Ballesty v Director of Liquor and Gaming - [2002] NSWSC 1102

No judgment structure available for this case.

CITATION: Ballesty & Anor v Director of Liquor & Gaming & Ors [2002] NSWSC 1102

CURRENT JURISDICTION: Common Law Division

FILE NUMBER(S): SC 13437/01

HEARING DATE(S): 18/11/02
19/11/02

JUDGMENT DATE: 11 December 2002

PARTIES :

John Patrick Ballesty (1st Pl)
Bulldogs League Club Limited
(ACN 000 191 248) (2nd Pl)
Director of Liquor and Gaming (1st Def)
John Manning Turnbull
on behalf of Liverpool Catholic Club Limited
(ACN 000 874 073) (2nd Def)
Raymond Roy Stewart
on behalf of John Edmondson VC
Memorial Club Co-Operative Limited
(ACN 069 233 236) (3rd Def)
William Thomas Basan
on behalf of Cabramatta Rugby League
Club Limited
(ACN 000 650 206) (4th Def)
Shane Victor Atkins
on behalf of The Leo McCarthy Memorial
Smithfield RSL Sub-Branch Club Limited
(ACN 000 926 661) (5th Def)
Michael William Moody
on behalf of St Johns Park Bowling
Club Limited
(ACN 001 067 241) (6th Def)
Joseph Di Pietrantonio
on behalf of Club Marconi of Bossley Park
Social Recreation and Sporting Centre Limited
(ACN 000 196 832) (7th Def)
Gregory Jame Pickering
on behalf of Mount Pritchard & District
Community Club Limited
(ACN 000 458 622) (8th Def)
Terrence George Goldsworthy
on behalf of Ingleburn RSL Sub-Branch
Club Co-Operative Limited
(ACN 069 232 702) (9th Def)
William Francis O'Brien
on behalf of Cabra-Vale Ex-Active
Servicemen's Club Limited
(ACN 000 102 269) (10th Def)

JUDGMENT OF: Kirby J

LOWER COURT
JURISDICTION : Licensing Court of NSW

LOWER COURT
FILE NUMBER(S) : N/A

LOWER COURT
JUDICIAL OFFICER : D B Armati, D A Kok, M C Beveridge LCMs

COUNSEL : D P F Officer QC/A Hatzis (Pls)
I A N Lawry (1st Def)
S B Austin QC/J B Costigan (2nd-10th Defs)

SOLICITORS: Back Schwartz Vaughan (Pls)
I V Knight - Crown Sol (1st Def)
Phillips Fox (2nd-10th Defs)

CATCHWORDS: Appeal from Licensing Court - Error of Law - Wrong test? - Limited exception where construction of Act - Relevance of particular areas within local community

LEGISLATION CITED: Registered Clubs Act 1976
Liquor Act 1982
Gaming Machines Act 2001
Gambling Legislation Amendment (Responsible Gambling) Act 1999

CASES CITED: Cross v McHugh (1974) 1 NSWLR 500
Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126
Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1
Haines v Leves & Anor (1987) 8 NSWLR 442
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Gangemi Holdings Pty Ltd v Salter & Ors [1999] NSWSC 1004
Carr v Neill [1999] NSWSC 1263
SRA v Smith [2000] NSWSC 334
R v District Court: Ex Parte White (1966) 116 CLR 644
Williams v Gandour (unreported, C of A, 7.12.87)
Hope v Bathurst City Council (1980) 144 CLR 1
Harris v McKenzie (1986) 9 NSWLR 139

DECISION: Appeal allowed

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

KIRBY J

Wednesday 11 December 2002

13437/01 - BALLESTY & ANOR v DIRECTOR OF LIQUOR & GAMING & ORS.
JUDGMENT

1 KIRBY J: This is an appeal by the Bulldogs League Club Limited ("the Club") and its Secretary against an order made by the Licensing Court on 8 October 2001. The Club made application under s18(1)(b1) of the Registered Clubs Act 1976 for an endorsement of its Certificate of Registration. The endorsement was to permit two clubhouses which were not contiguous, one at Belmore (the existing Club), and one at Liverpool. The premises planned at Liverpool were part of a larger development known as The Oasis Development.

2 The application attracted a number of objections. The Director of Liquor and Gaming ("the Director") objected, as did other clubs and hotels in the vicinity of the proposed clubhouse at Liverpool. Part way through the proceedings, the hotels withdrew their objection.

3 The hearing before the Licensing Court (Mr D B Armati, Mrs D A Kok and Mr M C Beveridge) occupied 15 days. There were 110 exhibits, including a 550 page Social impact assessment prepared by KPMG Consulting on behalf of the Club. The Court reserved its decision. On 8 October 2001, the Court unanimously rejected the Club's application for endorsement. Its reasons run to 111 pages.

4 Before going to those reasons, and the complaints made by the Club, I should set out the legislative framework relevant to the application.

The Legislative Framework.

5 Under the Registered Clubs Act 1976 ("the Act"), a club may make application to the Licensing Court for an endorsement of its Certificate of Registration where it proposes to increase the area of its premises by the acquisition of new premises (not being contiguous to its existing premises) (s18(1)(b1)). The Licensing Court is obliged to hear and determine such an application, which it may grant, with or without conditions (s18(2)).

6 Objection to the application may be taken upon a number of grounds specified in the Act (s25(1)(a) to (m)). The Director, and certain clubs in the Liverpool and Cabramatta area, objected to the application, upon the following grounds:

"s25(1)(c) Having regard to existing facilities and social amenities available to meet the purposes of the club, the club is not required to meet a genuine and substantial need.

(d) The registration or conduct of the club will, if the application is granted, result in undue competition and economic waste.

(e) The quiet and good order of the neighbourhood in which the premises of the club are situated will be disturbed if the application is granted.

...

(m) The certificate of registration should not be granted on any other ground."

7 Section 25(1)(m) is a catch-all, public interest ground. The Director suggested that the application was against the public interest because it offended, in various ways, one of the primary objects of the Act, gambling harm minimisation. The Act (in common with the Liquor Act 1982) identified two primary objects, liquor harm minimisation and gambling harm minimisation. The latter was expressed in these terms:

Gambling harm minimisation and responsible conduct of gambling activities are primary objects of the Act

(1) Other primary objects of this Act are:

(a) gambling harm minimisation, that is, the minimisation of harm associated with the misuse and abuse of gambling activities, and

(b) the fostering of responsible conduct of gambling activities."

8 The Licensing Court, in exercising its functions under the Act, was obliged "to have due regard to the need for gambling harm minimisation and to foster responsible gambling activity" (s3A(2)).

9 By Act No 13 of 2000, Parts 10B and 10C were added to the Act. Part 10B is headed "Freeze on number of approved gaming devices kept at clubs". The freeze began on 28 March 2000 (s88AD(1)). It operated at the time of the Club's application to the Court. The Director argued, in these circumstances, that the Court had no jurisdiction to entertain the application. The proposed Club premises included 600 gaming machines (rising to 800 in 2007). Indeed, the Club made it clear that the project would not proceed unless approval were ultimately given (once the freeze had been lifted) for that number of machines (paras 19 and 309). However, the Court was satisfied that it had jurisdiction. It said this: (para 176)

"The application before us is not per se one to keep poker machines, rather it is an application for endorsement of a certificate of registration in respect of premises in which it is planned, in the future, to keep gaming devices. The actual application for authorisation to keep gaming devices must be made at some time in the future, when the Liquor Administration Board must apply the law as it then stands."

10 Part 10C of the Act is headed "Social impact assessment of gaming devices". The object of this Part was identified in these terms:

"s88AI(1) The provisions of this Part are a means (but not the only means) of giving effect to the primary objects of this Act referred to in section 3A (Gambling harm minimisation and responsible conduct of gambling activities are primary objects of the Act)."

11 Certain applications (including an application under s18 of the Act) required the preparation of a Social impact assessment (s88AJ(1)(a); s88AK(1)). Once received, it was to be placed on public exhibition (s88AM(1)(a)), and the attention of the public drawn to it by advertisement (s88AM(1)(b)). The public was invited to furnish submissions.

12 Section 88AL dealt with the contents of a Social impact assessment. This appeal turns upon the construction of that section. It is in these terms:

Content of social impact assessment

(1) A social impact assessment of an application to which this Part applies is required to assess the likely impact on the local community of the granting of the application.

(2) For the purpose of any social impact assessment, the local community comprises the people in the area or group from which the persons utilising the services and facilities of the club are likely to be drawn.

(3) The social impact assessment is to address social and economic impacts and set out any net social and economic benefits to the local community.

(4) The social impact assessment is to contain details of the following:

(a) the number of approved gaming devices already kept by the club and the number kept by other registered clubs having he same or a similar local community (and by any hotels in the neighbourhood),

(b) past increases in the number of approved gaming devices so kept,

(c) the public demand for gambling within the local community,

(d) the incidence of problem gambling within the local community,

(e) the availability of problem gambling services in the local community,

(f) the action proposed to be taken by the club to minimise any harm associated with an increase in the number of approved gaming devices available within the local community (including the action proposed to be taken to protect children),

(g) any likely change in the demands on public transport, any likely employment consequences for other businesses in the local community and any likely change in the demands on welfare, health and housing services in the local community,

(h) the result of consultation about the application with the local community, the local council in whose area the club premises are or are to be situated, the Department of Community Services, the Department of Health, organisations concerned with the social consequences of gambling and other appropriate bodies,

(i) any other relevant matter.

The assessment may also address any benefits or support provided by the club to persons who are not members of the club.

(5) The regulations may make further provision for or with respect to the furnishing or content of social impact assessments under this Part."

13 No regulations have been made.

14 The Court was given power to grant or reject the application. Section 88AN was in these terms:

Consideration of social impact assessment and submissions

(1) The Licensing Court or Board is required to take into account any social impact assessment furnished by the applicant in connection with an application to which this Part applies and any written submissions made on the matter within the 30-day period referred to in section 88AM.

(2) Accordingly, the Licensing Court or Board may grant or reject the application (in whole or in part), grant the application for a temporary period or impose conditions on the grant of the application.

(3) The power conferred by subsection (2) applies whether or not the provisions of this Act dealing with the determination of those applications confer that power."

Change in the Law

15 Since the Court gave its decision there have been a number of changes in the law. The Gaming Machines Act 2001 was introduced to deal with gaming machines in clubs and hotels. It effected changes to both the Liquor Act 1982 and the Registered Clubs Act 1976. It received the assent on 19 December 2001. It began operation on 2 April 2002.

16 Schedule 3 to the Gaming Machines Act repealed a number of sections of the Registered Clubs Act, including s3A (gambling harm minimisation), Pt 10B (the freeze provisions), and Pt 10C (Social impact assessment of gaming devices). Henceforth, applications under s18 of the Registered Clubs Act to endorse a Certificate of Registration, to incorporate new premises, would not require a Social impact assessment. Such an assessment would be required, however, when application was made to the Liquor Administration Board for approval to operate gaming machines within a registered club. The new Act also lifted the freeze. However, it imposed a limit of 450 machines upon the number of machines which could be approved (s12(1) Gaming Machines Act 2001).

Error of Law

17 A person aggrieved by a decision of the Licensing Court may appeal to the Supreme Court "on a question of law" (s42(1) of the Act). It is said by the objectors that many of the issues which the Club seeks to agitate upon this appeal are matters of evaluation, and are essentially questions of fact and degree (cf Cross v McHugh (1974) 1 NSWLR 500 at 502). It is, therefore, as well to be clear on what is, and is not, a question of law.

18 In Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126, Jordan CJ considered the nature of an appeal on a question of law. He distilled from the authorities a number of propositions. Relevantly, he said this (omitting references): (at 138)

"(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences.

(4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences, or, (c) if it has misdirected itself in law."

19 The issue has been considered in a number of cases since that time, including Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1; Haines v Leves & Anor (1987) 8 NSWLR 442; Harris v McKenzie (1986) 9 NSWLR 139; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; Gangemi Holdings Pty Ltd v Salter & Ors [1999] NSWSC 1004; Carr v Neill [1999] NSWSC 1263; SRA v Smith [2000] NSWSC 334. Arising from these authorities, a number of broad propositions can be stated:

· First, there is no error of law in simply making a wrong finding of fact (Australian Broadcasting Tribunal v Bond (supra) per Mason CJ at 341), unless there is no evidence to support that finding.

· Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence (Glass JA in Azzopardi v Tasman UEB Industries Ltd (supra) at 155).

· Thirdly, it is not an error of law even if the reasoning process by which the Court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in R v District Court: Ex Parte White (1966) 116 CLR 644, at 654).

· Fourthly, there is a limited exception in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment (Mahoney v Industrial Registrar of NSW & Anor (supra) per Hope JA at 3 and Samuels JA at 5).

20 There will be an error of law, however, in the circumstances described by Mason CJ (Brennan J agreeing) in Australian Broadcasting Tribunal v Bond (supra): (at p 355)

"The question whether there is any evidence of a particular fact is a question of law. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. This is because, before the inference is drawn, there is the preliminary question whether the evidence reasonably admits of different conclusions. So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law."

21 The Club asserts that the Court misconstrued the Act, and applied the wrong test. Such a submission obviously raises a question of law. Alternatively, it was suggested that the Court, in reaching its conclusion, had regard to material which was irrelevant. That, essentially, is an argument that there was no evidence to justify the Court's conclusion. That, too, is a question of law.

22 The decision by the Licensing Court must be read as a whole. It must be read fairly. In Cross v McHugh (supra), the Court said this: (at 503)

"The first consideration is to understand what the licensing court intended to convey by its reasons. They should be fairly read and it should be remembered that it was for the original appellant to show an error of law in order to attract the jurisdiction of the Supreme Court."

23 The decision, moreover, should be read without an undue predisposition to finding error (Williams v Gandour (unreported, C of A, 7.12.87) per Samuels JA, with whom McClelland JA agreed).

The Proposal

24 The Canterbury Bankstown Rugby League Club (which became the Bulldogs League Club Limited) was established in 1956. It became a Registered Club in 1957. In 1960 it moved to the clubhouse which it now occupies at Bridge Road, Belmore. Belmore is within the Municipality of Canterbury.

25 However, since 1956, there have been demographic and other changes which have affected the Club's membership. Almost half of its present membership reside outside the Municipality of Canterbury, either in Liverpool or Fairfield or Bankstown. Moreover, the shift in the Club's supporter base to the west and southwest is accelerating, with growth in population. Members living in Liverpool must undertake a thirty minute journey to reach the premises at Belmore (para 11).

26 In the early 1990's the Club determined that it should develop additional premises and facilities to service its membership in the southwest of Sydney (Exhibit A, page 40). Its vision was shared by the Liverpool City Council. In 1993, the City of Liverpool released its Strategic Plan. It proposed the redevelopment of Woodward Park.

27 A proposal was developed, known as The Oasis Development. It comprised three interrelated projects. The first was a new clubhouse for the Bulldogs League Club. The clubhouse was to be part of a development known as The Palms. Secondly, within the same building there was to be a hotel with 252 bedrooms. The Club and the hotel were to share a common foyer.

28 The third aspect was a collection of sporting facilities. There would be an indoor arena with a seating capacity of 8,000. It was to be home for the West Sydney Razorbacks, a basketball team sponsored by the Club. There would also be a water park facility. It would have a 75 metre wave pool and slides. Finally, there would be a stadium with a seating capacity of 34,800. It was to be the home ground of the Bulldogs football team.

29 The new clubhouse was to be the centrepiece of the development. It was the combined view of the Club and the Liverpool City Council that without the Club the development would not go ahead.

No Genuine and Substantial Need

30 For the application to succeed, the Club had to overcome a number of objections (s25(1)). It then had to persuade the Court that there were net social and economic benefits to the local community (being the persons who might use the facility) in granting the application (s88AL; s88AN).

31 The Club was successful in overcoming each objection. However, it failed to persuade the Court that there were net social and economic benefits arising from the project. The application was therefore refused.

32 Before examining the reasoning behind the Court's refusal, it is instructive to examine the reasons provided for the rejection of each objection. In the course of examining each objection, the Court provided a commentary upon benefits and disbenefits arising from the application. That commentary is relevant to the Court's later assessment (under s88AL and s88AN) of the net social and economic benefits to the local community.

33 The first objection was that there was no genuine and substantial need for the additional Club premises (s25(1)(c)). The onus was upon the Club to prove such a need (s25(9)(b)).

34 The Court was provided with plans of the proposed Club and a detailed description of the facilities which were planned. It accepted that it would be a lavish facility (para 25), built to a very high standard (para 29, 290). The budget for the new premises was $110 million. The Court accepted that it would be well managed (para 290). The Club at Belmore was well run and described as being "in harmony with the neighbourhood" (para 163).

35 The Court was urged to ignore aspects of The Oasis Development other than the club. It was suggested that the wider development was unlikely to proceed, and had been incorporated, as by "smoke and mirrors", to hide limitations of the proposed Club premises (para 90).

36 The Court rejected that view (para 290). It believed that, in examining the purposes of the Club, it could not ignore the wider development. The Club premises (aside from the aspect of gambling, which it dealt with separately), and the "promised spin off of The Palms and Oasis", would have considerable social benefits for the local community, although mainly in the Liverpool area (para 290). The Court accepted that the project was likely to go ahead. Development approval had been given for the hotel (para 41). Funding had been organised with the Macquarie Bank, subject to success in the application for endorsement of the Certificate of Registration (paras 44 and 45).

37 The Court accepted that there had been a shift to the west of players and supporters (para 78). Liverpool was a growing area (para 88). The shift, already evident, would be accentuated with the passage of time. Facilities in that part of Sydney did not meet the needs of members, existing and prospective (paras 62, 88, 112 and 113).

38 The Court therefore found that there was a substantial need for such a Club, adding these words: (para 113)

"... That need exists and remains unsatisfied because there is no club or there are no clubs or facilities and amenities generally with the purposes proposed having regard to individual facilities and social amenities or all of them."

39 The Court's conclusion on this issue was stated in these terms: (para 116)

"In summary we are much persuaded by the quality of the facilities to be provided on the registered club premises without being attracted to the proposed theming evidence, and do not find, under the needs test, a distraction from that finding by the size or location of the gaming area. These will be large, modern, airconditioned premises with a wide range of facilities for members and prospective members. ..."

40 The objection failed.

Undue Competition and Economic Waste

41 The objection based upon undue competition and economic waste aims at preventing the undue proliferation of registered clubs (para 126). The onus is upon the objector to establish that the proposed club would degrade existing facilities throughout the area.

42 Here, the Secretary of the Club acknowledged that the viability of the proposed club premises would depend upon it being able to attract "market share from other venues" (para 135). The objecting clubs argued that the Bulldogs Club was the victim of its own success. The existing club premises at Belmore traded above the State average, particularly in gaming. The proposed club at Liverpool was expected to do even better. There was the danger, so it was said, that the proposed club would become an "economic Goliath", swamping other clubs (para 138).

43 The Court examined the projected return from poker machines at the proposed club. The return in the first year, commencing July 2004, was expected to be $43.8 million. The returns on poker machines in other clubs in the area, in the previous year, were as follows: (paras 140 to 145)

CLUB	RETURN $millions
The Edmondson VC Memorial Club	10.76
The Mounties	40.70
The Liverpool Catholic Club	20.40
The Cabramatta Leagues Club	20.90
The Cabra-Vale Ex-Servicemen's Club	11.16
Club Marconi	29.70

44 The Court found that the proposed clubhouse at Liverpool would simply create further competition. The competition and the impact upon other clubs would not be "undue". The new club premises would not lead to a diminution of existing facilities.

45 The objection failed.

Quiet and Good Order of the Neighbourhood

46 The objector clubs asserted that, were the application granted, the quiet and good order of the neighbourhood would be disturbed (s25(1)(e)). The onus was upon the objectors to establish the validity of the objection (s25(9)(c)). The concept of the "neighbourhood" was different from, and narrower than, the concept of the "local community", being the term used throughout Pt 10C, in the context of the Social impact assessment. The Court found this: (para 163)

"... We note that Bulldogs already conduct club premises in the middle of Belmore which are now as busy as the new premises are planned to be. There was no evidence that there had been any relevant complaints about the behaviour of patrons or intending patrons outside the Belmore premises. In fact the evidence all pointed to the club being well-run in harmony with its neighbourhood."

47 The objection therefore failed.

The Public Interest

48 The Director objected to the application as not being within the public interest (s25(1)(m)). The onus was upon the Director to establish that objection (s25(9)(c)). The objection was in two parts. The first concerned one of the primary objects of the Act, gambling harm minimisation (s3A). The second concerned the impact of the proposal, and whether it would cause a major exacerbation of problems relating to gambling.

49 Elaborating upon that objection, the Director said this: (para 310)

"That it would not be in the public interest to grant the application on the ground:

That it will be contrary to a primary object of the Registered Clubs Act being gambling harm minimisation, that is, the minimisation of harm associated with the misuse and abuse of gambling activities and the fostering of responsible conduct of gambling activities in that the grant of the application will encourage or is likely to encourage the misuse and abuse of gambling activities.

That the grant of the application will result in a rapid and significant influx of gaming machines into an area where it is likely to result in a major exacerbation of problems related to gambling."

50 Dealing with the first part, the Court extracted the Minister's Second Reading speech, when introducing the Gambling Legislation Amendment (Responsible Gambling) Act 1999 (para 313). The Minister said this, referring to the terms of the primary object of gambling harm minimisation in s3A:

"... are directed at ensuring the creation of a more responsible gambling environment in which the key elements include: ensuring that operators do not target consumers who may be especially vulnerable - for example, minors, people who are disadvantaged and people who have gambling problems: and ensuring that operators advertise and promote their activities in a manner that recognises general community concerns about gambling; and ensuring that operators do not engage in activities that may tend to exacerbate or encourage irresponsible gambling by consumers - for example, the provision of credit for gaming purposes and the provision of inappropriate inducements to gamble."

51 Gambling, for most people, was a harmless activity which gave pleasure to significant numbers. The Act does not, as such, seek to discourage gambling. Rather, it focuses upon the misuse and abuse of gambling activities (para 314).

52 The Court examined the Club's practices and records at Belmore. There was no evidence that it conducted its activities in breach of the statutory test (para 317). The Court said this: (para 317)

"... To the contrary the evidence is to the effect that the club is well managed with responsible gambling foremost in the mind of the management and board of the club."

53 The Court was satisfied that the practices the Club proposed to introduce at Liverpool would likewise meet the statutory requirements. The first aspect of the objection failed (para 319).

54 The Court then turned to the second aspect. It considered whether, adopting the wording of the objection, the number of gaming machines proposed (600 initially) may be regarded as a "rapid and significant influx into (the) area"? The Court recognised that the answer to that question may depend, potentially, upon the definition of area being examined. The Court had, by this point in its judgment, already examined the Social impact assessment. In the course of that examination, it had been obliged to assess the likely impact of the application "on the local community" (s88AL(1)). Within that context, the Court was required to give definition, geographically, to the "local community". It adopted the criteria suggested by the Social impact assessment, namely, those people who could drive to the premises within 20 minutes. The impact of the proposal, however, would fall unevenly upon that area. Within "the local community" there was a smaller area, termed the "core area", where the adverse effects of the proposal would fall most heavily. This is an aspect of the judgment about which the Club complains, and which will be examined more closely below, when considering the Club's grounds of appeal.

55 Measured against the 10,390 gaming machines in the "local community", the addition of 600 machines by the proposed Club would be an addition of 5.8 percent. When the numbers rose in 2007 to 800 machines, the percentage increase would be 7.7 percent. However, the population of the area was expected to grow by 2007, so that the "percentage increase in the number of machines will be low" (para 328).

56 In the much smaller "core area", closer to the Club itself, there were said to be 1700 machines (an assertion which will also be examined below). The addition of 600 machines to that area would be an increase of 35 percent (para 329).

57 The Court found that within the "core area" such an increase "will be significant". Even within the "local community" the increase may be regarded as significant. The Court said this: (para 331)

"... as to the local community area it will still be rapid and we believe that an increase of 5.8% of machines is in fact significant. We find it to be significant not focusing purely upon the percentage figure of 5.8% but upon the total number of machines, namely 600, and their concentration."

58 The Court referred to its earlier discussion (in the context of the Social impact assessment) of those who might be expected to patronise the new Club. It said this, employing different terminology ("the area about these premises"), but presumably referring to the "core area": (para 335)

"We find that the material which we have just outlined relating to the demographics of the socio-economic area about these premises, particularly low weekly incomes and spending on gaming machines, despite the absence of precise quantification of problem gambling, does establish that there are members of the community who are vulnerable to problem gambling and that they are located in the area about these premises. To find otherwise would ignore what we are satisfied is the overwhelming evidence to this effect from a reading of the Productivity Commission report and the evidence of Dr Alcock and Professor McMillen."

59 Such persons would be exposed to the Club and its temptations. The Club's policies of gambling harm minimisation would not prevent a number of them becoming problem gamblers (para 336). The Court then made the following finding: (para 338)

"We find that there will be a rapid and significant influx of gaming machines and that there is currently problem gambling in the area relevant to this application and that there will be an exacerbation of problem gambling."

60 Thereafter the Court considered whether the likely increase in problem gambling could, in the terms of the objection, be characterised as a "major exacerbation". The Court was not prepared to go that far. It said this: (para 339)

"... We are only prepared to find that there will be an exacerbation."

61 It added: (para 340)

"We do not find it will be major because, despite the fact that in the core area there will be a 35% increase in gaming machines, we cannot necessarily draw the conclusion that there will be a proportionate or even similar increase in problem gambling. Likewise if we adopt the 5.8% figure for the local community which the applicant would wish us to use then of course the percentages drop away considerably when assessing the test of 'major'. There is no evidence of any correlation between the increase in the number of machines and the likely number of problem gamblers that will result. We have already found there will be an increase in problem gamblers but not to the extent it will be major."

62 The objection by the Director on both public interest grounds therefore failed.

The Local Community

63 Having overcome the objections, the Club was required to satisfy the Court that there were net social and economic benefits to the "local community" (being the persons who might use the facility) in granting the application (s88AL; s88AN(2)). The Court, therefore, had to determine the identity of the "local community". It then became the measure of net social and economic benefits.

64 A number of consultants offered alternative descriptions of the "local community". KPMG Consulting, the authors of the Social impact assessment, suggested a catchment area where the boundaries were determined by an ability to reach the proposed clubhouse within 20 minutes by car. Such an area had an irregular shape, as you would expect (depicted in Exhibit 4). It incorporated the following Local Government areas: (Exhibit B, p207)

"The catchment area encompasses all of the Bankstown LGA, almost all of the developed parts of the Liverpool LGA, the greater part of the Fairfield LGA, and parts of the Holyroyd, Parramatta, Auburn, Strathfield, Canterbury, Hurstville, Campbelltown and Camden LGAs. In 1996 the total population in the whole of the LGAs of Liverpool, Fairfield and Bankstown accounted for approximately two thirds of the total population of the catchment."

65 The Bulldogs Club retained Mr Chambers, a town planner with BBC Consulting Planners. Mr Chambers agreed with KPMG Consulting. He also identified a "core area" within the catchment. He said this: (Exhibit B, p208)

"Within the catchment area described above, being the area within 20 minutes driving time of the subject premises, the eastern part of Liverpool LGA, being the part most urbanised, can be considered the "core area" from which most members of the club could be expected to be drawn. ..."

66 Mr George Smith of Design Collaborative Pty Limited was retained on behalf of the objecting clubs. Mr Smith is also a town planner. He believed the "local community" was much smaller than suggested by KPMG. It had a population of perhaps 150,000 compared to more than 750,000 in the catchment identified in the Social impact assessment. Mr Smith said this: (Exhibit B, p422)

"I believe it would be reasonable to consider that the 'local community' for the purpose of this application as those living in the urban area and nearby rural parts of the City of Liverpool, i.e. the area described by BBC as 'the core area'."

67 Mr Smith's view did not, in fact, coincide with that suggested by BBC. Mr Chambers of BBC had included the urban area in the city of Liverpool, but not "the nearby rural part" of that municipality.

68 Professor Jan McMillen was called by the Director. She is the Executive Director of The Australian Institute of Gambling Research at the University of Western Sydney. She is also a member of the Queensland Gaming Commission, and a former member of the Victorian Gaming Commission. Professor McMillan also defined an area smaller than that suggested by KPMG. Her suggestion partly overlapped with the catchment area in the Social impact assessment. Professor McMillen's proposal was described by the Court in these words: (para 214)

"She said that given the local transport and urban patterns, she considers that Fairfield-Liverpool SSD (Statistical Sub-Division), containing the Statistical Local Areas (SLAs) of Fairfield and Liverpool, plus the neighbouring Bankstown SLA can be considered as the potential local catchment area of the (proposed premises) for the purposes of impact analysis."

69 The Court, as mentioned, determined that the "local community" was that suggested in the Social impact assessment, that is, those areas within 20 minutes drive-time by vehicle. The Court recognised the implication of that finding, which was favourable to the Club. It said this: (para 254)

"... We note, however, that the 20 minute drive time concept has the advantage for the Bulldogs that, despite evidence that Liverpool and Fairfield LGAs have a relative abundance of poker machines, whose numbers have grown fast in the last few years, it includes areas where there are not many existing machines. Thus, over the selected area as a whole, the distribution of such machines per 1000 residents (or even, it seems, per 1000 adults) is, according to the SIA, below the state average, even after adding the machines proposed for the new premises."

70 The Court added the following comment, which is important: (para 259)

If granting the application would have a serious effect on a significant part of the 'local community', then that also has to be taken into account in exercising the power conferred by s88AN.

71 The Club, on this appeal, asserted that the definition of the "local community" had important implications. First, the Social impact assessment, and the consultant planner retained by the Club, alone amongst those called to give evidence, addressed the precise issue which was relevant, namely, the net social and economic benefits to the "local community", as defined.

72 Secondly, the material gathered, and the conclusions offered by the other consultants, related to areas which, geographically, did not coincide with the "local community". Such material had to be approached with caution. It was irrelevant and apt to mislead, unless care were taken to ensure that the particular observation or statistic had application to the "local community", and did not include areas outside that community.

Evaluation by the Court

73 The Court set out at some length the evidence concerning the social and economic impact of the proposal (paras 178-289). Under the heading "Net Social and Economic Costs/Benefits", it stated its findings and conclusion that the application should be rejected.

74 The Court acknowledged a number of clear benefits to the local community. The facilities (aside from gambling) would be built to a high standard. They would be well run. They would be an asset to the local community. Building the Club would ensure the completion of other aspects of The Oasis Development. That would also generate considerable social benefits (although mainly in the Liverpool area). It would bring people to the area, with a net economic benefit to the local community (para 290). The proposal, moreover, had widespread community support (para 293).

75 In its review of the evidence, the Court referred to the analysis within the Social impact assessment concerning job creation (para 282). It was estimated that the project would generate 425 construction jobs over two years, without looking at the multiplier effect. There may be 1000 direct jobs in the larger development. Commenting upon these figures, the Court said this: (para 288)

"The authors of the SIA themselves state that it is simplistic to assume that the number of unemployed in the area will reduce by the number of new jobs they say will be created and we agree. We are satisfied that the new premises and the developments that depend on the new premises would create some more employment, and lead to some reduction of unemployment in the part of the catchment area near the new premises, but that changes will probably not be of the magnitude forecast in the SIA."

76 The Court then analysed the effect of 600 gaming devices (rising to 800 after three years) within the Club premises. That aspect of the Club would, in part, constitute a benefit to the local community. The Court said this: (para 291)

"the gaming facilities proposed for the new premises would provide a form of entertainment to a number of members of the local community, thus providing a social benefit, although partly at the expense of existing gaming outlets within the community."

77 That statement, and the analysis which followed, reflected information gathered by the Productivity Commission in its report on gambling in 1999, which was set out in the Social impact assessment: (Exhibit A, p19/20)

· A total of 2.1% of Australian adults are believed to be problem gamblers (comprising 1% (130,000) with 'severe' problems and 1.1% (160,000) with 'moderate' problems). Conversely, 97.9% of Australian adults are believed to not be problem gamblers.

· Average gambling losses for problem gamblers (2.1% of the Australian adult population) are estimated to be 20% of household income compared with 1% for recreational gamblers (97.9% of the Australian adult population).

78 The Court then dealt with the harm which 600 gaming machines (and later 800) would be likely to engender. A record return on each machine, as at Belmore, could be expected (para 291). The Court accepted that the Club would apply best practice in gambling harm minimisation. That would not, however, prevent an increase in problem gambling. The Court said this: (para 292)

"... the gaming facilities would divert money from members of the community in areas that are already low income and socially disadvantaged areas. It would we believe, result in an increase in problem gambling. The increase is impossible to quantify."

79 The Court added: (para 292)

"At one extreme, if the club were to attract only existing gamblers, the probability is that the availability of its new machines would be accompanied by a less than proportionate increase in problem gambling, but this argument is offset by the Bulldogs' facility in managing their poker machines profitably. At the other extreme, if the club, by reason of its superior facilities, were to attract an all-new clientele who do not otherwise attend existing clubs or do not attend them much, then the increase in problem gambling may be even greater than the proportionate increase in the number of machines in the community."

80 Although the Court stated that it would be impossible to quantify the increase in problem gambling, it gave, in the context of the Directors' Public Interest objection, a broad indication of the likely increase. It said there would be an exacerbation (supra 60), but not a major exacerbation of that problem, whether viewed from the prospective of the "core area” (where the increase in machines was expected to be 35%), or the local community (where the increase would be 5.8%) (supra 61).

81 There was considerable evidence concerning the make up of the local community. The Court quoted from the Productivity Commission's report of 1999, as follows: (para 195)

· Where socially and economically disadvantaged areas do have a high density of gaming machines, there will be implications for the local community (p10.45).

· ... evidence of concentration of gaming machines in areas of low socio-economic status in ... NSW ... suggests that a greater proportion of residents in these areas are likely to be problem gamblers, and thus the social costs in these areas will be higher (p11.8).

82 In addition, the Treymayne Report (which the Court found to be objective and useful (para 216)), compared Local Government areas in terms of advantages and disadvantages. It produced a table of disadvantage. Fairfield-Liverpool was identified as the most socio-economically disadvantaged area of Sydney (para 217). It had the following characteristics: (para 217)

· " the lowest median income;

· the second highest annual loss on club poker machines;

· the third highest annual per capita loss on club poker machines;

· an above average increase in total expenditure on poker machines;

· an above average growth rate of 7.1% in expenditure per adult on poker machines;

· over several years, the highest annual expenditure in Sydney Clubs per poker machine;

· the third highest level per adult of club poker machine tax."

83 The Canterbury-Bankstown statistical sub-division, part of which fell within the catchment area, was the second most socio-economically disadvantaged area in Sydney, with comparable patterns of expenditure on gaming machines (para 218).

84 The "local community" was described. There were more children and more young adults than the state average. A higher proportion than the state average were born overseas. The rate of unemployment was higher, and a higher proportion was dependent upon welfare. The Court set out the following statistics on income: (para 263)

"The SIA acknowledges that the community has a lower proportion of households with an income of $1000 or more and a higher proportion of households with an income of $500 or less when compared to Sydney as a whole (26% against 32% and 33% against 29%)."

85 The Court then made the following observation: (para 268)

"... a person addicted to poker machines who loses, say, $200 per week on the machines will cause much more severe harm if the household income is $500 per week than if it is $1500 per week."

86 There was an indirect cost associated with problem gambling. The report of the Productivity Commission included the following statistics:

"Costs of problem gambling include financial and emotional impacts on the gambler and others (estimated to be 5-10 other persons affected either directly or indirectly)."

87 Welfare services, already stretched, would be placed under even greater strain if the application were successful (para 294).

88 The objectors urged the Court to focus upon the "core area" within the local community. That was the area closest to the Club. It was the area likely to shoulder most of the harm. It was also an area of socio-economic disadvantage (para 295).

89 The Court responded to that suggestion in these terms: (para 296)

"We acknowledge that the statutory test requires us to consider the whole local community and we expressly do so. But in our opinion we should not only consider that community as a whole, but also the particular parts of it which are in close proximity and are much affected by the proposed premises."

90 That statement echoed similar statements made in the course of its review of the evidence. Professor Jan McMillen gave evidence that the area Liverpool, Fairfield and Bankstown was already beset with problems and was "at risk". In her view, no matter what the benefits, the development was against the public interest. Responding to that argument, the Court said this: (para 222)

"... She is, of course, perfectly entitled to hold such a view, but the process required by Part 10C of the Act means the Court itself cannot ignore any net social or economic benefits."

91 Shortly before reaching its conclusion, the Court restated the test, and did so accurately: (para 306).

"Balancing all of these facts and findings we must assess the likely impact on the local community (the whole of it) and consider social and economic impacts and net social and economic benefits to that local community."

92 Having said that, and said that it would also consider particular parts of the area in close proximity which were "much affected", the Court provided the following commentary upon the distribution of gaming machines: (paras 297-299)

"297. In this 'core area' Canterbury-Bankstown has the fourth highest concentration of machines in the State; Fairfield-Liverpool has the third highest growth rate in machines in the period 1994 to 1999; these three areas had the second and fourth highest real expenditure on machines in Sydney clubs up to May 1995; in 1999 the Fairfield-Liverpool area had the third highest level of lost revenue in machines in the Sydney region ($823).

298. All of these are in an area of socio-economic disadvantaged and the lowest level of median weekly income.

299. This core area currently has 1700 machines and a 600 increase will be about 35% whereas for the local community as a whole there are 10,390 and the increase would only be 5.8%. These are telling figures."

93 The Court added: (para 300)

"300. We accept Prof McMillen's evidence that the Fairfield-Liverpool and the Bankstown districts (making up about two thirds of the local community) are fragile communities with multiple social problems, and would suffer disproportionately severe problems if the projected increase in poker machines at the new premises were to occur."

94 The Court then made the following observations: (paras 301-302)

"301. We are conscious of the argument that the harm done by adding 600 machines to the number of machines already in excess of 10,000 in the catchment area would be 'minimal'. We do not accept that an increase of about six and up to eight per cent of poker machines in the area of the local community as a whole is 'minimal' or that its effect must be 'minimal'. Even if this were so, it seems to us that (however small the increase requested) there is a point at which the community, and those charged with acting in the interests of the community, must say 'no', if net harm will result.

302. In our view the factors against the applicant outweigh any justification of the increase based on it being only minimal."

95 The Court then stated its conclusion in these terms: (paras 307-308)

"307. We are satisfied that, having regard to the many matters of which we must take account under the heading of 'Social Impact' there would be significant social damage (impact) as against a moderate economic benefit to the local community from granting the present application. The balance is such that, we reject the application pursuant to the provision s88AN(2) of the Act.

308. We do not repeat the findings on impact and benefit we have set out at length. We state that we, inter alia, particularly took into account the standard of club which the present Board and management would operate with its proposed excellent facilities and gambling program. Against this we inter alia, strongly balanced the impact on the very socio-economically disadvantaged local community in which the club would be located."

The Grounds of Appeal

96 The Club pointed to three errors on the part of the Court.

· First, the Court, whilst acknowledging that it was obliged to consider the whole community, failed to do so. Its consideration of the "core area" supplanted its proper consideration of the local community as a whole.

· Secondly, the Court erred in the weighing process in respect of the net social and economic benefits to the local community (para 307).

· Thirdly, the Court ultimately applied a test (even a minimal impact would compel rejection) (para 301), which was not authorised by the Act.

97 I will consider each objection in turn.

The "Core Area"

98 Under this ground, the Club made three complaints:

· First, the "core area" was ill-defined. Insofar as it was given definition, it took in areas outside the catchment of the local community. The Court, in reaching its conclusion, impermissibly took into account those areas.

· Secondly, there was no basis for the finding that the "core area" had 1,700 machines, such that an additional 600 machines would be a 35% increase.

· Thirdly, the Court placed an "improper emphasis" upon the "core area", such that it supplanted its proper consideration of the local community as a whole (written submissions paras 27, 65(a)).

99 It is convenient to deal with the first and second issues together. I have, to some extent, referred to the evidence already. The expression "core area" was first used by Mr Chambers of BBC Consulting Planners to refer to "the eastern part of the Liverpool LGA, being the part most urbanised". The expression was taken up by Mr George Smith, consultant to the objecting clubs. He purported to adopt the definition of Mr Chambers, but included "nearby rural parts" of the City of Liverpool.

100 The waters were muddied still further, according to the Club, by the cross examination of Mr Ball (of KPMG) by Mr Costigan of counsel (appearing for the objecting clubs). Counsel asked the following questions of Mr Ball: (Exhibit C, p 997)

COSTIGAN: It equates with Mr Ball with respect to the Liverpool local government area, - LGA.

BENCH: Tell me just where that is on p.9?

101 The cross examination continued (Exhibit C, p998)

102 The Court adopted that analysis in para 299, which, for convenience, I repeat:

"299. This core area currently has 1700 machines and a 600 increase will be about 35% whereas for the local community as a whole there are 10,390 and the increase would only be 5.8%. These are telling figures."

103 The Club submits, however, that Mr Smith did not define the area as "the Liverpool LGA". Rather, he referred to "those living in the urban area and nearby rural parts of the City of Liverpool". More importantly, the "local community", which should have guided the Court, did not include the whole of the Liverpool LGA. Rather, it included, according to the description given by BBC Consulting (supra 64), "almost all the developed parts of the Liverpool LGA".

104 Further, Mr Ball did not, according to the Club, give evidence that there were 1700 machines "in the area" (whatever the "area" may be). He was asked by counsel to make an assumption, in order to answer a question about percentage increases. Mr Ball responded by saying: "If you say so, yep". In these circumstances, the Club made the following submissions: (paras 53-54)

"53. There is no other reference in the evidence to the club providing an increase of 600 machines to an existing supply of 1700 within a 'core area'.

54. This evidence, it is submitted, provides no basis for a finding that one or other of the possible 'core areas' has 1700 machines which will increase by 35% if the application is granted. It is entirely unclear from the evidence as to what 'area' was the subject of the evidence."

105 There is some force in these submissions. There was imprecision by the Court in the identification of the "core area", being the area most affected. The area identified by Mr Chambers was not the area identified by Mr Smith, and may not have been coextensive with the Liverpool Local Government Area, referred to by Mr Costigan. The areas identified by Mr Smith and Mr Costigan were not wholly within the catchment of the "local community". The basis for the 1700 figure in Mr Costigan's question was not explained. The judgment of the Court does not provide an explanation. No explanation has been provided on this appeal. I would infer that Mr Costigan took the figures appearing in Table 7.1 of the Social impact assessment (Exhibit A, p88) (being the location of the 10,390 machines in the catchment area), and made a rough approximation of the number of machines within the Liverpool Local Government Area.

106 Given that there was imprecision in the identification of the "core area", did that give rise to an error of law? Did it lead the Court, impermissibly, to use material which was irrelevant to the question it was required to address?

107 In answering these questions, it is important to understand the place of the "core area" in the court's analysis. The "core area" was important for two reasons. First, it defined the area of greatest impact. Although the "local community" included people who drove 20 minutes to reach the Club, the bulk of the Club's membership would be drawn from a much smaller "core area". The magnetism of the Club could be likened to a series of concentric circles, like ripples on a pond. The closer the person to the Club, the greater the pull of the Club (Exhibit C, p1135). Professor McMillen spoke of a study in Victoria by KPMG. People ordinarily travelled between 2.5 and 3.5 kilometres to reach their local club (Exhibit C, p1128). So, most members could be expected to come from the area in the near vicinity of the Club, the area described by Mr Chambers as the "core area", which was the urbanised part of Liverpool. Most of the problem gamblers would also come from the ranks of that group.

108 The Court obviously knew the boundaries of the catchment. It appreciated the area from which members of the Club would be drawn. Any imprecision in its description of the "core area" did not affect its reasoning in respect of that aspect.

109 The second way in which the Court used the "core area" was in respect of the concentration of machines. This was the area where it was proposed to locate a further 600 machines. In para 299, the Court appeared to adopt the reasoning under-pinning Mr Costigan's questions. Since Mr Costigan presumably made his calculation (of 1700 machines) by reference to the Liverpool Local Government Area, and since part of that area was geographically outside the "local community", does it follow that the Court, on an important issue, had regard to irrelevant material? Was there, upon this basis, an error of law?

110 The machines were located in clubs and hotels. The catchment area included "the eastern part of the City of Liverpool, being the most urbanised". The Appellant did not point to any particular area in the Liverpool Local Government Area, but not the catchment area, which may have distorted the figures. The difference between Mr Chambers' definition of the "core area" (which was wholly within the catchment) and that of Mr Smith and Mr Costigan (which extended beyond the catchment) appears to have been rural land. If that be right, the differences in definition of the "core area" would appear to have no relevance to the issue which the Court was addressing (which concerned the concentration of gaming machines).

111 Even if that be wrong, the Court in para 299, and especially 301, ultimately used, as the basis for its conclusion, the figure 5.8% (rather than 35%). That figure was unquestionably referable to the catchment area, that is, the "local community". I do not believe that there was an error of law on this aspect.

112 I should, in this context, deal with a further submission made by the Club. The submission was directed at para 300 (supra 93), where the Court referred to the socio-economic characteristics of the Fairfield, Liverpool and Bankstown districts, which were characterised as "fragile communities with multiple social problems". In respect of that paragraph, the Club made the following written submission: (para 44)

"This demonstrates a further misconception by the Court. SIA, page 51 (table 3.1) shows that indeed, about two thirds of the 'local community' of the proposed club is to be drawn from persons who reside within the Local Government areas of Liverpool, Fairfield and Bankstown. However, it is clear, that only some of the residents from those LGAs are included within the 'local community'. There are significant areas of the LGAs which are outside the 'Local Community' boundaries."

113 Evidence was given concerning the characteristics of the Local Government Areas, or the statistical subdivisions. The characteristics attributed to each involved a level of generalisation. In my view, it was appropriate for the Court to use these characteristics, and attribute them to so much of the Local Government Areas as fell within the catchment. I do not believe there is substance in the Club's complaint.

114 Moving to the third aspect of the first ground (supra 98), the Club suggested that the Court had placed "improper emphasis" upon the "core area", such that it supplanted its proper consideration of the local community as a whole. The Club submitted that the Court was bound by the terms of s88AL to consider the whole of the local community. Whilst areas within the local community may have different characteristics, and the impact of the proposal may differ from one location to another, the statutory test remained. The way in which the Court should have approached its task was identified in these terms: (para 26)

"It is however submitted that as a matter of construction of the legislation, the correct approach is for the totality of the local community to be considered and weighed and that there ought not be and the legislation does not permit a concentration upon any particular part of that community."

115 The question, according to the Club, was not the effect of the proposal on any part of the local community. Rather, it was the effect of the proposal on the whole of the community. The Club neatly encapsulated the difference in these words: (para 27)

"While the whole is undoubtedly made up of parts, it is the whole which must be considered and weighed."

116 The Director, in response, drew attention to the fact that the Court had referred to the relevant statutory provisions (paras 249-250). It examined the "local community". It made findings in respect of its characteristics (para 260-261, 263-266, 270-273). Particular locations within the catchment area were also relevant, as the Club acknowledged. The Court said this: (para 255)

"... the Director, criticised the approach of passing evenly over all the area and all the people in it. He directed attention to special areas - more affected and more vulnerable - in closer proximity to the new premises. In reply counsel for the applicant conceded that any such matters would be considered by the Court in the weighing exercise which it is required to make."

117 I accept that the Court was conscious of the need to consider the whole community, not simply the impact upon the "core area". In para 296, for instance, the Court said this:

"We acknowledge that the statutory test requires us to consider the whole local community and we expressly do so."

118 The Court stated, accurately in my view, the relevance of localised effects within the local community. It said this: (para 259)

"... If granting the application would have a serious effect on a significant part of the 'local community', then that also has to be taken into account in exercising the power conferred by s88AN."

119 An adverse (or beneficial) local impact was relevant. Such an impact, however, was not determinative. It was something "to be taken into account" (see also para 306).

120 I do not believe that the Club has established the first error which it identified.

Ground 2: The Weighing Process

121 Counsel for the Club, in written submissions, recited the findings of the Court, relevant to the weighing process. On the credit side, the Court found the following:

· That there was a genuine and substantial need in the area for the proposed premises.

· That the premises would not give rise to undue competition and economic waste.

· That the premises would not disturb the quiet and good order of the neighbourhood.

· That the premises were not otherwise against the public interest.

· That the premises would be built to a high standard and would be an asset to the community.

· That the premises would be well run.

· That the Club would apply the best available practices of gambling harm minimisation.

· That the promised "spin off", being the hotel and facilities forming part of The Oasis Development, would have considerable benefits for the local community, although mainly in the Liverpool area.

· That the premises had widespread community support.

· That the new premises and additional facilities would have a net economic benefit to the community. They would create jobs and bring people from outside the area to the local community.

· That the gambling facilities would, for the vast majority of patrons, provide entertainment and may be considered a social benefit.

122 On the debit side, the Court found that there would be an exacerbation of problem gambling. However, the exacerbation would not be to "the extent it will be major" (para 340).

123 I would add, on the debit side, the Court's finding that welfare services, already stretched, would be placed under further strain. I do not believe that low income families (not being problem gamblers) who spend part of their income (1% according to the Productivity Report) (supra 77) on gambling are to be regarded as a detriment. They are recreational gamblers who chose to spend part of their income in that way. That is their right. It is not for others to say that their money may be better spent.

124 These being the findings, counsel for the Bulldogs Club asked rhetorically, the following question: (para 64)

"In those circumstances, one may well ask how it was that the Court rejected the application on the basis of a consideration of the Part 10C matters?"

125 Within this context, the Club pointed to the second and third errors. They are, it was suggested, aspects of the same problem. The Court, whilst stating the appropriate formula, did not properly perform the weighing process required by s88AL and s88AN. There were, according to the Club, two clues to the mistaken approach in para 307 (which, for convenience, I repeat):

"307. We are satisfied that, having regard to the many matters of which we must take account under the heading of 'Social Impact' there would be significant social damage (impact) as against a moderate economic benefit to the local community from granting the present application. The balance is such that, we reject the application pursuant to the provision s88AN(2) of the Act."

126 The first suggested flaw was the reference to "significant social damage". What did that mean? Counsel for the Club, in written submissions, said this:

"... 'significant social damage' cannot be a reference to an increase in problem gambling because at paragraphs 339 and following the Court is not prepared to find that there would be a major exacerbation of this problem. It is not clear in the circumstances what is being referred to."

127 Counsel speculated that perhaps the Court (in his submission, impermissibly) was referring to the concentration of machines in the "core area", which already had a significant number of machines (cf para 297ff). However, the Court was not prepared to find that even the projected increase within the "core area" (35%) would increase the number of problem gamblers to a major extent (para 340). The Court recognised that there was no simple relationship between additional machines and problem gamblers. It said this: (para 275)

"It is tempting to assume there is a direct relationship between the number of poker machines in an area and the number of problem gamblers, with a proportionate increase in one leading to the same proportionate increase in the other. The Productivity Commission report and the SIA warn against such an assumption. Both accept, however, that an increase in the number of machines will be accompanied by some increase in the number of problem gamblers."

128 The question therefore remains, what, if anything, apart from the increase in problem gamblers, did the Court include in the phrase "significant social damage"? In its review of the evidence, the Court identified three adverse effects of the proposal. The first was problem gambling and a consequent demand for welfare services. The second was the effect the Club may have on some local businesses in the food and entertainment sectors (para 286). There was no elaboration. The third was that gambling within the Club, as entertainment, would draw patrons away from other clubs and hotels to some degree (para 291). In the context of para 307, I assume that the phrase "significant social damage" was referring only to problem gambling. Making that assumption, and accepting that problem gambling will increase, but not to a major extent, what is the error of law?

129 Unquestionably the benefits were significant and widespread. The Club would be an asset to the community, with many members. They would enjoy its facilities. A wider public would benefit from the sporting facilities which would follow. Those facilities would include several sporting arenas, seating, in one case, 34,800 people. Many would attend sporting fixtures week after week, and derive enjoyment. These benefits, and others, were on one side of the ledger. On the other side would be an exacerbation of problem gambling, but not to a major extent. That would cause misery to those afflicted, and the five to ten others who were associated with each of them.

130 The Court was ultimately required to compare benefits and disbenefits, and form a view. Ordinarily, that would be regarded as a matter of evaluation and a question of fact. Even if the Court's view were perverse, in the sense that it was contrary to the overwhelming weight of evidence, it would still not constitute an error of law (Azzopardi v Tasman UEB Industries Ltd (supra) at 155).

131 Should the issue be approached, rather, as one falling within the limited exception identified by Hope JA in Mahoney v Industrial Registrar of NSW (supra) at 3? The Court was required to make a decision in the context of a statutory description, namely, "net social and economic benefits to the local community".

132 Here, the Court made appropriate findings as to the primary facts. It carefully identified benefits, as well as disbenefits. The Court then correctly stated the principles of law which should guide them. It was obliged to compare benefits to the local community as a whole with disbenefits, and determine whether there were "net social and economic benefits to the local community" (s88AL(3)). The attack is upon the ultimate finding that there would be net harm if the application were granted. Can it be said that, given the benefits and disbenefits identified, error has intruded? Is the ultimate decision on the facts one which could not be reasonably entertained or supported, if the tribunal had properly understood the true construction of the relevant enactment? (Hope v Bathurst City Council (1980) 144 CLR 1, per Mason J at 7; Azzopardi v Tasman UEB Industries Ltd (supra) per Glass JA at 156-157; Mahoney v Industrial Registrar of NSW (supra) per Hope JA at 3, and Samuels JA at 5); Harris v McKenzie (supra) per Kirby P at 148.

133 In Azzopardi v Tasman UEB Industries Ltd (supra) Glass JA provided a helpful analysis of the circumstances giving rise to an error of law. He said this: (at 156/157)

Hope v Bathurst City Council

Australian Gas Light Co v Valuer-General

134 The third stage, in this case, that is applying the statutory test to the facts as found, also involved questions of evaluation and discretion. Does the principle identified apply in that circumstance? Assuming it does, what is the position? The disparity based upon the Court's findings between social and economic benefits, on the one hand, and harm, on the other, must be such that some misconstruction of the legislation or extraneous matter has led the Court to the wrong answer. Here, to my mind, on the Court's findings, the benefits were very significant. The harm, problem gambling, was likely to increase, but not to a major extent. Welfare services would come under strain. That being the equation, can it be said that the finding of net harm, and the refusal of the application, was a view which could not reasonably be entertained or supported if the tribunal had properly understood the true construction of Pt 10C? I am not sure that I would be prepared to go that far, although, in view of the conclusion I have reached on the third ground, which I will deal with shortly, I need not finally determine that issue.

135 The second suggested flaw in para 307, was the comparison made between "significant social damage (impact)" with "moderate economic benefits to the local community" were the application granted. In the Club's submission, the Court failed to put in the balance the other significant social benefits which it had found.

136 It must be said that the Court's choice of words in para 307 was unfortunate. Its formulation does, as the Club says, appear to leave out of account the many social benefits which would arise from completion of the Club. However, a fair reading of the decision as a whole does demonstrate that the Court was conscious of such benefits, including benefits from the wider development. It described those benefits in the section dealing with the weighing process, headed "Net Social and Economic Costs/Benefits" (para 299ff). The Court expressly referred to such benefits in the next paragraph, para 308. I would therefore reject the second suggested flaw.

Third Ground: The Wrong Test

137 The third error was said by the Club to be evident from para 301. The context is important. Paragraph 299 set out the numerical effect of the proposal, which for convenience, I repeat:

"299. The core area currently has 1700 machines and a 600 increase will be about 35% whereas for the local community as a whole there are 10,390 and the increase would only be 5.8%. These are telling figures."

138 The Court then described those who would be harmed. It said:

"300. We accept Prof McMillen's evidence that the Fairfield-Liverpool and the Bankstown districts (making up about two thirds of the local community) are fragile communities with multiple social problems, and would suffer disproportionately severe problems if the projected increase in poker machines at the new premises were to occur."

139 The Court, presumably, was referring to the area which would be the source of problem gamblers, including the multiplier effect (the five to ten others).

140 The Court then said this:

"301. We are conscious of the argument that the harm done by adding 600 machines to the number of machines already in excess of 10,000 in the catchment area would be 'minimal'. We do not accept that an increase of about six and up to eight per cent of poker machines in the area of the local community as a whole is 'minimal' or that its effect must be 'minimal'. Even if this were so, it seems to us that (however small the increase requested) there is a point at which the community, and those charged with acting in the interests of the community, must say 'no', if net harm will result.

302. In our view the factors against the applicant outweigh any justification of the increase based on it being only minimal."

141 The Club made the following submission as to para 301: (para 65(c))

would

any

142 The Director submitted that the paragraph must be read in the context of the whole decision. He suggests the words "net harm" signified that it was a conclusion at the end of the weighing process.

143 However, I am persuaded that there was error. I believe that, having regard to what is said in paras 301 and 309, it is reading altogether too much into the words "net harm" to suggest that it is simply the culmination of the weighing process. Rather, the Court, in comparing benefits and disbenefits for the whole community, has intruded a philosophy that "enough is enough". The reasoning appears to be this: harm, in the context of this socially disadvantaged community, is unacceptable. There will be harm. The application should therefore be refused.

144 The philosophy emerges most clearly from the concluding words in paragraph 301, in combination with para 309. Paragraph 301 was as follows:

i.e. even if the increase were minimal numerically and in terms of effect

145 Consistent with that view, the Court foreshadowed that a lesser number of machines would also be unacceptable. It said this:

We say that it is our view that a club venue with even proportionately fewer machines would not in any event provide an acceptable alternative.

146 Hence, notwithstanding the very considerable benefits, and whatever adjustments were made to the numbers, the application would produce "net harm". It would meet the same fate and be refused.

147 One may have sympathy with a philosophy, in the context of gambling, that enough is enough. However, that is not the statutory test. The Court was obliged to compare social and economic benefits for the whole community with disbenefits, and reach a view as to the net position. Such a comparison is unquestionably difficult. One is not comparing like with like. The benefits may be small and diffuse. The disbenefits may be concentrated and awful. Nonetheless, each must be identified, weighed, and ultimately compared. A balance must be struck. There can be no prejudgment that any harm to the particular local community (because of its characteristics) is too much harm. Indeed, to approach the issue with that precept would involve the error which the Court itself recognised and disavowed, in the context of Professor McMillen (para 222) (supra 90). Nonetheless, I believe a fair reading of what was said and done reflects that approach.

148 The issue was the disbenefit arising from granting the application. The disbenefit, relevantly, was problem gamblers. The socio-economic disadvantages suffered by the local community, and its vulnerability, and the number of gaming machines within that community, were relevant because that information might assist the Court in understanding the likely number of problem gamblers, were the application to be granted. Here the Court found that the number of problem gamblers would increase, but not to a major extent. It is that finding that had to be put into the balance with the many benefits arising from the proposal.

149 Where there was a significant number of machines in the local community, or a significant part of the local community, and where the incidence of problem gambling was already high, or the projected increase likely to be major, these matters would obviously be relevant. They would alter the character of the disbenefit, clearly making it worse. However, that disbenefit, with that character, would still have to be compared with the social and economic benefits to the local community. Did the disbenefit, in that aggravated form, so outweigh the benefits, that the application should be refused?

150 The Court did not find that the incidence of problem gambling in either the core area or the local community was greater than elsewhere. In this respect it was hampered by an absence of reliable information. Mr Ball of KPMG Consulting provided an affidavit that the only information he could provide as to the incidence of problem gambling in the local community was the suggestion arising from the Productivity Commission's report concerning the state average, namely 2.1% of the community (para 184). A survey undertaken as part of the Social impact assessment suggested that 5% of persons interviewed from the local community had concerns about gambling in respect of family members were the Club to go ahead. The Court also had evidence from witnesses, such as Dr Allcock (a psychiatrist at Westmead concerned with the treatment of problem gamblers) that gaming machines figured more prominently in the addictions suffered by problem gamblers, than had been the case several decades ago (para 223).

151 One can imagine cases where the community was so disadvantaged, where the incidence of problem gamblers was already so great, that adding significantly to the problem would create a disbenefit of real concern. On the findings made by the Court, that was not this case. There was a disbenefit, in that there would be an increase in problem gamblers. The increase would not be major. It was, nonetheless, a matter of concern. It had to be weighed. But it did not, self evidently, cancel out the social and economic benefits which would arise were the application granted.

Order

152 I would therefore make the following orders:

1. That the appeal be allowed.

2. That the matter be remitted to the Licensing Court to be determined according to law.

3. That the defendants should pay the plaintiff's costs.

**********

Last Modified: 12/13/2002

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Citations

Ballesty v Director of Liquor and Gaming [2002] NSWSC 1102

Most Recent Citation

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Statutory Material Cited

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CITATION:	Ballesty & Anor v Director of Liquor & Gaming & Ors [2002] NSWSC 1102
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 13437/01
HEARING DATE(S):	18/11/02 19/11/02
JUDGMENT DATE:	11 December 2002
PARTIES :	John Patrick Ballesty (1st Pl) Bulldogs League Club Limited (ACN 000 191 248) (2nd Pl) Director of Liquor and Gaming (1st Def) John Manning Turnbull on behalf of Liverpool Catholic Club Limited (ACN 000 874 073) (2nd Def) Raymond Roy Stewart on behalf of John Edmondson VC Memorial Club Co-Operative Limited (ACN 069 233 236) (3rd Def) William Thomas Basan on behalf of Cabramatta Rugby League Club Limited (ACN 000 650 206) (4th Def) Shane Victor Atkins on behalf of The Leo McCarthy Memorial Smithfield RSL Sub-Branch Club Limited (ACN 000 926 661) (5th Def) Michael William Moody on behalf of St Johns Park Bowling Club Limited (ACN 001 067 241) (6th Def) Joseph Di Pietrantonio on behalf of Club Marconi of Bossley Park Social Recreation and Sporting Centre Limited (ACN 000 196 832) (7th Def) Gregory Jame Pickering on behalf of Mount Pritchard & District Community Club Limited (ACN 000 458 622) (8th Def) Terrence George Goldsworthy on behalf of Ingleburn RSL Sub-Branch Club Co-Operative Limited (ACN 069 232 702) (9th Def) William Francis O'Brien on behalf of Cabra-Vale Ex-Active Servicemen's Club Limited (ACN 000 102 269) (10th Def)
JUDGMENT OF:	Kirby J

LOWER COURT JURISDICTION :	Licensing Court of NSW
LOWER COURT FILE NUMBER(S) :	N/A
LOWER COURT JUDICIAL OFFICER :	D B Armati, D A Kok, M C Beveridge LCMs

COUNSEL :	D P F Officer QC/A Hatzis (Pls) I A N Lawry (1st Def) S B Austin QC/J B Costigan (2nd-10th Defs)
SOLICITORS:	Back Schwartz Vaughan (Pls) I V Knight - Crown Sol (1st Def) Phillips Fox (2nd-10th Defs)
CATCHWORDS:	Appeal from Licensing Court - Error of Law - Wrong test? - Limited exception where construction of Act - Relevance of particular areas within local community
LEGISLATION CITED:	Registered Clubs Act 1976 Liquor Act 1982 Gaming Machines Act 2001 Gambling Legislation Amendment (Responsible Gambling) Act 1999
CASES CITED:	Cross v McHugh (1974) 1 NSWLR 500 Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1 Haines v Leves & Anor (1987) 8 NSWLR 442 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Gangemi Holdings Pty Ltd v Salter & Ors [1999] NSWSC 1004 Carr v Neill [1999] NSWSC 1263 SRA v Smith [2000] NSWSC 334 R v District Court: Ex Parte White (1966) 116 CLR 644 Williams v Gandour (unreported, C of A, 7.12.87) Hope v Bathurst City Council (1980) 144 CLR 1 Harris v McKenzie (1986) 9 NSWLR 139
DECISION:	Appeal allowed