Mellor v Liquor Administration Board - [2003] NSWSC 38

No judgment structure available for this case.

CITATION: Mellor v Liquor Administration Board [2003] NSWSC 38

HEARING DATE(S): 04/11/02; 21/11/02

JUDGMENT DATE:
14 February 2003

JUDGMENT OF: Whealy J at 1

DECISION: I make orders as follows: ; 1. Summons dismissed; 2. Plaintiff to pay defendant's costs; 3. Exhibits may be returned.

CATCHWORDS: Gaming Machines Act 2001 - Liquor Act 1982. Gaming Legislation freeze on poker machines in hotels and clubs. Power to impose conditions on dormant licences. Legislative intention of freeze regulation - prohibition on stockpiling gaming machines

LEGISLATION CITED: Liquor Act 1982
Liquor Amendment (Approved Gaming Devices) Regulation 2001
Liquor Regulation 1996
Liquor Further Amendment (Approved Gaming Devices) Regulation 2001
Gaming Machines Act 2001

CASES CITED: Ex parte Mullen re Hood (1935) 35 SR 289 at 302; 525 (High Court)
Washington Soul Pattinson v Ogilvy (1954) 55 SR 143 at 148
Ex Parte Walsh re Latham (1949) 66 NSW WN 145 at 147

PARTIES :
David Mellor v Liquor Administration Board

FILE NUMBER(S): SC 12429/02

COUNSEL: Mr S. Austin QC; Mr I Lawry - Plaintiff
Mr M. Leeming - Defendant

SOLICITORS: Slater & Elias - Plaintiff
I. V. Knight (Crown Solicitor) - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

WHEALY J

FRIDAY 14 February 2003

12429/02 - David MELLOR v LIQUOR ADMINISTRATION BOARD

JUDGMENT

1 HIS HONOUR: The plaintiff is the licensee of a newly opened hotel in the heart of the central business district of Sydney. It is located at 60 Castlereagh Street just off Martin Place. By all accounts the hotel is an attractive establishment offering many facilities to the public. But it does not have any functioning gaming room and at the present time there are no poker machines or gambling devices operating at the establishment.

2 This state of affairs might be regarded by some patrons as something of a benefit rather than a disadvantage. That, however, is not the attitude of the owners and operators of the hotel. They wish to operate poker machines in the hotel. It is common ground in this litigation that the ability to operate 20 gaming machines in a hotel in the heart of Sydney is an extremely valuable financial commodity.

3 The hotel commenced trading at Castlereagh Street on the 21st September 2001. The hotel licence had originally attached to a site at 252 Sussex Street, Sydney. This parcel of land had an interesting history. The site at 252 Sussex Street was originally granted to the Wentworth family estate in the early 1800s. There were dwellings and small shops on the site until about 1882. A hotel known as the United States Hotel was constructed in 1882 on the southern portion of the land. In 1914 the northern portion of the site was used as a weighbridge. In 1922 the buildings were all demolished and a new hotel was established on the site opening in 1924. It was also called the United States Hotel. In 1987 the premises were renamed St Elmo’s Tavern but this building was demolished in 1997.

4 In 1996 a Mr John Howard Lyons was a director of a company known as “888 Casino and Tavern Pty Ltd”. This company purchased the licence attaching to the site at 252 Sussex Street, Sydney. Mr Lyons applied on behalf of his company to transfer the licence to his own name in his capacity as a director of the company. In his application he informed the Licensing Court of New South Wales that the licence would be held in a dormant capacity and not exercised pending its transfer to a further nominee of the company. On 15 June 1998 – the delay has not been explained – the Licensing Court granted the transfer of the licence to Mr Lyons. The order of the court was endorsed “Licence to be held in a dormant capacity until court orders otherwise”. As mentioned earlier, the premises had been demolished in 1997 although this fact does not appear to have been brought specifically to the Licensing Court’s attention at the time of the transfer. The details of the application however indicated that there was no intention to conduct any business under the licence at the premises in the event that the licence was transferred to Mr Lyons. Further, Mr Lyons had informed the court that the existing business of the hotel was to cease on or about 5 November 1996. Mr Lyons made no application, in conjunction with the transfer application, to transfer the ownership of any approved amusement devices into his name. His company had no right to occupy, nor any intention of occupying, any part of the Sussex Street premises.

5 The subsequent history shows that in about 2000 Mr Lyons and others associated with his business activities determined upon a course of action to establish a new hotel at new premises to be provided at 60 Castlereagh Street, Sydney. The vehicle for this was to be the dormant licence at 252 Sussex Street, Sydney. First, the licence was transferred from Mr Lyons name to that of Mr Theo Feros. Subsequently, in July 2000 it was transferred into the name of Mr Rayk, an employee of one or more of the Lyons companies. Secondly, on 4 July 2000, the Liquor Administration Board approved the change of the name of the licence premises at 252 Sussex Street, Sydney to “The Verandah Bar and Bistro Sydney”. This was despite the fact that there was no intention or ability to trade the licence at Sussex Street, Sydney. Thirdly, there commenced a series of applications to the Liquor Administration Board known as “stand alone gaming device applications”. These applications were made pursuant to s 161 Liquor Act 1982 (as amended). It is convenient at this stage to set out the terms of that section as it stood at the relevant time.

“ 161 Authority to keep approved gaming devices

(1) On the application of an hotelier, the Board may impose a condition of the hotelier’s licence authorising the licensee to acquire and keep in the hotel, and to permit the use and operation of, not more than 30 approved gaming devices.

(2) A condition in force under this section may be varied or revoked by the Board as provided by section 20 (Conditions of licences) but such a variation may not authorise the keeping, use or operation of more than 30 approved gaming devices.

(3) In the instrument by which it imposes, varies or revokes a condition, the Board is to identify the device or devices to which the condition, variation or revocation relates.
(4) An application to the Board:

(a) For the imposition of a condition authorising the acquisition and keeping of an approved gaming device, or

(b) For a variation, or the revocation of an existing condition authorising the keeping of an approved gaming device, is to be in a form approved by the Board and is to accompanied by such documents as comply with the requirements of the form.

(5) If, before a decision is made on an application, there is a change in the information provided in or accompanying the application (including information provided under this subsection) the applicant must forthwith provide the Board with full particulars of the change.

Maximum penalty: 20 penalty units.

(6) The Board may, from time to time before making a decision on an application, require the applicant to provide, or require the applicant to authorise another person to provide, the Board with such further information in relation to the application as is specified by the Board and, until the information is provided, may defer consideration of the application.
(7) The Board:

(a) May approve an application form that requires the information provided by completing the form to be verified by statutory declaration, and

(b) May require information or particulars provided by an applicant to be verified by statutory declaration.

(8) The Board may refuse to proceed with an application by an hotelier for imposition or variation of a condition under this section if the hotelier fails or refuses to provide the Board with such information as may be required by the Board as to:

(a) The ownership of each approved gaming device to which the condition, or the varied condition, would relate, or

(b) The financial or other arrangements in accordance with which each such device has been, or is proposed to be, acquired or modified.

(9) A fee is payable, in an amount and in a manner determined by the regulations, whenever a condition authorising the keeping of one or more approved amusement devices is imposed or varied by any person exercising the functions of the Board in accordance with section 155b.

(10) The Board is to exercise its functions under this section so as to ensure that the total number of approved gaming devices that my be used an operated at an establishment does not exceed 30 even if there is more that one hotel at the establishment, unless the Board is satisfied that there is good reason for treating the hotels as separate establishments.
(11) It is a condition of a hotelier’s licence that, if more than 10 approved gaming devices are kept, used or operated at the hotel:

(a) Nor more than 5 may be located in the general bar area of the hotel, and

(b) The others (or all of them if none are located in the general bar area) are to be located in another area that conforms to the requirements of the regulations.

The regulations may make provision for or with respect to identifying the general bar areas of hotels.

(12) In calculating the number of approved gaming devices kept by a hotelier for the purposes of this Act, any subsidiary equipment kept by the hotelier an approved by the Board for use in connection with such gaming devices is to be disregarded.
(13) If the hotelier’s licence is held by a body corporate or a partnership, an application under this section may be lodged, and supporting information may be furnished and verified, on the hotelier’s behalf by the manager approved by the court under Division 8A of Part 3.”

6 Section 162 of the Act, as it then stood, dealt with the qualifications for keeping an approved amusement device. In short, the Board was not to subject a hotelier’s licence to a condition under s 161 or to vary such a condition by adding an approved amusement device to the condition unless it were satisfied as to the matters dealt with in sub-sections 2 and 3 of the section. In essence these were that each device was to be acquired or modified under a written contract that included such terms and conditions (if any) as maybe prescribed; and that the device was to be either owned unconditionally and free from encumbrances or, if otherwise, in accordance with financial arrangements approved by the Board. Section 164 contained a number of statutory conditions relating to approved amusement devices. Relevantly for the purposes of the present litigation the following may be noted -

“ 164 Statutory conditions relating to approved amusement devices

(1) Compliance with the requirements of this section is a condition of a hotelier’s licence.

(2) The Hotelier is not to permit or suffer an approved amusement device to be in the hotel if the device is capable of being operated to provide cash or credit otherwise than as a prize authorised by this Act.

(a) the provisions of this Act, and

(b) a condition of the licence authorising the hotelier to keep that device and permit its use and operation, and

(c) any other conditions imposed by or under this Act.

(6) An approved amusement device is not to be kept in any part of the hotel other than a restricted area.

(7) An approved amusement device is not to be used or operated at any time other than a time at which liquor maybe sold or supplied in the restricted area in which the device is kept.

(a) the Board has authorised disposal of the device, and

(b) the hotelier complies with any conditions imposed by the Board when authorising disposal of the device, and

(c) the Board has made a appropriate variation of, or has revoked, the condition imposed under section 161 in so far as it authorised the hotelier to acquire and keep, and to permit the use and operation of, the device.”

7 It is sufficient for present purposes to mention only one other section of the Liquor Act 1982 as amended. This is s 20 which deals with the Licensing Court’s power to impose conditions not inconsistent with the Act upon various categories of licences including hotelier’s licences. Sub-section 2 of s 20 provides that a licence is subject to prescribed conditions, any conditions imposed under various sections of the Act including s 20 itself, any conditions imposed by the Court in the hearing of disciplinary proceedings heard by the Court or complaint proceedings heard by the Board; and any other conditions the Court or Board is authorised by the legislation to impose, including any conditions imposed under the act in relation to an approved gaming device. There are additionally a number of statutory conditions imposed by the Act itself on an hotelier’s licence. It is not however necessary to set these out as they are not directly relevant to the issues in the proceedings.

8 On 25 August 2000, the Council of the City of Sydney had given development approval to the Castlereagh Street proposal for the “fit out of upper ground level as a bar and bistro and take away wine shop and a retail telephone shop”. A condition of this approval was that “no amusement or poker machines are to be installed on the premises”. The developers, however, secured an important concession in this regard on 22nd December 2000. On that date the Council issued, in effect, a modification of the development consent which permitted use of part of the premises as a gaming area but restricting the number of gaming machines to be operated from the premises to twenty.

9 The overall result of the various applications made pursuant to s 161 of the Liquor Act 1982 (as amended) was that the Liquor Administration Board, approved the keeping and operation “on the premises” as a condition of the licence some 20 itemised gaming machines. According to the chronology prepared on behalf of the defendant, these approvals took place on 21 September, 16 October, 11 November 2000 and 14 March 2001. The ultimate nature of the approvals relating to the Sussex Street premises may best be seen from the document which is Annexure A to the affidavit of Rodney William Slater filed in support of the plaintiff’s summons (Exhibit “A”).

10 The document bears an issue date of 8 March 2001. It is described as a Schedule to Licence number 106246. It is issued by the Liquor Administration Board and appears to be signed by “PJ Scanlon Principal Registrar” and endorsed by the signature of a delegate of the Board. The document itemises 20 gaming devices, some 15 of which are poker machines and five of which are approved amusement devices (“card machines” or “AADs”). It will be convenient to refer to these collectively as gaming devices or gaming machines.

11 The document is addressed to “The Verandah Bar and Bistro 252 Sussex Street, Sydney 2000”. The text of the document (leaving aside the description of the machines) is in the following terms:-

“In accordance with the Liquor Act 1982, this schedule forms part of your hotelier’s licence and records those approved gaming devices which you are authorised to keep on your premises as a condition of your licence.

By this instrument the Board imposes or varies a condition on your licence authorising you to keep and operate the following identified approved gaming devices within a restricted area of your hotel.”

The document concludes with the following statements:-

“This schedule replaces any previously issued. It should be kept securely on the premises for reference by Special Inspectors or Police Officers. Previous schedules should also be kept on the premises.

The number of devices kept and operated on the premises must not, at any stage, exceed the number allowed as a condition of the licence.”

12 It will be observed that the “authority” was directed to the Verandah Bar and Bistro at 252 Sussex Street Sydney 2000. The truth is that the licensed premised at 252 Sussex Street Sydney had been long demolished and there was no hotel in operation on that site at all. It was and would have been physically impossible for the licensee to keep gaming machines at the Sussex Street site. Moreover, he had no right to occupy any part of these premises. Further, the Verandah Bar and Bistro was the name which the proposed operators intended to utilise if the hotel were successfully relocated to 60 Castlereagh Street Sydney. There were no licensed premises at the proposed location during October and November 2000 when three of the four categories of approvals were issued. For reasons later mentioned, this remained the position when the further category of authorisations were issued on 14 March 2001.

13 On 13 November 2000 there came before the Licensing Court of New South Wales an application which had been lodged by Mr Rayk on 24 October 2000. This was an application for the conditional removal of the hotelier’s licence from 252 Sussex Street Sydney to the proposed premises at 60 Castlereagh Street Sydney. Full details of the proposal were contained with the application. They included a plan of the proposed premises. This plan indicated a room at the rear of the proposed wine shop which was described as “reserved for future gaming lounge – potential stage 2 application”. In paragraph 14.1 of the affidavit in support of the application Mr Rayk said:-

“When the licence is exercised, if gaming devices operate, I agree to abide by Annexure “C” in relation to responsible gaming practices.”

14 Information with the application indicated that the application was made on behalf of two companies namely Liquor Distributors (Australia) Pty Ltd and Synthetic Technology Investment Corporation Pty Ltd. There were a number of persons disclosed as having an interest in the application arising from their association with each of these companies. The interested parties however included Mr Lyons and his wife. The freehold owner of the property at Castlereagh Street was disclosed as Perpetual Nominees Ltd.

15 As I understand it, a series of private objections were lodged to this removal application. Consequently the hearing of the application was postponed until such time as, following successful commercial negotiation, the objections were withdrawn. This happened in late February 2001. The Licensing Court then granted the conditional removal of Licence 106246 from 252 Sussex Street to 60 Castlereagh Street on 23 February 2001. The application was granted subject to the imposition of a number of conditions. Two of those are relevant for present purposes. They were:-

“(2) No application shall be made for approval for the installation of gaming devices in respect of the premises until 21 days after a copy of the proposed evidence of compliance with the statutory condition under Section 21 AA Liquor Act 1982 and gaming room requirements of Clause 46B Liquor Regulations 1996 is submitted to the Director of Liquor and Gaming.

16 This latter condition was imposed apparently to accord with Council’s modified development content.

17 On 15 March 2001, Mr Lyons wrote a letter to the Liquor Administration Board. It was in the following terms:-

Please be informed that the twenty gaming machines as per the enclosed schedule have now been relocated from 252 Sussex Street to our premises at 60 Castlereagh Street. They are turned off and under lock and key. The new premises at 60 Castlereagh Street are in the process of being fitted out and the hotelier’s licence has been approved to being removed to such premises by decision of the Court dated 23rd February 2001.

18 It seems highly unlikely, despite Mr Lyons’ statement in his letter, that the twenty gaming machines referred to in the Schedule were ever located at 252 Sussex Street, Sydney. It is not clear why the letter was written by Mr Lyons to the Board. It may be – although this is purely speculation – that he had some forewarning of the imminent freeze on gaming devices in hotels. In any event, the New South Wales government brought in a freeze on the number of approved gaming devices allowable in hotels, the freeze commencing on 19 April 2001.

19 It is common ground that at the date of Mr Lyons’ letter namely, 15 March 2001, the premises at 60 Castlereagh Street were not yet licensed premises. The premises had the benefit of a conditional order but the premises would not become licensed premises until a final order was secured (s 4(5) of the Liquor Act).

20 The Liquor Amendment (Approved Gaming Devices) Regulation 2001, published in Government Gazette No 70 on 19 April 2001, inserted Clause 46AA into the Liquor Regulation 1996. It was in the following terms: -

“ 46AA Number of approved gaming devices

(1) It is a condition of a hotelier’s licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device:

(a) that was not acquired, and

(b) the acquisition, keeping, and the use or operation of which was not authorised and permitted by the court or the Board,

immediately before the commencement of this clause.

(2) A hotelier cannot apply to the court or the Board to impose, vary or revoke a condition of the hotelier’s licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the commencement of this clause.

(3) The court or the Board cannot, while this clause is in force, determine an application made to it by a hotelier before the commencement of this clause to impose, vary or revoke a condition of the hotelier’s licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the application was made.

(4) This clause expires 3 months after the commencement of this clause.”

21 It is apparent the Regulation was promulgated with a degree of haste. There was a need to make certain amendments to it. The Liquor Further Amendment (Approved Gaming Devices) Regulation 2001 was published in Government Gazette No 76 on 2 May 2001. There were two substantive changes made to the earlier Regulation. First, the terms of the condition which had been imposed by sub-clause 1 of the original Regulation was altered. The condition was now in the following terms: -

“(1) It is a condition of a hotelier’s licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device so as to exceed the maximum number of approved gaming devices that were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the commencement of this clause.”

22 The second change to the original Regulation related to exemptions from the freeze which are not relevant to the issues in these proceedings.

23 The original freeze had been for a period of three months. Legislation came into force on 17 July 2001 which in effect put into final form the terms of the original short term freeze. The Liquor Amendment (Gaming Machine Restrictions) Act 2001 amended the Liquor Act 1982 so as to insert new sections 180D, 180E and 180F. Sections 182D and 182E were in the following terms: -

“ 182D Definitions

(1) In this Division:

application for additional gaming devices means an application by a hotelier to the court or the Board to impose, vary or revoke a condition of the hotelier’s licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the period of the freeze.

period of the freeze means the period:

(a) commencing on 19 April 2001 (being the date on which clause 46AA of the Liquor Regulation 1996 took effect), and

(b) ending on the date appointed by proclamation.

(2) The date appointed for the end of the period of the freeze may be altered by a further proclamation or proclamations published before the date so appointed.

182E Number of approved gaming devices in hotels not to be increased during the period of the freeze

(1) It is a condition of a hotelier’s licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device so as to exceed the maximum number of approved gaming devices that were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the period of the freeze.

(2) A hotelier cannot, during the period of the freeze, make an application for additional gaming devices.

(3) The court or the Board cannot, during the period of the freeze, determine an application for additional gaming devices.

(4) This section is subject to the other provisions of the Division.”

24 Section 182F is not relevant to the determination of the issues in these proceedings.

25 Between February and September 2001, the proposed hotel premises at 60 Castlereagh Street, Sydney were established and outfitted. It appears that they were substantially completed in accordance with the plan earlier approved by the Court on the 23 February 2001. This work was completed by the 21 September 2001. On that date, the final order for the removal of the licence was obtained and the hotel was thereupon entitled to trade. Trading in fact commenced on or about 27 September 2001.

26 On 24 September 2001 Mr Lyons had written a further letter to the Gaming Department, Department of Racing and Gaming at 323 Castlereagh Street, Sydney 2000. Mr Lyons informed the Department that the premises had been fitted out and that a final order for a grant of the hotelier’s licence had issued on 21 September 2001. He indicated that it was his intention to commence trade on 27 September 2001.

“Twenty gaming machines are attached to the licence and as previously advised have been stored on the premises since 15th March 2001. A copy of an affidavit sworn by the licensee Mr Churti Rayk, which deals with the conformation to Section 21 AA of the Liquor Act 1982 and 46 B of the Liquor Regulation 1996, is enclosed. In accordance with the order of the Court we now inform you that we intend to turn on the gaming machines in 21 days from 21st September 2001, namely 13th October 2001. We have made provision for CMS and in all other respects we conform with the Liquor Act 1982, and regulations, 1996.

27 On 12 October 2001, the Liquor Administration Board wrote a letter to the licensee of the Verandah Bar and Bistro. The letter informed the licensee that the Board had become aware of the issue relating to gaming machines at the premises and that it had reviewed correspondence in relation to it. The letter drew the licensee’s attention specifically to s 182E of the Liquor Act and continued:-

“After reviewing correspondence it does not appear that gaming machines were kept, used or operated at the premises of 252 Sussex Street, Sydney immediately before 19th April 2001.

On the face of it, this licence does not appear to fulfil the criteria established by law to be now able to operate the gaming machines at 60 Castlereagh Street, Sydney.”

28 The letter from the Board then suggested to the licensee that he should take legal advice in relation to the issue to ensure compliance with the provisions of the Liquor Act 1982. Finally, the licensee was invited by the Board to show cause why the Board should now revoke the condition authorising the keeping of twenty approved gaming devices pursuant to s 161(2) of the Liquor Act 1982.

29 On 24 October 2001, Mr Lyons wrote a comprehensive submission to the Board. In part his letter states:-

“The situation then, was that at the time of the commencement of the freeze on 19th April, the machines attached to the licence were the subject of a court order that they could not be used without following the procedures laid down in Condition 3. This was a very different situation from that in which machines may have been ‘stockpiled’ in anticipation of some restriction being introduced. On the contrary, the fact was that the machines could not be used without breach of the law. The conditions of Section 182 E do not apply to this unique situation. We are unaware of any other hotel in New South Wales confronting this problem and it having arisen in quite the same manner. It should also be noted that when the Premier announced the overall cap of 104,000 machines, that because our 20 machines were contained upon our licence and within the computerised resources of the Department of Racing and Gaming, our allocation were already within such existing 104,000 machines.

As the Board knows, it was made clear in the second reading speech that the sole purpose in the imposition of the freeze was to stop hotelier’s speculating upon the future direction of government policy about gaming reform. We respectfully contend that the criteria established by law are fulfilled, and that subject to compliance with Condition 3, the gaming machines at 60 Castlereagh Street can be operated. It will, we trust, be readily apparent the government’s purpose is not advanced at all by a refusal to allow the matter to proceed in the way outlined. We respectfully seek a ruling on this rather unique situation as a matter of some urgency.”

30 The “show cause’ hearing took place on 9 November 2001. It appears that no definitive decision was made on this day although the Board’s preliminary attitude appears to have been that it was minded to revoke the conditions authorising the keeping of the twenty approved gaming devices. For reasons apparently satisfactory to both parties, a compromise interim situation was reached whereby the licensee undertook not to use or operate the relevant approved gaming devices or permit their use or operation until he had satisfied the Board that he was entitled to do so. On that basis, the defendant made no order revoking the condition authorising the keeping of the approved gaming devices.

31 This temporary resolution was evidenced in the following manner. On 15 November 2001 Messrs Slater & Elias, the solicitor for the then licensee, Mr Rayk wrote to the Secretary of Liquor Administration Board a letter which enclosed an undertaking “from the Licensee of The Verandah Bar & Bistro”. The undertaking itself was addressed to the Secretary, The Liquor Administration Board, Level 6, 323 Castlereagh Street, Sydney. It was in the following terms: -

“Dear Sir,

Re: The Verandah Bar & Bistro,

60 Castlereagh Street, Sydney

Hotelier’s Licence No 106246

I hereby undertake not to use or operate the approved gaming devices as particularised in the schedule dated 8 March 2001 a copy of which is annexed to this document until I have satisfied the Board that I am entitled to do so.

I agree that the above shall become a condition of the hotel licence.”

32 The undertaking was dated 15 November 2001 and signed by Mr Rayk. Annexed to it was a copy of annexure “A” to the affidavit of Mr Slater solicitor (Exhibit “A”). This was the document which I earlier quoted at page 8 of these reasons.

33 The defendant apparently, “issued” a further schedule to the licence on 9 November 2001. I say “apparently” because there is some controversy about the provenance of this document and the circumstances of its origin. For the moment, I shall simply record that the plaintiff tendered in evidence and there was admitted a document described as “Schedule to Licence No 106246 issued 9 November 2001”. It became Exhibit “B”.

34 Exhibit “B” is headed “The Verandah Bar & Bistro 60 Castlereagh Street Sydney 2000”. It follows precisely the form of annexure “A” to Mr Slater’s affidavit. The gaming devices which are listed as being “authorised” by the document are the 15 poker machines and five AAD’s listed in the authorisation which had been issued on 8 March 2001. The dates of “authorisation” correspond to those in the earlier document

35 Although the name of “P. J. Scanlon, Principal Registrar” appears on the document it is not signed by Mr Scanlon nor by any delegate of the Board.

New Legislation

36 On 28 February 2002, Mr Rayk transferred the licence to Marcus Bawden. On 18 July 2002, Mr Bawden transferred the licence to the current nominee Mr David Mellor, the plaintiff in these proceedings. In the meantime on 2 April 2002, the Gaming Machines Act 2001 had commenced.

37 It will be necessary for me to mention a number of specific provisions of this legislation but by way of introduction it may be convenient to refer to the remarks of the Minister for Gaming and Racing in the second reading speech when the Bill was introduced on 30 November 2001. This is done to provide no more than a general overview of the legislation.

“Under the proposed legislation, the previous automatic entitlement of clubs and hotels to install gaming machines will be abolished. The current numbers of gaming machines will be frozen, and the only way that clubs and hotels will generally be able to acquire additional machines in future will be to purchase the right to keep those machines from other premises. At the time of the announcement, it was noted that the development of a new scheme for transferable entitlements for gaming machines was such a significant reform that the Government was keen to involve key industry bodies in the development of that scheme. As I said in my opening remarks, that process took time and delayed presentation of this bill…”

“Prior to 1997 clubs could not operate approved amusement devices and hotels could not operate poker machines. In 1997 the legislation was amended by cross-applying relevant provisions of the Registered Clubs Act to hotels in respect of poker machines, and by cross-applying relevant provisions of the Liquor Act to registered clubs in relation to approved amusement devices [AADs]. The overall legislation is complex, unwieldy and incomprehensible to all but a few specialist lawyers…It is proposed to take this opportunity to transfer all gaming machine provisions relating to clubs and hotels from the Liquor and Registered Clubs Acts, and place them in a new Gaming Machines Act. As I said earlier, this bill, which is a complete rewrite of the Act, is fairly voluminous…”

“The bill also specifies that the maximum number of gaming machines that can be kept by a single hotel is 30. The current restriction on poker machine numbers for hotels will be removed…The key features of the transferable entitlement scheme are as follows. Poker machine entitlements will be issued for all poker machines which clubs and hotels are entitled to keep as at the date of the relevant freeze—which is 28 March 2000 for clubs and 19 April 2001 for hotels…”

“Clubs can sell their entitlements to other clubs, hotels can sell their entitlements to other hotels, but for every two entitlements sold, another one must be forfeited into a forfeiture pool.”

38 It is to be observed from the Second Reading Speech and a perusal of the legislation that one novel aspect of the Gaming Machines Act 2001 is the introduction of a concept described as “poker machine entitlements”. This, as I understand it, is a system of tradeable poker machine entitlements. The general nature of the scheme is that the Liquor Administration Board has the task of allocating poker machine entitlements required to be allocated in respect of a hotelier’s licences. The system is, that on the commencement of Section 15, one poker machine entitlement is to be allocated by the Board for each approved poker machine that comprises “the frozen number” of approved poker machines for a hotel. The frozen number of approved poker machines for a hotel is the number that is determined by the Board after taking into account the number of poker machine stipulated in ss15(3) (a) and (b).

39 Following the initial allocation of poker machine entitlements under s 15, poker machine entitlements may, in accordance with the Act and such arrangements as may be approved by the Director-General, be allocated by the Board from time to time in respect of hotelier’s licences or the premises of a licences club (s 16). A poker machine entitlement allocated in respect of a hotelier’s licence is transferable (Section 19). This transfer must be approved by the Board and must otherwise comply with the legislation. Poker machine entitlements allocated in respect of a hotelier’s licence may be transferred only to another hotelier’s licence (s 19).

40 The system of administrative controls in relation to gaming machines is included in Part 5 and, relevantly for present purposes, especially in Division 1 of that Part. This Division deals with authorisations to keep or dispose of gaming machines. Section 56 provides that a hotelier must not keep or dispose of an approved gaming machine unless the keeping or disposal of the gaming machine is authorised by the Board, and the hotelier complies with the requirements of the Act in relation to the keeping or disposal of the gaming machine and with the conditions to which the authorisation is subject. The total number of approved gaming machines that the Board may authorise to be kept in a hotel from time to time consists of the number set out in sub-section 4 of sub-section 56. This relevantly includes the number of approved poker machines that corresponds to the number of poker machine entitlements allocated for the time being in accordance with the Act in respect with the hotelier’s licence. (There are other categories as well but they are not relevant for present purposes.)

Further Correspondence after the New Legislation

41 After the new legislation came into force there was a considerable amount of correspondence passing between the hotel interests and the Board relating to the impact of the new legislation on the issue that had arisen between the parties. It is not necessary to detail this correspondence for the purposes of the submissions that have been made in these proceedings. Nevertheless, it appears to be the position arising from the correspondence that the Board had by now indicated a preliminary view that it was its intention to issue a “zero entitlement” pursuant to the powers in Section 15 of the Gaming Machine Act 2001. On 7 May 2002, Mr Slater the solicitor for the plaintiff wrote to the Board. At the conclusion of his letter he said:-

“We would respectfully submit that the test of whether the machines were authorised, kept, used and operated as at the 19th April 2001 is now irrelevant and that the proper test is whether those machines were “authorised to be kept” as at 19th April 2001.

Therefore the Board is required to take into account the fact that 15 poker machines and 5 AADs were authorised to be kept in the hotel as at 19th April 2001 and is to allocate 15 poker machine entitlements.”

42 Mr Slater’s comments were based upon his brief recitation of the provisions of s 15 of the Gaming Machines Act 2001 together with the undoubted fact that one consequence of the new legislation was to repeal the former s 182E of the Liquor Act 1982.

43 In any event, the correspondence between the parties really achieved no positive result. On 26 July 2002, Mr Slater informed the Board that if the allocation of entitlements for the plaintiff’s hotel did not occur prior to 7 august 2002, the plaintiff would have no alternative but to commence proceedings in the Supreme Court in an endeavour to bring finality to the matter.

The Present Proceedings

44 On 16 September 2002 the Plaintiff commenced these proceedings. The relief sought was in the following terms:-

“(1) A declaration that the poker machines bearing the serial numbers set out in Schedule 1 hereunder were authorised to be kept in the hotel known as the Verandah Bar and Bistro, 60 Castlereagh Street, Sydney as at 19th April 2001 and accordingly were approved poker machines.”

(There then follows a schedule in which the machines are identified.)

“(2) An order that the defendants proceed to determine the allocation of entitlements to the approved poker machines referred to in Declaration 1 according to law.

(3) Such further or other order as may be appropriate.

(4) Costs”

45 At the hearing to the summons, Mr S.B. Austin QC (who appeared with Mr Ian Lawry for the plaintiff) refined the relief sought in “short minutes of order” which were handed to the court. The principal relief was refined and expressed in the following terms:-

“(1) Declare that the gaming machines bearing the serial numbers set out in the Schedule 1 hereunder are authorised to be kept in the hotel known as the Verandah Bar and Bistro at 60 Castlereagh Street, Sydney.

(There then follows a Schedule identifying the machines.)

(2) Order that the Defendant proceed to determine the allocation of entitlements to the approved poker machines referred to in Declaration 1 hereof.”

46 Points of claim and points of defence were filed between the parties. These pleadings delineate the issues to which I will now turn.

The Issues

47 The defendant does not dispute that the plaintiff, if otherwise entitled, should have the relief sought notwithstanding that the Liquor Administration Board has not at this stage made a final determination of poker machine entitlements under s 15 of the Gaming Machines Act 2001. As I understand it, the defendant is content that the Court accept that the preliminary position taken by the defendant (that the poker machine entitlement should be “zero”) is sufficient to found relief for the plaintiff, if I am otherwise satisfied the plaintiff has made good his case.

48 The defendant argued however that the plaintiff is not entitled to the declaration sought in the Short Minutes of Order. It follows if that declaration is refused, that there is no need to make an order in terms of paragraph 2 of the Short Minutes of Order. This is because there can be no doubt the Liquor Board will fulfil its duty and proceed to make a determination in relation to poker machine entitlements under s 15 of the legislation.

49 The essential argument of the plaintiff is based on the proposition that each of the documents, (Annexure (a) to Exhibit “A” and Exhibit “B”) represent an “authority” in favour of the licensee to acquire and keep in the hotel (and to permit the use and operation of) the relevant number of approved gaming devices. (s 161(1) Liquor Act 1982).

50 More precisely, each of the documents represents the recording of the imposition of a condition of the hotelier’s licence authorising the licensee to acquire and keep in the hotel (and to permit the use and operation of) the relevant number of approved gaming devices.

51 The plaintiff’s argument bases itself on one of two approaches each of which it is submitted, lead to the same result. The first focuses upon s 15(3) of the Gaming Machines Act 2001. This subsection requires the Board, in undertaking the task of allocating poker machine entitlements for a particular hotel, to take into account:

Liquor Act 1982

(b) any increase in that number after that date and before the commencement of this section that had been authorised by the Board”.

52 According to this aspect of the plaintiff’s argument, the Board is not concerned when it sets about determining poker machine entitlements to examine the number of poker machines that in fact were kept in the hotel as at 19 April 2001. Nor is it concerned to examine the number of poker machines that were kept used or operated as at that date. The only matter that the Board is to take into account is the number of poker machines “authorised to be kept in the hotel under the Liquor Act 1982 as at 19 April 2001”.

53 The plaintiff’s point is that each of the documents (Annexure A: to Exhibit “A” and Exhibit “B”) may be said to be an authorisation for twenty gaming machines (ie. 15 poker machines and 5 AADs) authorised to be kept in the hotel under the Liquor Act 1982 and that these authorisations were in force as at 19 April 2001 or, in the case of Exhibit “B, after that date.

54 The second document was “issued” 9 November 2001. Although it was issued after the date of the freeze it did no more, according to the plaintiff’s original submission, than recognise the authority which had earlier issued but related it to the premises at 60 Castlereagh Street Sydney. This happened because in the interim a final order had been made in relation to the removal of the licence from 252 Sussex Street to 60 Castlereagh Street Sydney on 21 September 2001. This had the consequence of converting the Castlereagh Street premises to licensed premises.

55 The second strand of the plaintiff’s argument is based on the savings and transitional provisions of the Gaming Machines Act 2001. Relevantly, these are to be found in Schedule 1, and, in particular at Clause 2 of Part 2 which is headed “Provisions Consequent on Enactment of this Act”.

56 This part deals with “the preservation of existing gaming machine approvals and authorisations”. It is in the following terms:-

“(1) In this Clause:

existing gaming machine approval or authorisation means any approval or authorisation in respect of a poker machine or an approved amusement device:

(a) granted under a provision of the Liquor Act 1982, or the Registered Clubs Act 1976 repealed by this Act,

(b) in force immediately before the repeal of the provision.

(2) An existing gaming approval or authorisation is, subject to this Act and the regulations, taken to be an approval or authorisation in force under this Act.

57 So the plaintiff’s argument is this: each of the two relevant documents admitted into evidence may appropriately be described as an approval or authorisation in respect of poker machines and AADs granted under s 161 Liquor Act 1982 (now repealed by the Gaming Machines Act 2001). Additionally, each approval or authorisation was in force immediately before the repeal of s 161. In those circumstances each approval or authorisation is, subject to the provisions of the Gaming Machines Act 2001 and its regulations, taken to be an approval or authorisation in force under the Gaming Machines Act 2001.

58 The defendant argues that this approach is in effect, overly simplistic and does not reveal the true picture. Take, for example, the Schedule issued 8 March 2001. On its face it purports to permit fifteen poker machines and five AADs to be kept and operated on the premises known as the Verandah Bar and Bistro at 252 Sussex Street Sydney. It purports to do so as a condition of the hotelier’s licence.

59 In specific terms it purports to be an instrument by which the board has imposed a condition of the hotelier’s licence authorising the licensee “to keep and operate” the specified approved gaming devices within a restricted area of the hotel.

60 While it is true the hoteliers licence “attached to” the premises at Sussex Street Sydney, those premises in fact did not exist. There were no hotel premises in which the poker machines could be kept nor were they ever kept at these premises. The licensee for the time being never had any right to occupy those premises even before their destruction and demolition. Moreover, the licence was held in a dormant capacity, that is to say the licensee was not entitled “to exercise the bundle of statutory rights which comprised the licence” (see Exhibit 1 – Agreed Fact). These rights included operating the premises to permit the sale of liquor and the operation of gaming machines.

61 The defendant argues that a Licensee could not be “authorised to keep” poker machines in a hotel if there were no hotel.

62 The defendant’s original argument in relation to the 19 November 2001 documents is not quite so clear. It certainly appears to be the case however that no new authority could issue after 9 April 2001 when the poker machine freeze came into operation.

63 Notwithstanding that, the Defendant Board apparently issued the 9 November 2001 document which, on its face, authorised the keeping of twenty machines at the premises at 60 Castlereagh Street. (It will be necessary to return to the factual basis underlying the issue of this document).

64 The defendant has also pointed to the fact that the removal order made in February 2001 was a conditional one. It did not of itself operate so as to remove the licence to 60 Castlereagh Street Sydney. That could not happen until the final order was made. This did not occur until September 2001 after the freeze had come into effect.

65 The final point relied upon by the defendant related to the condition imposed upon the licence at the time of the conditional grant namely that no application was to be made for the installation of gaming devices until twenty one days after evidence of compliance with the statutory condition and gaming room requirements of the regulation had been submitted to the Director of Liquor and Gaming.

66 In response to all of these arguments the plaintiff has argued that the only question is whether the hotelier’s licence itself carried with it the authorisation to keep the requisite number of relevant machines. If it did, the fact that the premises at Sussex Street had been demolished and the fact that the licence had been in a dormant capacity could not effect the situation. In other words, these issues are not to the point. First, the fact that licensed premises have been destroyed and that there is a condition on the licence requiring the licence to be held in a dormant capacity does not affect the licensee’s ability to ask the Court or Board to impose a condition on the licence. Nor would it prevent the Licensing Court or the Board from varying or deleting a condition on the licence. Secondly, the demolition of the premises and the dormancy of the licence does not mean that the licence ceases to exist. The Board was entitled to grant authorisations in these circumstances and it could not be said that such authorisations were a nullity. In any event, no application has been made or is being made by the defendant to set them aside.

67 As I have said, it is common ground between the parties that the making of the conditional order for removal did not result in the premises at 60 Castlereagh Street becoming licensed premises. This did not happen until the making of a final order when the premises had been completed in accordance with the plan approved by the court, at the time of the making of the conditional order (ss 4(5), 58 and 60 of the Liquor Act 1982).

Further Assistance is provided to the Court

68 On 21 November 2002, the Court sought further assistance from the parties. This took the form of a written document which sought assistance in three respects. These were: -

(a) The furnishing by the parties of copies of the Regulatory and Legislative alterations to the Liquor Act and its Regulation relevant to the imposition of the statutory freeze in 2001. Copies of the Regulation and Legislation were provided to the Court. Relevant details of these have already been incorporated into these reasons.

(b) An explanation of the factual circumstances that led to the production of Exhibit “B”, the alleged “authorisation” issued on 9 November 2001. The Court was provided with a draft affidavit by Mr Septimus Charles Rivers. This draft affidavit was later replaced by an affidavit sworn by Mr Rivers on the 12 day of December 2002.

69 Not surprisingly, the defendant embraced this possibility and, in fact, submitted that the subject licence was significantly affected by the condition imposed as a consequence of the freeze regime. While the precise form of the statutory condition changed during the period (depending on whether its source was the first amending regulation, the second amending regulation, or the amending Act) the practical result was that “as at 19 April 2001” the original March “authorisation” had been varied so as to bring about a result where there were no approved gaming devices for the Sussex Street licence. So far as Exhibit “B” was concerned namely, the 9 November 2001 print out, the defendant now argued that the Board was not, and could not have been, empowered to issue an authority inconsistent with s 182E. Moreover, the material contained in Mr Rivers’ affidavit demonstrated that the document could not be classified as an authorisation issued by the Board under the 1982 legislation.

Mr Rivers’ Affidavit

70 Mr Rivers had been employed at the Liquor Administration Board within the structure of Department of Gaming & Racing for more than ten years. He was especially experienced in the Device Authorisation Section of the Liquor Administration Board. He was also experienced in the implementation and operation of the new computerised Authorisation and Central Monitoring System within the Department. Mr Rivers said that the document Exhibit “B” was a print out from the computerised data base maintained by the Board and the department. It was in fact a reconstruction from the original instrument of authority which would have issued on or around 11 November 2000 or perhaps 14 March 2001. It would have been based on information retained on the department’s computer system database as at 9 November 2001 being the date when the reconstruction was printed out. He explained that the computer system permits an authorised officer of the department to interrogate the database and obtain a print out of a document in the form of an authorisation which would have issued in relation to a previously processed application. The reconstruction process used by the computer system, he acknowledged, was imperfect. This was so in that, rather than using the historical premises address as the date of the original issue of the instrument of authority, it uses the address of the premises current as at the date of print out of the reconstruction. He had no personal knowledge as to how the document Exhibit “B” came to be issued on 9 November 2001. He acknowledged that it was a matter of routine for the Board to issue such “reconstructions” at the request of the Licensees amongst others. In para 6 Mr Rivers said: -

“6. The reconstructions dated 9 November 2001 are not Instruments of Authority. They are not signed by a delegated officer of the Board or the Principal Registrar of the Licensing Court. It is the invariable practice of the Board for Instruments of Authority issued following the determination of applications to be signed by both the Board’s delegate and the Principal Registrar. Nor are they, because of the imperfections in the computer system as set out above, copies of the Instruments of Authority which would have issued following the determination of each of the applications.”

The Plaintiff’s Response

71 The plaintiff’s response was quite lengthy. It embraced some 20 pages of written submission. Essentially, the fundamental position argued by the plaintiff was this: Whether or not authorisations granted under the now repealed Part 11 of the Liquor Act could or could not be utilised during “the period of the freeze” has nothing to do with whether or not those authorisations are to be counted for the purposes of s 15 of the Gaming Machines Act 2001. Secondly, the plaintiff analysed with considerable care the provisions of the Gaming Machines Act particularly in relation to the scheme for Authorisations for Gaming Machines and the scheme for the Board’s Determination of tradable poker machine entitlements. An examination of the latter scheme revealed, so it was argued, that the Board’s statutory task was to determine the “frozen number of approved poke machines for a hotel” by taking account of “the number of poker machines authorised to be kept in the hotel under the Liquor Act 1982 at 19 April 2001”. That is to say, the frozen number is be ascertained by counting the number of authorisations which s 15(3) of the Gaming Machines Act 2001 identifies, not by seeking to understand whether or not those authorisations were able to be utilised during the periods of the (repealed) freeze.

72 Against the context of these broad submissions, the plaintiff then responded to the various questions raised by the Court. In each case it argued, for detailed reasons supplied, that the issues raised by the Court’s questions should be answered in the plaintiff’s favour.

73 One matter which was raised in the written submissions related to certain intervening legislative amendment. Only a few days after the conclusion of oral argument, legislation was introduced into Parliament on 13 November 2002. It received assent on 29 November 2002. The new legislation amended s 15 of the Gaming Machines Act 2001 by providing new sub-sections 6 and 7. They were in these terms: -

“(6) Despite sub-section (1), the Board is not required to allocate a Poker Machine Entitlement for any such approved poker machine unless the Board is satisfied that the hotel or registered club concerned;

(a) Was lawfully in a position to keep the poker machine when the authorisation to keep the poker machine was granted, or

(b) Would have been lawfully in a position to keep the poker machine by the date nominated in the application for the authorisation.

(7) If a Poker Machine Entitlement has been allocated in respect of a hotelier’s licence or the premises of a registered club but the Board would, had sub-section 6 been in force when the Entitlement was allocated, not have been required to allocate the entitlement in accordance with that sub-section, the hotelier or club must forfeit the entitlement to the Board.”

74 In my view, the new sub-sections enacted in November 2002 are not relevant to the issues I have to determine in these proceedings. They were not argued as such and no submissions have been made by the defendant in relation to them. In my view, the new intervening legislation represents a distraction from the issues which I must determine. Consequently, I do not propose to take them into account in any manner in the resolution of the present issues. Whether the interim legislation will be relevant in any subsequent determination by the Board as to entitlements under s 15 is very much a matter for the Board in the light of the material and submissions that may be (or may not be) placed before it.

Resolution of the Issues

75 The Liquor Act 1982 had utilised a method of authorisation by the imposition of conditions imposed under the statue. It was only by the imposition of a condition pursuant to s 161 of the Liquor Act 1982 that a hotelier could validly point to an authorisation for the acquisition and keeping in the hotel of approved gaming devices.

76 There can be no doubt, and indeed it is not challenged in these proceedings, that the Board purported to approve the keeping and operation on the Sussex Street premises as a condition of the licence some 20 itemised gaming machines. The combined terms of the original and varied conditions relating to these 20 machines can be appropriately seen in annexure “A” to Exhibit “A” namely, the document of 8 March 2001.

77 Notwithstanding the careful arguments advanced by Mr Leeming on behalf of the Board, it seems to be the inescapable conclusion that there was no jurisdictional bar to the Liquor Administration Board acting in the way in which it did. There is much to be said for the argument that the Board, as a matter of policy, might have taken the view that it should not impose the condition or conditions which gave authorisation for the keeping and operation of some 20 gaming machines on the Sussex Street premises. These would have included the fact that the premises had been demolished and that the licensee had no right to occupy those premises nor any intention to occupy or reactivate the premises. The Board may well have been entitled to take the view that, because the licence was being held by way of a condition that kept the licence in a dormant capacity for the time being, that it would be inappropriate to impose a condition or conditions authorising the keeping and operation on the premises of some 20 gaming machines.

78 The Board did not as a matter of policy adopt any of these reasons or approaches to the series of decisions that culminated in the issue of the document of 8 March 2001. It plainly regarded itself as possessing jurisdiction to impose the relevant condition or conditions. It has continued to treat its own decisions as valid. At the hearing, as I indicated earlier, Mr Leeming expressly disclaimed any proposal to set aside the conditions which the Board had imposed on the licence by 8 March 2001.

79 In my opinion, Mr Leeming’s central argument is too broadly stated. It has been accepted that a hotelier’s licence may continue to exist notwithstanding that the hotel premises have been demolished or destroyed (Ex parte Mullen re Hood (1935) 35 SR 289 at 302; 515 (High Court)). Where a condition is imposed on a licence that it be held in a dormant capacity, there seems to be no reason in theory why further conditions could not be imposed on the licence or existing conditions varied during the period of dormancy. The hotelier’s licence still exists even though the premises have been either temporarily or permanently disabled. The grant of a licence operates as a judgment in rem and cannot be called into question by the licensee, the property owner or the world at large (Washington Soul Pattinson v Ogilvy (1954) 55 SR 143 at 148).

80 In my view, s 20 is sufficiently wide so as to enable the Court or Board to impose conditions or vary existing conditions in relation to a licence which is held in a dormant capacity or in respect of which the physical premises have been either substantially changed or demolished. In my opinion, the Court and Board’s power in this regard is sufficiently wide to mould conditions so as to protect the public interest and to ensure that the purposes and objects of the legislation are fulfilled. I should make it clear that I am not expressing an opinion to the effect that the Court or Board must impose a condition or vary a condition if requested to do so during a period of dormancy or structural disablement. That question remains essentially for the Board. In my view however, the Board is not deprived of jurisdiction because of dormancy or structural disablement.

81 I do not consider that the third and fourth points relied upon by Mr Leeming can succeed. These were, in a sense, the same point but viewed from different angles. The third argument was that the plaintiff’s position did not relevantly improve prior to the 19 April 2001 notwithstanding that a conditional order for removal of the licence to 60 Castlereagh Street was granted on 23 February 2001. This date post-dated three of the approvals which had been made by the Board pursuant to s 161 of the Liquor Act 1982 but pre-dated the last of those which occurred on 14 March 2001. Mr Leeming’s point was that if the Board could not have imposed and varied conditions in relation to the keeping of poker machines at Sussex Street premises, the conditional order could not have given validity to the process. The thrust of this argument was based on the fact that the making of a conditional order does not of itself confer authority until such time as the conditions have been satisfied (Ex Parte Walsh re Latham (1949) 66 NSW WN 145 at 147). The plaintiff did not quarrel with this proposition but rightly argued in my view that the premise on which the argument was based should not succeed. There was no need for the plaintiff to improve its position by virtue of the conditional order for removal simply because the Board had jurisdiction to impose or vary the conditions relating to the acquisition and keeping of machines in the Sussex Street premises notwithstanding that those premises had ceased to exist and that the licence was held in a dormant capacity.

82 The fourth argument was based on a condition which had been imposed at the time the conditional order for removal was granted. This was the condition that no application should be made for approval for the installation of gaming devices in respect of the premises until 21 days after a copy of the proposed evidence of compliance had been submitted to the Director of Liquor and Gaming. Mr Leeming’s argument was that no authorisation to keep poker machines could have been given in the light of this condition until compliance evidence had been submitted in accordance with the time frame expressed in the condition.

83 Again, the plaintiff’s arguments must succeed on this point. The Board’s power to impose a condition on the hotelier’s licence authorising the licensee to acquire and keep in the hotel gaming devices derived from the combined effect of ss 20 and 161 of the Liquor Act 1982. The condition imposed by the Licensing Court when it granted the conditional order for removal related to the next anticipated step once the premises had been completed in accordance with the plan approved by the Court. That step was the proposal to install gaming devices in the premises pursuant to the authority to acquire and keep those machines which had already been given. The statutory conditions under s 21AA of the Liquor Act 1982 and the gaming room requirements of Clause 46B of the Liquor Regulation 1996 are appropriately described as matters of detail relating to the lay out and mode of operation of the area into which the gaming machines are installed. Those matters of detail would not ordinarily require a variation to the condition imposed under s 161 unless, for example, the installation of the machines were to result in a situation where there were to be a different number of machines in the gaming room than the number originally authorised or if those machines were to be different machines than those originally authorised.

84 In those circumstances, the imposition of the condition by the Court on 23 February 2001 had no impact on the authorisations under s 161.

The Freeze

85 Although the 1982 Liquor Act provisions imposing a freeze on poker machines have now been repealed, there can be no doubt that the new gaming legislation remains importantly linked to the repealed legislation. The new scheme of poker machine entitlements and the ability to trade in those entitlements is of course novel. But the initial determination to allocate poker machine entitlements is in a number of respects bound to the freeze. First, s 15(1)(a) provides that, on the commencement of the section, one poker machine entitlement is to be allocated by the Board for each approved poker machine that comprises the frozen number of approved poker machine for a hotel. Thus it may be seen that the very concept that is central to the initial allocation is “the frozen number of approved poker machines”.

86 Secondly, the Board in making its determination as to “the frozen number” must take into account, inter alia, “the number of poker machines authorised to be kept in the hotel under the Liquor Act 1982 as at 19 April 2001”. Why was the 19 April 2001 selected as a critical date for examination of a count of the number of poker machines authorised to be kept in the hotel?

87 The answer is plainly that the 19 April 2001 was the date when the short term freeze came into operation by virtue of Regulation 46AA. It was also the date that was the commencement date for “the period of the freeze” brought about by the subsequent legislation which replaced the regulation.

88 I should at the outset make it clear that, in my view, the rather complicated situation that arose out of the fact that there was first a regulation promulgated on 19 April 2001, later amended by a further regulation; and then altogether replaced by a legislative provision dating, in effect, back to 19 April 2001 makes no difference to the ultimate outcome in this case. It is true that the condition imposed by the April regulation differed in a number of respects from the condition introduced by the second regulation. It is also true that the legislative replacement of the Regulations utilised slightly different terminology. The important matter, however, is that nothing happened in relation to this hotel licence which, in the ultimate, made any practical difference to the position of the licence between 19 April 2001 and 17 July 2001 when s 182D, E & F came into force. Moreover, the condition introduced by s 182E was grounded in the examination of a situation as it existed “immediately before the period of the freeze”. The starting point of the period of the freeze was defined to be a period “commencing on 19 April 2001”. For those two reasons, it seems to me that any variation in the statutory condition when one compares the first regulation, the second regulation and the final legislative enactment of it is, in the circumstances of this matter, of no practical or legal consequence. What remains of importance, however, is the form of the statutory condition as it appeared in s 182E of the Liquor Act 1982.

89 An important aspect of the plaintiff’s argument focused in fact upon the terminology in s 15(3)(a) and, for that matter, (b) of the same sub-section. The focus was on the expression “authorised to be kept in the hotel”. The plaintiff argued both in oral and written submissions that the section was not concerned with an examination of the number of machines that were in fact kept in the hotel at the relevant date. Nor was it concerned with the number of poker machines that were being used and operated in the hotel as at that date. Rather, the focus was simply on the question as to whether there was or was not, an authorisation that permitted the relevant number of poker machines to be kept in the hotel as at 19 April 2001. The plaintiff’s argument was that both annexure “A” to Exhibit “A” and Exhibit “B” were such authorisations. It will be necessary to examine each of those contentions in detail. For present purposes, however, it seems to me that it may be said that the plaintiff’s submissions in this regard beg the question.

90 The concept of the interim freeze created by the repealed legislation is the cornerstone of the method adopted under the new legislation to determine the numbers that will yield or tend towards yielding the poker machine entitlement under s 15 of the Gaming Machine Act 2001.

91 One asks therefore – as at 19 April 2001, how many poker machines were authorised to be kept at the hotel at 252 Sussex Street, Sydney pursuant to Hotelier’s Licence 106246? The answer to that question depends on the impact of the regulatory and legislative changes (“the freeze”) introduced in 2001.

92 There can be no doubt for the reasons already indicated that, absent the freeze, the hotel in this case was authorised to keep 20 gaming machines. They were identified in Annexure A to Exhibit “A”. None of the defendant’s arguments as originally formulated altered this situation.

93 But the authorisation was in the form of a condition or conditions imposed under s 161 of the Liquor Act 1982. The condition was capable of variation alteration or revocation.

94 In my view, so far as this hotel was concerned, the freeze effectively revoked the authorisations which had been granted between September 2000 and March 2001. Importantly, as a result of the freeze, the revocation occurred on 19 April 2001. That has important consequences for an understanding of the correct view of s 15 of the Gaming Machines Act 2001.

95 Sections 182D and 182E of the Liquor Act 1982 plainly cemented the short term freeze which had been introduced by 19 April 2001 regulation. First, it extended the freeze indefinitely while confirming its commencement date as at 19 April 2001. Secondly, it prohibited the Court or the Board, during the period of the freeze, from determining an application for additional gaming devices (s 182D(3)). Thirdly, it prohibited a hotelier from making an application for additional gaming machines during the period of the freeze (s 182E(2)).

96 The phrase “application for additional gaming devices” was defined in s 182(d)(1)). It is highly relevant to note that the prohibited application was couched in specific terms. What was prohibited was an application by a hotelier “to impose vary or revoke a condition of the hotelier’s licence so as to authorise the acquisition keeping or the use or operation of more approved gaming devices than were lawfully kept in the hotel and used or operated in the hotel immediately before the period of the freeze”. The prohibited application might have been couched in terms of “more approved gaming devices than were lawfully authorised to be kept in the hotel” but in fact it was expressed more widely. It is also significant to note that the original form of the statutory condition introduced in the first regulation was substantially altered and widened in its operation in both the second form of the regulation and the July legislation. The condition in its wider form, corresponded with the language of s 182D(1).

97 Fourthly, s 182E imposed a condition on each and every hotelier’s license. Although the condition in these precise terms was not imposed until 17 July 2001 it operated in a retrospective fashion in two respects. These emerge from the concluding phrase “immediately before the period of the freeze”.

98 The first temporal connotation resided in the phrase “the period of the freeze”. It was defined to mean the period “commencing on 19 April 2001” and ending on the date appointed by proclamation. The second temporal connotation resided in the words “immediately before”. An assessment of the operation of the condition required a factual evaluation to ascertain “the maximum number” of approved gaming devices that were “lawfully acquired kept in the hotel and used or operated in the hotel”. The evaluation had to be made “immediately before” 19 April 2001.

99 Once the maximum number was ascertained, the condition operated to prohibit the acquisition and keeping in the hotel of an approved gaming device so as to exceed that maximum. It also prohibited the hotelier from permitting the use or operation of any approved gaming device so as to exceed that maximum.

100 In the present case, it is quite clear that there were no gaming devices that “were lawfully acquired, kept in the hotel and used or operated in the hotel” immediately before the period commencing on 19 April 2001. It may be conceded for the purposes of the argument that the evidence is capable of establishing that 20 gaming devices had been “lawfully acquired”. But they had never been kept in the hotel or used or operated in the hotel at the relevant time. It was in fact physically impossible that they could have been so kept and used or operated in the hotel at that time, or indeed at any time following the purchase of the hotelier’s licence at Susses Street.

101 It will be observed from this analysis of ss 182D and 182E that the freeze prohibited the making and determination of applications, during the freeze period, that would have authorised “the acquisition keeping or the use or operation of more approved gaming devices than were lawfully acquired kept in the hotel and used or operated in the hotel immediately before the freeze” (s 182D(1); s 182E(2) and (3)). By way of contrast, the statutory condition in s 182E(1) did not in terms directly impact upon the authorisations that may have existed but did so indirectly in the event that the factual situation demonstrated that, immediately before the period of the freeze, there was a disparity between the authorised number and the number of machines answering the description in the statutory condition. The indirect effect was substantial since, in the circumstances, the hotel was thereby prohibited from acquiring keeping and using or operating the disparate number of machines. What was the situation however when a authorisation had been granted, a machine acquired but had never been kept in the hotel and never used or operated in the hotel?

102 It seems to me to be the clear general intention reflected in s 182D and s182E that any such disparity was to reduce effectively the number of authorised machines able to be acquired, kept, used or operated in the particular hotel. Further, where a machine had been lawfully acquired before the freeze but was not kept in the hotel and used or operated in the hotel immediately before the period of the freeze, it was henceforth not authorised to be kept at the hotel. In addition, it was no longer authorised to be used or operated in the hotel. This appears so from the language of s 182D itself, the language of s 161 (the authorising section) and the method of authorisation adopted by the legislation (that is, by imposition of a condition or conditions). There is no need for me to repeat the language of s 182D. But what is important is that it reflected precisely the language of s 161(1) of the Liquor Act 1982 (“authorising the licensee to acquire and keep in the hotel and to permit the use and operation of “gaming machines”). The third matter is the method of imposing a statutory condition on all licences. This was an apt and effective method of displacing or altering the impact of an earlier condition imposed on individual licences on individual occasions. Indeed, the plaintiff in its written submissions conceded that it would be necessary to read the two conditions side by side on the licence following the introduction of the freeze. I cannot accept, however, as the plaintiff argued that the statutory condition merely coexisted with the earlier condition. In my view it substantially affected the substance of the existing condition and in the case of this hotel it displaced the earlier authorisations.

103 The legislative intention to which I have referred was a sensible one. It prevented, as Mr Lyons rightly pointed out in his letter of 24 October 2001, the stockpiling of machines against dormant licences. The New South Wales Government would have been well aware that there were a number of dormant licences held in New South Wales and that each of these was capable of utilisation so as to generate an entitlement to gaming devices. The proposed freeze could be watered down by shrewd and alert entrepreneurs.

104 Before dealing with the final arguments, it is necessary to say something about the status of Exhibit “B”.

Exhibit “B”

105 This, it will be recalled, was the printout issued on 9 November 2001. The plaintiff argued that this constituted an authorisation for the use of the gaming devices listed in it. As such it could be relied upon for the purposes of s 15 of the Gaming Machines Act 2001. Alternatively, it was relied upon as ”an existing gaming machine approval or authorisation” within the meaning of the transitional provisions of the Gaming Machines Act 2001.

106 In my view, this argument cannot succeed for a number of reasons. First, the legislation in force immediately prior to the repeal of the relevant parts of the Liquor Act 1982 prohibited the hotelier from making an application for additional gaming devices. Equally, the Court and the Board were prohibited from determining an application for additional gaming devices. It was faintly argued that the document may have been a document that was issued at the behest of the Board and hence was not the determination of an application that was prohibited by the freeze legislation. I cannot accept that it answers this description. Whatever were the circumstances of its issue (these were not satisfactorily explored in the evidence) it would have been contrary to the interim arrangement reached between Mr Rayk and the Board as reflected in the written undertaking dated 15 November 2001. Why, it might be asked rhetorically, would the Board issue a new authorisation to Mr Rayk at the very time that it was demanding that he give a written undertaking not to use or operate the gaming devices particularised in the schedule dated 8 March 2001 until he had satisfied the Board that he was entitled to do so? It is clear that the outstanding issue between Mr Rayk and the Board related to the very question as to whether the authorisations prior to the freeze had been displaced by the freeze legislation. Moreover, Mr Rayk’s undertaking, dated as it was some days after the issue of Exhibit “B”, made no mention of the so called authorisation dated 9 November 2001. Rather, as is clear, the undertaking relied upon the schedule dated 8 March 2001.

107 In any event, I am not satisfied that Exhibit “B” is an authorisation of any kind. The evidence does not establish that it is such an authorisation. Indeed, the evidence of Mr Rivers which was not traduced makes it clear that it is no more than a computer print out reconstructing an earlier authorisation. Mr Rivers pointed out that Exhibit “B” is not signed by the Principal Registrar or by any Delegate of the Board and that the usual practice would have required instruments of authority issued following the determination of applications to be signed by both the Board’s delegate and the Principal Registrar.

108 For all these reasons, I am satisfied that Exhibit “B” does not advance the plaintiff’s case.

Section 15 of the Gaming Machines Act 2001

109 The plaintiff argued that the statutory purpose of s 15 is to identify, by count, the authorisations which ground the initial allocation of poker machine entitlements. The written submissions argue that the “frozen number” is to be ascertained by counting the number of authorisations which s 15(3) identifies, not by seeking to understand whether or not those authorisations were able to be utilised during the periods of the repealed freeze. The argument continued in these terms: -

“Section 15(3)(a) says nothing about whether or not the approved machines the subject of the authorisations were affected by the limitations of the so called freeze because sub-paragraph (a) nominates, in terms, the one relevant point of time “as at 19 April 2001” ie, before “the period of the freeze” …”therefore, one counts the number of authorisations that were in effect (sic) before any impact of either freeze”.

110 (Paras 20 and 22 of plaintiff’s written submission December 2002).

111 In my view, this is a tortured examination of the plain meaning of s 15. It is true the section provides a statutory basis for the Board’s determination. The determination is not completely at large. Rather it focuses on a date. The date, as I said earlier, is very significant and indeed, critical. It is not the date when the Act came into force nor is it, as the plaintiff argued, the date before the period of the freeze. It is the very day on which the freeze commenced. It is, in terms of the repealed s 182D, the day on which “the period of the freeze” commenced.

112 The consequence is that the relevant number of poker machines (ie, those “authorised to be kept in the hotel under the Liquor Act 1982“) is to be ascertained as the situation was on 19 April 2001, the day when the freeze commenced.

113 Moreover, this interpretation makes legislative sense. The contrary would make no sense at all. In 2001, the New South Wales Government decided to implement an interim freeze. It was later cemented by legislation introduced in July but which had the retrospective operation which I have earlier described. The freeze remained in force and was designed to remain in force until the passage of the Gaming Machines Act 2001. The new legislation repealed the freeze legislation but capped the number of gaming machines in the State so as to reflect the cap intended to be brought about by the freeze legislation. The novel system of poker machine entitlements introduced in Part 3 of the new Legislation took as its starting point (and often its finishing point) the “frozen number of approved poker machines” for a hotel. This in turn, as I have earlier explained, centred upon the freeze legislation and took its context and meaning from it. Where a machine was no longer authorised to be kept at the hotel as a result of the freeze, it was not to be taken into account for the purposes of poker machine entitlements.

114 The plaintiff’s argument that s 15 is to be construed so as to result in a count of authorisations that were in existence before any impact of the freeze legislation is, in my view, entirely contrary to the plain legislative intent of the Gaming Machines Act 2001.

115 The consequence of the foregoing is that the plaintiff cannot succeed on either of the two arguments he has advanced. In my opinion, for the reasons stated, there were “zero” poker machines authorised to be kept in the hotel under the Liquor Act 1982 as at 19 April 2001. Notwithstanding the authorisations which had been made prior to 8 March 2001 and the terms of Annexure A to Exhibit “A” itself, the plain consequence of the freeze legislation was that those authorisations were, in the circumstances of this case, at an end. Secondly, and for precisely the same reasons, the transitional provisions of the Gaming Machines Act 2001 are of no assistance to the plaintiff. The 8 March 2001 authority was displaced by the freeze legislation and the statutory condition imposed on the licence by the legislation. As a result, it could not be said that there was an existing gaming machine approval or authorisation in force immediately before the repeal of the relevant sections of the Liquor Act 1982. The final matter is, as I have earlier indicated, that the document issued on 9 November 2001 (Exhibit “B”) is not an authorisation issued under the repealed legislation.

116 The plaintiff is not entitled to the declaration sought in the Short Minutes of Order which were handed up to supplement the orders framed in the original Summons. I decline to make a declaration in those terms. Since there is no doubt that the defendant will proceed according to law to determine the allocation of entitlements in relation to the subject hotel, there is no utility in making the orders sought in para 2 of the Short Minutes of Order.

117 In those circumstances, the orders I make are as follows: -

1. Summons dismissed.

2. Plaintiff to pay defendant’s costs.

3. Exhibits may be returned.

**********

Last Modified: 02/17/2003

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Citations

Mellor v Liquor Administration Board [2003] NSWSC 38

Most Recent Citation

Gaming Machines Amendment Act 2005 (NSW)

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CITATION:	Mellor v Liquor Administration Board [2003] NSWSC 38
HEARING DATE(S):	04/11/02; 21/11/02
JUDGMENT DATE:	14 February 2003
JUDGMENT OF:	Whealy J at 1
DECISION:	I make orders as follows: ; 1. Summons dismissed; 2. Plaintiff to pay defendant's costs; 3. Exhibits may be returned.
CATCHWORDS:	Gaming Machines Act 2001 - Liquor Act 1982. Gaming Legislation freeze on poker machines in hotels and clubs. Power to impose conditions on dormant licences. Legislative intention of freeze regulation - prohibition on stockpiling gaming machines
LEGISLATION CITED:	Liquor Act 1982 Liquor Amendment (Approved Gaming Devices) Regulation 2001 Liquor Regulation 1996 Liquor Further Amendment (Approved Gaming Devices) Regulation 2001 Gaming Machines Act 2001
CASES CITED:	Ex parte Mullen re Hood (1935) 35 SR 289 at 302; 525 (High Court) Washington Soul Pattinson v Ogilvy (1954) 55 SR 143 at 148 Ex Parte Walsh re Latham (1949) 66 NSW WN 145 at 147
PARTIES :	David Mellor v Liquor Administration Board
FILE NUMBER(S):	SC 12429/02
COUNSEL:	Mr S. Austin QC; Mr I Lawry - Plaintiff Mr M. Leeming - Defendant
SOLICITORS:	Slater & Elias - Plaintiff I. V. Knight (Crown Solicitor) - Defendant