Courto v Tasmanian Gaming Commission
[2014] TASFC 12
•22 October 2014
[2014] TASFC 12
COURT: SUPREME COURT OF TASMANIA (FULL COURT)
CITATION: Courto v Tasmanian Gaming Commission [2014] TASFC 12
PARTIES: COURTO, Michael
v
TASMANIAN GAMING COMMISSION
FILE NO: FCA 57/2014
JUDGMENT
APPEALED FROM: Courto v The Tasmanian Gaming Commission
[2013] TASSC 80
DELIVERED ON: 22 October 2014
DELIVERED AT: Hobart
HEARING DATE: 4 June 2014
JUDGMENT OF: Blow CJ, Wood and Pearce JJ
CATCHWORDS:
Professions and Trades – Licensing or regulation of other professions, trades or callings – Other callings – Gaming industry employee – Disciplinary proceedings – Breaches of licence condition – Purchase of keno tickets whilst on duty.
Gaming Control Act 1993 (Tas), s 112T.
Aust Dig Professions and Trades [1314]
REPRESENTATION:
Counsel:
Appellant: K Cuthbertson
Respondent: A McKee
Solicitors:
Appellant: Murdoch Clarke
Respondent: Acting Director of Public Prosecutions
Judgment Number: [2014] TASFC 12
Number of paragraphs: 47
Serial No 12/2014
File No FCA 57/2014
MICHAEL COURTO v TASMANIAN GAMING COMMISSION
REASONS FOR JUDGMENT FULL COURT
BLOW CJ
WOOD J
PEARCE J
22 October 2014
Orders of the Court
Appeal allowed.
Order dismissing appeal against the decision of the respondent set aside.
Decision of the respondent set aside.
Appellant's special employee's licence under the Gaming Control Act 1993 suspended for three months.
Each party has leave to apply as to the commencement date for that period of suspension.
Unless an application is made within 14 days as to that commencement date, the period of suspension is to commence 28 days after the making of these orders.
Serial No 12/2014
File No FCA 57/2014
MICHAEL COURTO v TASMANIAN GAMING COMMISSION
REASONS FOR JUDGMENT FULL COURT
BLOW CJ
22 October 2014
I have had the advantage of reading the reasons for judgment of Pearce J in draft form. For the reasons stated by him, I agree that grounds 1 and 5 of the grounds of appeal must succeed. I also agree with the orders he proposes.
I regret that I disagree with his Honour in relation to ground 2. In my view that ground should also succeed. That ground relates to the appellant's degree of co-operation when his gambling was first investigated. He readily admitted that he had purchased the two winning keno tickets on 7 April 2012 but, when asked about the other eight tickets he had purchased whilst on duty that day, he made no comment. The learned primary judge inferred that he "hoped not to be detected in relation to all his activities": Courto v The Tasmanian Gaming Commission [2013] TASSC 80 at [32]. At [34] of her Honour's reasons, she listed five factors that she regarded as supporting her conclusion that cancellation of the appellant's special employee's licence was the only appropriate penalty. One of those five factors was "the limited initial co-operation with investigating officials".
At the hearing of this appeal, counsel for the appellant argued that the appellant's admissions as to purchasing the two winning tickets were properly regarded as a mitigating factor, and that his silence in relation to the purchase of the eight non-winning tickets should have been treated as a neutral factor, but was erroneously treated by the learned primary judge as an aggravating factor. I agree with that analysis. I infer from her Honour's reliance on "the limited initial co-operation with investigating officials" that she regarded the appellant's silence as to the eight non-winning tickets as a factor that weighed in favour of the cancellation of his licence. That might have been appropriate if there had been evidence that the appellant had been formally required to attend before an inspector and answer questions, and had then failed, without reasonable excuse, to answer some questions when required to do so. Such a requirement can be made by a notice in writing pursuant to s 133(1)(d) of the Gaming Control Act 1993. Failing to answer questions, without reasonable excuse, would then constitute an offence contrary to s 135(1)(c) of that Act. But there was no evidence of any such formal requirement in this case. Thus there was no evidence that the appellant was under any obligation to answer any investigator's questions.
When an accused person is to be sentenced for a crime, the making of admissions and other types of co-operation with the authorities must be taken into account by way of mitigation, but any failure to answer questions or otherwise co-operate, when that does not involve a breach of a legal duty, must be regarded as a neutral factor, not an aggravating factor. There is no reason to take a different approach in relation to disciplinary proceedings relating to the gambling industry. In the absence of evidence that the appellant had been formally required to answer questions, his failure to make admissions in relation to the purchase of the eight non-winning tickets should not have been regarded as a factor that weighed in favour of the cancellation of his licence. It should have been regarded as irrelevant. Similarly, the inference that he "hoped not to be detected in relation to all his activities", whilst it is a rational inference, is also irrelevant. Further, I do not think it appropriate to attach much significance to the fact that the appellant contravened his licence conditions by purchasing ten keno tickets rather than two on the day in question.
Otherwise, I entirely agree with Pearce J.
File No FCA 57/2014
MICHAEL COURTO v TASMANIAN GAMING COMMISSION
REASONS FOR JUDGMENT FULL COURT
WOOD J
22 October 2014
I have had the benefit for reading the reasons for judgment of Pearce J and the reasons of the Chief Justice. It is my conclusion that the appeal succeeds on grounds 1, 2 and 5. For the reasons given by Pearce J, I consider that grounds 1 and 5 must succeed. My views coincide with all that Pearce J has said, except concerning ground 2. I agree with the reasons of the Chief Justice, and I take the same view that ground 2 should succeed as well. The substituted orders proposed by Pearce J should be made.
File No 57/2014
MICHAEL COURTO v TASMANIAN GAMING COMMISSION
REASONS FOR JUDGMENT FULL COURT
PEARCE J
22 October 2014
In April 2012, the appellant, Michael Courto, was the manager of the Railway Hotel at Queenstown in Tasmania. The hotel held a gaming licence under the Gaming Control Act 1993 (the Act) authorising the game of keno. The appellant, as he was required to do by the terms of his employment, held a special employee's licence issued by the respondent (the Commission) under the Act. The licence authorised him to carry out duties associated with gaming. The Act, s 56(3), imposed a condition on every special employee's licence that the employee must not "participate in gaming whilst on duty other than as required in the course of his or her employment". The Commission imposed a further condition on the licence that the appellant "must not play keno in a casino, hotel or club prior to or during a shift".
On 7 April 2012, in breach of his licence conditions, the appellant played keno while he was on duty as manager at the hotel. On 9 April 2013 the Tasmanian Gaming Commission cancelled the appellant's special employee's licence. The appellant appealed the Commission's decision. The appeal was heard by Tennent J. Her Honour concluded that the appropriate order was cancellation of the appellant's licence and dismissed the appeal: Courto v The Tasmanian Gaming Commission [2013] TASSC 80. The appellant now appeals to this Court.
The factual circumstances
In 2002 the Railway Hotel was acquired by the Tasmania Hotels Corporation, a joint venture of the Tasmanian Aboriginal Investments Trust and the West Coast Aboriginal Corporation. The appellant was appointed manager and licensee, a position he still held in 2012. He was issued with a special employee's licence on 5 June 2002, endorsed since 19 July 2002 with "senior writer competency". He performed a range of functions including management and supervision of the hotel's liquor and gaming operations. On 7 April 2012, the appellant purchased keno tickets and played 10 games of keno between just after 9am and just before 5pm. Two of the games played by the appellant were substantially successful. On one ticket he won $412,215.70 and on another ticket he won $11,053.80. The larger amount of money won by the appellant was on a "9 Spot" ticket. A percentage of every keno ticket purchased by a member of the public is assigned to a jackpot on such tickets until it is won by a player. The prize won by the appellant consisted partly of a jackpot amount.
The appellant was an experienced keno operator and knew about the conditions on his licence.
A complaint about the appellant was made by a member of the public and referred to the Commission's compliance unit. An investigation was commenced by officers of that unit. The investigators had available to them CCTV recordings of the hotel gaming area and electronic transaction analysis reports of keno games played at the hotel on that day. The appellant was interviewed. Disciplinary action was recommended. The Commission determined that it was appropriate to take disciplinary action against the appellant. The appellant was notified and made submissions through his solicitor. Just over a year after the breach, on 9 April 2013, the Commission cancelled the appellant's licence.
It is agreed that the appellant had no capacity to affect the result of any game of keno and he did not act dishonestly.
The nature of the appeals
A person aggrieved by a decision of the Commission to cancel or suspend a prescribed licence may appeal to the Supreme Court: the Act s 173. Section 173(2) provides:
"(2) The Supreme Court must hear and determine the appeal and make such order as it thinks appropriate by reason of its decision, including, without limiting its power to make such orders —
(a) an order affirming or setting aside the decision of the Commission; or
(b) an order remitting the matter to the Commission to decide again in accordance with the directions of the Supreme Court."
The appeal to the Supreme Court is a hearing de novo: Bishop v Tasmanian Gaming Commission [1999] TASSC 9 at [11]. Crawford J (as he then was) said at [9]:
"It will be a matter for me to decide, upon the evidence the parties put before me, whether there are grounds for disciplinary action, as that expression is used in the Gaming Control Act 1993, s61(1), and if so whether, in the exercise of my discretion, disciplinary action of some form should be taken against the appellant. The onus will be on the respondent to justify its decision to cancel the appellant's licence. However my choice will not be merely to affirm or set aside the respondent's decision. In the exercise of my discretion I may, if I find that grounds for disciplinary action have been established, decide instead to censure the appellant or to vary or suspend his licence rather than cancel."
Thus, it was necessary for her Honour to determine whether, on the evidence before her, grounds for disciplinary action were established, and, if so, whether in the exercise of her discretion, disciplinary action of some form should be taken against the appellant. The learned primary judge was exercising a discretion given to her by statute. Her decision called for the making of a value judgment according to the circumstances of the case, on which there is room for reasonable differences of opinion: Norbis v Norbis (1986) 161 CLR 513. Consequently this Court cannot interfere with her Honour's decision unless the appellant can bring the case within the well-known principles dealing with appeals from discretionary judgments. The circumstances in which appeals from discretionary decisions can succeed are limited by the Supreme Court Civil Procedure Act 1932, s 45(1), which provides:
"(1) A Full Court, on the hearing of any appeal from any judgment, order, or other determination (whether final or otherwise) of a judge, shall not reverse or vary any adjudication of the judge which is, or purports to be, only the exercise of a discretion which the judge was entitled by law to exercise, unless it appears to the Full Court that —
(a) the judge has, in fact, declined or failed to exercise the discretion;
(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact;
(c) the adjudication is founded wholly or in part on an erroneous finding of fact or an erroneous determination in point of law; or
(d) by reason of further evidence received by the Full Court in exercise of the powers conferred by section 48, or some special circumstance, the adjudication should be reversed or varied."
That provision states in a statutory form the principles referred to in cases such as House v The King (1936) 55 CLR 499; Australian Coal and Shale Employees' Federation v Commonwealth (1953) 94 CLR 621; Mace v Murray (1955) 92 CLR 370 and Rodgers v Rodgers (1964) 114 CLR 608. With respect to general error, the following passage taken from the judgment of the High Court in Mace v Murray (above) at 378 is settled law:
"The order of the learned primary judge was made in the exercise of a discretionary judgment; and it has been repeatedly laid down by this Court, following decisions of the highest authority in England, that in such a case a court of appeal is not justified in interfering with the decision appealed from unless it reaches a clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a view different from that which the judges of the court of appeal would have taken if they had been in his place, but has failed properly to exercise the discretion committed to him: House v The King (1936) 55 CLR 499, at pp 504, 505; Lovell v Lovell (1950) 81 CLR 513, at pp 518-520, 526, 528, 532-534; Pearlow v Pearlow (1953) 90 CLR 70, at pp 76, 77; Paterson v Paterson (1953) 89 CLR 212, at pp218-224."
The High Court affirmed the general principles in Rodgers v Rodgers (above) where at 619–620, their Honours McTiernan, Taylor and Owen JJ said:
"The principles applicable in appeals from orders involving discretionary judgments have been stated and restated in a multitude of cases and a convenient summary is to be found in the reasons of Kitto J in Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621, at p 627: 'I shall not repeat the references I made in Lovell v Lovell (1950) 81 CLR 513, at pp 532-534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v The King (1936) 55 CLR 499, at pp 504, 505'."
The application of these authorities to s 45 has been affirmed by this Court in many cases including Tasmanian Pulp and Forest Holdings Ltd v Woodhall Ltd [1971] Tas SR 320, in particular Crawford J at 337 and Neasey J at 349 and Knight v Smith [1975] Tas SR 83 at 93. Consequently, in the absence of specific error, this appeal is to be considered in light of a strong presumption in favour of the correctness of the judgment of the learned primary judge and it is not enough that this Court may have exercised the discretion in a manner different to the manner in which it was exercised by her Honour.
The statutory regime
The title to the Act expresses it to be an Act "to make provision generally in respect of gaming and wagering, to provide for the supervision and control of casinos, gaming machines, keno, lotteries, lucky envelopes, gaming by telephone and other electronic means and other gaming and to provide for related matters". It regulates the conduct of gaming and gaming activities in Tasmania. In other words, it regulates wagering on games of chance and contingencies. All gaming must be carried out in accordance with the Act. It covers casino games, gaming machines and keno, and has application, with other legislation, to betting on sporting events, horse racing and lotteries. The Act establishes the Commission. The Commission is a body corporate consisting of three persons appointed by the Governor on the recommendation of the Minister. The Minister must not recommend a person for appointment as a member of the Commission unless the Minister is satisfied that the person has appropriate knowledge, experience and expertise to act as a member: s 124(2). The functions of the Commission are set out in s 125 and include to regulate and control gaming and wagering to ensure that it is conducted honestly and free from criminal influence and exploitation, to research and investigate matters relating to the control of gaming and other forms of wagering, including the probity and financial security of persons involved in the management of gaming, to review and determine complaints relating to the conduct of gaming and to foster responsible gambling and minimise the harm from problem gambling. Inspectors are appointed under the Act, s 128, with power to enter premises for the purpose of ascertaining whether the provisions of the Act and a licence or permit issued under the Act are being complied with: s 130.
The Act gives effect to an agreement between the State Government and three private companies by which the companies have the exclusive right to conduct casinos, gaming machines and keno in Tasmania. In turn, the companies oversee keno operations through an entity named "Network Gaming". Network Gaming authorises the conduct of gaming in premises holding liquor licences – hotels and clubs. The Act provides for payment of certain fees and taxes. Section 150 provides for the payment by licensed operators to the Treasurer of a tax based on the gross profit derived from gaming in each month.
The Act also provides for the licensing of various categories of premises and persons. Licences are issued by the Commission. Persons required to be licensed include casino operators, gaming operators, licensed premises gaming operators, technicians and employees. A person employed to work in a venue licensed to conduct gaming, and who also carries out prescribed duties associated with gaming, is required to hold a special employee's licence. The "prescribed duties" are those prescribed by the Commission under s 3(6) and published in the Gazette. As it applies to an employee of the holder of a licensed premises gaming licence, the duties include supervising and controlling a game of keno or gaming machine gaming, making payouts to players from a gaming machine and issuing keno tickets. For employees in other categories of gaming venues the prescribed duties are broader and, for example, may include supervision and control of gaming tables, dealing games and issuing and receiving gaming chips, tokens and money. The Commission must hold a certificate of competence in respect to the holder of a special employee's licence: s 50(3). Applicants for a licence must consent to the Commission taking their photograph, finger prints and palm prints. Applications may be referred to the police for inquiry and report. In considering an application for a special employee's licence the Commission must assess the integrity, responsibility, personal background and financial stability of the applicant, s 55(1)(a), and the general reputation of the applicant, having regard to "character, honesty and integrity", s 55(1)(b). A licence is to be subject to any condition imposed by the Commission, s 56(1). The Act imposes conditions on every special employee's licence that the special employee must not participate in gaming while on duty other than as required in the course of his or her employment, s 56(3), and that the special employee must not solicit or accept any gratuity, consideration or other benefit from a patron in a gaming area other than a benefit of nominal value approved by an authorised person, s 56(4). Special employees' licences remain in force for a period of up to five years.
If the licence of a special employee is suspended or cancelled then, on delivery of a notice from the Commission, the venue operator, gaming operator or licensed provider must, within 24 hours after receiving the notice, terminate the employment that constitutes the performance or exercise of the functions of a special employee or cause it to be terminated: s 64.
Disciplinary action
The Act, s 112T(2), provides that if the Commission considers it appropriate, it may inquire into whether there are grounds for disciplinary action against a prescribed licence holder. The term "disciplinary action" is defined in s 112T. So far as it is relevant to this appeal it means any one or more of the following:
"(a) the cancellation of a prescribed licence;
(b)the suspension of a prescribed licence;
(c)…
(d)…
(e)the amendment of the conditions to which a prescribed licence or a permit under this Act is subject, including the imposition of conditions where there were previously no conditions;
(f)the imposition of a fine not exceeding —
…
(iii) 50 penalty units in the case of a prescribed licence that is a minor gaming permit, a special employee's licence or a technician's licence; or
…
(g) the issuing of a letter of censure."
Section 112S(1) relevantly provides that the following are grounds for disciplinary action:
"(a) the prescribed licence holder is no longer suitable or qualified to hold a prescribed licence or gaming endorsement;
(b)an associate of the prescribed licence holder is no longer suitable to be an associate of a prescribed licence holder;
(c)the prescribed licence holder has contravened a provision of this Act or a gaming Act;
(d)the prescribed licence holder has contravened a condition to which the prescribed licence is subject;
(da)the prescribed licence holder has failed to take action as directed, or within the time specified, by the Commission under section 78;
(db)the prescribed licence holder has failed to comply with a direction under section 112P;
(e)the prescribed licence holder has been found guilty of an offence involving fraud or dishonesty, whether or not in Tasmania, the maximum penalty for which exceeds imprisonment for 3 months;
(f)the prescribed licence holder has failed to discharge financial obligations to the State or to a person who has wagered with the holder under the prescribed licence;
(g)the prescribed licence holder is bankrupt, has compounded with creditors, has made an assignment of remuneration for the benefit of creditors or otherwise taken, or applied to take, the benefit of any law for the relief of bankrupt or insolvent debtors;
(h)the prescribed licence holder is affected by control action under the Corporations Act;
(i)the prescribed licence … was obtained by a materially false or misleading representation or in some other improper way;
(j)the prescribed licence holder has contravened a code of practice, established under section 112L, applying to that prescribed licence holder."
These provisions apply to all categories of licence holder under the Act, not just the holder of a special employee licence. The prescribed licence holder must be notified if the Commission is considering taking disciplinary action. After allowing the opportunity for submissions, the Commission may then "take such disciplinary action as it considers appropriate or take no further action".
The appeal to this Court
The appellant does not contend, and did not contend before her Honour, that there are no grounds for disciplinary action. He admits that he played the 10 games of keno whilst on duty on 7 April 2012 and that, by doing so, he breached his licence conditions, and the ground for disciplinary action referred to in s 112S(1)(c) is made out. Her Honour determined that it was appropriate for disciplinary action to be taken. There is no challenge to that finding. The amended notice of appeal contains five grounds. Grounds 3 and 4 are abandoned. The subject of each remaining ground of appeal is her Honour's decision to affirm the Commission's decision to cancel the appellant's licence rather than take some other form of disciplinary action available under s 112T.
Ground 2
Ground 2 asserts specific error, namely that her Honour erred in proceeding on the basis that "the appellant did not initially co-operate with investigating officers, and it may be inferred hoped not to be detected in relation to all his activities". The sentence just quoted is extracted from her Honour's reasons. The appellant claims that is an error because "the evidence was that the Appellant participated in a record of interview with investigating officials and made admissions to playing keno whilst on duty on two occasions on 7 April 2012 and made no comment in respect of 8 further occasions on that same day and otherwise fully co-operated in the hearing de novo process in the Court below."
The appellant was interviewed by officers of the Commission's compliance unit. There is no evidence of the date of the interview. It is an agreed fact that the appellant purchased each of the 10 keno tickets identified by the investigating officers as having been purchased by him on 7 April 2012 and that by doing so he breached his licence conditions. The agreed facts contain the following passages:
"27 … Mr Courto made limited admissions during the interview, admitted that he had played Keno whilst on duty at 16.57.34 and 16.57.44 on Saturday, 7 April 2012.
28 Mr Courto was invited to make admissions in relation to the other instances in which he had played Keno and he indicated to the interviewing officer that he had 'no comment'."
I do not see any factual error in her Honour's remark that the appellant "did not initially co-operate with investigating officers". She was obviously referring to the appellant's failure to fully admit the extent of his keno playing on 7 April 2012 when interviewed by the Commission's investigators. Nor am I satisfied that the inference she drew reveals some error of fact, failure to take into account a material fact, or some other erroneous application of principle. In drawing that inference her Honour was referring to the appellant's state of mind when interviewed and treated it as one factor to be taken into account in the exercise of her discretion. There is nothing to suggest that her Honour did not fully appreciate, and take into account, the admissions made by the appellant by the time the appeal was heard. This ground is not made out.
Grounds 1 and 5
Ground 1 asserts that her Honour erred in the exercise of her discretion in that her decision to cancel the appellant's licence "was manifestly excessive having regard to the circumstances of the case". This ground does not allege specific error. It can only succeed if an error within the scope of s 45(1) is identified. Such an error occurs if her Honour "proceeded on a wrong principle" or "failed to exercise the discretion", or to borrow the expression from House v The King (above) often referred to, that her Honour reached a conclusion that was "so unreasonable or plainly unjust" that this Court can infer that her Honour failed to properly exercise the statutory discretion.
Ground 5 asserts:
"Her Honour proceeded on a wrong principle by attaching too much weight to:
· the number of acts constituting the breach;
· the apparent deliberate nature of them at regular intervals over a day against a background of the experience and knowledge of the appellant;
· the limited initial co-operation with investigating officials;
· the need to reassure the public as to the integrity of the keno system;
· the lack of any explanation as to why the appellant committed the breaches;
· and by attaching too little weight to the following factors:
· that the appellant had a strong work ethic and had made a significant contribution to the community;
· that the breaches giving rise to the disciplinary action occurred over the course of a single day;
· that the appellant had not previously been the subject of any adverse finding in respect of his special employee licence;
· that the appellant had co-operated with the respondent during the course of the investigation, the subsequent disciplinary action and in the preparation of the appeal to the Supreme Court;
· the impact of cancellation of the appellant's special employee licence upon his employment and the difficulties he would face in securing alternative employment given his age and location."
In an appeal from a discretionary decision to which s 45(1) applies, a ground of appeal that a judge attached too much or too little weight to a particular factor or factors, or failed to undertake a proper weighing and balancing process, can only succeed if an error within the scope of s 45(1) is identified: Norris v McGeachy [2010] TASFC 4 per Blow J (as he then was) at [29] and [42]. Such an error occurs if a judge attaches so much weight, or so little weight, to a particular factor or factors that it can be said that he or she has proceeded on a wrong principle within the meaning of s 45(1): Norris v McGeachy (above) at [42]. Thus, it seems to me that ground 5 raises much the same issue as ground 1 in that in both cases the appellant must show that her Honour proceeded on a wrong principle or failed to properly exercise the statutory discretion.
These two grounds can be conveniently dealt with together because both require analysis of the underlying purpose of the disciplinary proceedings in the Act and the exercise of the statutory discretion to determine what disciplinary action should be taken in a particular case. The evidence before her Honour was in the form of a statement of agreed facts and affidavits relied on by the appellant. At the time of the appeal before the learned primary judge the appellant was aged 62. He is married and has six adult children. He has lived all his life on the west coast of Tasmania, where he worked in the mines and for the local council. He is the Chair of the West Coast Aboriginal Corporation, one of the owners of the hotel. The purpose of that organisation is to assist indigenous persons in the area to obtain training and employment. He is strongly involved in other national and local indigenous and community organisations and highly regarded by others as a result. Despite being highly regarded by his employer, his employment as licensee and manager at the Railway Hotel is dependent on him not losing his special employee's licence for longer than three months, and there is no other employment available to him at the hotel. He is pessimistic about his prospect for other employment. He has not been found to have breached the Act or any condition on his licence on any previous occasion.
In his affidavit the appellant deposed that he is "unable to offer the Court any explanation for my conduct and I deeply regret my actions".
Counsel for the Commission provided the learned primary judge with a table setting out other instances of disciplinary action taken by the Commission between 2000 and 2012 against persons who had committed similar breaches, namely persons holding a special employee's licence playing keno while on duty. It was not made clear whether all such breaches are recorded in the table. The table makes clear that cancellation of the licence was an action commonly taken by the Commission, although not in every case. In some cases suspension, fines or letters of censure were imposed.
In her reasons the learned primary judge summarised her findings and stated her conclusions in the following passages:
"28 … The breaches took the form of the purchase of ten Keno tickets at intervals over the course of a day between 9.04am and 4.57pm. Two of the tickets earned him very significant winnings which was most likely the reason why a member of the public lodged a complaint. The appellant was a licence holder of many years' standing, and well knew the conditions he was obliged to adhere to and the possible penalties if he breached those conditions. There can be little doubt that a member of the public who saw the licensee buying Keno tickets and winning a large amount of money would have had legitimate concerns about the integrity of the system. That is a system, the integrity of which was important to those who operate it. The existence of the conditions the appellant breached was part of a system designed to protect that integrity.
29 There has been no explanation at all as to why the appellant engaged in the conduct that he did.
30 There is no doubt the appellant has over many years had a very good work ethic, has given much back to the community and is well thought of by his employer. However that does not assist him greatly in the face of deliberate actions in breach of his licence. Rhetorically, one must ask, why have the conditions if they can be breached so deliberately and without explanation?
31 The summary of prior penalties imposed by the Commission in respect of licensees gambling while on duty indicates that of the 21 matters listed (omitting that of the appellant), ten involved the cancellation of a licence. Only two involved a letter of censure, the rest being divided between suspensions and fines. It is not possible to use that list as any definitive indication of what the most common penalties imposed by the Commission were because there was very little information contained in it as to the circumstances surrounding each matter. However, what it does indicate is that clearly the disciplinary action involving cancellation is not uncommon.
32 The appellant did not initially co-operate with investigating officers, and it may be inferred hoped not to be detected in relation to all his activities.
33 The facts of this matter lead to only one conclusion, and that is that it is appropriate for disciplinary action to be taken in respect of the appellant. The only real issue on this appeal is the nature of that disciplinary action. In essence what the appellant submits is that the disciplinary actions outlined in the Act, s112T(1), range from the most severe, that is cancellation, to the most lenient, that is a letter of censure, and that the facts of this matter do not support the imposition of the harshest action.
34 The submissions of counsel for the appellant to that effect do have merit. However, the submissions of the respondent persuade me that cancellation is the appropriate penalty. The factors which support that in this case are:
- the number of acts constituting the breaches;
- the apparent deliberate nature of them at regular intervals over a day against a background of the experience and knowledge of the appellant;
- the limited initial co-operation with investigating officials;
- the need to reassure the public as to the integrity of the Keno system;
- the lack of any explanation as to why the appellant committed the breaches.
35 I am of the view that the cancellation of the appellant's Special Employee licence is in all the circumstances of this case the appropriate penalty to impose."
The Act does not prescribe the factors to be taken into account in determining which form of disciplinary action, if any, is appropriate. Guidance as to the purpose of the disciplinary provisions can be gained from other provisions of the Act which give some indication of the issues that the disciplinary provisions are designed to address. One of the functions of the Commission expressed in s 125 is to regulate and control gaming and wagering to ensure that it is conducted "honestly and free from criminal influence and exploitation". Another is to "research and investigate matters relating to the control of gaming and other forms of wagering including the probity and financial security of persons involved in the management of gaming and other wagering operations". According to the Macquarie Dictionary Online "probity" means "honesty, uprightness and integrity". The matters the Commission must take into account when considering applications for licences provided for in the Act include, in most, if not all, cases, the character and financial circumstances of the applicant. In the case of a special employee's licence the character requirement is emphasised by the terms of s 55(1) and the requirements in s 51 to consent to the provision of identification material, to provide further information on request and submit to police investigation. The legislation is designed to preserve the integrity of gaming and protect the public from persons who may be dishonest, unscrupulous, irresponsible, untrustworthy or incompetent. Accordingly, the character and financial circumstance of licensees are important considerations. Employees performing duties associated with the conduct of gaming may, for example, be required to handle and account for cash, account for player funds and the payment of winnings, ensure compliance with the statutory duties of the holders of gaming licences for player protection, prevent underage gambling, exclude problem gamblers and regulate compliance with rules made by the Commission under s 91. Rules may be made to control entry to gaming or wagering areas, sobriety in gaming or wagering areas, security in the premises used for gaming or wagering, exclusion of persons from gaming premises, and access to cash in approved venues. Some games, especially casino games, involve not only chance but also skill, and so the further opportunity for improbity exists. The character and financial requirements of licence holders are aimed at minimising the risk of dishonesty and susceptibility to improper influence and exploitation, and the maintenance of standards designed to protect those engaged in gaming. Those who participate in gaming are entitled to expect that they will be appropriately protected from the social and financial consequences of irresponsible gambling, and that their participation will be unaffected by the unfair or dishonest conduct of others. Disciplinary action against licence holders should be construed as designed to reinforce those principles.
The policy underlying the prohibition in s 56(3) that a special employee must not participate in gaming while on duty is to be understood in the context just outlined. The prohibition in s 56(4) on a special employee accepting a gratuity or benefit from a patron in a gaming area may be viewed in a similar way. These provisions are designed to prevent improbity. They are of general application and apply to all gaming, not just keno. The risk of improbity is higher in some forms of gaming than in others. Some games, especially those involving skill as well as chance, involve greater risk. Those games requiring greater human involvement involve higher risk. The statutory prohibition has recently been extended to technicians licensed to install, service, maintain or repair gaming equipment. The risk against which that prohibition is intended to guard is obvious.
Keno is a game conducted in a central location and networked into hotels and clubs. Playing the game involves virtually no risk of improbity because the player has no chance, whether a special employee or not, of manipulating, influencing or affecting the result. An employee may have a greater than usual appreciation of when a jackpot may be building up by virtue of his or her presence in a gaming venue while keno is being played. However a player's status as an employee gives no greater appreciation of that chance than any other member of the public also present. In those circumstances the underlying purpose of the licence condition imposed by the Commission on all special employees in licensed premises that a licensee "must not play keno in a casino, hotel or club prior to or during a shift" is less clear. The impression or appearance of probity remains very important. However, in the case of playing keno, the prohibition exists to deal with appearance or impression rather than to address a real risk of actual improbity. It relates to public confidence and perception. The submissions of counsel for the Commission do not point to any other purpose for the prohibition although he extended the issue of perception to whether it may be incorrectly perceived that a keno operator has a "vested interest" in the outcome of a game. Of course, this Court should also give due respect to the view of the Commission, the members of which are appointed on account of their knowledge, experience and expertise in such matters. The terms of every special employee's licence make clear the view of the Commission that such a prohibition should exist.
In my view, the principal purpose of the disciplinary provisions in the Act is to protect those members of the public who choose to engage in gaming and wagering. The legitimate business interests of the entities which conduct gaming activities are not a relevant consideration except to the extent that they coincide with the principle just stated. I hold that view notwithstanding the provisions in the Act which entitle the State to levies and taxes dependent on profit. The grounds for disciplinary action in s 112S all directly or indirectly relate to the protection of persons who engage in gaming and wagering. Action to cancel a licence for an indefinite period suggests a protective function. Other forms of disciplinary action, for example suspension for a fixed period and fines, suggest punishment. To the extent to which the forms of disciplinary action provided for in the Act are of a punitive nature, the punitive function is subordinate to and designed to facilitate the dominant protective purpose. The protective purpose may be served by preclusion from gaming, or by imposition of measures that have a specific and general deterrent effect. Because the punitive effect of an order is relevant, elements of mitigation personal to the appellant may be taken into account. The appellant submitted that disciplinary action is both protective and punitive. The Commission submitted that it was purely protective. I will deal with both aspects.
With respect to the learned primary judge, the cancellation of the appellant's licence went far beyond what was necessary to serve the protective purpose of the legislation. The appellant had not demonstrated a propensity to breach the conditions of his licence. The breach revealed nothing else about his character which would otherwise have made him unsuitable to hold a licence. All the evidence, apart from the breach itself, pointed to his continued suitability. His conduct involved no dishonesty. He did not, and could not, have engaged in any conduct that altered, affected or manipulated the result of the keno games he played, and he did not act with any intention to do so. To the extent that his conduct affected the integrity of the game of keno, it was entirely a matter of impression rather than reality. The appellant was not to be subject to disciplinary action because he won two of the games he played, even though the winnings were substantial and emphasised the issue of impression and perception of concern to the Commission. The reason for the disciplinary action was because he played, not because he won. A reasonable and impartial observer would appreciate that, whilst the appellant was extremely fortunate to win, his conduct did not result in any advantage to him or disadvantage to others that could, in any fair way, be attributed to his status as a licence holder.
To the extent that the disciplinary action was to serve a punitive purpose, cancellation of the appellant's licence fell well outside the range of action reasonably open to the primary judge. Taking all of the circumstances into account, the appellant's conduct did not warrant cancellation of his licence. Assessment of the punitive function of disciplinary action imports notions commonly applied in sentencing such as assessment of the level of culpability and the need for general and specific deterrence, retribution, reformation and mitigation: Rich v ASIC (2004) 220 CLR 129. Without wishing to understate the seriousness of the breach, it is not hard to imagine examples of a more serious breach. It was not a grave example of a breach of the Act or conditions. I repeat that it involved no dishonesty. As I have already explained, it did not actually attract advantage to the appellant or impose disadvantage on others. The breach had no social or financial impact on others. There was no evidence of any prior breach of the Act or licence conditions by the appellant. Other forms of disciplinary action will achieve adequate general deterrence. A cancellation order will mean loss of his employment. There is no proper reason to conclude that there is a substantial risk that the appellant will continue to commit breaches.
All of the foregoing is not to say that some form of disciplinary action was not warranted. There were grounds for disciplinary action because the appellant breached conditions of his licence imposed by the Act and the Commission. However, the form of disciplinary action taken by her Honour was the most serious form available. For a breach of sufficient gravity such a course may have been appropriate, even for a person with no record of having breached the Act or his licence previously. In my assessment this was not such a breach. Nor do I suggest that confidence in the Court's upholding of the importance of compliance with licence conditions is not a relevant consideration. As her Honour correctly pointed out the appellant played 10 games of keno on 7 April 2012 knowing that by doing so he breached the conditions of his licence. But in this case, those factors should reasonably have been dealt with by disciplinary action of another form.
I have not lost sight of the course taken by the Commission against other licensees in the past. The table of disciplinary action taken previously by the Commission to which I referred earlier provides little assistance because the circumstances of each breach are not explained in any detail. This Court is to form its own view of the seriousness of Mr Courto's conduct based on the circumstances of this case.
I have concluded that two errors within the scope of s 45(1) have occurred. First, for the reasons I have already given, the decision to cancel the appellant's licence was such an unreasonably harsh response to the gravity of the breach that I would infer a failure to properly exercise the statutory discretion. Second, amongst the five particular matters her Honour referred to as justifying an order cancelling the appellant's licence was "the need to reassure the public as to the integrity of the keno system". In her reasons her Honour said:
"There can be little doubt that a member of the public who saw the licensee buying Keno tickets and winning a large amount of money would have had legitimate concerns about the integrity of the system. That is a system, the integrity of which was important to those who operate it."
Although it was only one of the factors referred to by her Honour in weighing the factors both favourable and unfavourable to the appellant concerning what disciplinary action to take, it is apparent to me that the passage set out above assumed considerable significance in the exercise of her Honour's discretion. In fact, what the appellant did had no actual bearing on the integrity of the keno system at all. Any concern about the integrity of the game of keno was a matter of impression only. The interests of those who "operate" the game of keno were not a relevant consideration. The relevant consideration was the protection of the interests of those who choose to participate in gaming. In those circumstances, the weight placed by her Honour on those factors reveals to me that she has proceeded on a wrong principle within the meaning of s 45(1)(b).
Conclusion and orders
Grounds 1 and 5 of the grounds of appeal are made out. Her Honour's order dismissing the appeal against the Commission's decision will be set aside. The learned primary judge had power under s 173 of the Act to make such order as she considered appropriate. I will determine what order ought to have been made in substitution for her Honour's order. The Commission's decision should be set aside. I find that disciplinary action should be taken, and that the appropriate disciplinary action is suspension of the appellant's special employee's licence for three months. I give leave to either party to make application to be heard as to the commencement date for the period of suspension. In the absence of any application within 14 days the suspension will commence 28 days after the delivery of judgment.
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