AKUNA CLUB LIMITED & ACT GAMBLING and RACING COMMISSION
[2010] ACAT 3
•13 January 2010
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
AKUNA CLUB LIMITED v ACT GAMBLING AND RACING COMMISSION (Administrative Review) [2010] ACAT 3
AT 93 of 2009
Catchwords: ADMINISTRATIVE REVIEW – closure of premises – eligible club – gaming machine – gaming machine licence – use of gaming machines – non-use of gaming machines – disciplinary action – grounds for disciplinary action – criteria for disciplinary action – disciplinary notices – storage of gaming machines – non-operation of club – cancellation of gaming machine licence – reviewable decision – “must state”
Gaming Machine Act 2004 (ACT) sections 39, 51, 57, 58, 59, 60, 61, 62, 146 & 173
Legislation Act 2001(ACT) s146
Human Rights Act 2004 (ACT)
Bragon Traders Pty Ltd and ACT Gambling & Racing Commission [2006] ACTAAT 3 (7 February 2006)
Tribunal: Mr A. O’Neil, Senior Member
Date of Orders: 13 January 2010
Date of Reasons for Decision: 13 January 2010
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 93 of 2009
BETWEEN:
AKUNA CLUB LIMITED
Applicant
AND:
ACT GAMBLING & RACING COMMISSION
Respondent
Tribunal:Mr Allan O’Neil Senior Member
Date: 13 January 2010
ORDER
The decision under review is affirmed.
……………………………….
Mr Allan O’Neil
Senior Member
REASONS FOR DECISION
The Akuna Club Limited (‘the Club’) operated a licensed club in the basement of 240-260 City Walk Canberra City from April 1992. For various reasons the financial viability of the Club declined during 2008 and the early part of 2009. The Club ceased trading and closed its doors on 22 May 2009. During the Club’s operation it held Gaming Machine Licence Number 4500983 (‘the Licence’) issued under the Gaming Machine Act 2004 (ACT) (‘the Act’).
Prior to the closure of the Club premises, the Club had taken steps to interest other parties in acquiring the Licence, including placing an advertisement in the Canberra Times on 18 March 2009. In the latter part of 2008 and up to September 2009 negotiations took place with the […] Club (‘Club A’) to acquire the Licence but on 15 September 2009 [Club A] withdrew from the negotiations. Mr Malcolm Reid, the Secretary-Manager of the Club, gave evidence that he had telephoned several clubs in August 2009 but none had responded positively to negotiate the purchase of the licence. In mid-October 2009 some negotiations took place with two other Canberra clubs, but without success. At the hearing on 18 December 2009 Mr Reid conceded that he could not say that the Club would ever trade again.
On 13 May 2009, prior to the closure of the Club’s premises, Mr Reid discussed matters with staff of the ACT Gambling and Racing Commission (‘GARC’) and was told a long protracted transfer would not be tolerated and that the transfer should be completed in three months. Section 51(1) of the Act requires that gaming machines must be used. Section 51 of the Act is set out below:
“51 Licensee to use gaming machines
(1)It is a condition of a licence that the licensee use the licensed gaming machines.
(2)However, a licensee does not contravene the condition under subsection (1) if—
(a)the period for which the gaming machine is not used is 1 month or less; or
(b)the gaming machine is not used because it is broken or damaged and the licensee has taken, or is taking, all reasonable steps to make the machine operational again; or
(c)the licensee has the commission’s written approval for the gaming machine not to be used.
(3)On written application by the licensee, the commission may approve the non-use of a gaming machine for a stated period if satisfied that the gaming machine is not being used for a good reason.”
On 18 May 2009 the Club applied for approval under section 51(3) of the Act not to use its gaming machines for a period of three months (T11). Approval was granted on 21 May 2009 for the gaming machines not to be used and stored for a period of three months. The ACT Civil and Administrative Tribunal (‘the Tribunal’) notes that in both the application by the Club and the response from GARC the issue of approval not to use the machines under section 51 and for the storage of the machines under section 103(2)(c) seem to be mixed together and treated as one matter for approval.
On 7 July 2009 the Club wrote to GARC discussing negotiations with [Club A] and requesting an extension of time to store the machines until 30 November 2009 (T13). No mention was made of an extension of a non-use period but the letter uses similar expressions as those used in the earlier successful application for both a non-use approval and a storage approval. As has been indicated in the preceding paragraph the Club and GARC seem to have treated the earlier application as an application for both non-use of the machines under section 51(3) and storage of them under section 103(2)(c) and the Tribunal proposes to interpret the letter of 7 July 2009 in this way. GARC did not respond to the application.
On 21 August 2009 the Club made another written application for an extension of the non-use and storage period for a further three months, giving reasons in support of the application (T21). It appears that either no decision on the application was made by GARC or a decision, if made, was not communicated to the Club (T25).
An extension under section 51(3) may not be granted by GARC unless it is preceded by a written application by a licensee. It is an unsatisfactory state of affairs if GARC can simply ignore the Club’s written application, including its stated reasons why the extension should be granted. It may be that GARC’s failure to consider the application and reasons presented by the Club amounts to a failure to grant the Club a fair, or indeed any, hearing.
Mr Mullen, Gaming Regulation Manager of GARC, stated in his minute of 13 May 2009 (T5) that GARC “no longer tolerated long protracted transfers”. In his approval of a three month non-use and storage period (T11) he stated that any request by the Club for an extension “is unlikely to receive regulatory approval.” His language becomes quite inflexible in the next paragraph:
“… should the Club be unable to effect a transfer of its gaming machine licence within the approved three months, the Commission expects the Club to apply for the disposal of its machines and surrender its licence.”
These words suggest that GARC may have made its decision by the application of a pre-determined inflexible policy without considering the Club’s reasons for its request for an extension.
The Tribunal notes that decisions by GARC under section 51(3) and section 103 are not reviewable by the Tribunal.
On 22 September 2009, following [Club A]’s termination of its negotiations to acquire the Licence from the Club, GARC issued a disciplinary notice to the Club under section 61 of the Act (T24). The relevant parts of the notice are set out below:
“The disciplinary action proposed was cancelling the Akuna Club’s gaming machine licence No.4500983, pursuant to section 58(1)(e) of the Gaming Machine Act 2004 (the Act).
The Commission considered taking the proposed disciplinary action against the licensee on the following grounds:·the club is no longer an eligible club for the purposes of the Act;
·the gaming machine licence is subject to a condition in respect of the use of gaming machines and the licensee has failed to comply with a requirement of the condition;
·the club has not operated for over three months and the Commission’s approval to store the machines( and therefore not to operate) expired on 21 August 2009.”
11.The relevant sections of the Act relating to these disciplinary proceedings are set out below:
“39 Failure to comply with conditions of licence
(1)A licensee commits an offence if—
(a)the licensee’s licence is subject to a condition; and
(b)the licensee fails to comply with a requirement of the condition.
Maximum penalty: 100 penalty units.
(2)An offence against this section is a strict liability offence.
NoteLicence conditions are imposed by the commission and by other parts of the Act, as well as by this part.
…
57Grounds for disciplinary action
(1)Each of the following is a ground for disciplinary action against a licensee:
…..
(c)the licensee, or an agent or employee of the licensee, has contravened this Act;
……
(f)for a licence issued to a club—
(i)the club has been or is about to be wound up; or
(ii)the club has not operated for 3 months or, if the commission approves a longer period, that longer period; or
(iii)the club has ceased to be an eligible club;
…….
(3)The commission may, in writing, approve a period longer than 3 months for subsection (1) (f) (ii) if satisfied that—
(a)there is a good reason why the club is not operating; and
(b)the club will operate again after the end of the longer period.
58Disciplinary action
(1)Each of the following is a disciplinary action when taken against a person:
(a) reprimanding the person;
(b)imposing conditions on, or amending the conditions of, the person’s licence;
(c)ordering the person to pay to the Territory a financial penalty of not more than $100 000;
(d)suspending the person’s licence for a stated period or until a stated thing happens;
(e ) cancelling the person’s licence.
(2)A reprimand may include a direction by the commission that the licensee, within a stated time—
(a) cease contravening this Act; or
(b)rectify something that contributes to the ground for disciplinary action.
(3)A financial penalty imposed under this section may be recovered as a debt payable to the Territory.
59Criteria for disciplinary action
(1)In deciding what disciplinary action to take under section 58, the commission must consider the following:
(a)whether disciplinary action has been taken against the licensee before;
(b)whether the disciplinary ground on which the disciplinary action is to be taken endangered the public or the public interest;
(c) the seriousness of the disciplinary ground;
(d) the likelihood of further disciplinary action needing to be taken.
(2)The commission may also consider any other relevant matter.
60When disciplinary notice may be given
If the commission is satisfied that a ground for disciplinary action exists, or may exist, in relation to a licensee, the commission may give the licensee a disciplinary notice.
NoteThe commission need not give a disciplinary notice if the grounds for disciplinary action are the contravention of a direction in a reprimand (see s 62).
61Disciplinary notices
A notice (a disciplinary notice) given to the licensee must—
(a)state the ground for disciplinary action that caused the notice to be given; and
(b) tell the licensee that the licensee may, within 3 weeks after the day the licensee is given the notice, give a written response to the commission about the notice.
62Commission may take disciplinary action against licensee
(1)This section applies if the commission is satisfied that a licensee has contravened a direction in a reprimand.
(2)This section also applies if—
(a) a licensee has been given a disciplinary notice; and
(b) after considering any responses given within the 3-week period in relation to the notice under section 61, the commission is satisfied that a ground for disciplinary action exists in relation to a licensee.
(3)The commission may take disciplinary against the licensee.
(4)To remove any doubt, the disciplinary action may consist of 2 or more of the actions mentioned in section 58.
(5)Disciplinary action takes effect when the licensee receives written notice of the action, or on a later stated date.
…
146Eligible clubs
A club is an eligible club if—
………..
(g)the premises occupied by the club, and the facilities and property of the club, are kept and maintained for the benefit of members generally.”
Section 61 of the Act requires that the disciplinary notice “must state” the ground for the disciplinary action that caused the notice to be given. The first dot point substantially sets out the ground for disciplinary action contained in section 57(1)(f)(iii). The third dot point substantially sets out the ground for disciplinary action contained in section 57(1)(f)(ii). It should be noted that the words commencing in line one of the third dot point “and the Commission’s approval” up to and including the date “21 August 2009” are not relevant to the ground for disciplinary action contained in section 57(1)(f)(ii). The words are perhaps directed to an approval under section 51(3) in respect of non-use of the gaming machines and an approval under section 103(2)(c) for the storage of gaming machines. Although these superfluous words may have puzzled the recipient, the words are not sufficient to invalidate the ground for disciplinary action which is set out sufficiently clearly in the first line of the third dot point.
13. However the second dot point states that the licensee has failed to comply with a condition of the licence. This is not a ground for disciplinary action. The ground for disciplinary action should have been stated in terms of a contravention of the Act as required by section 57(1)(c), but it was not. Section 146 of the Legislation Act 2001 (ACT) states that when “must” is used in legislation the function is required to be exercised. The fact that section 39 of the Act makes a breach of the licence condition a contravention of the Act does not remove the obligation on GARC to follow the procedure laid down. If the ground for disciplinary action is a contravention of the Act then the disciplinary notice must say so. The Club should not have to guess what the ground for disciplinary action was. The Tribunal finds that no valid disciplinary notice was given to the Club in respect of the purported ground set out in the second dot point of the notice. It follows that no disciplinary action may be taken against the Club under that provision.
The Club responded to the disciplinary notice on 12 October 2009 and again repeated its requests of 7 July 2009 and 21 August 2009 to continue storing its gaming machines until 30 November 2009 (T25). It also pointed out that no answer to its extension requests had been received. By implication that was another request for extension of the non-use provision under section 51(3). It appears that yet again GARC did not consider the Club’s request. The Club also indicated that a further extension of the storage period might be required if discussions with two possible named purchasers reached a final stage.
On 20 October 2009 GARC considered the matter and decided to cancel the Licence. By implication it rejected the Club’s applications of 7 July 2009, 21 August 2009 and 12 October 2009 for an extension of its non-use period. On 22 October 2009 GARC informed the Club of its decision to cancel the Licence and gave reasons for its decision (T1). On 6 November 2009 the Club lodged an application with the Tribunal for review of the decision. The decision of the GARC to take disciplinary action and to cancel the Licence is reviewable by the Tribunal pursuant to Schedule 1 of the Act.
The review of the decision to cancel the Licence was heard by the Tribunal on 18 December 2009. Both Mr Reid, with the authority of the Board of Directors of the Club, and Mr Greg Jones, the Chief Executive Officer of GARC, gave oral evidence. Very few of the facts were in issue between the parties.
The Club expressed concern that [Club A] had been told by GARC that the acquisition of the Club’s Licence may jeopardise [Club A]’s own gaming machine licence. This was interpreted by Mr Reid as a threat, but he conceded that he had not been present at any of these discussions. Mr Jones’ evidence was that the GARC had told [Club A] that it could not hold both licences and that it would need to surrender its gaming machine licence in order to obtain the Licence from the Club. Mr Jones explained that the procedure would be to conditionally approve the transfer of the Licence, [Club A]’s licence would then be surrendered and, immediately thereafter, the Club’s Licence would be transferred to [Club A]. He said that this procedure had been used by GARC previously and [Club A] was not at risk.
18.The Club raised the issue of the generous treatment two other clubs [Club B and Club C] had received in the past when a non-use period of two years and nine months was granted to the city premises of [Club B] and a non-use period of two years was granted to [Club C]. Section 51(2)(a) allows one month’s non-use, but for periods in excess of one month approval of GARC is required.
19.Mr Walker argued for GARC that the previous extensions and generous treatment of the other clubs were not relevant as a decision on an application for extension of time under section 51(3) is not reviewable. While Mr Walker is correct to point out that review by the Tribunal is not available, it is also valid to note that policy should be applied equitably and consistently and that the Club, as a minimum, should have received reasons for its rejected applications for extensions of time. The differential treatment of the Club should have been explained. At paragraph 17 of his witness statement, Mr Jones says that GARC told [Club B] that alternative premises must be found. No such courtesy was extended to the Akuna Club.
At the core of each of the two valid grounds for taking disciplinary proceedings against the Club is the closure of its premises in Akuna Street and the absence of any alternative premises.
21.Without premises the disciplinary ground under section 57(1)(f)(ii) is made out after three months. As there is no real prospect of obtaining premises, GARC cannot be satisfied that the Club will operate again at the end of three months and hence cannot grant an extension under section 57(3) beyond the three months mentioned.
22.The lack of premises also means that the Club cannot provide facilities for its members and thus cannot satisfy its eligibility requirement under section 146(g). Upon ceasing to be an eligible club a ground for disciplinary action is created under section 57(1)(f)(iii).
Again it is striking that both [Club B] and [Club C] may also have been ineligible under section 146(g) for much of their periods of closure. GARC has no discretion to extend the time for a club to regain its eligibility. It is not surprising that the Club has pointed out the generous treatment of these other two clubs compared with its own treatment by GARC.
The Club did not argue that the decision was a breach of the Human Rights Act 2004 (ACT) (‘the HR Act’), given the more favourable treatment of other clubs by GARC. However the Club did not have legal representation. Section 8(3) of the HR Act provides for equality before the law without discrimination. In Bragon Traders Pty Ltd and ACT Gambling & Racing Commission [2006] ACTAAT 3 (7 February 2006) President Peedom interpreted this provision to mean that “administrative decisions by government officials should be based on coherent grounds, ensuring equality of treatment.” Section 28 of the Human Rights Act 2004 (ACT) provides that reasonable limits may be set by Territory laws. In this case those laws contained in the Act have set out the circumstances where a licence may be cancelled. The Act has been properly applied in this matter, although there is some cause for concern about its proper application in respect of the other clubs. The Tribunal finds that there is no scope for the application of the HR Act in this case.
25.In reaching its decision to cancel the Licence GARC noted that it had considered the four mandatory criteria set out in section 59(1) of the Act. This Tribunal notes that no disciplinary action has been taken against the Club previously. In using the term “endanger” in section 59(1)(b) the legislature must have contemplated a disciplinary ground that was more than being merely contrary to the public interest. It is difficult to conclude that the disciplinary grounds in any way endangered the public or the public interest. The disciplinary grounds are, however, serious and fundamental to the scheme of the Act that only functioning, eligible clubs hold gaming machine licences. In saying that the disciplinary grounds are serious, this is not a reflection on the directors of the Club or on Mr Reid as secretary/manager. This is not a situation where moral turpitude is involved but rather where a series of decisions has placed the Club in an untenable position. The final criterion involves the likelihood of further disciplinary action needing to be taken and unfortunately this is the case because the grounds are continued each day with no prospect of remedy.
Section 59(2) permits the consideration of any other relevant matter. The Tribunal considers the precarious financial situation of the Club to be a relevant consideration in determining what disciplinary action should be taken. The Club has not been wound up only because the principal creditor has not pressed for its moneys. Furthermore the cost of fulfilling its obligation to make good the vacated premises has reduced the current assets of the Club, while also reducing the value of its non-current assets. From Mr Reid’s evidence these include the substantial depreciated value of the Club’s fit-out. The Club seems to be in the position of its liabilities exceeding its assets.
The cancellation of the Club’s Licence is the most serious penalty that may be imposed on the licensee. In the Tribunal’s view it should only be imposed as a last resort and only when the other penalties contemplated in section 58 have been examined and found to be unsuitable. A reprimand will serve no useful purpose nor will a condition imposed on the Licence. Such actions will only be useful where the disciplinary ground may be remedied and is not so fundamental as an absence of premises. A financial penalty will only drive the Club closer to financial extinction. It is now preserved only because […] Pty Ltd, its principal creditor has not pressed for repayment of a debt of some $600,000.00. A suspension of the Licence will have no practical consequences since the Licence has effectively been suspended since the premises were closed on 22 May 2009 by the action of the Club itself.
28. The Tribunal finds that the penalty of cancellation, although extreme, is the appropriate penalty in the circumstances of the Club having no premises, no prospect of obtaining premises and no prospect of finding a purchaser for the Licence.
The Tribunal affirms the decision under review.
…………………………………..
Mr Allan O’Neil
Senior Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO: AT 09/93
APPLICANT: AKUNA CLUB LIMITED
RESPONDENT: ACT GAMBLING AND RACING COMMISSION
COUNSEL APPEARING: APPLICANT:
RESPONDENT: WALKER
SOLICITORS: APPLICANT:
RESPONDENT: ACT Government Solicitor
OTHER: APPLICANT: REID
RESPONDENT:
TRIBUNAL MEMBER/S: MR ALLAN O’NEIL, SENIOR MEMBER
DATE/S OF HEARING: 18 DECEMBER 2009 PLACE: CANBERRA
DATE/S OF DECISION: 13 JANUARY 2010 PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
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