection (1), a threshold increase application may be made by a person in relation to premises that are the subject of an application for a licence under the Liquor Act 2007 that has not yet been granted."
6. The relevant requirements for a GMT increase application are set out in s 35 of the GM Act: "35 Requirements relating to threshold increase applications (1) Except as provided by this section, a threshold increase application must be accompanied by a local impact assessment (LIA). An LIA, if required, is to be a class 1 LIA or a class 2 LIA as determined by this section. … (3) When class 1 LIA is required A threshold increase application must, unless subsection (2) applies in relation to the application, be accompanied by a class 1 LIA if the relevant venue - (a) is situated in a Band 1 LSA and the application is for a mid-range increase in the gaming machine threshold for the venue, or (b) is situated in a Band 2 LSA and the application is for a low-range increase in the gaming machine threshold for the venue. (4) When class 2 LIA is required A threshold increase application must, unless subsection (2) applies in relation to the application, be accompanied by a class 2 LIA if the relevant venue - (a) is situated in a Band 1 LSA and the application is for a high-range increase in the gaming machine threshold for the venue, or (b) is situated in a Band 2 LSA and the application is for a mid-range or high-range increase in the gaming machine threshold for the venue, or (c) is situated in a Band 3 LSA. (5) For the purposes of this section, a low-range increase, a mid-range increase or a high-range increase in a gaming machine threshold for a venue is to be determined in accordance with the regulations. (6) The regulations may make provision for or with respect to the following - (a) the information to be provided by an LIA, (b) the requirements that must be complied with in relation to an LIA, which may include a requirement to verify any information by statutory declaration, (c) the matters to be assessed or addressed by an LIA, (d) the advertising of LIAs, (e) the making of submissions in relation to LIAs. (7) The regulations may also create exceptions to this section and provide for the conditions to which any such exception is subject. (8) Except to the extent to which the regulations make provision, an LIA is to be provided in the form and manner approved by the Authority."
7. The classification of "LSAs" or "local statistical areas" is governed by s 33 of the GM Act which provides that the Authority is to specify on a publicly available website whether each LSA is either Band 1, 2 or 3 (where Band 1 is associated with the lowest risk and Band 3 the highest).
8. Although the difference between Class 1 and 2 LIAs is not made clear in the GM Act itself, the primary judge referred to the second reading speech to the Gaming Machines Bill 2001 (NSW) in which it was stated that the two forms of LIAs are centrally distinguished by the fact that Class 2 LIAs are to be accompanied by "significantly more information, and will need to satisfy a net economic and social impact statement", in addition to satisfying "prescribed consultation requirements": PJ [10].
9. Section 36 of the GM Act sets out the circumstances in which the Authority may approve an LIA: "36 Approval of LIA by Authority (1) If an LIA is required to be provided with a threshold increase application, the application cannot be approved unless the Authority approves the LIA. … (3) The Authority may approve an LIA only if it is satisfied that - (a) the LIA complies with the requirements of this Division and the regulations in relation to the LIA, and (b) the LIA has demonstrated that gambling activities in the relevant venue will be conducted in a responsible manner, and (c) in the case of a class 1 LIA - (i) the proposed increase in the gaming machine threshold for the relevant venue will provide a positive contribution towards the local community where the venue is situated, and (ii) the relevant venue is not, if the venue is a new hotel or comprises new club premises, situated in the immediate vicinity of a school, hospital or place of public worship, and (iii) the LIA has adequately addressed any community concerns arising out of the consultation process under the regulations, and (d) in the case of a class 2 LIA - (i) the proposed increase in the gaming machine threshold for the relevant venue will have an overall positive impact on the local community where the venue is situated, and (ii) the relevant venue is not, if the venue is a new hotel or comprises new club premises, situated in the immediate vicinity of a school, hospital or place of public worship, and (iii) the LIA has adequately addressed any community concerns arising out of the consultation process under the regulations, and (e) it is otherwise appropriate that the LIA be approved. (4) The regulations may specify other grounds on which the Authority may refuse to approve an LIA. (5) If any submissions are made in relation to an LIA in accordance with the regulations, the Authority must take those submissions into consideration in deciding whether to approve the LIA. (6) The Authority may, in any case it considers appropriate, partly approve an LIA, in which case the Authority may increase the relevant venue's gaming machine threshold by a number that is less than the number to which the threshold increase application relates. (7) Without limiting any other provision of this Division, the approval of an LIA is subject to such conditions as may be specified by the Authority. The LIA has no effect if any such conditions are not complied with."
10. Sections 36A and 36B of the GM Act provide as follows with respect to the satisfaction of the requirements set out in s 36(3)(c)(i) and (d)(i): "36A Community benefit requirement - payment of money to Responsible Gambling Fund (1) A community benefit requirement cannot be wholly or partly satisfied by a payment of money except a payment to the Secretary under the Casino Control Act 1992 for payment into the Responsible Gambling Fund as a community benefit payment under this Act. Note - Section 115B of the Casino Control Act 1992 provides that a payment under this Act into the Responsible Gambling Fund is to be applied for such purposes as the Minister determines for the benefit of local communities in which gaming machine thresholds for venues have increased. (2) A community benefit payment by a venue is to be taken into account by the Authority in the determination of a threshold increase application as if it were a contribution to the local community where the venue is situated. (3) In this section, community benefit requirement means a requirement under section 36 that a proposed increase in the gaming machine threshold for a venue will - (a) provide a positive contribution towards the local community where the venue is situated, or (b) have an overall positive impact on the local community where the venue is situated. 36B Community benefit requirement - consideration of additional positive contributions (1) In determining a threshold increase application, the Authority is to have regard to additional positive contributions by the venue in connection with the proposed increase and may decide to treat those additional positive contributions as being in partial satisfaction of a community benefit requirement (so as to reduce what is required to satisfy a community benefit requirement). (2) In this section - additional positive contributions means any of the following actions by a venue - (a) the putting in place of harm minimisation and responsible gambling measures that are in addition to measures already required by law, (b) the application of funds by a club to community development and support that constitutes Category 1 harm minimisation expenditure in excess of the amount that entitles the club to the maximum reduction in gaming machine tax under section 17 of the Gaming Machine Tax Act 2001, (c) the payment of money by a club into the ClubGRANTS Fund (established under section 17A of the Gaming Machine Tax Act 2001), (d) such other actions as the regulations prescribe as additional positive contributions for the purposes of this section. Category 1 harm minimisation expenditure means expenditure for projects or services that constitute Category 1 projects and services under the ClubGRANTS guidelines (referred to in section 16 of the Gaming Machine Tax Act 2001) and that in the opinion of the Authority are concerned with harm minimisation. community benefit requirement has the same meaning as in section 36A."
11. Pursuant to s 36C, the Authority may also publish guidelines in relation to GMT increase applications. In particular, s 36C(2) of the GM Act provides that, without limiting the Authority's discretion, the guidelines may provide guidance on what the Authority considers to be a positive contribution towards, or overall positive impact on, the local community and the conditions that the Authority may impose upon its approval of an LIA. However, s 36C(3) confirms that guidelines will not limit the Authority's discretion when deciding in a particular case what constitutes a positive contribution towards, or an overall positive impact on, a local community.
12. The relevant guidelines applicable to this appeal are the Class 1 Local Impact Assessment Process Guidelines (Guidelines) issued by the Authority on 13 October 2021. The Guidelines describe what constitutes a "positive contribution" in relation to a Class 1 LIA and provide that, in assessing whether a donation to support a Class 1 LIA constitutes a positive contribution to the community, the Authority will have regard to a particular formula. In relation to new hotels, that formula, contained on page 7 of the Guidelines, is: 15% of the average annual profit of existing gaming machines before tax in existing hotels in the Local Government Area (LGA), multiplied by the number of gaming machine entitlements to be added by the GMT increase per year over 5 years (ie: 15% x average profit x GMT increase x 5).
13. As was noted by the primary judge at PJ [20], the Guidelines, curiously, do not specify the particular period in relation to which the "average annual profit" is to be calculated or why LGAs, rather than "Statistical Area Level 2s" (SA2s) which are the Australian Bureau of Statistics geographical boundaries classified as being either Band 1, 2 or 3 and referred to on page 3 of the Guidelines, are referred to.
14. The Guidelines at pages 15-16 also deal with the imposition of conditions on successful GMT Increase Applications which a venue must satisfy before any GMT increase comes into effect.

Factual and procedural background

1. As noted above, on 19 December 2018, the Applicant lodged an application under the Liquor Act 2007 (NSW) for a hotel licence in relation to the proposed Flemington Hotel to be located at 195 Parramatta Road, Homebush West NSW 2140.
2. Subsequently, on 23 April 2019, the Applicant lodged its Class 1 LIA, accompanied by a letter from its solicitors detailing the proposed community benefit of the venue. The letter indicated that in the LIA, a community benefit payment of $1,000,000 was proposed. It was acknowledged that this was a significantly lower figure than the $3,551,323.35 which the Applicant had calculated by reference to the formula contained in the Guidelines: see [25] above. The Applicant contended, however, that this figure was "excessive in the circumstances of this case" (namely a new hotel) and pointed out that the proposed Flemington Hotel would make a positive contribution to the local community by reason of the "construction and fit out of a much-needed short-term accommodation facility comprising 152 short-term accommodation units" and by being "family-friendly". The Applicant also contended that it was inappropriate to apply the formula for the following additional reasons: "● The proposed hotel will be an entirely new business. The Applicant expects that it will take a number of years to ramp up gaming revenues to anywhere near current LGA averages. ● The proposed hotel will only trade standard hours … Competitor hotels in the LGA (including the nearby Wentworth Hotel and the Markets Hotel) trade well into the morning hours and trade substantially longer than the proposed new hotel will. ● The Applicant company is a related corporation to the company which owns the Wentworth Hotel. The grant of the threshold application will result in some diminution of revenue from the Wentworth Hotel as the new hotel will draw gaming expenditure from the incumbent operators. ● The Venue will establish harm minimisation practices over and above the requirements of the Gaming Machines Act and Regulations, to ensure that all gambling at the Venue does not cause problem gambling within the community. All staff will undertake the online course conducted by the Victorian Responsible Gambling Foundation prior to or on their employment at the Venue..."
3. Much of this detail was repeated in the actual Class 1 LIA, [5.4] of which stated that: "The applicant proposes to pay a positive contribution amount of $1,000,000, to be paid in annual instalments over 5 years into the Responsible Gambling Fund, pursuant to sec. 36A of the Gaming Machines Act 2001 and sec. 115B of the Casino Control Act 1982. That amount has been calculated having regard, among other things, to the formula set out in the LIA Guidelines published by Liquor & Gaming NSW." The LIA also outlined that the Applicant would take additional harm minimisation steps, above those required by the legislation. These included requiring that all staff undertake an online training course conducted by the Victorian Responsible Gambling Foundation and engaging a Gaming Room Attendant.
4. On 30 April 2019, the Applicant lodged a GMT Increase Application with the Authority.
5. While no submissions were received from the community which directly related to the GMT Increase Application and accompanying LIA, on 11 February 2020, the Authority provided the Applicant with a copy of a submission it had received from the Markets Hotel objecting to Applicant's hotel licence application. That submission also contained material relevant to the GMT Increase Applicant and LIA.
6. The Applicant responded to that submission on 21 February 2020 and, in so doing, provided reports by Geotech Information Services and Pitcher Partners which included analysis of the economic feasibility of the proposed business and the likely transfer of gaming machine profits from other premises in the area. It was reemphasised at this time that the Applicant intended to make a "very substantial 'positive contribution' … to the Responsible Gambling Fund in accordance with sec. 36(3)(c) of the [GM Act]".
7. On 7 December 2021, the Authority informed the Applicant through its solicitors that it was receiving independent expert advice in the matter and was considering the expert advice which was provided by the Applicant. It also identified that the Application would be considered by the Authority on 20 January 2021, after the Applicant was given an opportunity to consider the expert evidence upon which the Authority might rely.
8. On 21 December 2020, the Applicant was provided with a copy of a report prepared by BIS Oxford Economics (BIS).
9. The BIS Report offered a thorough assessment of the suitability of the Applicant's proposed community benefit payment pursuant to s 36(3)(c)(i) of the GM Act. BIS calculated the appropriate positive contribution figure in accordance with the Guidelines formula as being $4,762,708 and also noted that the Authority had calculated the figure to be $4,604,115. BIS explained that both figures were higher than those calculated by the Applicant using the formula because the Applicant had relied on combined data from both the Strathfield and Burwood LGAs when only the Strathfield LGA was in fact relevant. For reasons which were subsequently summarised by the Authority in its statement of reasons, BIS also rejected the view which had been expressed on behalf of the Applicant that the 15% profit figure in the formula was excessive by considering and dismissing each of the Applicant's proposed grounds for reduction in its quantum.
10. The Applicant responded to the BIS Report by way of a letter dated 24 March 2021. In this letter, the Applicant proposed that a community benefit payment of $3,705,000 could be made, subject to adjustment up or down based on the Guidelines. This amount was said to represent 75% of the adjusted projected gaming revenue for the proposed hotel and was said to be sufficient on the basis that the GMT Increase Application would serve the objects of the GM Act by diverting revenues from other venues. Further reports written by Geotech and Pitcher Partners were also attached to this letter.
11. On 30 June 2021, the Authority made a decision to refuse to grant the Applicant's hotel licence application. The Applicant subsequently sought review of that decision in NCAT. A statement of reasons for refusing the hotel licence application was provided on 20 September 2021. Relevantly for present purposes, the Authority in that statement of reasons referred to the Applicant's "LIA/GMT increase application" and said the following: "60. …[T]he determination of the LIA and GMT increase do not formally arise for determination as the hotel licence has not been granted and therefore the Authority has not determined whether to approve the LIA or the GMT increase. The Authority has an open mind as to determination of the LIA and GMT increase. The Authority nevertheless notes that, at present, it would be inclined to reject the LIA and refuse the application for the GMT increase because the Authority is of the view: (a) That the Applicant has not satisfied the obligation in subsection 36(3)(c)(i) of the GM Act that the GMT increase will provide a positive contribution toward the local community, noting that the Applicant proposes a community benefit payment of $3,705,000 payable over five years, which is approximately $1 million less than the minimum level of financial contribution specified in the Class 1 LIA Guidelines, and the Authority does not consider that additional positive contributions warrant a reduction in the community benefit payment; and (b) It is not otherwise appropriate that the LIA be approved pursuant to subsection 36(3)(e) of the GM Act, taking into consideration the statutory objects in subsection 3(1) of the GM Act (including relevantly, (a) to minimise harm associated with the misuse and abuse of gambling activities, (b) to foster responsible conduct in relation to gambling, (c) to facilitate the balanced development, in the public interest, of the gaming industry and (d) to ensure the integrity of the gaming industry, specifically, having regard to the concerns that rise from the clustering of 50 gaming machines between two adjacent co-owned properties, where the adjacent venue already has an extended trading authorisation in place, as detailed above)." (emphasis added)
12. Between December 2021 and January 2022, the Authority and the Applicant engaged in without prejudice correspondence concerning the terms upon which the Authority would revoke its original decision and grant a hotel licence in respect of the Flemington Hotel.
13. On 23 December 2021, the Applicant sent a letter in reply to the Authority, marked "without prejudice save as to costs", which included the following: "The [Applicant] understands that the [Authority] will, as a condition of any approval of the [LIA] require payment of a 'positive contribution' which has regard to the most recent gaming machine profit figures for the local government area in which these premises are situated." This observation was made as part of the Applicant's proposal that there be included in the settlement of the NCAT proceedings an undertaking on the part of the Authority to determine the LIA and GTI Applications within 30 days of any final orders by NCAT.
14. Following these negotiations, on 7 January 2022, the Applicant accepted an offer to settle the NCAT proceedings. On 24 January 2022, NCAT made orders by consent granting the hotel licence, subject to several conditions. Resolution of the outstanding Applications within a specified timeframe did not form part of the NCAT settlement however, on 18 February 2022, the Authority sent an email to the Applicant's solicitors noting that the Applicant's GMT Increase Application and LIA were refused at the Authority's board meeting on 19 January 2022.
15. A summons seeking judicial review of the decision was filed by the Applicant in the Supreme Court on 16 March 2022 and amended on 22 April 2022 and 19 July 2022.

The Authority's decision

1. A statement of reasons for the Authority's decision to refuse to approve the Applicant's Class 1 LIA, and hence its GMT Increase Application, was provided to the Applicant on 8 April 2022.
2. The Authority's primary reasons for its refusal were two-fold: "62. Having regard to the materials before the Authority and the matters set out in these reasons, the Authority is not satisfied that the proposed GMT increase will provide a positive contribution towards the local community pursuant to subsection 36(3)(c)(i) of the GM Act. 63. Further, having regard to the materials before the Authority and the matters set out in these reasons, the Authority is not satisfied that it is otherwise appropriate that the LIA be approved pursuant to subsection 36(3)(e) of the GM Act, taking into consideration the statutory objects in subsection 3(1) of the GM Act (including relevantly, (a) to minimise harm associated with the misuse and abuse of gambling activities, (b) to foster responsible conduct in relation to gambling, (c) to facilitate the balanced development, in the public interest, of the gaming industry and (d) to ensure the integrity of the gaming industry), specifically, having regard to the concerns that arise from the presence of 50 gaming machines between two adjacent properties, where the adjacent venue already has an extended trading authorisation in place."
3. With respect to its conclusions as to the non-satisfaction of s 36(3)(c)(i) of the Act, the Authority was not satisfied that reducing the Applicant's community benefit payment below the amounts suggested by the Authority itself or BIS would provide a positive contribution to the local community.
4. While the Authority took into account the reports provided by the Applicant which argued that a reduced community benefit payment was appropriate in the circumstances, it preferred the conclusions reached by BIS as to the appropriate quantum of the community benefit payment. It considered at [31]-[34] of its reasons that BIS had provided more impartial, reliable evidence and pointed to weaknesses in the statistical approach employed by Geotech.
5. Moreover, the Authority considered at [27] and [37]-[41], largely on the basis of the BIS report, that the Applicant's contention that the quantum of its community benefit payment should be reduced ought to be rejected because:

• While the proposed venue would have a "ramping up" period and may generate less profit per machine by operating only during standard trading hours such that the 15% figure in the formula could be an overestimation of its profits, this did not warrant a reduction because there would be an option to reassess the quantum of the Applicant's financial contribution based on the profits of the machines after 2 years;
• The contention that profits from the Wentworth Hotel would be cannibalised thereby warranting a reduction was not persuasive because when a new venue seeks to increase its GMT, other venues in the area cannot be compensated for having their revenue traded away nor can existing hotels who increase their GMT be compensated for diverting profits from the old to new machines. Moreover, the Applicant had not accounted for the fact that the proximity of the two venues could, in fact, draw in patrons from other venues, increase expenditure among existing gamblers or attract new to industry expenditure; and
• The Authority was not satisfied that increased taxes, improved venue facilities or the family-friendly character of the premises could be considered as "additional positive contributions" within the meaning of s 36B(1) of the GM Act and consequently treated as being in partial satisfaction of the community benefit requirement or, even if they could, those factors, alongside the Applicant's proposed harm minimised strategies, were not particularised with sufficient specificity to enable them to be considered as compensating for the Applicant's proposed reduced financial contribution.

1. Under the heading "Is it otherwise appropriate that the LIA be approved?", the Authority stated at [50] of its reasons that: "In relation to whether the Authority is satisfied that it is "otherwise appropriate" that the LIA be approved pursuant to section 36(3)(e) of the GM Act, the provision grants a degree of discretion to the Authority. It is well established however, that "every statutory power, however widely expressed, is confined by the subject matter, scope and purpose of the statute": see Independent Liquor and Gaming Authority v Auld [2019] NSWCATAP 184 at [130]. When considering subsection 36(3)(e) of the GM Act, the Authority has regard to the objects in s 3(1) of the GM Act, including relevantly (a) to minimise harm associated with the misuse and abuse of gambling activities, (b) to foster responsible conduct in relation to gambling, (c) to facilitate the balanced development, in the public interest, of the gaming industry, and (d) to ensure the integrity of the gaming industry."
2. The reasons then refer at [51]-[61] to a considerable body of research concerning the behaviour of at-risk and problem gamblers, particularly with respect to late-night gambling, to support its conclusions as to a possible and detrimental funnelling effect between the proposed Flemington Hotel and the Wentworth Hotel.

The primary judgment

1. After setting out the statutory scheme and background to the LIA, the primary judge considered the Applicant's contention that it had been denied procedural fairness in relation to the community benefit payment in two key respects. The first was that the Authority did not notify the Applicant of its conclusion that the proposed community benefit payment was less than what was required to satisfy s 36(3)(c)(i) of the GM Act and provide the Applicant with an opportunity to increase the amount of its payment. The second argument was to the effect that procedural fairness was denied because the Authority could have, but did not, elect to approve the LIA, conditional upon the Applicant paying a specified amount which was assessed as satisfying the requirements of s 36(3)(c)(i).
2. At first instance, particular reliance was placed on the passage from the 23 December 2021 letter extracted at [40] above, it being contended that this had the effect of notifying the Authority that the Applicant was willing to pay whatever community benefit payment amount was calculated by the Authority: PJ [57]. His Honour concluded at PJ [50] that the letter did not have this effect because: "(1) Significantly, the relevant paragraph appears towards the end of the letter which is expressly stated on page 1 to be "without prejudice save as to costs". The letter was primarily directed to the possibility of the parties agreeing to compromise the liquor licence proceeding in NCAT. Even if the relevant paragraph was not itself privileged, considering the broader and primary context of the letter in which the paragraph appears, it is understandable that the Authority did not view the paragraph as forming part of the plaintiff's applications. (2) All the more so having regard to the relevant terms of the paragraph, which refer to the plaintiff's understanding as to how the Authority will proceed. This falls far short of the plaintiff stating that, notwithstanding its previous proposals (which involved departing from the Guidelines), it was now willing to abide by a condition to make a payment in an amount determined by the Authority under the Guidelines. Reasonably read, the relevant paragraph was not stating that the plaintiff was willing to make a monetary payment as a "positive contribution" of a then unknown figure but one which the Authority would calculate using the formula in the Guidelines. It would have been an easy matter for the plaintiff to make clear to the Authority that, contrary to its earlier stated positions (which both involved the Authority agreeing to depart from the Guidelines), it was now belatedly prepared significantly to change its position such that it would pay into the Responsible Gambling Fund any figure which the Authority determined and imposed as a condition of approval. (3) Indeed, fairly read, the language used in the relevant paragraph suggests that the plaintiff was not contemplating that the Authority would calculate a figure by using the relevant formula in the Guidelines. That is reflected in the fact that the letter referred to the calculation of a payment "which has regard to the most recent gaming machine profit figures for the local government area in which these premises are situated" (emphasis added). That language does not reflect the terms of the formula in the Guidelines …"
3. Later in his reasons, the primary judge held that while the GM Act did not prevent the Authority discussing what might be a satisfactory community benefit payment with the Applicant, the Authority was under no legal obligation to do so. However, the primary judge accepted that the situation might have been different if the Authority did not publicly publish the gaming machine profit data necessary to use the formula for calculating community benefit payments contained in the Guidelines: PJ [53]-[54], [58].
4. Further, his Honour noted that satisfaction of the criterion in s 36(3)(c)(i) will not always depend on an applicant's willingness to pay a community benefit payment of a precise quantum. Rather, with reference to s 36A of the GM Act, the primary judge reasoned that: "[53] …[W]hile in some cases a monetary payment to the Responsible Gambling Fund alone may suffice for the purposes of the Authority attaining the requisite satisfaction of the criterion in s 36(3)(c)(i), in other cases the criterion may be satisfied by the payment of money coupled with other proposed actions directed to providing a positive contribution towards the local community where the venue is situated."
5. The primary judge also dismissed the Applicant's procedural fairness arguments on the basis that they were contrary to two well settled principles. It is helpful to extract those parts of his Honour's reasoning in full: "[59] On one view, parts of the plaintiff's procedural fairness argument are tantamount to a claim that the Authority was obliged to reveal its deliberative processes to the plaintiff and invite comment. This would be inconsistent with well-established authorities in Commissioner for the Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-2 per Northrop, Miles and French JJ, as approved in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 at [29] per Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ. In my view, the Authority complied with its procedural fairness obligations in the particular circumstances of this case when it provided the plaintiff with a copy of the BIS Report and invited its comments. That report disclosed to the plaintiff two figures which had been arrived at by the Authority and the BIS, as well as the reasons why the Authority may not have been inclined to accede to the plaintiff's request that a monetary figure be calculated otherwise than in accordance with the Guidelines. The plaintiff took advantage of the opportunity and provided a detailed response to the BIS Report. There was no procedural unfairness. [60] There is another aspect of the plaintiff's procedural fairness complaint which is contrary to legal authority. The complaint is not one of mere process. It also has a substantive element. The complaint turns on the proposition that the Authority was both obliged to undertake a substantive step (namely calculate a precise monetary figure for the purposes of s 36(3)(c)(i)), and then disclose that figure to the plaintiff. It is well-settled in Australian law that procedural fairness does not have any such substantive element (see, for example, Re Minister for Immigration and Multicultural and Indigenous Affairs v Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [65]-[67] per McHugh and Gummow JJ)."
6. The primary judge then considered the Applicant's argument that, in determining whether its Class 1 LIA should "otherwise" be approved pursuant to s 36(3)(e), the Authority was precluded from considering any of the matters listed in s 36(3)(a) to (d). In particular, the Applicant submitted that, by considering the negative impacts on the local community of the proposed GMT increase arising out of the "funnelling effect", the Authority had considered factors more appropriately falling within s 36(3)(d) which concerns Class 2 LIAs and had thus, taken "irrelevant considerations" into account.
7. His Honour held that the only difference between the approval of Class 1 versus Class 2 LIAs was that, in relation to the former, the Authority has to be satisfied that the proposed GMT increase will provide a "positive contribution towards the local community" whereas in relation to the latter, it has to be satisfied of a more demanding criterion, namely that the increase will have "an overall positive impact on the local community". In relation to both classes of LIAs, however, the Authority still must be satisfied that it is "otherwise appropriate" that the LIA be approved pursuant to s 36(3)(e): PJ [63]-[65].
8. In determining the relevance of a particular factor to the Authority's assessment as to whether an LIA should "otherwise" be approved, the primary judge noted, uncontroversially, that reference should be had to the subject matter, scope and purpose of the GM Act. His Honour accepted that, given the distinction between s 36(3)(c)(i) and (d)(i), an approach whereby the Authority rejected a GMT Increase Application pursuant to s 36(3)(e) because it would not have an "overall positive impact on the local community" would be a misapplication of the statute and would thus be in error. However, his Honour found that this was not the approach taken by the Authority. Rather, the primary judge considered that, in taking the "funnelling effect" into account, the Authority had appropriately considered its statutory objectives set out in s 3, particularly the need to minimise gambling harm and consider the public interest: PJ [67]-[69].
9. This did not mean that it had treated the Applicant's Class 1 LIA application as if it were a Class 2 LIA application: PJ [69].

Grounds of appeal

1. The Applicant's grounds of appeal (other than in respect of ground 4 in respect of which I would refuse leave to appeal: see [11] above) can be summarised as follows: 1. Grounds 1-3 contend that the primary judge erred in not finding that the Authority denied the Applicant procedural fairness in the way in which the Authority dealt with the "positive contribution" requirement in s 36(3)(c)(i) of the GM Act; and 2. Grounds 5-7 relate to the primary judge's conclusion that the Authority did not fall into error in its alternative basis for "otherwise" not being satisfied that the LIA was appropriate.

Grounds 1 to 3

1. The Applicant's submission was that the Authority was obliged to inform it as to how much money was necessary to be paid to meet the "positive contribution to the local community" requirement set out in s 36(3)(c)(i) of the GM Act.
2. It was contended that this was an unusual case in which the Authority "held all the cards" and an applicant for LIA approval could not know what the Authority's expectation was as to the quantum of a community benefit payment which would satisfy the requirements of s 36(3)(c)(i) of the GM Act.
3. This submission should be rejected not only for the reasons given by the primary judge which have been set out at [54] above but also for the reason that the Authority in effect told the Applicant that what was required was an amount calculated in accordance with the formula in the Guidelines. The Authority could not have made its position clearer in its statement of reasons for refusing the Hotel Licence Application (see [38] above) in which the Authority said that: "…the Applicant has not satisfied the obligation in subsection 36(3)(c)(i) of the GM Act that the GMT increase will provide a positive contribution toward the local community, noting that the Applicant proposes a community benefit payment of $3,705,000 payable over five years, which is approximately $1 million less than the minimum level of financial contribution specified in the Class 1 LIA Guidelines, and the Authority does not consider that additional positive contributions warrant a reduction in the community benefit payment."
4. It is to be recalled that these reasons were supplied to the Applicant on 20 September 2021 well prior to any decision being made in relation to the GMT Increase Application which required the approval of the LIA. The Applicant did not respond to what had been said there.
5. It follows that the Applicant was told precisely that which it contends on appeal procedural fairness required. Whether the requirements of procedural fairness required the Authority to go so far as the Applicant contended need not be determined. It is certainly arguable, as the primary judge held, that, were the Guidelines not in place, the Authority may have been obliged to give some guidance as to what was required in a financial sense to meet the positive contribution requirement but this is precisely what the Guidelines did. Moreover, in the present case, the Applicant was provided with (and took) the opportunity of making a case that the Guidelines should be departed from, and was given reasons by the Authority in advance of its final decision as to why the additional community benefits for which the Applicant contended, and upon which it relied as reasons justifying a lower monetary contribution, were not accepted.
6. Insofar as ground 3 of the Notice of Appeal contends that procedural fairness required the Authority to make the payment of the positive contribution amount indicated by the Guidelines a condition of any approval given, whilst the Authority could no doubt have done so, nothing in the GM Act or any consideration of procedural fairness required it to do so. It was open to the Applicant to make it clear that it would submit to such a condition, something that was not done by the 23 December 2021 letter (for the reasons given by the primary judge: see at [51] above) or on any other occasion.
7. For these reasons, the primary judge did not err in his conclusion that the Applicant had not been denied procedural fairness by the Authority in its finding that the "positive contribution" condition imposed by s 36(3)(c)(i) had not been satisfied. This is sufficient to dispose of the appeal because, as the Applicant accepted, it needed to succeed on both grounds 1-3 and grounds 5-7 because the Authority rejected the LIA on dual bases. It is useful, however, to deal with grounds 5-7 as the Applicant's construction argument concerning s 36(3)(e) of the GM Act involves the proper construction of the Act.

Grounds 5 to 7

1. The Applicant's broad contention was that, in applying its concerns as to the "funnelling effect" to its conclusion that it was not satisfied that it was otherwise appropriate to approve the LIA, the Authority had treated the Applicant's Class 1 LIA as though it were a Class 2 LIA.
2. The terms of s 36 of the GM Act have been set out at [22] above. In respect of a Class 1 LIA, the proposed increase in the GMT for the relevant venue is required to provide a "positive contribution towards the local community" (s 36(3)(c)(i)) whereas, in respect of a Class 2 LIA, there must be "an overall positive impact on the local community": s 36(3)(d)(i). Both the "positive contribution towards the local community" and the "overall positive impact on the local community" are "community benefit requirements" for the purposes of s 36A and 36B of the GM Act: see [23] above. By s 36A, a "community benefit payment" is made a mandatory relevant consideration which is required to be taken into account by the Authority in its assessment of a Class 1 or a Class 2 LIA.
3. The basis of the Applicant's contention that the Authority had treated the Applicant's Class 1 LIA as though it were a Class 2 LIA was that negative impacts of a proposed GMT increase are necessarily taken into account in assessing whether the increase will have "an overall positive impact on the local community" (the test for a Class 2 LIA) whereas under the test for Class 1, it is only a "positive contribution" which the Act identifies as relevant.
4. One consequence of this expressio unius style of argument is that, in the context of considering whether to approve a Class 1 LIA, any net negative impacts on the local community cannot be taken into account. Mr Howard SC, who appeared for the Applicant with Ms Gall, suggested that this was consistent with the fact that a Class 1 LIA is, by ss 33 and 35, tied to a Band 1 LSA (local statistical area) which represents the least level of socio-economic disadvantage of the three Band rating system. He appeared to submit, that because of that status or banding, negative impacts of an increase in the gaming machine threshold are not required to be taken into account.
5. I reject this subtle argument. It overlooks the importance of, and would have the effect of largely emasculating, s 36(3)(e) of the GM Act which provides that the Authority may only approve an LIA application if it is satisfied that it is "otherwise appropriate that the LIA be approved".
6. Section 36(3)(e) of the GM Act is expressed in broad discretionary terms. It is to be read in the context of s 3(2) of the Act which requires the Authority, when exercising a function under the Act such as considering an LIA, "to have due regard to the need for gambling harm minimisation and the fostering of responsible conduct in relation to gambling when exercising functions under this Act." There should not be imputed to the legislature an intention to constrain the Authority in assessing whether it is "otherwise appropriate that the LIA be approved". In a Class 1 LIA context, satisfaction of the existence of a "positive contribution" (which may be wholly or partially satisfied by the payment of money: see s 36A(1)) is a requirement for approval; it is not an implicit constraint on the taking into account of other relevant considerations.
7. The Applicant's submission was also contrary to the general rule referred to in R v Australian Broadcasting Tribunal; Ex parte 2 HD Pty Ltd (1979) 144 CLR 45 at 50; [1979] HCA 62, namely that: "a discretion expressed without any qualification is unconfined except in so far as it is affected by limitations to be derived from the context and scope and purpose of the statute. The fact that a discretion relating to a different subject-matter is confined to a particular consideration provides no rational reason for saying that another discretion expressed without qualification does not embrace that particular consideration."
8. The primary judge was correct in his conclusion at PJ [64] that s 36(3)(e) was a broadly expressed "catch all" provision confined only by the subject matter, scope and purpose of the Act. In taking into account research that supported the Authority's concerns about having 50 gaming machines distributed between two adjacent venues giving rise to a "funnelling effect", and as the primary judge held, the Authority was not applying the "overall positive impact" test applicable to Class 2 LIAs but was discharging one of its functions under the GM Act having regard to its objects.
9. Additionally, as submitted by Ms Sharp SC and Ms Patterson on behalf of the Authority, the Applicant's construction would have an outcome that could not have been intended for the reason that, pursuant to ss 36(3)(c)(iii) and 36(5) of the GM Act, the Authority is required to have regard to any negative impacts raised in a community submission, in order to be satisfied that the LIA adequately addresses that concern. But if the Authority, as a specialist regulator, was aware of a particular negative impact which did not happen to have been raised by a submission from the community, it would be prohibited from having regard to it, on the Applicant's argument. This anomalous result cannot be how s 36(3) of the GM Act was intended to operate.
10. It follows that I would reject appeal grounds 5-7.

Conclusion

1. For the above reasons, I would propose the following orders: 1. Grant leave to appeal in relation to appeal grounds 1-3 and 5-7; 2. Refuse leave to appeal in relation to ground 4; 3. Dismiss the appeal with costs.
2. BRERETON JA: I have had the benefit of reading in draft the judgment to be delivered by Bell CJ, with which I agree.
3. The applicant's procedural fairness complaint (Grounds 1-3) was untenable in the light of the content of the Authority's statement of reasons for refusing the hotel licence application provided on 20 September 2021, set out in the Chief Justice's judgment above at [38].
4. As to the applicant's irrelevant consideration argument (Grounds 5-7), there is as the applicant contends a distinction in the requirements for approval of a Class 1 LIA and a Class 2 LIA, as appears from s 36(3)(c)(i) and (d)(i), namely that in the case of the former the proposed increase in the GMT must provide a "positive contribution towards the local community" whereas in the case of the latter there must be "an overall positive impact on the local community". However, the distinction is that while in the case of a Class 2 LIA a net positive benefit is a mandatory threshold requirement, in the case of a Class 1 LIA it is not. The fact that in the case of a Class 1 LIA there is no such mandatory threshold does not mean that any negative impact is an irrelevant consideration as to whether the proposed increase is "otherwise appropriate". Such a construction would be entirely inconsistent with the obligation of the Authority, under s 3(2), "to have due regard to the need for gambling harm minimisation and the fostering of responsible conduct in relation to gambling when exercising functions under this Act".
5. I agree with the orders proposed by the Chief Justice.
6. KIRK JA: I agree with Bell CJ.

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