Halpin v Department of Gaming & Racing

[2006] NSWSC 891

Reported Decision: 68 NSWLR 211

New South Wales

Supreme Court

CITATION:	HALPIN v. DEPARTMENT OF GAMING & RACING [2006] NSWSC 891
HEARING DATE(S):	Thursday 13 July 2006
JUDGMENT DATE :	5 September 2006
JURISDICTION:	Common Law
JUDGMENT OF:	Hall J at 1
DECISION:	Appeal allowed. Leave to the parties to make submissions on the form of orders and on the question of costs.
CATCHWORDS:	GAMING – Offences – Licensing Court – appeal conviction of an offence under s.133(2) Gaming Machines Act 2001 (NSW) – connection fault between licensee’s gaming machine and the Central Monitoring System (CMS) via a Gaming Interface Card (GMIC) to Data Monitoring Services (DMS) (part of TAB Limited) – nature and extent of the obligation on plaintiff licensee to ensure connection where the connection fault was in the GMIC. - ACTS OF PARLIAMENT – Gaming Machines Act 2001 (NSW) – Interpretation – interpretation and application of s.132(1) and s.133(2) of that Act – the term “ensure” in this context creates an obligation or liability in the nature of strict or absolute liability – whether, however, such obligation requires a hotelier to ensure the continued transmission of electronic data to the CMS licensee - there is by the terms of those provisions a more limited obligation to ensure approved arrangements are in place, however, even if there can be said to be an ambiguity in s.132(1) and s.133(2) when read together - as the nature of such obligation or liability is quasi-criminal and the terms of s. 132(1) and s.133(2) are not plain, the principles of interpretation applicable to criminal legislation are relevant to determining the meaning and operation of the provisions.
LEGISLATION CITED:	Gaming Machines Act 2001 Liquor Act 1982 Occupational Health & Safety Act 2000
CASES CITED:	Carrington Shipways Pty. Limited v. Callaghan (1985) 11 IR 467 Beckwith v. The Queen (1976) 135 CLR 569 R v Adams (1935) 53 CLR 563 Taylor v. New Zealand Newspapers Limited (No. 3) (1938) NSWLR 212 Cultivaust Pty. Limited v. Grain Pool Pty. Limited & Ors (2006) 67 IPR 163
PARTIES:	HALPIN, Robert John v. DEPARTMENT OF GAMING & RACING
FILE NUMBER(S):	SC No. 15149 of 2005
COUNSEL:	Plaintiff: S.B. Austin, QC. Defendant: H. White
SOLICITORS:	Plaintiff: David Hand Defendant: I.V. Knight
LOWER COURT JURISDICTION:	Licensing Court of NSW
LOWER COURT FILE NUMBER(S):	237355.00
LOWER COURT JUDICIAL OFFICER :	D. Kok
LOWER COURT DATE OF DECISION:	6 October 2005
LOWER COURT MEDIUM NEUTRAL CITATION:	N/A

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HALL, J.

TUESDAY 5 SEPTEMBER 2006

No. 15149 of 2005

ROBERT JOHN HALPIN v. DEPARTMENT OF GAMING AND RACING

JUDGMENT

1 HIS HONOUR: The primary issue in these proceedings involves a question of statutory construction concerning the responsibility of a hotelier with respect to an approved gaming machine pursuant to specific provisions of the Gaming Machines Act 2001 (“the Act”).

2 The plaintiff appeals the decision of the Licensing Court given on 6 October 2005, whereby he was convicted of an offence under s.133(2) of the Act. The proceedings before the Licensing Court were brought pursuant to s.197 of the Act. That court found the plaintiff guilty of an offence under the abovementioned provisions of the Act and imposed a fine of $1,500.

3 Section 133(2) provides:-

‘A hotelier or registered club who or which keeps an approved gaming machine to which this section applies must ensure that the gaming machine is connected to an authorised CMS.”

4 Section 133(2) is a significant provision in Part 9 of the Act. It is required to be construed and applied having regard to the meaning of the term “connected” in s.132 of the Act which is set out below.

5 Section 132(1) under the heading “Meaning of ‘connected’ to an authorised CMS” provides:-

“s.132(1) For the purpose of this Part, an approved gaming machine is connected to an authorised CMS if arrangements of a kind approved by the Minister are in place for the provision of information in respect of the gaming machine that enables the functions of the authorised CMS to be performed in relation to the gaming machine.”

6 In her remarks on sentence made on 6 October 2005 (p.35), the learned magistrate referred to the plaintiff’s “clean record” (he having held a licence since 1990) so far as his responsibilities under both the Liquor Act 1982 and the Gaming Machines Act were concerned.

The appeal

7 The plaintiff appeals from the abovementioned decision on questions of law pursuant to s.187 of the Act. That provision provides:-

“(1) A person who is aggrieved by a decision of the Licensing Court in proceedings under this Act may appeal to the Supreme Court on a question of law.
(2) On the determination of an appeal under subsection (1), the Supreme Court is:-

(a) to remit the matter to the Licensing Court with the decision of the Supreme Court, or
(b) to make such other order in relation to the appeal as it thinks fit.

(3) An appeal under subsection (1) is to be made in accordance with rules of court of the Supreme Court.

(4) If a matter is remitted to the Licensing Court under subsection (2)(a), the Chairperson of the Licensing Court may replace with another Magistrate referred to in s.9 or 10 of the Liquor Act 1982 the Magistrate so referred to who constituted, or a Magistrate so referred to who was a member of, the Court to whose adjudication the matter remitted relates if:-

(a) the Magistrate being replaced has ceased to hold office as a Magistrate, or
(b) the Magistrate being replaced is absent, ill or otherwise unavailable for duty.

(5) A Magistrate who replaces another Magistrate for the purpose of determining a matter remitted to the Licensing Court under subsection (2)(a) may do any act or thing in connection with the remitted matter that could have been done by the replaced Magistrate if the replaced Magistrate had constituted, or been a member of, the Court determining the remitted matter and, for that purpose-:

(a) may read as evidence for any party the depositions of all witnesses in the proceedings, and
(b) may decide, or join in deciding, to grant leave for further evidence to be called by a party to the proceedings.”

8 The plaintiff filed the summons for relief on 3 November 2005. The grounds of appeal were as follows:-

“1. An order that the Licensing Court of New South Wales in its decision on 6 October 2005 erred in law.
2. An order that the matter be remitted back to the Licensing Court of New South Wales to be dealt with according to law.”

The offence charged

9 The plaintiff was charged pursuant to s.133(2) of the Act that on 15 September 2004, he did not ensure that a gambling machine described as the “Pinata Pays” was connected to what is referred to in the Act as the “authorised CMS” (an expression defined in s.4 of the Act).

10 The Department issued a Penalty Notice under s.203 of the Act alleging that the plaintiff had contravened s.133(2) of the Act on 15 September 2004. The plaintiff elected to have the matter determined by a court. A Court Attendance Notice was issued at the request of the Department on 3 November 2004, again alleging a contravention of s.133(2).

The legislative scheme – an overview

11 Before dealing with the specific provisions of the legislative scheme and the technical evidence concerning the gambling machine, the authorised Collective Monitoring System (“CMS”), the determination by the Minister as to the “arrangements” concerning the “Pinata Pays” gambling machine and other matters, it is as well to say something about the legislative scheme by way of overview.

12 The Act establishes a taxation regime in respect of approved gambling machines and, in particular, a scheme for the calculation and collection of that tax. It is plainly a significant source of government revenue. The regime to which I have referred operates by means of what is referred to as an authorised CMS operated by an authorised licensee. At the relevant times, the exclusive authorised licensee was TAB Limited. By amendment made to the Act in 2005, the exclusive authorised licensee became the Department of Gambling and Racing.

The Central Monitoring System (CMS)

13 The CMS is defined in s.4 of the Act to mean:-

“A system that:-
(a) monitors the operation and performance of approved gaming machines, and
(b) facilitates the calculation and collection of tax under the Gaming Machine Tax Act 2001 that is payable in respect of approved gaming machines, and
(c) is capable of performing other related functions.”

14 The CMS electronically collects information from each gaming machine. It does this by a Gaming Interface Card (“GMIC”) the function of which is to receive data from gaming machines and to transmit such data electronically to the CMS licensee (via a “site controller”). The GMIC at the relevant times transmitted data to an organisation known as Data Monitoring Services (“DMS”) (part of TAB Limited) which entity was an agent of TAB Limited for the purposes of operating the CMS. The GMIC is physically located within a gambling machine and is, on the evidence before the Licensing Court, a part of the CMS.

15 There are statutory restrictions which operate to prevent owners of approved gambling machines from interfering with a CMS. Section 140 of the Act provides:-

“(1) A person must not:-

(a) possess any device or equipment made or adapted, or intended by the person to be used, for interfering with the normal operation of an authorised CMS, or
(b) do anything that is calculated, or is likely, to interfere with the normal operation of an authorised CMS.


Maximum penalty: 100 penalty units.

(2) Subsection (1) does not apply to or in respect of the possession of any device or equipment, or to anything done in good faith, in connection with the installation, alteration, adjustment, maintenance or repair of an authorised CMS by:-

(a) the CMS licensee who is operating the authorised CMS, or
(b) the holder of a technician’s licence, or
(c) any other person approved by the CMS licensee.


(3) A person must not gain, whether personally or for another person, an advantage in the operation of an approved gaming machine that is connected to an authorised CMS as the result of knowing about any faulty or fraudulent computer programming in relation to the CMS.

Maximum penalty: 100 penalty units.

(4) A person must not authorise or permit another person to act in a way that is an offence under another provision of this section.

Maximum penalty: 100 penalty units.”

16 The evidence established that only DMS approved technicians were permitted to service GMICs. The Department/TAB pays for any necessary repairs to them.

17 Annexure “F” to the evidentiary statement of Special Inspector Michael Fitzgerald dated 16 June 2005 refers to the fact that the Department of Gaming and Racing in 2002 was changing the tax calculation and assessment process from self-assessment to an electronically calculated system. In the same document under the heading “CMS Connection Policy”, it is stated:-

“Registered clubs and hoteliers are reminded that all gaming machines used, kept and operated in a venue MUST be connected to the CMS. If a venue intends to remove the physical connection to CMS for any reason up to 48 hours, the venue must notify DMS on 131 785.”

18 A further entry in the same document under the subheading “Current Issues”, advised “venue operators” that Tab Limited had entered into contractual arrangements with a service provider for CMS maintenance – Bytecraft. A further entry under the subheading “Connectivity Issues” records:-

“The following simple steps can be taken to ensure connectivity to the CMS:-
• The site controller must NOT be turned off at any time unless a DMS employee requests the venue operator to do so;
• A venue’s staff must diagnose CMS connectivity issues or obtain the assistance of a licensed technician, to each machine and then verify it on the CMS site controller.
At any time the venue may contact the CMS Help Desk on 131 785 . DMS will arrange for a technician to restore connectivity. If the loss of connectivity is not due to a CMS component fault, the venue will be charged for this service.”

The plaintiff’s operations

19 The plaintiff owned a number of gaming machines including the “Pinata Pays” machine in question (serial number XAR 200145). That machine was an approved gaming machine for the purposes of the Act. The plaintiff conducted his business at the Bar Broadway Hotel, Sydney.

20 In the period between at least 31 May 2004 and 16 September 2004, information was not being transferred from the “Pinata Pays” machine to the control centre of DMS. There was no suggestion that this fault was due to any action of the plaintiff. The evidence established that the fault was in the GMIC and may have been associated with a GMIC that had been installed in the machine in March 2004. It was replaced by a DMS approved technician on 16 September 2004. Following its replacement, the GMIC once again commenced to transfer electronic information to DMS.

21 The chronology of events is set out in paragraph [44] of this judgment. It refers to the fact that on 19 July 2004, a Venue Support Officer from DMS contacted the plaintiff and advised him that the machine in question was not transferring data and that he should contact a technician to attend the machine. The plaintiff responded, saying, “it’s not my problem … it’s your problem”. He did nothing about the matter until 15 September 2004.

22 On the latter date Mr. Fitzgerald attended the hotel to investigate the matter. He spoke to the plaintiff. As a result of the conversation, the plaintiff arranged for a technician to attend who identified the fault as being the defective GMIC. This fault had prevented information from being transferred to the control centre of DMS.

23 The evidence of Mr. Fitzgerald, who had been appointed under s.109 of the Liquor Act 1982, was that on 30 July 2004 he received documentation from the DMS. These documents indicated to him that the plaintiff continued to operate a gaming machine that had not been connected to the CMS since 31 May 2004. He accordingly telephoned the plaintiff on 15 September 2004 to advise him. Later the same day, he attended the plaintiff’s hotel with Special Inspector Simon Munt for the purposes of speaking to the plaintiff and to conduct a routine compliance audit. On that occasion, Mr. Fitzgerald advised the plaintiff that it was his responsibility in the event that his technician was unable to deal with it to ring the DMS Help-Line and advise them of that fact.

24 In his evidentiary statement, Mr. Fitzgerald explained that on contact being made with the CMS Help Desk, the DMS would arrange for a technician to restore “connectivity” (paragraph 13).

25 In an evidentiary statement of Craig Lesley Webb, Venue Support Officer, dated 6 June 2005, the officer refers to the fact (paragraph 4) that the DMS “Missing Device Incident Report” (MDIR) indicated that the “Pinata Pays” gaming machine had not transmitted gaming machine meter readings to the CMS since 31 May 2004. Prior to speaking to the plaintiff he reviewed DMS records and noted that each of the hotel’s other gaming machines were connected and were properly reporting to the CMS.

26 The affidavit of Pamela Noel Lazzarini, solicitor to the Department of Gaming and Racing, annexed a copy of a letter from Bytecraft Systems (NSW) Pty. Limited dated 1 August 2005 to the Licensing Court, which was Exhibit 7 in the proceedings of the court (Exhibit PNL7 to Ms. Lazzarini’s affidavit). That letter indicates that two maintenance calls were made between 31 May 2004 and 15 September 2005 at the plaintiff’s hotel. The first is documented in job number 288311, 31 May 2004 and related to a problem indicated as “a P2 Lockup”, which was rectified by installing a replacement GMIC.

27 The second, job reference number 344490, related to the faulty GMIC identified and replaced on 16 September 2004.

The Prosecution case

28 In relation to the interpretation and application of s.132(1) of the Act, the Prosecutor relied upon the words in s.132(1) “that enables the functions of the authorised CMS to be performed in relation to the gaming machine” as imposing a particular obligation on the plaintiff, namely, an obligation to ensure that the machine was transmitting the relevant information to the CMS such that the CMS could perform its functions. The Crown contended that as the GMIC was not transmitting information to the DMS on 15 September 2004, it followed that the plaintiff contravened s.133(2) of the Act.

29 A central issue arising on the prosecution’s case involves a determination as to the nature and extent of the obligation upon the plaintiff by virtue of s.133(2) of the Act.

30 In that respect, the ambit or extent of the obligation under s.133(2) is to be ascertained by reference to the statutory meaning accorded to the term “connected” by s.132(1) of the Act, which has been reproduced in paragraph [5] above

The plaintiff’s primary argument

31 The plaintiff, both in the Licensing Court and in these proceedings, essentially relied upon two submissions. The first aspect of the plaintiff’s primary submission was that the statutory intention in enacting s.132(1) was to ensure that no “arrangements” for transmitting information other than that approved by the Minister was made to provide information.

32 It was further contended (the second aspect of the primary submission) that the words “enables the functions of the authorised CMS to be performed” in s.132(1) do not import into the meaning of “connection” an additional requirement that the hotelier is obliged to ensure actual performance of the CMS equipment at all times.

33 In relation to the first aspect mentioned above, the submission was made that the phrase which has been last italicised in the preceding paragraph refers simply to the sort of arrangement that may be approved by the Minister. Thus it was argued, that in the present case, by way of example, that having regard to the arrangement approved for electronic transmission information could not be provided by hardcopy but could only be provided by electronic transfer. It was argued in the Licensing Court in this respect that had the plaintiff provided information in documentary form, then he would have failed to discharge the duty, in accordance with the approved arrangements, that rested upon him by virtue of s.133(2) of the Act. Hence, s.132(1) was designed to ensure that only the approved arrangements were implemented.

34 I cannot accept, with respect, this last mentioned argument or approach as determinative in the interpretation of s.133(2) read with s.132(1). That argument or approach was sought to be supported by reference to s.132(2)(b) and (c) (alternative forms of arrangements that may be approved under the section). That does not mean that in determining a hotelier’s obligation under s.133(2) the nature of the arrangements approved is not relevant. As will be seen later in this judgment, I am of the opinion that the second aspect of the plaintiff’s submission should be accepted.

The Department’s arguments

35 The defendant/Department’s submission in the Licensing Court and in these proceedings was that the obligation imposed under s.133(2) was in essence one to ensure that what was referred to as the “infrastructure” (the physical items - including the GMIC, control monitor and other “hardware” - on the plaintiff’s premises) must be functioning correctly to enable a continuous transfer of information from the machine to the control centre of DMS to enable the function of the CMS to be performed (that is, to monitor the operation and the performance of approved gaming machines, and to calculate and collect tax that is payable in respect of gaming and other related functions). The defendant submitted:-

“Section 132(2) places an onus on the plaintiff to ensure that the gaming machine is connected at all times.” (paragraph 35 of the defendant’s written submissions, 19 June 2006)

36 The question falling for decision is whether s.132(2), on its proper construction, did impose such an “onus”, or more accurately, an obligation of that kind upon the plaintiff.

37 Mr. Hugh White of counsel for the defendant/Department, correctly referred to “the two limbs in the definition of s.132(1). The first limb related to “arrangements of a kind approved by the Minister required to be in place for the provision of information in respect of the gaming machine”. Given the terms of the arrangements approved by the Minister (see paragraph [39]), it was the defendant’s submission that the first limb should be read as:-

“… if the direct provision of information by electronic data transfer is in place for the provision of information in respect of the gaming machine.”

38 The second limb, Mr. White contended, was encapsulated in the words appearing in s.132(1), “that enables the functions of the authorised CMS to be performed in relation to the gaming machine”.

The Minister’s determination under s.200AA of the Liquor Act 1982

39 On 20 November 1999, the Minister for Gaming and Racing made a determination under the abovementioned provision. The determination was in the following terms:-

“I, Jack Richard Face, Minister for Gaming and Racing, approve for the purposes of s.200AA of the Liquor Act 1982 (Meaning of ‘connected’ to an authorised CMS) arrangements for the provision of the CMS licensee of information in respect of any approved gaming device which complies with the Technical Standards for Gaming Machines and Subsidiary Equipment in New South Wales approved by the Liquor Administration Board (‘X-Standard Machines’) which involve the direct provision of information by electronic data transfer. No other arrangements are approved under s.200AA for the provision to the CMS licensee of information in respect of X-Standard Machines.
Nothing in this determination applies to approved gaming devices which are not X-Standard Machines.
Jack Richard Face
Minister for Gaming and Racing

Dated this 20th day of November 1999, Sydney”

40 It will be seen that this determination reflects the terms of s.132(2)(a) of the Act and that the arrangements “approved” were arrangements that “involved” the “direct provision of information by electronic data transfer”.

41 It is correct to say that the arrangements approved by the Minister by his determination under s.200AA of the Liquor Act 1982 did require the direct provision of information by electronic data transfer. That does not, of course, determine the nature and ambit or extent of the plaintiff’s obligation under s.133(2). The plaintiff’s duty is to be determined by reference to the particular terms of the provisions of s.132(1) and s.133(2) of the Act giving them their proper interpretation.

Concessions made by the Department in the Licensing Court and provisions relating to the failure of CMS components

42 Before examining those provisions, it is necessary to refer to three matters:-

(a) The defendant, it was submitted by Mr. S.B. Austin, QC. for the plaintiff, conceded in the Licensing Court that “arrangements of a kind approved by the Minister” were in place “for the provision of information in respect of” the gaming machine in question within the meaning of s.132(1). A reference to the transcript of 6 October 2005, p.15, lines 9 to 14, appears to confirm that point with counsel for the defendant/Department in these proceedings, after quoting the first “limb” of s.132(1), saying: “I concede that that part of the connection was effected because arrangements were in place. But it then goes on to say, and it’s all part of the same subsection, that enables the function of the authorised CMS to be performed in relation to the gaming machine” .

(b) The GMIC (which proved to be the source of the problem, preventing transmission of the data because it was faulty) was part of the authorised CMS. The defendant conceded both that it was part of the CMS and that the GMIC was the relevant fault in the system).

(c) Section 140(1) of the Act (reproduced in paragraph [15]) imposes restrictions on what is termed “unlawful interference” with an authorised CMS. Section 140(2) provides that s.140(1) does not apply, inter alia, to anything done in good faith in connection with maintenance or repair by the CMS licensee or the holder of a technician’s licence (which licence may be granted on conditions under Part 7 of the Act). The material in Annexure “F” to Mr. Fitzgerald’s evidentiary statement refers to actions to be taken by “venue operators” in the event of “connectivity” problems:-

“The following simple steps can be taken to ensure connectivity to the CMS:-
• (not reproduced here)
• A venue’s staff must diagnose CMS connectivity issues or obtain the assistance of a licensed technician, to restore and return connectivity to each machine and then verify it on the CMS site controller.
• At any time the venue may contact the CMS Help Desk on 131 785. DMS will arrange for a technician to restore connectivity. If the loss of connectivity is not due to a CMS component fault, the venue will be charged for the service.”

43 It can be seen from what has been earlier stated that the practical operation of the direct electronic data transfer scheme to ensure continuity involved in part the notification to DMS of a problem in “connectivity” as revealed by the site controller. Notification would then serve both to inform and provide the CMS licensee with the opportunity of arranging for a licensed technician under the Act to attend the venue with a view to determining the cause of any connectivity problems and fixing them.

44 The chronology of events concerning the “connectivity” problems with the “Pinata Pays” machine XAR 200145 is as follows:-

(a) As noted earlier, on 19 July 2004, Mr. Webb of DMS contacted the plaintiff, having identified on that date from records held, that the above machine had not transmitted gaming machine meter readings to CMS since 31 May 2004. When Mr. Webb advised the plaintiff that the machine was “off-line” to the CMS, he asked him to have his own service provider look at the machine and get it back on-line. When asked about his understanding of his “connectivity responsibilities” , the plaintiff replied that “it’s not my problem” . In one sense (perhaps fortuitously), the problem was not his, at least in the sense that the cause of the problem was subsequently established to have been a CMS component fault (the GMIC). Whether it was “his problem” in any other sense remains to be determined.

(b) On 28 July 2004, Mr. Webb made inquiries and confirmed on that date that no calls had been received from the plaintiff’s venue in respect of the “Pinata Pays” machine. On that date, he sent a report about the matter to a Mr. McCarthy, DMS Team Co-Ordinator.

(c) On 29 July 2004, Mr. McCarthy sent the report on to a Mr. Munro (CMS Business Analyst) for the purpose of commencing “enforcement action” against the plaintiff.

(d) On 30 July 2004, Mr. Munro sent the report (referred to as “the Escalation” ) to Mr. Fitzgerald which the latter acknowledges having received.

(e) For reasons not explained, there was a delay between 30 July and 15 September 2004 on which latter date Mr. Fitzgerald spoke to the plaintiff, as earlier mentioned. In that period, no step was apparently taken by CMS to investigate the cause of the lack of transmission and if necessary arrange for the repair of any faulty component (in particular, the faulty GMIC which was rectified on 15 September 2004).

The Licensing Court’s decision

45 The Licensing Court’s decision, delivered extempore, is recorded in the transcript of proceedings dated 6 October 2005 at pp.18 to 20. Reproduced below are some relevant extracts:-

“I accept that the initial analysis by Mr. White of the matters to be established is reasonably correct and I am satisfied in relation to the evidence which has been given that the relevant machine, which is the subject of the prosecution is an approved gaming machine for the purposes of the section and that it has, to the extent that the (sic) might be necessary, been identified as capable of being connected to the CMS. I am further satisfied that the defendant is an hotelier and that the defendant kept the AGM; those two last points are not in dispute. …
… The issue therefore is whether the arrangements which are referred to simply mean those which require the machine to be set up with a gimmick which is then arranged to report to the CMS or whether connection requires the actual continuity of the transfer of the information for which it is required.
…
S 132 specifically says that arrangements that are to be in place are those of a kind approved by the Minister for the provision of information in respect of the gaming machine that enable the functions of the authorised CMS to be performed in relation to the gaming machine. I accept Mr. White’s submission that that involves the continuous capacity of the connection to transmit the information and is not the question of simply an arrangement being there which may or may not be operating in accordance with its required and designed function. Once the machine is not transmitting to the CMS, I’m of the view that it is no longer connected to the CMS.
In this particular case there are two parts of the evidence; one at the CMS end as it were, and one at the site end. At the CMS end there is evidence of failure to have information reporting over a period of time; of contact being made by telephone with the venue; and of subsequent contacts when there had been no change at the CMS end. I won’t go into the details of all of those encounters. At the venue end there is evidence not controverted but from the prosecution that the site was contacted and that is not denied. There is extensive evidence as to the conversation which took place and I’m satisfied that at the venue end, there was notice at least at that point of a difficulty.
…
The main evidence relates to the question of what the hotelier was on notice of, and what he did to comply with his obligations under s.133 which is that he must ensure the gaming machine is connected. It is conceded by the Crown, and may be logical or non-logical interpretation of the section, that if something happened outside his specific involvement which caused the machine to become disconnected in the sense of not complying with the provisions of s.132, that it would be his obligation to then immediately ensure that that was not a state of affairs that continued. It does not seem to be the case that they are putting, that when the section, the system goes down, he is necessarily immediately in breach prior to his having some knowledge or constructive knowledge of the situation.
Mr. Austin argues that the section, if it is going to be read to create an obligation on the hotelier, would operate the nano second there was a failure in the connection. That may well be in fact the way in which the statute is literally worded but I think that we would have to take account of the fact that it is intended that it is a continuing obligation of a hotelier which may be occasionally interrupted by technical or other problems which it is his obligation to immediately attend to and ensure that the interruptions of a technical nature are not ones which interfere with the day to day operations. It seems to me that it could have been slightly better worded but that that is the intention of the wording of the section.
I accept that it is the hotelier’s obligation however, to ensure that the gaming machine is connected whether it is as a – that any disconnection is as a result of a technical problem for which the CMS would, on a day to day basis, accept responsibility or whether it is on a basis of something which relates to the hotelier’s responsibility as has been outlined in a publication issued by the Department of Gaming and Racing which seeks to instruct hoteliers and clubs about the responsibilities they have in relation to faults in any equipment and the persons they should contact if such faults occur.
In my view that is simply an indication of who has the technical expertise and the responsibility, and the capacity to deal with the particular technical problems given that some of the issues will involve CMS equipment which is not necessarily able to be touched other than by their own people, their own technicians and for which they will take certain action. If they fail to take action, and the equipment remains unconnected, it is in my view still a responsibility of the hotelier to deal with that issue, and if that involves some other dramatic action, well that’s what he should take. I’m not satisfied that he would necessarily wear the full weight of the section if he had taken all reasonable steps to alert everyone relevantly involved of the problem and continued to make a lot of fuss about it. But if he sat on his hands and did not ensure that he was back connected and operating properly, I think it is his responsibility.
Now he had a gaming machine manager, he had technicians which he says he believed had attended to issues, but he certainly did not personally satisfy himself that the problems which had been personally brought to his attention, had been addressed. He did not apparently ensure that he received, over a lengthy period of time, any written confirmation that the connection had been restored and there is no evidence before me that he took any other particular steps to satisfy that situation. I don’t propose to go into all of the facts and all of the matters which have been placed in evidence before me but I am satisfied having heard all of the evidence and the submission in relation to them, that the offence is proved.”

The construction of s.132(1) and s.133(2)

46 The provisions of s.133(2) undoubtedly created an obligation on the plaintiff. Breach of that obligation would result in strict or absolute liability. The word “ensure” has been employed in other legislation which has been held sufficient to create an obligation and liability of that nature. See, for example, the Occupational Health & Safety Act 2000 (NSW), s.8(1) (“an employer must ensure the health, safety and welfare at work of all employees of the employer”) and, in respect to its predecessor, s.15(1) in the 1983 Act, and the line of case law commencing with Carrington Shipways Pty. Limited v. Callaghan (1985) 11 IR 467 (New South Wales Industrial Commission, Watson, J.). It is not uncommon to find that such legislation contains a defence provision, eg., s.28 of the Occupational Health & Safety Act 2000 which provides:-

“ Defence
It is a defence to any proceedings against a person for an offence against a provision of this Act or the Regulations if the person proves that:-
(a) it was not reasonably practicable for the person to comply with the provision;
(b) the commission of the offence was due to causes over which the person had no control and against which the happening of which it was impracticable for the person to make provision.”

47 Liability arising under a provision such as s.133(2) is quasi-criminal in nature. It must be established by proof to the criminal standard. The interpretation contended for by the defendant said to give rise to liability of that kind must be based upon the terms of a statute that are plain in their expression. If the words of s.133(2) read with those of s.132(1) are not plain, then regard should be had to the principles of interpretation that apply to criminal legislation. Such principles are to be applied with the appropriate degree of caution. They include the following:-

(a) In determining the meaning of provisions of a penal statute, the ordinary rules of construction must be applied. However, if the language of the statute remains ambiguous or doubtful, the ambiguity or doubt must be resolved in favour of the subject by refusing to extend the category of criminal offence. This rule is one of last resort: Beckwith v. The Queen (1976) 135 CLR 569 per Gibbs, J. at 576. See also Regina v. Adams (1935) 53 CLR 563, 567-568. It has been observed that, where provisions creating or extending criminal liability can reasonably be construed in two or more ways, they are to be given the narrowest of the alternative interpretations: The Laws of Australia 9.1.1680.

In the present case, the plaintiff contends that the proper interpretation of s.132(1) is that his obligation was satisfied by ensuring that the arrangements approved by the Minister were in place and that the meaning of “connected” in s.132(1) cannot be extended to require the plaintiff to ensure the continuous and effective operation of the CMS system. In this respect, the plaintiff contended there are no words in the section that expressly or plainly state (or state at all) that that is the plaintiff’s obligation.
The rationale for the above principle of statutory construction has been identified as the fact that the subject is entitled to receive fair warning of the ambit of criminal liability.

(b) Where the canon of strict construction referred to in (a) must be considered in the context of general statutory provisions and the principle that the interpretation which best serves its object or purpose is to be preferred, three possible solutions have been identified (see The Laws of Australia 9.1.1710).

(i) The first is that strict construction takes priority over purposive interpretation.
(ii) The second is that purposive interpretation takes priority over strict construction.

(iii) The third is that recognition can be given to a presumption that the legislature intends penal statutes to be strictly construed. A general preference for strict construction is then taken into account in determining the purpose or object of the statute: Taylor v. New Zealand Newspapers Limited(No. 3) (1938) NZLR 212 (SC) per Fair, J. at 214.

48 In relation to the provisions of s.132(1), the following observations are made:-

(a) The obligation created by s.133(2) is concerned with ensuring that the gaming machine is “connected” to an authorised CMS, that is, connected in the particular sense provided for in s.132(1).

(b) There are several means by which the provision of information may be effected. Three are specifically referred to in s.132(2) including the direct provision by electronic data transfer.

(c) The critical words in s.132(1) so far as the meaning of the term “connected” is concerned are:-

(i) “… if arrangements are in place …” . The phrase “in place” means in the original or proper position, in position, suitable, appropriate: Shorter Oxford English Dictionary, Volume 2 at p.2225.

(ii) “… for the provision of information in respect of the gaming machine”. This expression simply refers to the act(s) or action(s) by which the information specified is provided.

. There are two alternative interpretations in relation to these words. The first is that they are descriptive of the type of information that must be provided. The second (the one contended for by the defendant/Department) is that they extend the obligation on the plaintiff that required him to implement or put “in place” the approved arrangements, to include a further obligation of ensuring that the “arrangements” for the direct provision of information by electronic data transfer is in fact effective or continuous – what is referred to in the defendant’s written submission as “an ongoing obligation”:-

“The defendant submits that the intent of the legislation is to ensure that there is an ongoing obligation to report continuously to enable the functions of the CMS to be continuously performed.” (paragraph 28 of the submissions, 19 Jun 2006)

(d) In relation to the last-mentioned point, Mr. Austin, QC., as noted above, argued that there are no express words encapsulating the extended obligation contended for by the defendant. He observed that it would have been quite a straightforward drafting exercise to have added such a requirement. There is, in fact, no express reference in s.132(1) to the actual operation, performance, functioning or effectiveness of the approved arrangement itself.

(e) The term “enables” , it was noted in Cultivaust Pty. Limited v. Grain Pool Pty. Limited & Ors (2006) 67 IPR 163 (Finn, Emmett and Bennett, JJ.), may be taken to mean “make possible” or “give the means for” (relying upon the Shorter Oxford and Macquarie Dictionaries). Those meanings fit comfortably in s.132(1) to describe the type or nature of information to be directly provided by electronic data transfer being information that will enable the CMS functions to be performed. To understand what functions of the authorised CMS are to be performed in relation to the gaming machine, one turns to the definition in s.4 of the Act which has been set out in paragraph [13].

49 In the present case, the approved arrangements that were “in place” were arrangements for the provision of information by the means specified in the Minister’s determination of 26 November 1999 (direct electronic transfer) in respect of the “Pinata Pays” machine being information that would enable or “make possible” or “give the means for” the particular functions of the CMS referred to in the definition in s.4 to be performed.

50 A comment should be made in relation to the defendant’s submission that the above provisions, on the interpretation it contends for, placed the plaintiff under a continuous obligation to report any “connectivity” problem in the context of the facts of this matter. The chronology of events set out in paragraph [44] established that as early as 19 July 2004 Mr. Webb had ascertained that there had been no transmission for the machine in question since 31 May 2004 (it being noted, however, that the plaintiff was charged only with a single offence on one day, namely, 15 September 2004).

51 As noted in the chronology, on 19 July 2004, the plaintiff told Mr. Webb in blunt or forthright terms, “it’s not my problem … it’s your problem”. Certain things are clear:-

(a) CMS personnel knew in July 2004 there had been no transmission of information since 31 May 2004.

(b) The plaintiff made it plain that he would not deal with the problem because he did not consider it was his problem.

(c) The reporting of a transmission problem to DMS itself provides an opportunity for DMS to send a licensed technician to investigate. But a report by the plaintiff in this matter would not have added to what CMS personnel already know. For whatever reason, DMS did not investigate the transmission problems prior to 15 September 2004. It is difficult to see any significance in the failure to report that which DMS personnel already knew (that a continuity problem had been identified) as early as 19 July 2004.

(d) Under the DMS scheme, the plaintiff was under no responsibility to pay for the repair by the licensed technician (in this case, Bytecraft) engaged by DMS as the problem was in the GMIC and not in the gaming machine. The material in Annexure “J” to Mr. Fitzgerald’s statement refers in that respect to the responsibility for a CMS component failure as follows:-

“The delineation between venue and CMS responsibility and statutory obligation to maintain connection is defined as:-
CMS responsibility (Data Monitoring Services/TAB Limited).
CMS component fails eg. GMIC, CMS Site Controller, network communication links or routers, Telstra connection via the wide area network to the CMS host.
…”

52 Whilst the statement is not determinative of the interpretation question, it does indicate that in fact by reason of the GMIC fault (and the fact that this evidence indicates that GMIC failures were not uncommon) there was every reason for DMS to have investigated the lack of transmission that had been noted by Mr. Webb, Mr. Munro and Mr. Fitzgerald as an aspect of its responsibility or otherwise.

53 I have concluded that there is in fact no ambiguity in s.132(1) for the expression “enables the functions of the authorised CMS to be performed etc.” plainly refers to the character or nature of the information that must be provided. It does not, either in its express terms or by implication, refer to or provide for an extended obligation to ensure that continuity in the transmission of information occurs at every moment in time that the gaming machine is in fact in operation.

54 Given the quasi-criminal nature of the provision, clear words would be required for such an obligation. Further, without an accompanying or ameliorating provision providing for a defence for vigilant or conscientious hoteliers such, for example, as that referred to in paragraph [46], any such obligation would be extremely onerous and conceivably, in some circumstances, even draconian in its operation.

55 If contrary to what I have stated in paragraph [53], there could be said to be an ambiguity in s.132(1), then there are strong grounds for a strict construction to confine the obligation to one of ensuring that the approved arrangements are “in place”. These include:-

(a) The fact that, even between a failure in transmission occurring and its prompt reporting, there could, on the broad interpretation contended for by the defendant/Department, exist a contravention of s.133(2), there being no express provision limiting the asserted obligation or the alleged duty or providing for grounds of a defence;

(b) The imposition of an extensive and unqualified obligation and the visiting of quasi-criminal consequences upon hoteliers and others if any contravention occurs are serious matters that should only arise by the use of plainly worded statutory provisions.

The plaintiff’s secondary submission

56 Mr. Austin, QC. on behalf of the plaintiff contended:-

(a) That the prosecutor conceded that the GMIC was part of the authorised CMS.

(b) That there was no evidence that the machine was not connected to the GMIC in the machine within the meaning of s.132(1)

(c) The evidence established that the GMIC was faulty. It did not transmit the information it received from the gaming machine. The report attached to Mr. Webb’s statement stated that after that fault was rectified, there was “100% connectivity” (see Annexure C to Mr. Webb’s statement, 6 June 2005).

(d) The evidence did not, in fact, focus or address whether there was a fault in the connection between the machine and the GMIC . The only inference to be drawn, the plaintiff submitted, was that there was no such fault. Mr. White of counsel, in his submissions in reply on 13 July 2006, contended that there was no evidence in the Licensing Court that the “Pinata Pays” machine was able to transmit information to the GMIC. However, as the Department had the onus of proving that there was no connection to the authorised CMS (of which GMIC was part), it would seem that the inference the plaintiff relies upon is, at least, one open to be drawn. The evidence, in fact, suggests that information had been reaching the GMIC before the loss of continuity for, when it was replaced on 15 September 2004 with a new GMIC, information immediately flowed again to the CMS control. There, in other words, is no suggestion of problems “up-stream” of the GMIC. The evidence rather suggests the contrary.


(e) On that basis, it was contended it was not open to the Licensing Court to find proved beyond reasonable doubt that the machine was not “connected” to the CMS (which included the GMIC). It was also contended that that Court appears to have (wrongly) construed s.133(2) as imposing an obligation on the hotelier to ensure that the GMIC was properly passing on information to the rest of the CMS. In that respect, the plaintiff relied upon its primary submission. It was also said to be wrong as the GMIC being itself part of the CMS, the Act did not require the plaintiff to ensure the “entire CMS” was functioning properly.

57 In the context of the plaintiff’s secondary argument, the defendant contended that the mere receipt of information by the GMIC does not mean that the machine is connected within the meaning of s.132.

58 However, the facts establish that the machine had been connected to an authorised CMS and had been transmitting to the GMIC. On the evidence, the fault in the GMIC was the only defect which prevented transmission of electronic data to the control centre of DMS. In the plaintiff’s submissions in reply, it was contended, in my opinion correctly, that whether the GMIC failed to transmit the information to the control centre is just as irrelevant as if the control centre itself was not operating to recover the information from the CMS. Neither circumstance could be said to have been part of the plaintiff’s obligation.

59 The plaintiff also correctly, in my opinion, submitted that the defendant’s submission effectively meant that if any part of the CMS ceases to function, whether because TAB Limited decides to upgrade it, or maintain it, or it simply malfunctions, the hotelier is guilty of an offence. That, of course, could not be the case.

60 Mr. Austin, SC. in his written submissions (paragraph 23) observed that the learned magistrate did not, in terms, address the plaintiff’s secondary submission, based on the concession that the GMIC was part of the CMS nor made any finding of fact in accordance with the Crown’s concession (or contrary to it). It was submitted that in these circumstances, that her Honour must be taken to have accepted the Crown’s submission that the fact that the GMIC was part of the CMS was irrelevant because the obligation imposed by s.132(1) was to ensure that the machine was transmitting the relevant information to the CMS such that the CMS constantly performed its functions despite, for example, the inability of the hotelier to carry out work on the CMS (GMIC).

61 I have concluded that the learned magistrate was in error in concluding that s.132 requires under the approved arrangements that there be a continuous capacity of the connection to transmit electronic information and that the plaintiff was in breach of an obligation under s.133(2) in that respect to ensure that the gaming machine was connected to the authorised CMS.

62 I have concluded that the “Pinata Pays” gaming machine was connected within the meaning of s.132 and s.133 of the Act.

63 The plaintiff has sought relief, inter alia, that the matter be remitted back to the Licensing Court of New South Wales to be dealt with according to law. Under s.187(2)(b), this Court is empowered to make such an order in relation to an appeal as it thinks fit or, alternatively, to an order as sought in prayer (2) of the summons.

64 I propose to allow the parties to make submissions on the appropriate form of orders and on the question of costs. The proceedings may be re-listed by arrangement with my associate.

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