Start Living Prize Homes Inc v Chief Executive for Liquor and Gaming - [2021] QCAT 22

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Start Living Prize Homes Inc v Chief Executive for Liquor and Gaming [2021] QCAT 22

PARTIES: START LIVING PRIZE HOMES INC

(applicant)

v

CHIEF EXECUTIVE FOR LIQUOR AND GAMING

(respondent)

APPLICATION NO/S:

GAR143-19

MATTER TYPE:

General administrative review matters

DELIVERED ON:

20 January 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Howe

ORDERS:

The decision of the Acting Commissioner for Liquor and Gaming made on 26 March 2019 refusing the applicant’s application for a category 3 gaming licence is confirmed.

CATCHWORDS:
GAMING AND LIQUOR – GAMBLING REGULATION AND OFFENCES – LOTTERIES – where the applicant applied for a category 3 gaming licence – where the financial capacity of the applicant to ensure prizes were delivered and costs paid was in issue – where the financial information supplied was inadequate to establish capacity to pay without reliance on sales of tickets – where basic accounting information in support of financial standing was not supplied - whether the application should be granted in those circumstances

Charitable and Non-Profit Gaming Act 1999 (Qld) s 3(1), s 3(2), s 3(3), s 46, s 174(a), s 175

REPRESENTATION:

Applicant:

Self-represented by A Toohey

Respondent:

Self-represented by M Chen

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

Start Living Prize Homes Inc (‘SL’) was incorporated as an association on 13 November 2018.
SL’s objects stated in its Rules of Association are as follows:
1 To operate raffles exclusively to non-home owners, for the purpose of providing non-home owners with the chance of winning a house and land package.
2 The raffles will have a maximum number of 55,000 tickets per draw.
3 All profits of the raffles will be disbursed to Australian Charities and other disadvantaged groups within the community.
SL applied to the Office of Liquor and Gaming Regulation (‘OLGR’) for a category 3 gaming licence as a necessary requirement[1] under the Charitable and Non-Profit Gaming Act 1999 (Qld) (‘the Act’) because the proposed gross proceeds were more than $50,000.
[1]Section 20.
In the application SL stated the tickets would cost $20 each, first prize would be a house and land package valued at approximately $600,000, second prize a new car valued at $15,000 and third prize a $5,000 gift voucher.
On 15 February 2019 the Acting Executive Director, OLGR refused the application.
SL sought internal review of that decision. On 26 March 2019 the Acting Commissioner for OLGR on internal review again refused the application.
On 17 April 2019 SL sought external review of both decisions in the Tribunal.
It is not clear on what basis the Acting Commissioner OLGR conducted the internal review. It does not seem to be a prescribed precursor to external review under the Act. That is not to say it was beyond power. Any power to make a decision includes the power to amend or repeal the decision.[2]
[2]Acts Interpretation Act 1954 (Qld), s 24AA.
In so far as the within external review is concerned however, it is the final decision of the Acting Commissioner that is appropriately the subject of review.
By s 174(2) of the Act, if an application for a general licence is refused by the chief executive the applicant may apply, as provided under the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), to the Tribunal for a review of the decision.
A category 3 gaming licence is a general licence.[3]
[3]Section 36(b).
By s 175 of the Act the Tribunal must hear and decide the review by way of a reconsideration of the evidence before the chief executive when the decision was made in accordance with the same law that applied to the making of the original decision.
SL is an eligible association to apply for a category 3 gaming licence.
There is no evidence that SL or a management member’s (committee member’s) character makes SL unsuitable to hold a licence or engage in the proposed operation under the licence.[4]
[4]Section 45.
Matters such as how the house and land package first prize will be made available to the prize winner, who is entitled to buy a ticket and how the winning ticket is to be drawn were initially issues of concern but were resolved in the course of discussions between SL and OLGR so as to satisfy statutory requirements. I accept that that is the case and those matters need not be addressed further.
However a major issue that arose in the course of consideration of the application for a gaming licence was the financial capacity of SL to ensure delivery of prizes and payment of expenses associated with running the game proposed.
The decision made 26 March 2019 by the Acting Commissioner refusing SL’s application for a category 3 gaming licence was based on the failure of SL to provide acceptable financial evidence that the prizes proposed would be delivered if expected ticket sales failed to materialise.
I proceed to consider that matter afresh based on the evidence before the chief executive in reaching his decision.

The legislation

Section 46 of the Act states as relevant:
46 Suitability of applicant to hold general licence
In deciding whether the applicant, or a management member of the applicant, is a suitable person as mentioned in section 45, the chief executive may have regard to any relevant matter, including the following—
(a) the applicant or management member’s character or business reputation;
(b) the applicant or management member’s current financial position and financial background;

(c) if the applicant is not an individual—whether the applicant has, or has arranged, a satisfactory ownership, trust or corporate structure for conducting the licensee’s proposed operations under the licence;
(d) whether the applicant or management member has, or is able to obtain, the services of persons who have—
(i) financial resources the chief executive considers adequate to ensure the financial viability of operations conducted under the licence; and
(ii) appropriate experience to ensure the proper and successful conduct of the applicant’s proposed operations under the licence;

(e) for an application for a category 3 gaming licence or a special category 3 gaming licence—whether the applicant has in place adequate corporate governance practices for the planning, supervising and reporting of category 3 games.
…

The overarching object of the Act is to ensure that, on balance, the State and the community as a whole benefit from general gaming. That balance is achieved by allowing general gaming subject to a system of regulation and control designed to protect players and the community.[5] Within the overarching object, the specific objects include:[6]
…
(b)     to ensure the public obtains reasonable net benefits from the conduct of general gaming;
(c)     to prevent individuals engaged in conducting general gaming from deriving personal gain from it;
(d)     to maintain and protect the integrity of general gaming;
(e)     to maintain public confidence and trust in buying general gaming tickets as a worthwhile way of supporting fundraising activities.
[5]Section 3(1) and (2).
[6]Section 3(3).

An assurance as to prizes

Hence a very important factor for consideration in granting a gaming licence is an assurance that prizes promised will be delivered.
SL says it will purchase a property of choice of the first prize winner in the locale of his or her choice within Queensland to the value of $600,000. SL submits the sales from the limited number of tickets proposed to be offered (55,000 at $20 each) will cover the prizes.
The obvious caveat that arises concerning this claim of course is that there can be no guarantee that all 55,000 tickets in the game will sell. According to OLGR there are many other competing games which offer larger prizes at a cheaper cost per ticket. Whether the limited number of tickets would make SL’s game more attractive to players is not established and certainly there is no actuarial modelling made available in that regard.
Given that uncertainty OLGR asked SL to establish its financial viability and that of its management members.

Finances

SL is newly formed. It provides no evidence of any financial standing. It is therefore not surprising that no balance sheet of assets and liabilities has been made available.
SL was asked by OLGR to provide a bank guarantee for the value of the prizes and expenses of the game guaranteeing delivery of the prizes and payment of expenses regardless of the outcome of the game.
A bank guarantee is an appropriate and contemplated requirement under the Act to ensure delivery of prizes and payment of expenses. By s 55 of the Act, OLGR may impose conditions on the grant of a licence considered necessary or desirable. An example of such a condition cited in s 55 is a financial institution guarantee to ensure delivery of prizes.
SL’s response to that request was simply to say it cannot supply a bank guarantee.
SL was then given the alternative opportunity of supplying an undertaking signed by each management member guaranteeing delivery of the prizes and payment of expenses regardless of the outcome of the game.
SL’s management committee responded with a document signed by the President Anthony Toohey, the Secretary Jennifer Toohey and Treasurer Dean Toohey dated 21 December 2018. The document provided:
This letter will act as the official confirmation that the executive/management committee of Start Living Prize Homes Inc will guarantee the delivery of all prizes, payments and expenses incurred in the act of carrying out their art union raffles.
Subsequently on 24 February 2019 SL provided a letter from the Tooheys’ family-run business, Elite Fitting Service, signed by Phonteene Toohey as proprietor. Phonteene Toohey is not a management member of SL. The letter promised:
In the unlikely event that Start Living Prize Homes Inc fails to sell the minimum number of ticket (sic) required, and fails to achieve the amounts required to cover the costs of prizes in the upcoming art union lottery, Elite Fitting service will act as a guarantor to ensure that said prizes are delivered.
…
This letter will act as my official authority to provide the financial support to Start Living Prize Homes Inc should the need arise to provide the ability to deliver prizes should the association fail to achieve ticket sales to cover the cost of the prizes.
On 4 March 2019 OLGR was given “Veda” credit scores for the three aforementioned management members.
On 7 March 2019 a copy of a RAMS loan approval in the sum of $760,000 was provided.
Very limited information about the financial standing of the management members has been supplied. The Veda credit scores fail to disclose each member’s assets and liabilities. The Veda documents give a “score” to the person the subject of report and are said to be of utility in predicting the likelihood of a future adverse event being recorded on the individual’s records within the following 12 months. The Veda information was generated on 12 January 2017, more than two years before the date of supply of the credit information and was therefore out of date. It is of doubtful assistance in any case given it refers to it in the context of a consumer report.
The RAMS home loan approval was a $760,000 offer of credit to buy a home. It states it had effect for three months from 1 March 2018. It was issued to Anthony Toohey, Dean Toohey, Paige Toohey and Phonteene Toohey. There is no information provided as to whether or not the loan was actually used to buy a home. If it was, it must be noted that one borrower was Phonteene Toohey and another Paige Toohey, neither of whom are management members of SL.
If the loan was used to buy real estate, a mortgage burdens the realty concerned. There may be little equity remaining if the property was sold. Any such asset must be realised before funds are available, and there can be no comfort that it would be made available in any timely fashion. Assuming Ms Paige Toohey has become a registered proprietor, any opposition by her of the sale of the home to fund delivery of prizes for the proposed game could only result in long and expensive litigation.
Given this, the RAMS loan documentation is really quite meaningless.
What of the assets of the individual management members? According to Mr Anthony Toohey, his annual income is $67,000, Dean Toohey’s is $85,000 and Jennifer Toohey’s income $30,000. Presumably these are gross figures before tax. No income tax returns have been proffered to evidence the income figures claimed.
There is a similar dearth with respect to disclosed liabilities. There is no information about the existence or otherwise of current loans or current repayment obligations or any other expenses including living expenses burdening the individual management members.
What SL and the management members hope is that there will be enough tickets sold to cover funding of the prizes and expenses for the game. That is the best case scenario. Another possibility is that there are not enough tickets sold to cover prizes and expenses. Nothing in the information supplied by SL and the management members reasonably suggests it or they will be able to step up and fill the void if ticket sales are insufficient.
Whilst the legislation makes clear that there is no objection in principle to the financial support of management members being taken into account in assessing the suitability of the applicant for a licence, the efficacy of that avenue of financial support must surely be cogently demonstrated to be of any value.
The lack of financial documentation to establish the financial standing of SL and the management members is both obvious and concerning. It is concerning because what might be regarded as fairly standard accounting information, such as tax returns, bank account statements and ownership details of real estate, has not been provided where it might reasonably have been expected to have been.
By s 45 of the Act the chief executive may grant an application for a licence only if the chief executive is satisfied that the applicant is a suitable person to hold the licence.
By s 46 of the Act, in deciding whether the applicant, or a management member of the applicant, is a suitable person to hold the licence, the chief executive may have regard to any relevant matter including amongst other things the applicant or management member’s character or business reputation and the applicant or management member’s current financial position and financial background.
Whilst the legislation permits certain flexibility to game operators, public confidence in the probity and integrity of authorised games must be preserved and protected. There can be no reasonable assurance that SL is a suitable entity to hold a licence given the absence of evidence of financial resources available and adequate to ensure the financial viability of operations conducted under the licence.
As such the application for a category 3 gaming licence must be refused.