State of Victoria v Tatts Group Limited

[2015] HCATrans 290

[2015] HCATrans 290

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M83 of 2015

B e t w e e n -

STATE OF VICTORIA

Appellant

and

TATTS GROUP LIMITED

Respondent

FRENCH CJ
KIEFEL J
BELL J
KEANE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 11 NOVEMBER 2015, AT 10.18 AM

Copyright in the High Court of Australia

MS W.A. HARRIS, QC:   Your Honour, if it please the Court, I appear for the State of Victoria with my learned friends, MR R.G. CRAIG and MR K.A. LOXLEY.  (instructed by Johnson Winter & Slattery)

MR N.J. YOUNG, QC:   I appear with my learned friends, MR P.D. CRUTCHFIELD, QC and MR N.P. DE YOUNG, for the respondent.  (instructed by Clayton Utz Lawyers)

MR A.C. ARCHIBALD, QC:   May it please the Court, I appear with my learned friends, MR J.C. SHEAHAN, SC, MR P.C. LIONDAS and MR B.K. HOLMES, for Tabcorp.  (instructed by Herbert Smith Freehills)

FRENCH CJ:   Yes, Ms Harris.

MS HARRIS:   If the Court pleases.  Your Honours, Tatts succeeded below where Tabcorp failed because the Court of Appeal held that it had the benefit of a contractual provision – a contractual payment term as well as a statutory provision and that the contract responded where the statute did not.  The contractual term is at paragraph 30 of the Court of Appeal’s judgment which is at appeal book 672 and if I could ask your Honours to turn to that.  It is necessary to read subclauses 7.1 and 7.2 together to understand what it provides.  As your Honours see:

If the Gaming Operator’s Licence –

and we will come to the defined term shortly -

expires without a new gaming operator’s licence having issued to the Trustees, the Trustees shall be entitled to be paid, by the State of Victoria, an amount of money as compensation for the investment in infrastructure lost.  This amount will be equal to the Licence Value of the Gaming Operator’s Licence or the premium payment by the new licensee, whichever is the lesser.

Clause 7.2. is important because it says:

No amount will be payable . . . if a new gaming operator’s licence is not issued to any person, or is issued to the Trustees or a related entity of the Trustees. 

So, a gaming operator’s licence must have issued and it must have issued to someone other than the trustees in order for the payment entitlement to be enlivened.  Your Honours see from paragraph 147 of the judgment at page 716 of the appeal book the reason why Tatts succeeded.  It succeeded because the Court of Appeal held that:

objectively discerned, the intention of the parties was that –

that trigger phrase -

‘a new gaming operator’s licence’ would extend to a new licence or new licences substantially the same as the Trustees’ existing licence –

and it further held – later in the judgment – that gaming machine entitlements were licences of that kind and sufficient to trigger the contractual entitlement.

The State advances five grounds as to why that conclusion cannot be maintained and they are set out in our notice of appeal at appeal book 752.  In summary, those grounds are these.  The first ground is that, on its proper construction, the contractual term, like its statutory equivalent, could only be triggered by the issue of a gaming operator’s licence issued under the relevant part of the legislation – in this case, Part 4 of Chapter 3 of the Gambling Regulation Act.

Secondly, on a proper construction of the 1995 agreement the obligation in clause 7, to which I have just taken the Court, to make the terminal payment as well as an obligation in the contract on the trustees to pay a licence fee, were discharged by agreement once those obligations were embodied in legislation as the contract expressly contemplated they would be.

Thirdly, regardless of the intention of the parties to the contract, the enactment of Parliament of that terminal payment entitlement in materially the same terms as the contractual entitlement abrogated the latter, such that it was incapable of being revived if the statutory entitlement was nullified in some way.

Fourthly, even if the contractual entitlement survived, the enactment in 1996 of the parallel statutory entitlement was necessarily brought to an end when Parliament passed a law in 2009 which was calculated to, according to the Court of Appeal, and did, bring to an end the parallel statutory entitlement.  Fifthly, we say that even if the contractual entitlement was alive and well following those amendments it was not triggered by the issue of the gaming machine entitlements. 

Can I turn first to ground 1 which is the construction of clause 7.1?  I hardly need to remind this Court of what was said by the High Court last month in Mount Bruce Mining v Wright Prospecting [2015] HCA 37, in particularly at paragraphs 46 to 51, about the basic and fundamental principles which apply to construction of contracts, but it is worth restating them briefly at the outset.

The rights and liabilities of the parties are to be determined objectively by reference to the contract’s text, context and purpose and the meaning of the contract is to be determined by reference to what a reasonable business person would have understood the relevant terms to mean at the time of the agreement.  Ordinarily, this process of construction may be completed by having regard to the terms of the contract itself but sometimes recourse is appropriate to mutually known events or circumstances external to the contract, at least where the same might illuminate the meaning of an ambiguous term, for example, by identifying the commercial purpose or object of the contract.

The State will endeavour to demonstrate that examination of the text of the 1995 agreement between the State and the trustees confirms that the only trigger for the conditional payment entitlement in clause 7.1 was the issue of a new gaming operator’s licence of the kind then held by the trustees.  The State says further that examination of the circumstances in which the agreement was entered into only confirms that construction.

Now, your Honours, it is unnecessary to resolve for the purposes of this appeal the question that was left open in Mount Bruce, namely whether there must be ambiguity in the contract before recourse can be had to external circumstances.  I think the fact that we are here as the appellant suggests that there are different potential readings of clause 7.1 and so for the purposes of this appeal we would accept that there is ambiguity in the language sufficient to attract recourse to those external circumstances.  At bottom we say that had ‑ ‑ ‑

FRENCH CJ:   So you do not say that this is a case in which external circumstances illuminate the existence of an ambiguity?

MS HARRIS:   They illuminate the purpose and object of the contract which is what was accepted by the trial judge in the Court of Appeal below, and the purpose and object of the contract was then deployed below in order to illuminate the meaning of clause 7.1.  We say that when regard is had both to the four corners of the agreement and the circumstances in which it came into existence, the Court of Appeal’s construction of clause 7.1 is not one which would have commended itself to a reasonable business person in November 1995.  The first three paragraphs of the Court of Appeal’s judgment record the key contextual facts and they appear on page 662 of the appeal book. 

They are important because, as I said earlier, it is critical in construing the contract to look at it through 1995 eyes, the eyes of the reasonable businessperson at the time the contract was entered into.  That is important because when we look at the reasoning below, both in the Court of Appeal and the trial judge’s judgments on this question, there is a strong element of hindsight applied to the construction.  That is, the question of construction is viewed through the prism of what has since transpired, but that is not permissible.  Ordinary principles of construction require us to look at the contract and its meaning at the moment of its inception.  So, paragraphs 1 to 3 set out the following:

In 1991 gaming machines were legalised in Victoria for the first time.  The State created a duopoly in the operation of gaming machines between the Totalizator Agency Board of Victoria (the ‘TAB’), then a statutory corporation, and the Trustees of the Will and Estate of the late George Adams (the ‘Trustees’).  In 1994 the TAB was privatised.  Private investors were offered the opportunity to subscribe for shares in the company Tabcorp Holdings Limited (‘Tabcorp’) and those shares were then listed on the Australian Stock Exchange (‘ASX’).  The proceeds of the public offering were, after certain deductions, paid to the State.  In 1998 the business conducted by the Trustees was also restructured and corporatised, the relevant resulting corporation being Tattersalls Limited, which after floatation on the ASX in 2005 changed its name to Tatts Group Limited (‘Tatts’).

The State raised substantial funds in the Tabcorp float.  It maximised ‑ ‑ ‑

FRENCH CJ:   I think we can read it for ourselves, and it is history we have gone over yesterday, is it not?

MS HARRIS:   Indeed, your Honour, and thank you for that indication.  The importance of this is that we see most of this relates to Tabcorp.  Most of the contextual facts relate to what had transpired with the Tabcorp float.  Why was this important for the 1995 agreement?  Because the raison d’être of the agreement, the very point of it, was to establish a level playing field between the trustees and Tabcorp.  That proposition was not only uncontroversial below, it was positively propounded by Tatts and your Honours see that from the trial judge’s judgement at 127 to 129.

Putting the duopolist gaming operators on a level playing field involved centrally procuring the trustees to pay a licence fee for the licence that they already had, in addition to payments required of them under section 136 of the Gaming Machine Control Act 1991. Now, of course, the State could simply have imposed a licence fee using its legislative power, but it is not surprising that it sought the trustees’ agreement to the imposition of that fee. The court so found at paragraph 66 of the judgment which appears at appeal book 693.

But a level playing field also required that if the trustees were to pay a licence fee they would have to be afforded an end of licence payment equivalent to that conditionally available to Tabcorp under section 21 of the 1994 Gaming and Betting Act, and the court so found at paragraph 68 of their reasons.  Your Honours see there that the negotiations for the agreement:

proceeded on the express basis that the Trustees would receive a terminal payment on expiry of their gaming operator’s licence, equivalent to that which had been the subject of provision for a conditional terminal payout to Tabcorp.  These negotiations culminated in the 1995 Agreement -

Might I ask your Honours to note, without turning to them now, the trial judge’s findings – equivalent findings on the “genesis, purpose or object of the 1995 Agreement” which appear at paragraph 82 of his Honour’s reasons, appeal book 582 to 583.

Now, the purpose and object of the contract equivalent with Tabcorp is doubtless the reason that the court carefully set out in paragraphs 2 to 23 of its reasons all of the statutory provisions which then applied to Tabcorp in relation to its gaming licence, and then immediately went on to construe the contract in that light. The court understood that the commercial purpose of the agreement was to establish the agreed terms by which the trustees would, as holders of one of the two licences granted under the 1991 Act – section 33 – be subjected to substantially the same obligations and have substantially the same rights as the other licence holder.

Your Honours, this is what exposes the logic gap, if you like, in the Court of Appeal’s conclusions because having established that premise and having set out at paragraph 21 of their reasons section 21 of the 1994 Act, which we considered yesterday, and provided for a conditional payment entitlement in favour of Tatts only if the specific licence it then enjoyed was reissued upon expiry, a construction put beyond doubt by the definitions in the legislation as they then stood, and having given a like construction to the trustees eventual statutory entitlement, it nevertheless held that the contractual term that sat in between those two had a different meaning, even though that contractual term was supposed to be the equivalent of the statutory rights.

It was supposed to be the equivalent of Tabcorp’s statutory right that already existed and it was supposed to be, as we will see, the equivalent of the statutory right which came into existence in favour of Tatts after the contract was entered into, and yet incongruously we say, the Court of Appeal gave the contractual term a different meaning to those corresponding statutory entitlements. 

Can I turn to the agreement itself, your Honours, which is in appeal book 1 at page 371, and we do so to make good in the first instance the equivalence with Tabcorp premise of it and then to identify the textual indicators in the agreement which point towards a specific meaning for gaming operator’s licence in the key clause, 7.1.

FRENCH CJ:   Are we to read the reference in their Honours’ judgment at paragraph 68 of the trustees receiving a terminal payment as a reference to the trustees receiving an unconditional terminal payment because it is contrasted with what appears in the next line – reference to a conditional terminal payout to Tabcorp?  I was just wondering whether that linguistic difference has any significance.

MS HARRIS:   I am sorry, your Honour, where ‑ ‑ ‑

FRENCH CJ:   Paragraph 68.

MS HARRIS:   Yes.

FRENCH CJ:  

the express basis that the Trustees would receive a terminal payment –

Was that a finding of fact on the basis it would be unconditional?

MS HARRIS:   No, your Honour, no.  There is no suggestion in the judgment that a payment had to be made regardless of the satisfaction of the conditions in the clause.

FRENCH CJ:   Yes.  I just wondered why.

MS HARRIS: Well, I think the way to read it is that the terminal payment which they were to receive was to be equivalent to that which Tabcorp enjoyed, namely, a conditional terminal payment entitlement under section 21 of the 1994 Act. I think that is exposed, your Honours, by the reference to section 21 of the 1994 Act at paragraph 21 of the judgment. The agreement recites in paragraph D on page 372 this equivalence notion between the trustees and Tabcorp:

the business carried on by the Trustees –

which is defined in the definition section -

is to be regulated on terms substantially as favourable as . . . Tabcorp Holdings -

In the definition section, can I draw the Court’s attention to the following definitions:

“Act” means the Gaming Machine Control Act 1991 (Vic) -

which was then the Act under which the trustees had been issued and held their gaming operator’s licence, that licence having been issued in April 1992.  The agreement:

means this Agreement, including the Recitals, annexures and any subsequent amendment agreed by the parties –

That is important, in particular, because one of the annexures to the agreement, on page 382, is the letter from the Treasurer to Tatts – to the trustees – which makes clear that the principles on which the agreement is being entered into, to which I will return, are non‑binding on future governments and future legislatures.

Can I ask your Honours to note the definition of “business” because it extends beyond the mere conduct of gaming?  That becomes important potentially on the notice of – on our fifth ground of appeal where we say gaming machine entitlements were not on all fours, or even substantially on all fours with the gaming operator’s licence because they did not authorise a number of the aspects of the authority of the gaming operator’s licence, including the supply and installation of gaming machines.  Going to the next page:

“draft legislation” means the legislation drafted pursuant to clause 8 of this Agreement and contained in a proposed Bill -

Clause 8 to which we will come, is an important provision because it obliged the Minister to use his best endeavours to have legislation passed embodying the obligations in clauses 3 and 7, the licence fee and the terminal payment provisions, and that is important to our argument that once that draft legislation was enacted those clauses were discharged by agreement.  The next definition that is important is gaming operator’s licence.  That means, now your Honours know, the definition is –

“Gaming Operator’s Licence” means the gaming operator’s licence issued to the Trustees pursuant to the Act -

I want to come back to that and its significance for present purposes but it is sufficient for the time being to observe that, looked at through the eyes of a 1995 reasonable business person, that term, “gaming operator’s licence”, only had one connotation. It had the connotation of the licence which had been issued under section 33 of the 1991 Gaming Machine Control Act to the trustees.  Clause 1.3 is very important.  It provides that:

Words and phrases appearing in this Agreement shall, unless the contrary intention appears, have the same meaning as in the Act.

Now, I ask your Honours to note that it is expressed in terms of meaning.  If the words have a meaning under the Act, then they have the same meaning in the agreement.  It is not expressed in terms of definition.  So it does not say if a term is specifically defined in the Act then we pick up that definition and we import it into the agreement.  If it has a meaning under the Act then it is so imported. 

Now, that is critical here because the Court of Appeal found that the words “gaming operator’s licence” did have a “clear meaning under the 1991 Act”. That is at paragraph 151 of their judgment to which I will return. Having found that those words had a clear meaning, namely, gaming operator’s licence issued under section 33, that meaning had to be imported into this agreement and inform the meaning of clause 7.1. Clause 2 which appears on 373:

It is a condition subsequent of this Agreement that the Trustees obtain . . . a private binding ruling . . . on the taxation implications of the draft legislation and this Agreement -

If it was not satisfactory to them, then the agreement came to an end.  Now, the significance of that for present purposes is that the ruling was to be obtained on the draft legislation and we saw that the draft legislation was the legislation which had to pick up the terms of clause 3 and clause 7.  So it was important for the purposes of that condition subsequent that the clause 3 and clause 7 obligations were faithfully brought in to the legislation, otherwise any ruling would potentially be inutile.

It tells you that what the agreement is meant to do is set a concrete framework for that draft legislation in respect of the imposition of a licence fee and a terminal payment. It assumes that the obligations in those clauses will later be embodied in statutory form. At page 374 we see the licence fee payment obligation and, as expressed, it requires the payment of a licence fee calculated on net profits through to April 2012 when the licence was due to expire. Previously, under section 136, the trustees’ obligation to make a payment had been revenue based and now, in addition to that revenue based obligation, it had a profit based fee.

Clause 5 on page 376 is important for the purposes of the construction argument.  It applies where the trustees form the view that it would be advantageous for the gaming operator’s licence to be held by someone – by a related entity rather than the trustees and it enabled them to request the assistance of the Minister, who was then to:

use his best endeavours to cause the Gaming Operator’s Licence –

so the one held by the trustees –

to be transferred to the related entity or to have issued to that related entity a new licence on the same terms and conditions and to have the Gaming Operator’s Licence cancelled.

So if it could not be transferred, to cancel the old one and to reissue a new one.  Then in paragraph 5.2:

If the Gaming Operator’s licence is transferred to, or a new gaming operator’s licence is issued to, a related entity of the Trustees prior to the time at which the Gaming Operator’s Licence would expire by effluxion of time, no compensation will be payable to the Trustees pursuant to clause 7 at the time of such transfer or issue but such related entity will be entitled to the benefit of clause 7 as a permitted assignee or properly constituted successor of the Trustees.

Your Honours see the reference in that paragraph to “new gaming operator’s licence” – that composite phrase which is then picked up in clause 7.1.  Inescapably, in that clause of the agreement, it means the same thing that the trustees had because it is either the thing that has been transferred to them or the replacement one that has been issued to the related entity – the same thing.

We draw attention to that because when the Court of Appeal came to clause 7 it accepted the submission that where those words appeared in clause 7.1 they had a different meaning.  They had an ambulatory or generic meaning, the one that I took your Honours to in paragraph 147.  In clause 6, again, this is an equivalence provision.  It reinforces the purpose of the agreement to set out the level playing field and by this clause:

the Minister agrees that for the term of the Gaming Operator’s Licence the Trustees’ conduct of the business will be regulated on terms substantially as favourable as the terms regulating the gaming machine business operated by Tabcorp Holdings Limited or its operator.  At the time of entering into this Agreement the share of net machine income –

is as there set out and –

other terms regulating the business are contained in the Ministerial Directions document –

which is scheduled to the agreement at 381.  Then your Honours will note the last sentence:

Prior to entering into this Agreement the Trustees received from the Treasurer of Victoria, and considered, the letter annexed to this Agreement as Schedule 2.

That was the Treasurer’s letter.  So, it is at that point we arrive at clause 7.1, and it includes two references to “gaming operator’s licence” - one capitalised and one uncapitalised.  The capitalised one, as we saw, is defined to mean the gaming operator’s licence “issued to the Trustees”.  Now, the trial judge made a finding about the meaning of that term which was apparently embraced by the Court of Appeal and he did so at paragraph 76 of his reasons at appeal book 587.  It is paragraph 96, I beg your pardon.  Your Honours see the first sentence:

First, it may be accepted that the defined term ‘Gaming Operator’s Licence’ –

capital G, capital O, capital L –

means the –

lower case –

gaming operator’s licence held by the Trustees (later Tatts) pursuant to the 1991 Act as amended, re‑enacted or replaced with other legislation granting the Trustees or Tatts a gaming operator’s licence.

Now, that finding was critical because, unless that finding is made that the defined term is not only tied to the 1991 Act but to replacement legislation, then the payment term in 7.1 could not be triggered because by August 2012 when this licence expired it was not held under the 1991 Act.  It was held under the 2003 Act.  So, in order to succeed, Tatts had to have the benefit of a finding of that kind that, notwithstanding that the definition only applied to the 1991 Act, it impliedly embraced any replacement Act like the 2003 consolidation.

Why is that important?  Because of the inconsistent approach his Honour then exhibits at paragraph 98, again embraced by the Court of Appeal.  You see in 2003 when the consolidation was enacted and we saw yesterday the legislature inserted a definition of “gaming operator’s licence” into the consolidation.  That appears at section 1.3 of the 2003 Act, and that definition was only a gaming operator’s licence issued under Part 4 of Chapter 3.

Now, if that definition is picked up by the agreement, clause 7 requires as its trigger the issue of a new one of those.  The trial judge said in relation to clause 1.3 of the agreement, by which words defined in the Act have a meaning in the Act, they are transposed into the agreement.  That clause, unlike the definition of “gaming operator’s licence”, does not pick up replacements of the 1991 legislation.  It would not pick up the consolidation, his Honour held, and that is why you could not rely on the definition in the 2003 Act for the purpose of construing clause 7.1.

Now, our simple point around this is you cannot have it both ways.  There is a logic gap here.  Either the Act as referred to in the agreement is and is only the 1991 Act as defined, in which case Tatts is out of court because it did not hold a licence under that Act, or, as the State submitted below, it is necessarily implied that the reference to the Act in the agreement means successor legislation, and a fortiori when we are talking about a consolidation which simply picks up the old Act and puts it in a new consolidated version.  But that finding by the trial judge embraced by the Court of Appeal was critical because it denied the availability of that definition when we came to clause 7.1.

Putting aside the definition in 2003, the agreement still requires by clause 1.3 to ask ourselves whether the words “gaming operator’s licence” had a meaning under the 1991 Act.  If it did have a meaning, then that meaning had to be picked up, and the Court of Appeal held at paragraph 151, as I say, which is at page 717 at about line 27:

It may be accepted, as the State submits, that the phrase ‘gaming operator’s licence’ had a clear meaning under the 1991 Act –

It goes on to talk about two other things which do not undermine the existence of that clear meaning under the Act, and I will come back to them, but having said that they had a clear meaning under the Act that should have been the end of the matter.  That meaning needed to be picked up and incorporated in the agreement. 

Now, why did they say it had a clear meaning under the Act? Doubtless this was so because the legislation is replete with the term “gaming operator’s licence”. It did not define it in 1995 but it explicitly defined gaming operator as “the holder of a gaming operator’s licence” or gaming licence. Your Honours will see that from page 133 of the bundle in section 3 of the Gaming Machine Control Act. 

Your Honours see paragraph (a) of the definition, the gaming operator is “the holder of a gaming operator’s licence under Part 3” and gaming operator’s licence is used numerous times in the legislation.  We have picked them up in footnote 66 in our submissions.  Each time it is used it is used unambiguously to refer to the thing which confers the authority in section 14.  Section 14 appears on page 147.  So, your Honours see:

Authority conferred by gaming operator’s licence

(1)Despite section 7, a gaming operator’s licence authorises the licensee –

Now, the section assumes that you know what it is talking about. It can only be talking about the thing which is granted under section 33 on page 164 under the heading:

Gaming Operator’s Licence

again undefined, but with a clear meaning. Now, the words, “gaming operator’s licence”, as we point out in our written submissions, was not just used in this legislation, it was used in other Acts, including section 7 of the Gaming and Betting Act 1994 for the purpose of defining the authority conferred by Tabcorp’s gaming licence. Your Honours will remember from yesterday that Tabcorp’s gaming licence was said to confer the same authority as a gaming operator’s licence under the 1991 Act.

So, even without the definitional provision in clause 3, a reasonable businessperson in 1995 would have understood the term “gaming operator’s licence”, as deployed in section 7.1, to mean the “thing” which had been granted under section 33 and the “thing” which was contemplated by clause 5.2 which was only such a licence. Now, how did the Court of Appeal avoid this result?

FRENCH CJ:   By the way, there is a bit of overlap, is there, between 5.2 and 7.2, at least in relation to issue to a related entity?

MS HARRIS:   So, they are temporally different, your Honour.  Clause 5.2 can only operate before the licence has expired.  So, your Honour might remember that clause 5 deals with the position where the trustees think it would be better if the licence was held by a related entity, by somebody else.

FRENCH CJ:   Yes, I understand, yes.

MS HARRIS:   So, it is pre the expiry, as it were.

FRENCH CJ:   I am sorry, I see.  Yes, okay.

MS HARRIS:   The Court of Appeal’s reasons for rejecting that specific meaning appear at paragraph 147 and following, and your Honours might care to leave the 1995 agreement handy as we go through them.  So, we start on page 716 of the appeal book.

FRENCH CJ:   I think we will need to adjourn, briefly.

MS HARRIS:   As your Honour pleases.

AT 10.58 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.01 AM:

FRENCH CJ:   You can pick up where you left off, Ms Harris.

MS HARRIS:   Thank you, your Honour.  So we were at page 716 of the judgment.  Now, time is against me, so I need to be reasonably brief, but I do want to take your Honours through the reasons why the Court of Appeal found against us on this point.  The first one appears at 148 where their Honours focus on:

the natural meaning of the words ‘a new gaming operator’s licence’ embraces the mean which the judge attributed to it.

That is, the generic meaning, if we can call it that.  Now, as I have tried to demonstrate to your Honours, the natural meaning of “gaming operator’s licence” in 1995 at the moment this agreement was entered into was the thing which had been issued to the trustees only a few years before ‑ gaming having been legalised only in 1991 ‑ issued under the Gaming Machine Control Act.  That was the natural meaning of the words.

KEANE J:   Well, it was the only thing they were talking about.

MS HARRIS:   Indeed, your Honour, that was the point we sought to make.  So, in a sense, the Court of Appeal’s reasoning here starts from exactly the wrong proposition and we think that when we read the judgment as a whole that it is, with respect, infected by that hindsight perspective.  They are looking at what has happened and saying, “How can we read this so as to accommodate the situation which has occurred?”.

That is the wrong way to read this clause. We have to look at it as the reasonable businessperson standing there in 1995 knowing that gaming has only just been legalised four years earlier, that three years earlier the trustees and the Totalisator Agency Board had been issued gaming operator’s licences under section 33 of the Gaming Machine Control Act, an Act which was replete with those definitions.  It was the only thing that those words could refer to at that point in time.

Then we get to paragraph 149 and their Honours seek to draw a contrast between the specific definition of “Gaming Operator’s Licence” – capital G, capital O, capital L – and the “gaming operator’s licence” – little g, little o, little l – issued to the trustees pursuant to the Act.  They say there is a direct contrast.  There was no contrast.  They were exactly the same thing; necessarily they were exactly the same thing.  There was not just substantive identicality, they were identical.  The adjective “new” only tells, as the Court of Appeal said at the end of 148, that it is freshly issued.  It does not change the meaning of that central term “gaming operator’s licence”.

In 150 the Court of Appeal invokes the Treasurer’s letter and it makes a point about the concurrent gaming licences which are held by others, including Tabcorp and the casino.  It is worth turning to the Treasurer’s letter which is at appeal book 382.  True enough, the Treasurer’s letter refers to the trustees concurrently holding licences with other operators.  That is in paragraph 1 of the principles. 

Now, we remember that the principles are preceded by this antecedent chapeau that says the principles that I am now setting out do not “bind this Government or future Governments” and they do not bind future legislatures.  As your Honour Justice Bell put to me yesterday it is a statement of the obvious but it is an important statement of the obvious here because it tells you something about what was in the parties’ minds at that time, what they turned their minds to. 

The first statement of principles is the concurrent right and then we get down in paragraph 5 to the reference to the payment entitlement, one of the non‑binding principles that future governments might change their minds about.  The reference here to the concurrent authorities was somehow used by the Court of Appeal to alter the meaning of or to afford a generic meaning to the phrase “new gaming operator’s licence”.  We do not understand how that could be.  The fact that others enjoyed authorities, if anything, told against the court’s conclusion for several reasons. 

Firstly, those other authorities were defined by reference to the authority conferred by a gaming operator’s licence, so they came back to the same meaning. We see that from section 7 of the Gaming and Betting Act 1994 and section 32 of the Gaming Machine Control Act 1991, which conferred a limited version of the gaming operator’s authority on the casino. The second thing that that tells us – or reminds us is why “new gaming operator’s licence” in clause 7.1 cannot have the generic ambulatory meaning for which Tatts contended.

If we go back to clause 7.1 and read “new gaming operator’s licence” as any licence freshly issued which confers substantially the same authority as the gaming operator’s licence enjoyed by the trustees, the words “new gaming operator’s licence” will pick up both Tabcorp’s gaming licence and the casino’s licence to conduct gaming.

Now, can I give you a reference to the latter?  Your Honours will see from the definitions in the 1991 Gaming Machine Control Act, section 3, that casino operator had the same meaning as in the Casino Control Act, so when we look at section 32, it confers on the casino operator a modified version of the gaming operator licence authority. We are referred back to the Casino Control Act, and section 3 of the Casino Control Act defined a “casino operator” as the person who was the holder of a licence under Part 2 of that legislation, and Part 2 had provisions for the grant of licence to casinos which rendered gaming in the casino unlawful to that extent.

So, the Treasurer’s letter far from supporting the generic construction reminds us that there are other holders of licences out there, the issue of which would trigger clause 7.1 if it bore the generic meaning.  Clearly, that was not the intention of the parties, that Tatts would get a windfall if the casino licence expired and was renewed.  This agreement was predicated upon a fresh issue of the licence held by the trustees and no one else.

FRENCH CJ:   A licence of precisely the same kind.

MS HARRIS:   Well, because it had a meaning, your Honour.

FRENCH CJ:   Yes, I understand but precisely the same kind.

MS HARRIS:   Well, your Honour, in terms of the content of the authority, yes, your Honour, precisely the same kind as that held by the trustees.  So if, for example, section 14 of the Act had been amended during the term of the licence to grant some additional authority on the trustees, then that would then set the parameters of what a gaming operator’s licence was at the conclusion of the licence.

Let us say the Act had been amended so as to give it another name.  Let us call it a pokies licence, a poker machine operator licence.  That does not alter the content of the authority but once you move away from that thing, we are not talking about a gaming operator’s licence any more.  We are talking about something else that the legislature has created.

FRENCH CJ:   What do you have to move away from to take you out of the class of thing called a gaming operator’s licence for the purposes of 7.2?

MS HARRIS:   The thing that someone in 1995 would recognise as a gaming operator’s licence and in 1995 someone would only recognise it as a gaming operator’s licence if it was the thing that was issued under Part 2 of the 1991 Act.

KEANE J:   So does that mean, in terms of irreducible minimum, it has to be recognisable as an element of the duopoly that then existed?

MS HARRIS:   Indeed, your Honour, because that was a fundamental characteristic of the regime as it then stood, that you would have a limited number of entities and the legislation for a time prescribed only two, as it turned out the casino had a limited licence.  Once you move away from that, to the current system, for example, and the contrast with the current system is nice because it is a venue operator system.  It is not recognisable as a gaming operator system.

FRENCH CJ:   If you have a car ‑ ‑ ‑

MS HARRIS:   Yes, your Honour.

FRENCH CJ:   ‑ ‑ ‑ and you change the engine, you change the wheels and you change the doors there may be a debate as to whether or not you still have the car.

MS HARRIS:   Indeed, your Honour.

FRENCH CJ:   So what do you have to change, sufficient to take you out of the class of gaming operators?  Does it become a kind of qualitative judgment?

MS HARRIS:   Well, I think that is the problem with this, your Honour, that the meaning which was picked up, the meaning which was picked up was the thing which was recognisable as a gaming operator’s licence in 1995.  Now, if you had some other authority to conduct gaming, created by some other section of the legislation, that would be an authority to conduct gaming, but it is not the thing which bears the meaning of “gaming operator’s licence” and “gaming operator’s licence”, as your Honour Justice Keane has pointed out, was redolent of the structure which then existed by which there were several gaming operators who owned all of the machines together and operated those machines in other people’s venues.  So, it is easy we say in this case to distinguish that from the thing which is supposed to have triggered clause 7.1, a venue operator system.

FRENCH CJ:   Even within your submissions, there is a kind of genus.  It might be a little genus occupied by things of the class “gaming operator’s licence.”  I suppose the question is how fragile - the fragility of the conditional entitlement, the ease with which the condition – the disentitling condition can be invoked depends upon how easy it is to move out of that class.

MS HARRIS:   That is what vexed the courts below, with respect, but we say it is actually easy in this case.  It is not that hard because it is answered by the question which, with respect, we pose, namely, what would a reasonable business person in 1995 recognise as a gaming operator’s licence.  It was only one thing.  It was the thing which was granted under Part 2 of the 1991 Act, which conferred the authorities set out in section 14.  That is the only thing that was recognisable as a gaming operator’s licence then or thereafter.

KIEFEL J:   Although the parties also recognised, by reference to the Treasurer’s letter and consistently with what you submitted yesterday, that things could change via legislation.

MS HARRIS:   Indeed, your Honour.  So that, your Honour, supports the specific meaning, not the generic meaning.

FRENCH CJ:   It could be a two‑edged sword, that argument.

MS HARRIS:   Well, with respect, we do not understand how that could be because when we read clause 7.1 in this context, including in the context of the Treasurer’s letter; we say especially in the context of the Treasurer’s letter – what it contemplates is a continuation of the current regime, both pre and post the expiry of the current licence.  It tells you what is to happen in 17 years’ time, when this licence expires, and a new one of those things is issued and if it is not issued to the trustees there is a payment.  But what the Treasurer’s letter says is if one of those things is not issued, that is, if a future Parliament has moved away from this structure, then all bets are off.

KIEFEL J:   You see, in the Treasurer’s letter, at paragraph 3, it says:

The Government does not currently intend to grant further gaming licences ‑ ‑ ‑

MS HARRIS:   That is right.

KIEFEL J:   Which is rather generic.

MS HARRIS:   “During the licence period”.  Remember, your Honour, this is during the licence period and the legislation at that point provided for a gaming licence to issue ‑ ‑ ‑

KIEFEL J:   A lengthy licence period, though.

MS HARRIS:   Indeed, your Honour.

KIEFEL J:   The Treasurer’s letter is putting them on notice.

MS HARRIS:   But, your Honour, the Treasurer’s letter is talking about gaming licences of the kind which have already been issued.  So what it is saying is at the moment you have an effective duopoly and we do not intend to move away from that effective duopoly during the term of your licence.  So, for as long as you have your licence, our present intention is not to move away from that duopoly. 

Now, section 33 was later amended to make provision which could notionally allow for other gaming operators to be appointed with the same authorities as Tatts’ licence, but that did not alter the meaning of “gaming operator’s licence”, and what this paragraph is telling us is that the government did not presently intend to exercise that power under section 33 to grant additional ones before the end of the licence. This is the thing – and we see it when we come to paragraph 151 where the Court of Appeal says – it:

had a clear meaning under the 1991 Act –

but it was a meaning that fell to be considered:

in 17 years’ time –

Somehow, those considerations drove the Court to find that the phrase had a generic meaning.  The fact that it operated in 17 years’ time was a furphy in this sense.  Firstly, it did not just operate in 17 years’ time.  The phrase “gaming operator’s licence” needed to be understood immediately because of the obligation in clause 8 to elevate the statutory entitlement, the contractual entitlement, into the statute.  So, you had to understand what a gaming operator’s licence was in order to translate the obligation into the statute.  Secondly, there was no particular mystery about what the landscape would look like in 17 years’ time because the trustees had a licence which would continue for that time.

KIEFEL J:   Speaking of how things would look in 17 years’ time – if we are going to get to ground 2 within time ‑ ‑ ‑

MS HARRIS:   Yes, your Honour.

KIEFEL J:   ‑ ‑ ‑ are you going to make some submissions about what the parties would have made of the Treasurer’s letter and whether or not that would have affected their view about whether the contractual promises should be regarded as discharged if legislation was effected?  Speaking for myself, I could do with some assistance in relation to ground 2.  I realise you have prioritised your grounds but ‑ ‑ ‑

MS HARRIS:   I know I am behind time, your Honour, and I will come to it because I need to.  Can I finish this thought and, perhaps, one other?  The court seemed to suggest, as the trial judge did below, that you had to give a generic meaning to “gaming operator’s licence” because no one know what the landscape would look like in 17 years’ time.  With respect, they had a pretty good idea.  There was no mystery about it because the trustees held a licence – a vested right, if you like – to conduct gaming operations until April 2012.

What the agreement was directed towards was a situation where that licence expired and another one of the same kind was issued and it told us what was to happen if it was not issued to the trustees.  One did not need to construe the clause as having a generic meaning to accommodate that reality or to accommodate any difference in regime at the time.  The Treasurer’s letter, indeed, told us that if a future government changes its mind, you might lose out on this payment.

So, the court’s construction was antithetical to the very message that was being conveyed by the Treasurer’s letter and likewise the Court of Appeal’s reliance on notions of sovereign risk.  You do not need to give “gaming operator’s licence” a generic meaning because the parties were conscious of sovereign risk, firstly, because a contractual right is just as fragile as a statutory right but, secondly, because the Treasurer’s letter was explicit in warning about that risk that a future government might change its mind and you might be denied payment.  So, again, it is antithetical to construing the clause in that fashion.

The final thing I wanted to say other than to rely on our submissions on the court’s reasoning here is to say the Court of Appeal, like the trial judge, said there was no good commercial reason for assigning the specific meaning.  Now, we make two points about that.  First, that is to invert the process.  They should have started from the point – the point of departure was the finding that they had made in paragraph 151 that the words “gaming operator’s licence” had a clear meaning, a specific meaning by reference to the statute, and so they then should have asked themselves whether there was any good commercial reason to depart from that.  So that is the first problem.

The second problem was that there was a good commercial reason. A very good commercial reason for assigning it a specific meaning was that the purpose of this agreement was to put the trustees on a level playing field with Tabcorp, and Tabcorp under section 21 only had a right to a terminal payment which could be triggered by the issue of a licence of exactly the same kind as they enjoyed. That was the good commercial reason.

Now, your Honours, ground 2, we say clause 7 did not survive the enactment of the statute in 1996 for two reasons, which we put on alternative bases.  Clause 8 appears at page 378:

The Minister will cause to be drafted and will use his best endeavours to procure that the Parliament of Victoria enacts legislation which:

8.1.1includes the Trustees’ obligation to pay the Minister in accordance with clause 3 of this Agreement;

8.1.2includes the obligation of the State of Victoria to pay the Licence Value to the Trustees in accordance with the provisions of clause 7 –

We ask your Honours to note the language – the obligations – those very obligations are to be elevated into statutory form.

KIEFEL J:   The parties do not say what will occur if legislation did not come to pass.

MS HARRIS:   Well, indeed, your Honour, the parties do not say that and that is why we draw the analogy with Masters v Cameron in our written submissions.  So, in the first class of the Masters v Cameron contract the parties say, “Here’s our agreement but we will join together to bring into existence some other more formal or more extensive version of it”.  If that other more formal and extensive version of it does not come into existence, the first contract continues to govern.  So if that legislation had not been passed – and the parties recognise that the Minister could only use his best endeavours – if that legislation had not been passed, then clauses 3 and 7 would have continued to govern the situation, and they needed to in order to provide that level playing field with Tabcorp.

But exactly as in the Masters v Cameron situation, once that second instrument comes into existence, it necessarily overtakes the first.  There is no suggestion in a Masters v Cameron type case that if the second agreement is terminated for whatever reason, that the first agreement springs to life again and continues to govern the parties’ obligations.  It is discharged by agreement because the parties have agreed to bring it into existence in substitution for their earlier contract.

Now, in that first class of Masters v Cameron Case, you really see in the contract some explicit expression of that notion, that once our second agreement comes into force this first agreement will stand discharged.  It is implicit, and so it was here.  Once those obligations had been elevated to statutory form, they were discharged by agreement.

KEANE J:   If the statute had not been passed there would have been a problem, would there not, in the absence of an appropriation from consolidated revenue to meet the payment obligation?

MS HARRIS:   There might have been.  The Parliament would have had to appropriate in order to meet it but I guess that ‑ ‑ ‑

KEANE J:   And until that happened, if the agreement were to stand alone, there would have been a difficulty, would there not?

MS HARRIS:   Well, it depends whether the Parliament did the right thing at the conclusion of the licence, I guess; the time for appropriation would come when the payment entitlement was enlivened.

KEANE J:   Well, it is just that the other legislation that we saw in relation to the Tabcorp Case actually made provisions for appropriation immediately.

MS HARRIS:   Your Honour, that might be because – my recollection of the state of the authorities at that point in time was hazy but I think we find some uncertainty in the cases about whether a right could be considered enforceable unless there had been an explicit appropriation.  So it is sort of belts and braces and I think decisions of this Court since have indicated that that does not go to the heart of the enforceability of the right, but that might explain why those words appeared in the statute at the time.

FRENCH CJ:   You might have an appropriation to meet an obligation.

MS HARRIS:   Indeed, your Honour.  There might have been a problem – if Parliament refused to enact the obligations as set out in the agreement, then there would be a question as to whether the Executive could enforce the agreement as it stood.  Those questions do not arise here because what happened was the Parliament did enact into law the clause 3 and clause 7 obligations.  The clause 3 obligations found their expression in sections 135A to 135C of the Gaming Machine Control Act, and the clause 7 obligation found its expression in section 35A of the Gaming Machine Control Act, and they were substantively the same obligations.  It is worth looking at the balance of clause 8 because it informs the State’s construction; 8.1.3 and 8.1.4 and 8.1.5 and 8.1.6 require the inclusion of various other provisions in the legislation.  All of those things were done.

KIEFEL J:   Was the obligation to which clause 8.1.2 refers, as reflected in the legislation, equivalent to an obligation to pay money as compensation for the investment in infrastructure lost, that is, comparing the terms of the legislation with the obligation in clause 7.1?

MS HARRIS:   Did those words appear?  Compensation for ‑ ‑ ‑

KIEFEL J:   Does it have the same effect?  What I am saying is does the legislation have the same effect as the promise in clause 7.1?

MS HARRIS:   Your Honour, yes, because even though those words were not found in the statute, those words in the agreement are a simple characterisation of the payment.  The obligation is not to pay compensation for infrastructure lost, it is to make a payment of a sum certain and the words “as compensation for . . . infrastructure lost” are a matter of characterisation.

Now, if it matters, those words were referred to by her Honour the Attorney‑General in the second reading speech, so that when this payment entitlement was included in the legislation, the second reading speech reflected that that was the purpose for which it was being elevated into the statute and the reference to that speech is the supplementary bundle which we understand is to be handed up by our learned friends at tab 11, page 566 of Hansard on 4 June 1996.

Clause 8.2 is significant too because the Minister was required to consult with the trustees in causing the draft legislation to be prepared and that is the other sort of Masters v Cameron signal that the parties are – it is not some unilateral act on the part of the Executive or Parliament, but the trustees get to have a say to make sure that those obligations are sufficiently translated and appeal book 393 is a letter from the Treasurer to the trustees recording that the trustees had had input into the legislation.

Now, it is a short point, in a sense, your Honours, but it is dealt with in a strange way, with respect, by the Court of Appeal.  The Court of Appeal’s reasoning on this is sparse.  It appears at paragraphs 211 to 214 and those paragraphs embrace its reasoning on both the argument that as a matter of construction clause 7 was discharged and the argument that once the enactments were passed, clause 7 was abrogated by force of those legislative changes, regardless of the parties’ intention.

Now, paragraphs 211 through to 212, and possibly 213 – it is a little hard to tell – appear to deal with the construction argument and the three points that appear to be advanced by the court in these paragraphs as to why the 1995 agreement should not be construed as a compact but the promises in clauses 3 and 7 are discharged once embodied in legislation appear to be these.  Firstly:

the 1995 Agreement imposed continuing obligations over the term of the Gaming Operator’s Licence.  Hence, the textual indications were that the agreement was intended to survive the enactment of the statutory provisions ‑

Your Honours, we agree.  The agreement was meant to survive.  Clauses 3 and 7 were not.  There were other clauses in the agreement, clauses 4, 5, 6 and 9 to 12 that had clear ongoing operation as well as the definition section, of course, once those enactments were made.  So, the Court of Appeal’s reasoning missed the point.  The point was whether those two particular clauses continue to exist.

The second observation at 212 regards sovereign risk.  Sovereign risk was an important consideration in the lead up to the execution of the 1995 agreement.  It would be commercially improbable to attribute an intention to the parties that their rights and obligations under the agreement should be spent upon the passage of the legislation provided by clause 6.  Sovereign risk goes in the other direction.  A contractual right is, if anything, more fragile than a statutory right. 

Certainly, if Parliament chooses to abrogate a contractual right it may do so.  In some circumstances the Executive can just walk away from a contract as a matter of executive necessity.  Contractual rights are inherently more fragile.  Sovereign risk could not drive you to conclude that the parties, both parties, mutually intended that the contract would survive.  Indeed, when one has regard to the Treasurer’s letter, attributing such a ‑ ‑ ‑

BELL J:   What page do we find that on again?

MS HARRIS:   I beg your pardon, your Honour, 382.  It is appended to the agreement.  When we look at the Treasurer’s letter, attributing that intention to the parties is positively subversive because the Treasurer’s letter makes clear that sovereign risk, that future governments might take this off you.  So, the Court of Appeal’s reasoning seems to attribute to the Executive and Tatts a wish to try and subvert any expression of parliamentary will of that kind.  That is not rational.  The sovereign risk which is referred to by the Court of Appeal – in other words, it was precisely the risk of which the letter warned and that was, obviously, a mutually known fact because the parties went to the trouble of annexing it to their agreement.

Now, the third thing that the Court of Appeal says is at 213 and it makes a point about Bromley v Forestry Commission of New South Wales.  We have dealt with this case in our written submissions, suffice as to say at the moment, that that case was not a case which concerned a contract that contemplated that legislation would be passed with respect to its subject matter.  It had nothing to do with that.  It was a case where a right to payment for damage existed in a lease – in a Crown lease – and rights to payment existed in various iterations over time in legislation and the question in the case was whether those statutory enactments abrogated the contractual entitlement by necessary intendment, either because Parliament intended to cover the field or they were somehow inconsistent, and the burden of the Court’s findings was that the statute did not cover the field and its existence was not inconsistent with the existence of the rights in the lease.

That is not this case.  This case is a case where the parties have a contract.  In that contract they say, two of our obligations are going to be given statutory force, and they are given statutory force, and it is perverse, we say, to think that thereafter the rights continued in parallel, thereby creating two sets of obligations and two sets of rights depending upon whose shoes you stood in. 

Now, Tatts makes a point about this contractual construction, pointing to the 1999 agreement.  The 1999 agreement appears at page 431 of the appeal book.  It is an agreement which modifies the terms of clause 3, the licence obligation clause.  It came into existence because the tax treatment of the licence fee paid by Tatts was to change at the end of the financial year, 1999. 

The fee that it was paying was no longer to be deductable, according to the Commissioner.  So the trustees came to the government and said, “What can we do about this?” and the licence fee was changed from one that was profit based to one that was revenue based.  So the legislation was changed to reflect a revenue based licence fee rather than a profit based licence fee, which saved it from the adverse tax treatment that the Commissioner had foreshadowed.

Now, the 1999 agreement amends clause 3, or purports to amend clause 3, so as to reflect that change, but there are a number of things about that.  Firstly, the amendments to clause 3 actually bring it to an end two days after the agreement.  So the 1999 agreement reinforces the fact that these two sets of obligations do not in fact continue in parallel for the life of the licence because clause 3 unambiguously came to an end at that point.  The second thing we say about it is that it makes no mention whatsoever of clause 7.  So there is nothing in the 1999 agreement which would imply the continuing existence and enforceability of clause 7.

The third thing we say, and perhaps the most fatal of all, is that what Tatts tries to do with this and what the Court of Appeal tries to do with this at the end of paragraph 214 is to use the later acts of the parties to construe an earlier agreement.  It does not explain how anything done in 1999 or thereafter could conceivably tell us anything about the meaning of an agreement entered into in 1995.  We have referred in our submissions to statements of this Court that have made clear, including Agricultural & Rural v Gardiner, that have referred to the general principle of construction that it is not a legitimate aid in construction of agreement to use anything the parties said or did afterwards.

Likewise, the transfer agreement that was entered into in 2005, at page 435 of the appeal book, was an agreement by which the trustees’ rights and trustees’ business was effectively transitioned to Tatts.  Relevantly, clause 10 of that agreement assigns the rights and obligations under the 1995 agreement from the trustees to Tatts.  The argument by Tatts and, apparently, accepted by the Court of Appeal in 2014 is that that shows you that the agreement was still on foot.  We know the agreement was still on foot.  It does not tell you whether clause 7 was still on foot.  Clause 10 of the transfer deed could only pick up the 1995 agreement as it then stood.  So if the 1995 agreement no longer included clause 7 it was an agreement, absent clause 7, which was picked up and assigned to Tatts at that point.

Nothing in the court’s judgment, either on appeal or below, explains why a reasonable businessperson, in 1995, would have attributed to the parties the intention that they would have parallel sets of rights and obligations – two obligations on the part of Tatts to pay a licence fee, two obligations on the part of the State to pay a payment entitlement.

Now, Tatts has struggled with an answer to this.  The court does not even advert to the problem.  Tatts says – and the trial judge referred to it briefly – they say, “Well, there are principles of double compensation that would come into play here”.  That is problematic for at least three reasons.  The authorities on double recovery of damages, some of which are in Tatts’ supplementary authorities, do not assist.  We know the law may prevent a plaintiff recovering double damages in respect of a single loss in reliance on two causes of action or against two defendants.  It cannot recover for the same loss twice.

But that is not this case.  If the statutory and contractual rights exist in parallel, they create independent debts, so there is a debt created by the contract and a debt created by the statute, both in respect of the licence fee and the terminal payment.  The cases on double recovery damages do not help us here, and it is not a question of there being concurrent securities for a single debt.  They are two separate debts and, as such, if they existed in parallel, independently enforceable.

BELL J:   I rather understood the Court of Appeal at appeal book 736, paragraph 214, to proceed upon acceptance that clause 7:

could not have co‑existed with the right to compensation for which the Act provided ‑ ‑ ‑

MS HARRIS:   Yes, and I want to come to that directly if I might, your Honour, because that is probably the most problematic part of the reasoning, if your Honour pleases.  Just on this double recovery point, it creates a particular problem when we conceptualise it by reference to clause 3, which is the licence fee payment.  We do not see anything in the authorities on double recovery which could save the trustees from having to pay two licence fees if the contractual right co‑existed with the statutory right.

But perhaps most critically for present purposes, this is a question of construction.  Why would a reasonable businessperson in 1995 choose to go down that kind of path, relying on having to go to court and be saved from payment of two fees, being relieved of those parallel obligations, having to exploit the authorities on double recovery in order to avoid that outcome?  It does not make any sense.  A reasonable businessperson in 1995 would construe this agreement as giving rise to a singular obligation which was replaced by the statutory obligation, thereafter bringing the contractual obligation to an end and avoiding any problems around double enforcement.

Your Honour Justice Bell has raised 214, and that is the subject of our ground 3, and your Honour is right, and this is why the Court of Appeal’s reasoning in this area is very difficult and opaque because, having said that the contract could co‑exist with the statute in 211 to 213, it then states in 214 the opposite.

The burden of the reasoning in 214 is very hard to follow.  It suggests both by the first sentence and then again over the page at line 10 and following that what happened here was that the contractual right came to an end pro tem until something happened to the statute and then it was resuscitated.  Now, there is no reasoning around that.  There is no jurisprudential foothold for it.  There is no textual foothold in the contract referred to.  It simply – it starts from the proposition, correctly we say, that clause 7 of the contract could not have co‑existed with the statute, but once we conclude that that is the end of it.  It cannot come to life again if the statute is repealed.

But it is worse than that here because in this case the statute was not repealed.  The parallel statutory right, section 3.4.33, stayed in the statute.  So it was the enactment of the predecessor to that provision, namely section 35A, that brought an end to the existence of clause 7.  Then that provision remained in the legislation at the expiry of the trustee’s licence, Tatts’ licence.

What happened was that that payment entitlement could no longer be triggered because the singular licence which could trigger it was not issued and by force of 3.4.3 could not be issued, but the section itself remained in the legislation.  So that the burden of the reasoning of the Court of Appeal appears to be, well, section 3.4.3 which was the equivalent of section 4.3.4A that we considered yesterday in relation to Tabcorp effectively emasculated or abrogated the right in section 3.4.33, and the moment it did that it re‑enlivened the contractual right.

The next ground of appeal deals squarely with the incongruity of that result.  But, for the purposes of ground 3, we say that in 1996 this right disappeared from the contract because it had been replaced with an equivalent statutory right.  So the Court of Appeal’s invocation in paragraph 214 of Bromley and the legality principle, again, finds no relevance here because the 1996 statute did not take away a right.  It replaced one right with another, the same one.  According to the parties’ contract, it was the same one.  So there was no taking away of a vested right.  It was the replacement of that right with a right of equal or even better character because it now sat in legislation.

So, we say, your Honours, about this that the court was right to apprehend – if it did apprehend – that the 1996 amendments could not tolerate the ongoing existence of clause 7.  They could not.  But, once one reaches that conclusion, then that is the end of it.  Clause 7 came to an end and it could not, as the court suggested, be re‑enlivened by anything which thereafter affected the enforceability of the statutory right.

Now, Tatts says at a point there is no evidence that Parliament was even aware of the 1995 agreement when it passed the 1996 amendments.  We say two things about that:  firstly, the second reading speech which appears at appeal book 395 refers expressly to the negotiations, to the conclusion of the agreement and to the reason for the enactments being ensuring equivalence with Tabcorp.  So Parliament was well aware of the agreement.

The second thing we say about it is that when we look at statutory provisions which came into effect in pursuance of the clause 8 obligation, they are a match.  That is not coincidence, your Honours.  They are a match because Parliament was elevating to statutory form the obligations that are identified in clause 8. 

Perhaps I can ask your Honours to make a marginal note in clause 8 which appears at 378 to 379 of those provisions.  Clause 8.1.1 became sections 135A to 135C.  Clause 8.1.2 became section 35A.  These are all references in the Gaming Machine Control Act. Clause 8.1.3 involved the repeal and replacement of section 36. Clause 8.1.4 involved a new section 38 and 38A. Clause 8.1.5 – section 136(3B) was so amended. The proposed section 136(3B) contained in section 160 was so amended. Clause 8.1.6 – that premium payment obligation was embodied in section 33A.

Now, I did not get to come to it in the context of the construction argument but of course we rely on the premium payment and the tying of that to the issue of a gaming operator’s licence in the same way we did with Tabcorp because it is a necessary integer in the formula.  Clause 8.1.7, as I am reminded by the learned juniors, makes clear that the purpose of the legislation is:

to give effect to this Agreement. 

Ground 4, which is paragraph 5 of our notice, engages with the situation in 2009, at the moment when the 2009 amendments, specifically section 3.4.3 were passed and ground 9 asserts that even if clause 7 survived the enactment of section 35A in 1996, it could not survive the enactment of 3.4.3 which put an end to further gaming operator’s licences and we say that the abrogation of the statutory entitlement, which was the Court of Appeal’s characterisation, carried with it the necessary abrogation of the parallel contractual right.

The issue arises in this way, your Honours.  Section 3.4.33 of the 2003 legislation which is at appeal book 580 - this is the embodiment of the payment provisions in statute and it is triggered where:

(a)a gaming operator’s licence held by a person (the former licensee) expires; and

(b)the Commission grants a gaming operator’s licence to a person other than the former licensee –

So it is triggered by the grant of a gaming operator’s licence to someone other than Tatts.  Now, the problem that Tatts ran into in the Court of Appeal and the trial judge in relation to the enforcement of this provision, which is the subject of the notice of contention, is that “gaming operator’s licence”, as it appears in the legislation, is given the specific meaning in section 1.3 that appears on page 481, namely:

a licence granted under Division 3 of Part 4 of Chapter 3 -

Now, as we saw yesterday, and again Tatts pleaded below, in April 2008, the government announced the move away from the duopolistic model to an entirely new regulatory model for the operation of wagering and gaming and we see that from the Premier’s release of 10 April 2008 at appeal book 523, which makes clear at appeal book 525 that no new gaming operator’s licences will be issued.

We saw again from the budget paper what the government said about the end of licence payment arrangements being predicated on a continuation of the current regime.  That is consistent with the court’s construction of this clause which required and assumed that it was only triggered by a gaming operator’s licence of the same kind.  The budget paper was evidence in this case and your Honour will see it at pages 528 and 534.  So after this announcement is made, the government enacts clause 3.4.3 and that appears at page 536 of the bundle:

This Part applies only with respect to the gaming operator’s licence that was issued on 14 April 1992 and does not authorise the grant of any further gaming operator’s licence.

So, the equivalent of section 4.3.4A.  By negating the possibility of the issue of the only thing which could trigger 3.4.33 on its terms, section 3.4.3 abrogated, rendered inoperative 3.4.33 and the Court of Appeal so found.  Your Honours will find their reasoning on this at paragraph 52 and following at appeal book 688.  We see, for example, the first line of paragraph 52:

We recognise that to construe ‘gaming operator’s licence’ in s 3.4.33(1)(b) in that fashion deprives s 3.4.33(1)(b) of relevant application because of the abrogation by s 3.4.3 of the State’s ability to issue new wagering and gaming licences under Division 3 of Part 4 of Chapter 3.

In paragraph 57, at about line 31, we see the words:

abolition of the State’s ability to issue further gaming operator’s licences -

In paragraphs 58 and 59 their Honours refer to the:

calculated legislative intent to prevent the change in regime being seen or treated as an alteration to the rights . . . legislative determination to eschew any idea of Tatts once having had a right to payment which the change in regime has now denied it.  We see that as the purpose of the express preservation of the operation of s 3.4.33 –

FRENCH CJ:   Your constructional argument about all this is precisely the same, is it, as the argument we heard yesterday?

MS HARRIS:   Yes, your Honour, and the Court of Appeal was right then about all this.

BELL J:   Well, the Court of Appeal here viewed the definition as determinative and that is a point of distinction with respect to Tabcorp.  It is the matter that Mr Archibald raised yesterday suggesting some transposition of reasoning was not appropriate.

MS HARRIS:   The Court of Appeal did not distinguish on that basis but Mr Archibald does, says this reasoning is not applicable to me because Tatts is burdened with a definition that I am not burdened with.  That is right, your Honour.

BELL J:   Exactly.  What I am taking you to at the moment is that the determinative consideration for the Court of Appeal here was the strictness of the definition.

MS HARRIS:   Indeed, your Honour, and so they saw – they recognised that the very purpose of 3.4.3 was to deny the payment entitlement its trigger to prevent the payment having to be made.  That was the very purpose of 3.4.3 and no other purpose was identified or frankly could be identified.  That was the purpose of that provision, to prevent the payment being made. 

So the State’s position was, well, if the purpose of Parliament in passing that law was to prevent a State from having to make the terminal payment, then that must equally, at least impliedly, bring that obligation to an end insofar as it survives within the four corners of the 1995 agreement.

It was in that context that we referred the Court to Thomson’s Case and Magrath, and I will have to deal with those extremely briefly, but they are the cases that tell us that even where Parliament does not advert to a particular contractual obligation, if the ongoing existence of that contractual obligation is inconsistent with an expression of parliamentary will, it comes to an end.  It necessarily has to come to an end. 

So Parliament did not need to say we are bringing an end to clause 7 of the contract.  I mean, I dare say a reasonable person looking at the matter at that time would have thought clause 7 ceased to exist some time ago at the point that it was elevated from a contractual right to a statutory right. 

But the point of Thomson and Magrath to which the Court of Appeal just do not advert is that you do not need to say, “I am abrogating that contractual right”.  If the necessary implication of the step that is taken by Parliament is that that contractual right – that the ongoing existence of that contractual right is inconsistent with that expression of parliamentary will, it comes to an end.

The Court of Appeal again gave this very scant attention, if I might put it that way.  Their reasoning appears in the two paragraphs in the second half of appeal book 737, paragraphs 216 to 217.  The reasons for rejection appear at 217.  They say first the submission:

is premised on an assumption that ‘a new gaming operator’s licence’ within the meaning of cl 7 . . . has the narrow specific meaning for which the State contended –

That is not so.  If it bears that meaning, I do not need to worry about the 2009 amendments abrogating a right.  If it bears the specific meaning, Tatts is out of court because no such licence is issued.  The State’s argument below engaged with the possibility that that right had continued and bore a generic meaning.  But the reason it could not continue was that it provided for a payment entitlement which Parliament had taken deliberate steps to eradicate.  So it did not turn on the specific or generic question.  The second thing they said, at line 47:

As has been explained, parallel contractual and statutory rights may co‑exist and changes to the statutory rights will not affect contractual rights unless exercise of the contractual rights would abrogate or stand in the way of the operation of the amended statute.  In this case, they would not.

Now, there is no question but that contractual rights may co‑exist with statutory rights in an appropriate case, but that is the start of the discussion, not the end, and here the court was obliged to examine whether these rights actually could co‑exist.

We conclude this part of the argument by referring your Honours, albeit briefly, to what is said in Thomson’s Case which picks up that which was said in the earlier case of Magrath.  Thomson’s Case is No 8 in our list, Perpetual Executors and Trustees v Federal Commissioner of Taxation.  It is known as Thomson’s Case because that was the name of the testator in that case.  The facts were pretty simple.  The government had issued some bonds and the terms of the bonds were such that the government promised that income tax would not be payable on the interest which was paid on the bonds.  Mrs Thomson, the deceased, owned some of the bonds but she did pay tax on the interest that she received.

Then as a result of Magrath’s Case, which is referenced at pages 24 to 25 of the judgment and elsewhere, the Commonwealth issued a refund of tax to Mrs Thomson and a question arose as to the characterisation of that refund. Was it payment for damages for breach of the contract - that is, the contractual promise that you will not have to pay tax on the interest – or was it a voluntary payment as the executors contended.  The answer to that question determined whether it fell to form part of the estate for the purpose of estate duty. 

Now, in Magrath’s Case – you will see this on pages 24 to 25 – the Court had held that the bonds did include a promise of that kind.  There was a promise that income tax was not payable.  They were asked a second question in Magrath as to the enforceability, but the Commonwealth’s position was that once question 1 was answered against it, it did not require an answer to question 2 because it would refund the tax, so make what it considered to be an ex gratia payment. 

So the question about the enforceability of the promise only arose for the first time in Thomson’s Case.  But the Court had had some things to say in Magrath about that question and their Honours - as is recorded in the judgments in Thomson and is set out in our submissions – the Justices in Magrath had indicated that the Executive could not by contract tie the hands of Parliament.  In other words, the contract had to give way in the face of the contrary intention manifest in the taxing statute.  So, the question of enforceability, having arisen for decision in Thomson’s Case – we see what was said by his Honour Justice Dixon at the bottom of page 28.  At about point 9 of the page:

A statute destroys all contracts which stand in the way of its operation.

The imposition of a tax necessarily involves an intention that when levied it shall not become repayable.  Any liability ex contractu to repay it in substance, whether as damages, indemnity or recoupment, must be dissolved by force of the statute.

The reasoning of his Honour the Chief Justice – Chief Justice Latham with whom Justice McTiernan agreed – was to the same effect at page 17.  We refer your Honours, in particular, to what fell from Justice Williams at the top of 37 because it perhaps best encapsulates the principle insofar as it applies to the present case.  At three lines from the top of 37:

A future Parliament can repudiate the exemption either by repealing the statute in which it is contained expressly or by implication –

and this is the important bit -

or by putting an end to the contract by legislation which is expressly or impliedly inconsistent with its further existence.

The contract was inconsistent with the legislation in that sense.  The legislation had made the further existence of clause 7 an impossibility because it had taken the step of passing a law which was directed precisely to eradicating this payment entitlement.  The reasoning of the Court of Appeal is to the effect, well, it was just wasting its time because it left on foot this contract which was to the same effect.

That, with respect, is not the appropriate characterisation of what Parliament did.  Parliament’s intention, as found by the Court of Appeal, was to get rid of the payment entitlement.  So, having made that finding, it should have followed that clause 7.1, regardless of whether it bore a generic meaning or a specific one, had to fall.  

Your Honours, ground 5, I need to give a very light touch because my time is almost at an end.  Gaming machine entitlements are not equivalent in substance to the gaming operator’s licence.  Our submissions deal with this at 57 to 60.  Can I just make some very short points?

The Court of Appeal found that “gaming operator’s licence” – “new gaming operator’s licence” in the contract meant a new licence or licences substantially the same as the trustees’ existing licence.  That is at paragraph 147.  Gaming machine entitlements are not substantially the same as the trustees’ licence.  We are driven back to the statute because that is what tells you the authority is that is conferred by a gaming operator’s licence. 

The authority conferred by gaming machine entitlements is found at 3.4A.2 of the statute.  It is substantially different to the authority conferred by the gaming operator’s licence at 3.4.2.  The gaming machine entitlement authority is much narrower and it prohibits – this is set out in our submissions – a number of the very activities which were authorised to a gaming operator under section 3.4.2.

Now, the Court of Appeal got around that by aggregating the gaming machine entitlements with venue operator’s licences and saying we will look at them in globo and that was illustrated by the submissions of our learned friend, Mr Sheahan, yesterday.  There were several problems with that.  Firstly, the venue operator’s licence was a licence of a kind which the gaming operators were never entitled to hold.  They were prohibiting from holding it by section 3.4.9 of the legislation and section 19A of the 1991 Act. 

The second thing is that the legislation expressly states that a venue operator’s licence does not constitute a gaming operator’s licence.  That is 3.4.1A.  So it should not have been able to be aggregated with the gaming machine entitlements in order to produce a bundle that was then said to be equivalent to the gaming operator’s licence. 

Section 3.4.1A which says a venue operator’s licence does not constitute a gaming operator’s licence is an interesting section because, as we say in our submissions, there can be only one purpose for that in the legislation.  The only purpose is to stop the payment entitlement being triggered.  So, again, it is perverse to use the venue operator’s licences and mash them together with the gaming machine entitlements in order to get home on equivalence. 

Even if one moves beyond that, there are things which are prohibited to venue operators holding gaming machine entitlements which were authorised by a gaming operator’s licence.  Those are “manufacture of gaming equipment or monitoring equipment” - 3.4.1(2)(a) compared with 3.4A.2(b), supplying gaming equipment and monitoring equipment and servicing and repairing and maintaining gaming machines other than the ones you actually own.  Now, your Honours will remember that the gaming operators could service or repair or maintain any and all gaming machines, venue operators are only allowed to do that with respect to the ones that they actually own. 

That brings us to the final point, if you like, and that is the one your Honour Justice Keane referred to yesterday, the quality of difference between the two regimes.  One is a regime whereby a single gaming operator or two single gaming operators own all the machines in the State.  The second regime is where the authorisation, the gaming machine entitlement, applies to one machine only.  The difference between the two could not be stronger.  Your Honours, I will deal with the notice of contention in reply as needs be.  If your Honours please.

FRENCH CJ:   Thank you, Ms Harris.  Yes, Mr Young.

MR YOUNG:   If the Court pleases, I apologise in advance for my voice, I have had some difficulties.  The courts below applied a natural and ordinary meaning of the words “new gaming operator’s licence” when they came to construe clause 7.1.  In its natural meaning it means a licence or authority of substantially the same kind in a functional sense to the licence that was conferred on the trustees and subsequently Tatts. 

Now, the Court of Appeal found that that construction was compelling and inevitable.  It was supported by language of the provision, the context within the agreement, the genesis and purpose of the agreement and as well by reference to the way in which clause 7 was intended to operate. 

It was intended to operate at a distant future date in an environment in which the current legislative regime did not extend and where the legislative regime that might apply at that time was uncertain and unpredictable but likely to be different.  It had already substantially changed between 1991 and 1995.  The organ of government issuing the licence had changed and the availability of a second licence under the Act had disappeared with the enactment of the 1994 Act.  So there had already been radical changes in three years.

Now, before I go to the Court of Appeal’s reasons, I did want to make an observation about the rival constructions advanced by the State.  The Court of Appeal found that they were untenable.  Those rival constructions are noted by the Court of Appeal at paragraph 77 at 696 and the same are replicated in the notice of appeal at page 752.  It is an attempt to confine the composite phrase that appears only in the agreement to a meaning given by the 1991 Act or for these parties an unknown future piece of legislation, the 2003 Act.

In the notice of appeal, the oddity of saying that the parties were binding themselves to an unknown future definition in future legislation was recognised because the argument changed so that the second limb of the argument, the alternative construction, is that it is whatever meaning it might have in replacement legislation from time to time, whatever that may be and despite the fact that its contents were entirely unknown to these parties.

Of course, if it is any replacement legislation, that would not assist the State at all because the provisions of the 2009 amendments are, when one assesses functional similarity, replacement legislation.  Now, the Court of Appeal noticed that the State resiled from these arguments in the Court of Appeal.  The Court of Appeal’s judgment in that respect is at paragraphs 80 and 82 at 697.  The argument slipped to essentially embrace the natural meaning, a licence or:

right which was in substance the same as a gaming operator’s licence –

Now, how that happened is revealed by the transcript at page 651 that we have included over those pages, and I will not go through them.  Justice Nettle put a series of questions to Mr McLeish along the lines that your Honour the Chief Justice posed this morning - how far away can you move? 

Justice Nettle progressively put questions in terms of, what if the name of the licence changes, what if the licence provisions are then located in a different part of the Act, what if the licence has somewhat different features?  What if the grant takes a different legislative form, perhaps pursuant to regulations, and all of it ended up with the State accepting the proposition that Justice Nettle or the Court of Appeal records in the reasons and that is a recognition that the argument that attempts to confine the composite phrase, unnaturally, in the way that the State advances, simply cannot be maintained.  It is commercially nonsensical.  There is a similar contradiction in the State’s written submissions in the High Court.  At paragraph 26 they say this, and without going to it, I will quote it:

the composite phrase “new gaming operator’s licence” is used inescapably to connote a new gaming operator’s licence of the same kind as the Trustees’ Gaming Operator’s Licence.

Now, like my learned friend did, I am going to use the Court of Appeal’s comprehensive reasons as a roadmap through their various grounds for construction and that starts in the reasons at paragraph 147 at page 716.  I will not attempt to rehearse every aspect of the reasons given by the Court of Appeal.  The Court can see and read those.  What I will endeavour to do is to add to them as appropriate and to meet some of the observations that have been made by counsel for the State.

The first proposition in paragraph 148 goes to the natural meaning of the words and there can be no debate about the natural meaning of the composite phrase “new gaming operator’s licence”.  If we put the Act to one side for a moment, it is exactly what the Court of Appeal says in paragraph 148 and it would embrace any new licence to authorise the conduct of gaming operations, of substantially similar functional kinds.

Now, much reliance is placed on the specific definition in the Act, compared to the definitions in the agreement.  The composite phrase is not used in the 1991 Act and it is not defined or confined by any definition and as the Court of Appeal said throughout the 1995 agreement, it is plainly used in contradistinction to the capitalised term, “Gaming Operator’s Licence”, which is defined.  When one looks at the definition, if I could ask the Court to go to the 1995 agreement at page 372, the definition of the capitalised term, “Gaming Operator’s Licence”, means only one thing:

the gaming operator’s licence issued –

past tense –

to the Trustees pursuant to the Act –

That occurred in 1992.  By 1995 there could be no other licence granted under the 1991 Act.  The TAB licence previously granted under the 1991 Act was removed and then addressed by the 1994 legislation.

So the capitalised definition exhausts the universe of possible licences under the Act.  There can be no other licence.  So when “Gaming Operator’s Licence” in the capitalised form is used in this legislation, it is referring to the only kind of licence that can exist under the Act.  There is no other such licence.  So that capitalised definition is exhaustive.  It means that the composite phrase, “new gaming operator’s licence”, cannot be a reference to the defined term in the Act.  Were that so, the capitalised expression would be used.  It must be a reference to something else. 

Now, while we have the agreement, can I just notice 7.1?  Not only does it use the phrase “a new gaming operator’s licence”, but it is deliberately general about its issuance.  It does not speak in terms of the 1991 Act where the Commission was to be the issuer because that had already changed in the first few years.  It speaks of “having issued to the Trustees”.  There was no reference to the precise source of statutory authority for that issuance, and that is deliberate, in our submission.

FRENCH CJ:   The lower case “gaming operator’s licence” is a gaming operator’s licence issued to someone other than the trustee?

MR YOUNG:   Yes, so it cannot be a 1991 Act.

FRENCH CJ:   That is the minimum point of difference.

MR YOUNG: Yes, but that means it cannot be a licence under the 1991 Act because that was impossible. So it must be a new gaming operator’s licence enacted under some future piece of legislation, and the issuance is contemplated to occur on expiry. The trustee’s licence was for a fixed term, section 33. It was not extendable. It was not transferable, section 37.

It was bound to expire at the end of its term unless earlier cancelled, which would also be an expiration relevantly for the purposes of this clause.  So there was no element of contingency about expiration.  It was bound to happen.  It was simply a future date which would trigger the payment if the other conditions existed at that point of time. 

Now, I have referred to the court saying the expressions are used in contrast and contradistinction.  It is worth going to the passage in the Court of Appeal’s reasons where they use the phrase “contradistinction”.  It is paragraph 104.  That is at page 702.  That observation is made – and it is entirely accurate – having just quoted clause 5.2.  Clause 5.2 deals with the ongoing operation of clause 7 because what clause 5.2 contemplates is this.  If at any time prior to expiry, that is to say in the ensuing 17 years:

a new gaming operator’s licence is issued to, a related entity . . . no compensation will be payable to the Trustees pursuant to clause 7 at the time of such transfer or issue but such related entity will be entitled to the benefit of clause 7 as a permitted assignee –

It is an explicit statement that clause 7 is continuing to operate and in the circumstances of a new licence being issued prior to expiry, no compensation will be payable because that will be a related party.  There will be no need for compensation.  There will be no loss, effectively.

The Court of Appeal makes those observations I have just made at paragraphs 136 to 138, at page 712 - particularly 137, contradicts something my learned friend said this morning when she went to clause 5.2.  This morning she said that the Court of Appeal accepted that 5.2 used the expression “new gaming operator’s licence” to mean a 1991 Act licence.  That is the exact opposite of what they said.  They said it was used generically in both 5.2 and clause 7.1.  They go on to give an illustration about why that must be so and the illustration is entirely convincing - I will not go through it. 

The consequence of these matters is that where the agreement refers to “a new gaming operator’s licence” it is plainly not referring to a licence issued under the 1991 Act.  No such licence could be issued except the trustees’ licence and that is exhaustively covered by the capitalised definition.  My learned friend also relies upon clause 1.3 of the 1995 agreement which the Court will see at page 373.  This is to the effect that:

Words and phrases appearing in –

the 1995 –

Agreement shall, unless the contrary intention appears, have the same meaning as in the Act.

Well, the composite phrase is not used in the Act, so the composite phrase is not informed by clause 1.3 at all and the reference to the Act means, and only means, according to clause 1.1, the 1991 Act.  It does not mean the 2003 Act.  It does not mean unknown future replacement legislation.  So, clause 1.3 does not assist the State for those reasons.  Indeed, there is not even a definition of “gaming operator’s licence” in the Act and that is because the Act treats and addresses three different types of gaming licences:  the casino licence; the Tabcorp licence; and the trustees’ licence in some of its regulatory provisions.

Now, can I, in the context of dealing with these definitions, address a remark by your Honour Justice Keane this morning?  Your Honour, when my learned friend put this submission, asked a question about whether her argument was confined to a licence that led to a duopoly situation.  I may be paraphrasing, your Honour, but I think that is the gist of it.

KEANE J:   Sure.

MR YOUNG:   The licence conferred on the trustee has no such limitation.  Nor does the licence conferred on Tabcorp by the 1994 Act.  There is no limitation to, in that respect, that arises from the terms and conditions of the licence or the authorities it grants.  The only way in which the 50/50 arrangement arose was pursuant to ministerial directions under section 12 of the 1991 Act under which the Minister can give directions capping the maximum number of gaming machines, putting caps on regions versus metropolitan areas and so forth. 

There is an example in Schedule 1 of the 1995 agreement.  If the Court still has the agreement handy the Court will see this is a direction pursuant to section 12.  Paragraph (a) at that point of time in 1995 stipulated a maximum of 25,000 and going - and aside from regions and clubs and so forth having their own separate caps.  Paragraph (e), last few words:

the proportion of gaming machines which each gaming operator is permitted to operate is 50%.

Now, by 2012, the ministerial direction had a maximum cap of 27,500, still 50/50 between the two gaming operators, but the interesting thing about this is that both the trustees and Tabcorp are treated as gaming operators for the purposes of the section 12 direction, regardless of the fact that their licences derive from different statutory sources. 

That kind of direction mechanism has been retained.  Similar directions apply to venue operators holding gaming machine entitlements.  There are maximum caps, regional caps in shares likes this pursuant to section 3.4A.5.  So any concept of maximum caps, duopoly, how many operators they can be, is outside the licence.  It is the subject of a separate set of directions and the same regime for directions now exists under the 2009 amendments in section 3.4A.5, as existed in 1991.  So with respect to my learned friend when she answered your Honour to the effect that this was a relevant feature of a licence, it was not.

KEANE J:   It was an aspect, though, of the matrix of facts, if you like – the commercial context in which these things were being done.

MR YOUNG:   Yes.  It was part of the overall system of regulation of the three concurrent gaming licences issued under different pieces of legislation, and those licences were treated generically as gaming licences in the other annexure to the 1995 Act, the Treasurer’s letter.  So the parties were conscious that different sources of legislation threw up generic gaming licences sourced in different pieces of legislation, but the regime as a whole had an element in which they were regulated in a similar fashion.

Can I give another example.  The taxing provisions of the 1991 Act, sections 135 and 136, apply to gaming operators.  The 1991 Act defines gaming operators as both the trustees and Tabcorp holding a licence under a different Act.  So the taxing provisions for both gaming operators are in the 1991 Act, and that was so at 1995.  So the Act approached the matter by treating gaming operators as subject to a range of regulations because they held the same kind of gaming licences even though their licences were sourced in different statutory reservoirs.

Now, can I go back to the road map the Court of Appeal has provided at 147 and following. The next point I want to make really amplifies on 149, and I have started to do it already by looking at the wider context provided by the 1991 Act. Section 3 of the 1991 Act defined “gaming operator” to include Tabcorp. It defined in section 3(2) the “conduct of gaming”, and in section 32 it deemed the casino operator to be a “licensed venue operator” holding a gaming operator’s licence.

Now, that is much like the beast that emerges in post‑2009. An entitlement holder is defined in the 2009 amendments as a venue operator holding gaming machine entitlements. It is only through the combination of the two that you can conduct gaming. The casino was always in that kind of position under section 32 of the 1991 Act. It was deemed to be a licence venue operator holding a gaming operator’s licence. I have dealt with section 12 and I have dealt with taxing provisions.

The summary, therefore, of the legislative scheme under the 1991 Act, is that it addresses three licences to conduct gaming – casino licence, a gaming operator’s licence and the Tabcorp gaming licence.  They are all subject to regulation under the Act despite their different statutory sources.  The parties were cognisant of the fact that they were treated as concurrent licences and, indeed, that was the basis upon which they contracted as they indicated by the incorporation of the Treasurer’s letter.

Therefore, the Court of Appeal, at paragraph 55 was perfectly right to say that the trustees held the same kind of authority as Tabcorp despite different statutory origins. They might have added that they had the same kind of authority as the casino did under section 32. They did not add that but they might have added that as well. So, the context of the 1991 Act, looking more broadly than the exhaustiveness of the definition I dealt with, is against the argument that there is some meaning in the 1991 Act that controls the composite phrase that is used in contradistinction to the only definition used in the 1991 Act.

Can I then turn to paragraph 150 of the Court of Appeal’s reasons at page 716?  The court deals with the Treasurer’s letter.  That passage should be read in conjunction with paragraph 156 where the Court of Appeal elaborates with the trial judge’s conclusions about the significance of the Treasurer’s letter. 

To those observations made by the Court of Appeal and the trial judge I would add these.  As well as identifying the essential characteristics of the three different licences being essentially the same, the letter goes on to speak of a public tender occurring on the expiry of the trustee’s licence where new licences will be issued to the highest bidder and that will be the source of the capital compensation to the trustees provided for in clause 7.1.

FRENCH CJ:   That might be a convenient moment, Mr Young.

MR YOUNG:   Yes, thank you.

FRENCH CJ:   The Court will adjourn until 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.13 PM:

FRENCH CJ:   Yes, Mr Young.

MR YOUNG:   May it please the Court.  I was addressing the Court of Appeal’s reasons in relation to the Treasurer’s letter.  Those reasons are found in a number of paragraphs and it started with paragraph 150 at page 716.  The Court of Appeal adds to that reasoning at 153 at the foot of the next page, then at 156 and, lastly, later at 212 at page 736.

In our submission, the point of the parties incorporating the Treasurer’s letter was that it recorded mutually known matters that were the agreed basis for their contract for the payment of compensation.  That is not gainsaid by pointing to the fact that the letter says the principles are non‑binding.

Three things can be drawn in those circumstances from the incorporation of the Treasurer’s letter; they are these.  First, the letter indicates that at that point of time the conduct of gaming was regulated concurrently under three different gaming licences emanating from different statutory sources but they were all treated as within the species of gaming licences about which the parties were contracting.

Secondly, the letter indicates that the anticipation of the parties – their expectation – was that on the expiry of the trustee’s licence there would be a public tender process, new licences would be issued to the highest bidder and that payment, the upfront payment by the highest bidder, would be the source of funds for the compensation payment to the trustees.  The third thing that the letter indicated was that the parties were acutely conscious of sovereign risk.

As the trial judge found at a series of paragraphs, sovereign risk was clearly understood and recognised within the 1995 agreement by incorporation of the scheduled documents.  His Honour was referring to both the ever‑changing ministerial directions as well as what was said about the risk of future legislative changes in the Treasurer’s letter.  I will not go to them but those paragraphs are 57, 77, 99 to 102 and 107 in the trial judgment. 

The Court of Appeal found, or accepted the trial judge’s findings, that both parties recognised the risk for potential further regulatory change, and that was the central basis upon which they were shaping their contract.  Those passages in the Court of Appeal are at 115 to 116, 125, 152 and 153 and 212.  So the parties recognised that the future legislative world was entirely uncertain, but they were agreeing upon a provision that called for performance 17 years into the future.

Of course, they were postulating that the legislative environment at that point of time was unknown but it was likely that the State would continue to regulate gaming, after all they had raised hundreds of millions of dollars from Tabcorp and now from the trustees through the regulation of gaming and the Treasurer’s letter said that they anticipated that, on a grant of further licences, they would again raise upfront fees.

So, it is hardly surprising that there was an expectation that, on the grant of future licences, there would be upfront payments to source the payment of compensation which was the quid pro quo for the trustees agreeing to make the progressive payments they did by clause 3.

FRENCH CJ:   Incidentally, were the trustees involved in the settlement of the Treasurer’s letter?

MR YOUNG:   Not the settlement.  They asked for a letter like Tabcorp and I think they stipulated what they wanted to see but “settling” is probably overstating it, your Honour.

FRENCH CJ:   “Involved in”, I said.

MR YOUNG:   Yes.  It was just the word “settling”.

FRENCH CJ:   All right.

MR YOUNG:   They certainly requested a letter and they requested it go as far as court to give them some assurances.  Now, the recognition of sovereign risk informs a reasonable business‑like interpretation of clause 7.1.  A reasonable businessperson, reading those words and recognising that the future legislative world in 17 years was entirely uncertain, would not attribute to them a meaning fixed by irrelevant provisions of the 1991 Act that did not apply anyway.  Nor would they say they are confined by some unknown piece of legislation that might be passed in 2003.  They would adopt a generic natural meaning of those words, cognisant of the fact that gaming was already regulated by a number of different licences.

In this area Ms Harris made an observation this morning that was wrong about the implications of the Treasurer’s letter.  She said that the reference to the different forms of concurrent licence tended against a generic construction for the reason that if that were so then the grant of any of these other licences to the casino or Tabcorp would trigger 7.1.  That is plainly not so.  The opening words of 7.1 use the capitalised expression:

If the Gaming Operator’s Licence expires ‑

That is defined to mean the trustees’ licence issued in 1992.  So the only way in which a payment is triggered by 7.1 is on expiry of the trustees’ licence in 17 years, not the expiry of a Tabcorp or casino licence.

Now, the next paragraph in the Court of Appeal’s reasons is paragraph 151 that addresses clause 1.3.  I have already made submissions about 1.3 providing no foundation for an alternative construction because 1.3 is confined to the 1991 Act.  But my learned friend did make some submissions about the second sentence at paragraph 151 at 717, where the Court of Appeal said:

It may be accepted, as the State submits, that the phrase ‘gaming operator’s licence’ had a clear meaning under the 1991 Act –

However, my learned friend misreads the sentence, partly because she does not read it with what follows.  The clear meaning under the 1991 Act is indicated by the second bullet point:

no new gaming operator’s licence could be issued under [that] Act –

The only licence issued or capable of being issued under the 1991 Act was the trustees’ licence.  That was its clear meaning and that was exhausted by the capitalised definition.  So there is no support in that sentence for the proposition that their Honours were saying that the phrase “gaming operator’s licence” in the Act had some meaning which was not the capitalised meaning.  That was the only meaning it was capable of bearing, the capitalised meaning.

Their Honours also pointed out that the different contrasting phrase “new gaming operator’s licence” fell to be applied in 17 years’ time.  So when you put those matters together, there was no support for the proposition my learned friend advanced this morning.  The next paragraph in the Court of Appeal’s reasons deals with clause 8 of the 1995 agreement and specifically clause 8.1.6.  The Court might care to open the 1995 agreement again to go to the text of clause 8. 

We adopt what the Court of Appeal said.  All that clause 8 does is envisage, as their Honours said, the possibility of legislative change.  It was only a best endeavours obligation.  No legislation may come to pass.  Such legislation as came to pass might not fully or completely reflect the parties’ agreement and if any legislation did come to pass it may not endure.  It may not be in existence at the date that clause 7.1 called for performance of the promised payment of compensation.

BELL J:   Accepting it was best endeavours only, as it turns out legislation was enacted.

MR YOUNG:   Yes.

BELL J: When one turns to 8.1.2, is it accepted that the legislation that was enacted in section 21 of the 1996 Act provided with respect to the obligation of the State of Victoria to pay to Tatts the compensation as it is described in clause 7 of the 1995 agreement?

MR YOUNG:   In the result of this case, or given the result of this case, the answer must be no because the Court of Appeal and the primary judge found that the statutory obligation was narrower and different from the contractual obligation because its terminology differed.  But our case on the notice of contention is that the substantive effect of the legislation, notwithstanding that different words are used, should, properly construed, arrive at the same result.

BELL J:   What is your submission respecting the Court of Appeal’s analysis at 214 that perhaps, putting it at its highest, is that one ‑ clause 7 in their Honours’ view was unlikely to have co‑existed during the – with the right for compensation that the Act conferred?

MR YOUNG:   Yes, I was going to come to this, your Honour, but I will do it immediately.  The starting premise of your Honour’s question is, with great respect, slightly mistaken.  Their Honours do not accept the proposition that clause 7 could not have co‑existed.  That is no more than an assumption in 214, because the contrary finding, not challenged by any ground of appeal, is made at the end of the previous paragraph:

they were capable of concurrent existence.  So it is here.

After 214, in 217, at the very foot of page 737, their Honours say:

As has been explained, parallel contractual and statutory rights may co‑exist and changes to the statutory rights will not affect contractual rights unless exercise of the contractual rights would abrogate or stand in the way –

which is the abrogation principle requiring clear and unmistakable language.

BELL J:   For my part, I had understood it clear from 213 that their Honours were of the view that the legislative regime did not effect implied abrogation of the contractual right, but that their Honours also appeared to acknowledge in the succeeding paragraph that the right to compensation under clause 4 of the agreement might not co‑exist with the right to compensation for which the Act provided because that is what they said, prefaced by the word “possibly” but read in context.

MR YOUNG:   Not just possibly, but the next sentence:

But, even if so ‑ ‑ ‑

BELL J:   Yes.

MR YOUNG:   This is an assumption because they make a finding at the end of 217 that the only governing principles are the abrogation principle requiring unmistakable language in the parliamentary enactment standing in the way of the operation of a statute and then they say:

In this case, they would not.

So, in our respectful submission, 214 is to be read as making an assumption against the primary finding of the court that these rights did co‑exist, and on that assumption what they go on to point out is that ‑ over the page, if I may, at 737 at about line 11, or perhaps from the top of the page:

The clause was always capable of applying in circumstances where the statute did not provide for compensation, and thus the fact that the Act may have provided for a right of compensation for some of the time does not imply the repeal of the clause in relation to the rest of the time.

So, in our respectful submission, this is an exercise in canvassing the possibility, based on an assumption which is the opposite of their primary finding, and may I add that the primary finding is not challenged.  The only ground of appeal addresses this assumption.  Indeed, the ground of appeal is framed in language of assumption.  The ground of appeal is:

the Court of Appeal erred in finding that, even if the State’s obligation . . . could not co‑exist –

et cetera.  Now, that is at page 753, ground 4.

BELL J:   So that when the best endeavours clause bore fruit and the Minister procured the enactment of legislation, including the obligation of the State of Victoria to pay the licence value to the trustees, that produced a statutory obligation that co‑existed with the contractual obligation; that is your submission, is it?

MR YOUNG:   Yes, but can I add, your Honour, they called for performance only on expiry at a distant future date and the only principles in play ‑ and our learned friends do not suggest some other legal principle other than construction ‑ are statutory abrogation requiring manifestly clear language and the principle against double satisfaction or double compensation.

So, if the rights still exist concurrently at expiry, we only claimed one payment on alternative grounds.  There is a governing legal principle that in respect of both debts and damages you cannot get double satisfaction, even though you rely on different causes of action, and that is long enshrined in the cases. So, that is the controlling mechanism.

BELL J:   The matter I am directing your attention to really goes to the second ground in the notice of appeal which is numbered 3 which asserts error in finding that the:

obligation under cl 7 . . . on its proper construction, survived the enactment –

MR YOUNG:   Yes.  I follow that, your Honour.  In the first place, I was dealing with construction.

BELL J:   Yes.

MR YOUNG:   Your Honour took me to a passage about what happened when the legislation was enacted.  If we are dealing with construction, as at the time of the 1995 agreement, legislation pursuant to the “best endeavours obligation” is a possibility.  It is not a certainty.  Nor is it a certainty that it will reflect the contract.  Nor is it a certainty that it will endure until performance.

GORDON J:   So, what is it purpose, then?

MR YOUNG:   Clause 8.1?

GORDON J:   Clause 8.

MR YOUNG:   Clause 8 is to ‑ ‑ ‑

GORDON J:   On your present construction, or your present argument, it has no purpose or effect.  It is there just as window dressing.

MR YOUNG:   No, it is a “best endeavours obligation” that, if performed, will give both parties the position that there are concurrent statutory contractual rights.

GORDON J:   That is the result that you would have us adopt.  But, what is the purpose of that?  Why would you have it?

MR YOUNG:   You have it to achieve that outcome, to lead to a position where there are concurrent, statutory and contractual rights.

GORDON J:   But, why?  Why do you need both of them in this situation?

MR YOUNG:   From Tatts’ viewpoint, it wanted both because it had greater security if it had the underlying contractual right for the reasons given by the primary judge.  It is much less likely that Parliament will abrogate a solemnly agreed contractual right where they have taken the benefit of the progressive licence payments than it is that they will change legislation in some way that might affect that right.  That was the primary judge’s point.

GORDON J:   Does this mean you do not need the legislation?

MR YOUNG:   From the government’s point of view, they may have wanted the legislation.  But the objective – your Honour asked me the purpose.  The purpose was to agree a “best endeavours obligation” that may result in a concurrent legislative right, but that purpose does not suggest an intention to abolish, or negate, or discharge the contractual right.  There is no language at all.  There is not a single piece of text in the 1995 agreement that says that.  Indeed – I was about to go to 8.1.6 when your Honour Justice Bell asked me a question.  Can I go there now?  Clause 8.1.6 contemplates the fact that:

the holder of any new gaming operator’s licence issued following the expiry –

would involve the payment of a ‑

lump sum premium upon the grant of the new licence ‑

Notice the width of the language, “any new gaming operator’s licence”.  It is not a 1991 Act licence.  It is not confined in that fashion.  It is deliberately general because one does not know what legislation will prevail on the expiry of the capitalised “Trustees’ licence”, but the requirement about paying the premium is important because, as Justice Kiefel observed yesterday, the linchpin of this arrangement was that the State was going to get in progressive licence fees equal to what TAB had achieved as the value of the licence.

The quid pro quo was that the expiry of the licence, provided there was a source of funds available from a premium from any new licensee, those funds would be applied to pay the compensation, and 8.1.6 reflects that.  But the generality of the language indicates that 8.1.6 was intended to cater for a wide range of new possible licences in the future that might exist on expiry.  It is not using language that is tied to the 1991 Act, so that indicates the absence of any intention to terminate clause 7 rights.

BELL J:   It is talking about the legislation which the parties have in mind will be enacted, presumably to address the sovereign risk.

MR YOUNG:   Well, certainly the first part of that, but as to addressing the sovereign risk, the parties also had in mind they were addressing that by maintaining the contractual right.  One does not exclude the other, your Honour.

BELL J:   No.

FRENCH CJ:   What construction is placed on the words “in accordance with” in 8.1.2?  There are a couple of ways of reading that, are there not?

MR YOUNG:   Yes, and there are degrees of difference about what might be regarded as “in accordance with”, your Honour.

FRENCH CJ:   In compliance with, might be one interpretation.

MR YOUNG:   Yes, which might be stricter than saying “giving substantial effect to”.

FRENCH CJ:   Yes, or just reflecting the provision.

MR YOUNG:   Reflecting, yes.

FRENCH CJ:   Reflecting would, of course, be consistent with subsuming the contractual obligation; in compliance with would be consistent with maintaining the contractual obligation.

MR YOUNG:   Yes, but one should not read it as subsuming in the sense of dispensing with.

FRENCH CJ:   Well, that is what I assumed you were going to say but I just wondered whether that was debated.

MR YOUNG:   Yes, because, I mean, if that were intended, it would have been spelt out in this agreement because elsewhere, as I indicated in 5.2, the parties plainly stipulate that clause 7 is of continuing force and effect, and they say that in 5.2, because that operates at any time prior to expiry and pursuant to clause 7 at the time of such transfer – so that is a future date beyond any legislation enactment date, clause 7 is going to operate but not be available to trigger compensation to the related entity.

FRENCH CJ:   Incidentally, Ms Harris gave us a list of the provisions introduced into the Gaming Machine Control Act 1991 in 1996 corresponding with various subclauses of 8; do you disagree with that?

MR YOUNG:   I do not agree with a listing, but when your Honour goes to the provision that deals with the terminal payment it does not match the language of clause ‑ ‑ ‑

FRENCH CJ:   No, I am not suggesting it was put as a matching, but sort of corresponding to.

MR YOUNG:   Well, in broad terms, yes.

FRENCH CJ:   Yes.

MR YOUNG:   But, of course, the courts have held that there is no correspondence in the critical respect because the definition of “new gaming operator’s licence” under clause 7.1 properly construed is quite different.  Can I go to purpose, which is the next ground ‑ ‑ ‑

KEANE J:   Before you do, can I just ask, you said that the other side put their case here in terms of legal theories on a view of construction and on abrogation but do they not also put their case on the footing that, pursuant to clause 8 and in performance of it, what were obligations in clause 7 became statutory obligations?

MR YOUNG:   They put that as a matter of construction only.  That is their – the parties only intended that these rights exist ‑ ‑ ‑

KEANE J:   Not, you think, as a matter of performance that clause 8 was performed in this way?

MR YOUNG:   Yes, but what they put is that when clause 8 is performed by the enactment of legislation, they say as a matter of construction the parties must be taken to have intended that that should discharge clause 7.l.

KEANE J:   Well, that is usually the effect of performance of a contract.  Once it is performed, it is discharged.

MR YOUNG:   But that is performance of clause 8.  That is not performance of clause 7 by making a terminal payment.  They are altogether different things.

KEANE J:   No, clause 8 requires the inclusion of an obligation to pay in accordance with the provisions of clause 7.

MR YOUNG:   Yes.

KEANE J:   The performance of clause 8.1.2 is the procuring of the enactment of a statutory provision having that effect – creating that obligation.

MR YOUNG:   Well, firstly, the courts have answered that in the negative; no, it was not, because of the different language.  Secondly, the performance of clause 8 only erects a parallel statutory right.  There is nothing in clause 8 or anywhere else in the agreement to indicate that it brings clause 7.1 the contractual right to an end, and clause 7.1 is performed only by making a payment where the conditions are satisfied on expiry of the trustee’s licence.  That is different performance, and clause 8, the statutory obligation to make a payment has never been performed.

So, your Honour, as a matter of construction one would have to say we need to find in the text of the 1995 agreement clear language indicating that the enactment of legislation pursuant to the “best endeavours” obligation has the effect of destroying or discharging clause 7.1.  Far from there being any such language, there is language directly to the contrary in clause 5.2.

There is no textual basis for this construction argument, saying it is discharged, and nor is there any more general principle saying that the mere co‑existence of statutory and contractual rights about the same subject matter always leads to the discharge of the contractual rights.  It is commonplace in our legal realm that you have contractual rights paralleled by statutory rights.

You have a contractual obligation in employment contract to maintain a safe working environment.  You will have a parallel statutory obligation in workplace safety regulations or in workers’ compensation legislation.  The co‑existence of parallel rights about the same subject matter, capable of giving rise to compensation, has never been regarded as dispensing with the contract.  I can give you hundreds of examples.

Take the franchise code.  When the Trade Practices Act enacted the franchise code and you had existing franchise agreements with provisions that were concurrent and complementary to the franchise code, they were not discharged by the enactment of the franchise code.  And, I mean, you can go to the lease field.  Leases have provisions about assignment and consent not being unreasonably withheld. 

There are parallel statutory provisions to the same effect and the Retail Tenancies Act.  The enactment of the Retail Tenancies Act does not dispense with the contractual rights and so on and so forth.  You can give hundreds of examples.  And the same applies to State agreements.  When a State agreement is authorised, even when it is authorised as if enacted, the cases in this Court and in the Court of Appeal of Western Australia say the contract remains as a contract as well.

It is not dispensed with simply because you have a provision saying, we have a concurrent statutory enactment of the same thing, and the case I am referring to is Wik.  Wik Peoples says precisely that and the case it endorses is Commonwealth Aluminium to that effect.  So, this is commonplace.  There is no principle.  The only controlling principles are the rule against double satisfaction or double compensation and the rule that says Parliament can abrogate a contractual right provided it spells it out in unmistakably clear language and neither apply here.

FRENCH CJ:   Do you place any significance on the use of the term “as compensation” in 7.1, in relation to the argument about double dipping.

MR YOUNG:   I do, your Honour.  Yes, I do.  Can I move to that now?  That is part of what I wanted to say about purpose.

FRENCH CJ:   Yes.

MR YOUNG:   The Court of Appeal addresses purpose in three places.  In the chain of summary points I am dealing with, it is paragraphs 154 and 155 at 718.  They are both paragraphs about purpose and the first of the paragraphs raises the point your Honour the Chief Justice raises:

compensation for the ‘investment in infrastructure lost’ ‑

and the second part, paragraph 155 is ‑

the purpose of cl 7 was to provide compensation for the loss of the gaming business upon the expiry of the existing licence whilst ensuring that compensation was limited by reference to the premium . . . there is nothing in this fundamental scheme to support the conclusion that ‘a new gaming operator’s licence’ must be granted under the 1991 Act.

KEANE J:   Yet, under 7.2, no amount is payable by way of compensation if a new gaming operator’s licence is not issued.

MR YOUNG:   There is an obvious reason for that, your Honour.  Under clause 7.2 there are three permutations.  The first is it is issued to the trustees or a related party.  If that occurs, there is no loss and no occasion for compensation.  The second is it is not issued at all.  Then there is no premium to fund a compensation payment and the State’s preparedness to agree on compensation was contingent on there being a source of funds.  That is why it is the lesser of the premium or the licence value.  The third permutation is that it is issued to a third party and if a new licence of the species, substantially similar, is issued to a third party they will pay an upfront payment, the premium, and the purpose of clause 7.1 is that premium is then applied to pay the compensation.

The Court of Appeal says all of this at paragraph 143, at 714.  The second sentence is perhaps the nub of it.  They go on to say that that was the basis clearly that the State was prepared to settle for a payment.  They had a source of funds.  Then they make the observation, relevant to a reasonable business‑like interpretation of 7.1, that a person would not have contemplated that the State would double‑dip, retain the progressive licence fees they extracted from Tatts or the trustees on the promise of a terminal payment.  Then, in the third permutation, get an upfront payment from a new licensee and endeavour to keep it.

KEANE J:   Or if they decided not to issue new licences at all and there would be no payment.

MR YOUNG:   Because there would be no premium.

KEANE J:   Even though there is an occasion for compensation, there would be no payment made.

MR YOUNG:   But that is because the bargain reflected in the whole of clause 7 is that compensation would be only payable if the State had the funds sourced from a premium from the replacement person who is going to stand in the shoes of the trustees even under a substantially similar licence.  That is the scheme and that is what the Court of Appeal, correctly, in our view, set out in those two paragraphs, 154 and 155.

KEANE J:   Mr Young, I meant to ask you - the purpose of clause 8, at least in relation to 8.1.2, would it be the case that without that provision there would be some sort of Bardolph problem?

MR YOUNG:   Some sort of – I am sorry?

KEANE J:   Bardolph problem, in that there would not be an appropriation that would entitle your client to payment in the event that it arose, for example, under a contract, without a statutory appropriation?

MR YOUNG:   No, your Honour.  Governments enter into contracts which call for payments at future dates all of the time and they only secure the relevant appropriation at or about the time that payment falls due.  In fact, that is what occurred here.  When we were successful at trial, the judgment debt was paid and an appropriation bill was passed.

KEANE J:   I have in mind the provisions that we were shown yesterday, which actually provided at the time an appropriation to meet the obligation to make the statutory payments.

MR YOUNG:   Yes, but that was in respect of a statutory payment.  The absence of an appropriation in respect of the incurring of clause 7.1 is the ordinary way in which governments enter into contracts.  The contracts call for payments at distant future dates.  The appropriation is made proximate to the time when the debt falls due.

FRENCH CJ:   Or it might be coloured by some sort of recurrent standing appropriation, I suppose.

MR YOUNG:   Yes.  The government does not rush off and get an appropriation every time it makes a contract calling for payments. 

KIEFEL J:   Sometimes not at all.

MR YOUNG:   Probably so.  But that is no argument against ‑ ‑ ‑

KEANE J:   But, that would make you more secure, would it not?  Having a statutory authority ‑ ‑ ‑

MR YOUNG:   It might make the statutory right more secure, only in this sense, that the appropriation you might need at a future date you have provided for earlier does not necessarily make it more secure because the statute can always change and the appropriation may not be used.  So it does not make it more secure.  I wanted to go to one other paragraph where the Court of Appeal addressed purpose if I may, at 135, page 711.  This is an important paragraph being linked with a couple of other paragraphs recording the trial judge’s findings.  At the top of page 712:

the whole point of cl 7 was to enable the Trustees to claw back all or part of the payments made under cl 3 out of the premium . . . In those circumstances, as the judge said, there is no sense in restricting the natural and ordinary meaning . . . there is every reason to read it as extending – as semasiologically –

which means semantically or naturally -

it readily does – to any statutory authority –

Now, that meshes in with the findings by the primary judge as to purpose which the Court of Appeal recites at 128 to 129.  I go to this because my learned friend misstated what was found to be the purpose of clause 7.  It is not confined to an even playing field as suggested.  One looks at 128 on 708:

the purpose of the 1995 Agreement included:

(1)the State receiving fees . . . 

(2)the State paying Tatts a terminal payment which was broadly equivalent . . . and

(3)ensuring that the State received a premium –

Then at 129, the amount of that progressive licence fee is addressed in 129.  It reflects the capital value realised by Tabcorp on the sale of its gaming business by the float and that is the $520 million you find in clause 7.3.  May I make, in passing, an observation about 7.3 of the 1995 agreement?  One sees the formula ‑ ‑ ‑

FRENCH CJ:   These purposes are defined essentially by reference to what the contract does on its face.

MR YOUNG:   Yes.  Yes, very plainly.

KIEFEL J:   It is not so much purpose as operation, is it not?

MR YOUNG:   Yes, it is, but we agree with your Honour’s observation the other day that the interlinking between the progressive licence fees and the payment obligation is really the linchpin in terms of understanding the purpose of clause 7.1, coupled of course with the necessity for a source of funds, but 7.3 is specific to the trustee.  The 520 million is what was realised by the TAB float.  The equation that follows - the integers are the actual balances achieved by the trustees over the period from 1995 until expiry.  So 7.3 is a one‑off formula directing itself to the trustee’s licence, as is 7.1.

Now, one other observation about purpose - compensation is not part of the regulation of gaming.  That observation was made by Mr Archibald.  We agree, but in our case there was a specific finding to that effect by the primary judge at 191, paragraph 619.  That finding is binding because it was not appealed.

BELL J:   Can you give me that paragraph number again.

MR YOUNG:   Certainly, 191 at 619, line 28.

BELL J:   Thank you.

MR YOUNG:   That was in the context of an argument we based on clause 6 that gave us a right to be regulated on terms substantially as favourable.  The primary judge held that did not extend to the terminal payment because it was not part of the regulation of gaming.  So compensation stands apart from the regulation of gaming. 

One final observation in this regard:  the compensation out of premium aspect of this agreement is plain on its face.  That is its central intended operation, but, as I think my learned friend conceded this morning, the same is true of the concurrent statutory provision.  That is a compensation provision.  It does not use the word “compensation” in its text, but the 1996 second reading speech describes it as a compensation provision, and the source of funds to pay the compensation is the premium.

Now, they both being compensation provisions, the rule against double compensation applies.  The same rule applies to double satisfaction of debts, as Sir Harry Gibbs has said in the Behn Case, and other cases have held as well.  So if any controlling mechanism is needed to prevent what they describe as a windfall or double compensation or two payments, it exists in the double compensation, double satisfaction principles.

Now, just finally, there are a couple of other observations about the agreement.  Can I ask the Court to pick up the agreement again, please?  Two observations firstly about recital D.  Recital D refers to “the business carried on by the Trustees” being regulated, and “business” is defined as the actual business of the trustees, and that of course was the gaming business.  No part of that business involved any manufacture, as the judge found.  Insofar as there is any supply, it was really the location and installation of machines in venues of operators pursuant to contractual arrangements.

Secondly, recital D goes on to say the trustees or the business of the trustees is to “have the benefit of the terms of this Agreement”.  That is an indication that it is to have the ongoing benefit of clause 7.1.  Recital D interlinks with clause 6, that not only incorporates the schedules, but I would ask the Court to notice there is a reference to 33 and a half per cent.  That is the share of gaming revenue that goes to ‑ ‑ ‑

FRENCH CJ:   I think it is 33 and a third.

MR YOUNG: I am sorry, 33 and a third, your Honour is right. My eyesight is failing, as well as my voice. Section 136 of the 1991 Act, as I said, applies to both Tabcorp and the trustees as defined gaming operators. The 33 and a third per cent take applies to both of them. So this is another indication that the two gaming operations under differently sourced licences are being treated generically as the same species by the parties in their reference to the 33 and a third per cent.

As to clause 6, I have already made some observations about the ministerial directions this morning to your Honour Justice Keane.  Can I add this?  The ministerial directions, on the evidence before the primary judge, changed five times between 1992 and 1995, prior to the 1995 agreement.  They changed many times thereafter.  So, what particular distribution of business among existing gaming operators was a matter of ministerial fiat that had already by 1995 changed from time to time and that stood outside the core scope of what was authorised by the gaming licences.

The other thing about the definition of “business” and clause 6 is no relevant distinction is drawn between the two businesses of Tabcorp and the trustees, yet they had different licences with different labels and different statutory sources.  They were both gaming operators within the taxonomy of the 1991 Act and the 1995 agreement.

Now, as to the limb of the State’s argument about it is confined by any replacement legislation, in particular the 2003 legislation as amended in 2009, I draw attention to the Court of Appeal at 164.  That is page 719, I believe ‑ 720, I apologise.  In our submission, that assessment of what a reasonable commercial person would consider looking at the natural meaning of the words “new gaming operator’s licence” is completely correct.  Now, I have addressed the discharge by agreement argument to some extent.  Can I move to that and add a few observations – relatively few to what I have already put? 

FRENCH CJ:   Sorry, I just do not quite – what does that mean:

the phrase ‘a new gaming operator’s licence’ must be read as having whatever meaning it was given from time to time in unknown future legislation.

This suggests some sort of ambulatory operation.

MR YOUNG:   Well, that was the State’s argument.

FRENCH CJ:   Yes.

MR YOUNG:   The State’s argument was that the meaning of “new gaming operator’s licence” is confined by such meaning as it may have in any replacement legislation from time to time including in particular the unknown future 2003 GRA as amended in 2009.

FRENCH CJ:   So that was an argument attached to that collocation of words.

MR YOUNG:   Yes.  If your Honour goes back to the heading just before 159, this is a rejection of the State’s alternative argument.

BELL J:   That followed the portion of the transcript to which we were taken.

MR YOUNG:   It does, yes.

BELL J:   Yes.

MR YOUNG:   Now, on the proposition that performance and best endeavours discharged clause 7.1, that argument was neither pleaded nor argued below.  So much was accepted by the Solicitor‑General of Victoria at page 220 of the transcript, which is tab 1 of our supplementary materials.  It has been raised for the first time here in this Court and we do object to it, but we have dealt with the substance.

BELL J:   You say you object to it.  Do you have a Coulton v Holcombe basis for that?

MR YOUNG:   Well, the argument seems to keep changing its shape and form, your Honour.  It was never pleaded and each time ‑ ‑ ‑

BELL J:   I understand that, but is it an argument you cannot meet ‑ ‑ ‑

MR YOUNG:   No, I cannot say that.

BELL J:   ‑ ‑ ‑ having regard to the way the case was run?

MR YOUNG:   We can meet it.  I cannot say I am not prejudiced except by the shifting dynamics of what it is because – Masters v Cameron was mentioned this morning and other things keep emerging.  It was rejected as being inconsistent with the text of the agreement and the parties’ acceptance of the recognition of sovereign risk and the primary judge’s finding that there was much less likely to be interference with a solemnly engaged contractual right especially where the State had already taken the benefit of the incoming payments and then did not deliver on the quid pro quo.

The primary judge made those observations.  I will find the passage.  Perhaps I had better find it later.  Now, I think the primary judge’s passage to that effect is 107 at 592 to 3.  In our submission, it is a sound point, borne out by common experience.  Even Magrath’s Case that my learned friend referred to this morning, ended up with the High Court saying, the Commonwealth did not have to do it but the Commonwealth did honour the solemn promise in its bonds not to subject them to tax, a fortiori when they have taken the benefit of one half of the bargain.

KIEFEL J:   In any event, you say that the relevant feature is that, as I think his Honour the primary judge found, that is what the parties appreciated, that is the background to their ‑ ‑ ‑

MR YOUNG:   Yes, it is.  Now, novation is another matter relied upon by both judgments below.  This is not a matter of subsequent conduct.  The contract that Tatts Group Limited sues on is the novated contracted of 2005.  At the time of the novated contract, the State and the trustees had contracted in 1999 on the basis that clause 3 had an ongoing operation after the enactment of the 1996 legislation and clause 3 stands in no different respect in relation to clause 8 as clause 7.

So, the parties expressly in 1999 contract on the basis that clause 3 was still operating but for tax reasons, as my learned friend explained, there was an agreement to change the basis of the progressive licence fee payments.  So, clause 3 was amended and can I ask the Court to go to the 2005 novation agreement, it is a tripartite agreement.  It is at page 436 of volume 1. 

The relevant provisions ‑ firstly, it is a tripartite agreement; secondly, a guarantor came into the picture to guarantee the obligations of both the trustees and the incoming party.  Recital D sets out the purpose to:

effect the transfer of the rights and obligations under the 1995 Agreement as amended by the 1999 Agreement together with all rights and obligations of the Trustees ‑

The novation provision is clause 10, it is in similar terms.  But this agreement with Tatts and a guarantor is entered into on the footing explicitly as revealed by the 1999 agreement, as amended, that the parties are contracting on the basis that clause 3 had a continuing operation up until June 1999.  That does say something about the continuing operation of clause 7.  There is nothing in this agreement to suggest that clause 7 does not have a continuing operation.  And if the parties had intended that it was discharged on the enactment of the 1996 amendments, this agreement would have recognised that fact.  On the contrary, it does not.  So this is not subsequent conduct.  This indicates the basis on which Tatts was brought into the contractual arrangement and it is inconsistent with the discharge argument, as both courts below found.

I have said the two controlling principles are only double satisfaction:  we cannot have it and it is not claimed.  Secondly, the principle concerning statutory abrogation of a contract, Parliament must express itself in its legislation in a manifestly clear way.  There is nothing in the 1996 amendments that does that.  There is no mention of the contract.  There is no abrogation of the contract.  It was a valuable contractual right.  It cannot be abrogated without explicit language and there is no basis to find that it was.  I have addressed paragraph 214 in the Court of Appeal’s judgment.

I mentioned Wik Peoples earlier. The passages I was referring to your Honours are at 187 CLR 1, 99 to 100 in the judgment of Justice Brennan and 256 in the judgment of Justice Kirby, citing with approval Justice Dunn’s judgment in Commonwealth Aluminium, that the agreement remains something apart from the Act.  That was a case where the authorising Act said:

The Agreement shall have the same force and effect as if enacted ‑

There are cases in Western Australia to the same effect.  One is the Hancock Case in our supplementary materials and the best passage is at paragraph 150 in President McClure’s judgment.

Can I then go to the 2009 amendments?  There are two areas I want to deal with.  One is the allegation that they involved a statutory abrogation of the contract, which was the only abrogation argument pleaded.  The second argument is our notice of contention, which is the proper construction and application of the compensation provision.

I propose to do those matters before I deal with the issuance of the GMEs because, in a sense, the similarity of the new regime to the old regime is the back end of both the statutory and the contract claims.  As to the alleged abrogation by the 2009 amendments, the 1995 agreement is not mentioned in the 2009 amendments.  There is no language directing itself to an abrogation of the concurrent contractual right.  Indeed, the State today, and below, has said it does not contend for an express or implied repeal of the terminal payment provision – in our case, 3.4.33.  They say the highest it reached was an elimination of the trigger.

There is no way in which the text of the 2009 amendments can satisfy the clear and unmistakeable language test required for abrogation of the valuable contractual right.  There is simply no clear language abrogating the statutory right.  None of it is directed to the statutory right.  If it is directed to 3.4.3 at all, it is only directed to the existence of a statutory precondition.  There is no such contractual precondition because clause 7.1 has been held to be in vastly different terms.

Not only do they not contend for a non‑repeal of 3.4.33, as we understand it, the State accepts, as inevitably it must, that 3.4.3, in fact, affirmed the fact that 3.4.33 was operating and would apply – I quote the words – “with respect to the trustees’ licence”.  The Court of Appeal so found at paragraphs 52, 58 and 59 at 690 to 691.

Thomson’s Case and Magrath’s Case have no possible application.  Thomson’s Case concerned a promise not to levy tax on bonds.  Subsequently, tax legislation was passed levying tax.  So, the contracts could not stand in the way of a subsequent piece of tax legislation imposing tax, notwithstanding a contract for promise at an earlier date that there would be no tax.  There is no comparison here.  The most they put is that the 2009 amendments through 3.4.3 eliminated a trigger to the statutory right.  The contract does not stand in the way of the elimination of a statutory trigger.  The contract stands entirely apart from that circumstance and has its own set of performance conditions.  That is why, after a quite rigorous analysis, the primary judge and the Court of Appeal, accepting that analysis, rejected any relevance of Thomson and Magrath.

That is all I want to say beyond our written submissions on this point, and I should say of course we adopt our written submissions.  I am not repeating everything we have said there.  Can I turn to the notice of contention, our statutory claim based on 3.4.33?  The general structure of our provisions is very similar to the Tabcorp provisions that the Court has been taken through.  There are some differences that I will address.  That means that I can adopt almost all of the submissions made by Mr Archibald and in due course Mr Sheahan about the nature of the new regime.

The one reservation we have is that Mr Archibald made a very slight attempt to contrast our provision with the Tabcorp provision based on the existence of the definition.  The contrast, in our submission, does not exist because the definition ceased to have any relevant content on the enactment of 3.4.3, for reasons I will go into, which means there is an appearance of a difference but no real difference in our two positions.

As your Honour Justice Bell pointed out this morning, the crux of the decision against us was that the definition was simply too strict to allow a natural reading of 3.4.33 in the environment that existed statutorily in August of 2012.  That finding is at paragraph 204 of the court’s reasons at 734.

Now, before I come directly to the issues about the definition, can I start with a matter of general principle?  In our submission, the Court of Appeal in dealing with the statutory claim failed to give full effect to the overriding legal principle that applies.  The principle applies because this is a case in which you have a deliberately retained provision, a specific compensation provision conferring valuable rights on the expiry of a long‑term licence where those rights have existed since 1996 and, because of the promise of the compensation payment, the State has gathered in all these progressive fee payments.  That is first aspect of the circumstance.

The second aspect is the argument is that that provision has been rendered incapable of operation by a later general enactment which can be properly classed as an organisational provision.  In those circumstances, a third factor becomes relevant.  The alleged inoperability would destroy a longstanding and valuable right.  Given those trio of circumstances, the court’s clear task, in our submission, in such a situation is to give the compensation provision a construction that allows it to operate.

I want to refer to one case that says that quite forcefully.  It is Justice Hayne in Plaintiff M47/2012.  It is in our bundle of supplementary authorities at tab 7.  The passage is about paragraph 172.  It cites Blue Sky in 172, but then goes on to stress the strength of the rule.  His Honour goes on to say:

such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction –

and the word “any” is emphasised.  It may not have to be, you know, the perfectly finished construction, but if there is an alternative available construction it is to be adopted rather than the alternative of destroying a valuable right effectively by the side wind of an organisational provision.  There is something similar said by Justice Gummow in a case called Dover Fisheries at page 574.  One strives to find a construction that allows the provision to operate in circumstances such as those I have described. 

Now, I have started there because, in our submission, the Court of Appeal strayed somewhat from that task.  Their Honours did start by acknowledging the proposition that you construe the Act as at August 2012.  You look at the Act as the combined statement of all the amendments up to that date, rather than inverting the exercise as the State’s arguments do.  The Court of Appeal said that at paragraph 51, page 688. 

But then, perhaps lulled by the State’s arguments, there was something of a falling into the change in meaning argument, the inversion of the proper approach.  If we go to firstly 689, paragraph 54, which is perhaps only an introduction - the better passage is at 56, 690, third‑last line of paragraph 56, “signify a change in meaning”.

Now, the primary judge referred to our argument as the altered meaning contention, so again having this inverted approach.  That was page 630 at paragraph 230.  But the error permeates the State’s approach and it generates a false onus, as if we have to construe the Act applying on 15 August 2008 in a way that is governed by previous meanings predating the radical changes that were made in 2009.  The fact is there are a new set of circumstances in 2012, a new context, and the combined Act has to be applied.

Can I move directly to the definitional issue?  There are, in our submission, three key inquiries:  first, the meaning to be given to 3.4.3; secondly, the consequence of that meaning and does it have the consequence that the definition in section 1.3 ceases to have any relevant operation at all after the enactment of 3.4.3; and then, thirdly, how our submissions about the earlier two matters then interlink with and affect the operation of 3.4.33 as a specifically applied and continued provision with respect to the trustees’ licence.  Can I ask the Court to open 3.4.3?  It is in the same form as the comparable Tabcorp provision which is 4.3.4A.  It has two limbs.  The first limb is:

This Part applies only with respect to the gaming operator’s licence that was issued on 14 April 1992 –

That means you read every provision in that part as applying only – and we stress the word “only” - with respect to the trustees’ licence, the historic 1992 licence.  Now, the 1992 trustees’ licence is not a licence granted under this Act.  It is deemed to be by the Schedule 7 provision – unfortunately for the Schedule 7 provision one needs to go back to I think it is tab 8, page 410 of tab 8.  It remained after the 2009 amendments; just unfortunately was not reproduced.  Does the Court have that?

There are two limbs of clause 3.5 of the schedule.  The first is a deeming – a gaming operator’s licence under the 1991 Act and the only licence under that Act was the trustees’ licence – is taken “to be a gaming operator’s licence under . . . Part 4 of Chapter 3”.  So it is deemed to be a licence for the balance of its term.  It is not a licence granted under that part, but it is deemed to be.  But clause 3.5(2) is very relevant too.  The grant clause in the 2003 Act – 3.4.29 – has no operation until after the expiry of the trustees’ licence:

A gaming operator’s licence granted under section 3.4.29 . . . must not commence before the expiry, or earlier termination –

of the trustees’ licence.  So the grant power could not be exercised at all until the expiry of the trustees’ licence.  So they are the footholds upon which we approach 3.4.3.

Can I go back to 3.4.3?  The effect of the first limb, amongst other things, is that that affirms the ongoing operation of 3.4.33.  The first limb affirms that 3.4.33, being within that part, applies with respect to the trustees’ licence.  So we have an explicit parliamentary affirmation of the operation of the compensation provision. 

The second part, the second limb of 3.4.33 destroys the grant provision.  This part does not authorise the grant of any further gaming operator’s licence.  So none could be issued under clause 3.5 of the schedule whilst the trustees’ licence is on foot and none can be issued thereafter by force of the second limb.  So the grant provision – 3.4.29 at page 576:

The Commission. . . may grant –

That has no operation after the 2009 amendments take effect.  That has no operation, nor does 3.4.30.  That has no operation either so there can be no premium.  Nor does 3.4.31 – that has zero operation after 2009.  If I turn to 3.4.32, this provision was foreshadowed in 2008, introduced in 2009 – it has an operation.  It is not a grant provision, but it is confined to an extension of the trustees’ licence because that is the only gaming and operator’s licence capable of existing prior to 15 August 2012.  What it did was to permit an application to extend the gaming operator’s licence, being the trustees’ licence, under subsection (3), only:

so that the licence expires on 15 August 2012.

I will go to some extrinsic materials that explain that but the reason was there were disparate terminal dates for Tabcorp and the Tatts’ licence.  Tatts’ licence was 15 April.  Tabcorp was 15 August 2012.  The government wanted a seamless transition so the gaming machines in the same venues would be sold to the venue operators who received gaming machine entitlements in respect of those machines in that venue.  So there would be seamless change – no one would know there is any change at all.  That was the reason for this extension provision as explained in the parliamentary materials.

But 3.4.32 applies only to the trustees’ licence.  So we have this issue.  Clause 3.4.33 has denuded the grant provisions of any operation.  It has confined all other provisions to the trustees’ licence but at the same time it has affirmed the ongoing operation and application of 3.4.33 to the trustees’ licence by the first limb.

The task of the court is to work out how we make it work in accordance with the governing principles. 

Now, can I turn to the definition?  The definition is not an issue or a problem because it is rendered devoid of any relevant content by 3.4.3.  Let me explain why.  Can we go to the definition in 1.3?  The definition is entirely derivative of the power to grant.  This is at page 481:

gaming operator’s licence means a licence granted under Division 3 of Part 4 of Chapter 3 -

Now, we have two time periods.  Historically, we have the trustees’ licence.  It is deemed to be a licence granted but that is the only licence that can exist up until its expiry date so we have that past period and, true it is, the gaming operator’s licence would qualify as a licence deemed granted within this definition but the definition has no other operation because in respect of the later time period, after expiry of the trustees’ licence which is when 3.4.33 operates, there can be no other licence because the grant power has been destroyed by the second limb of 3.4.3.

So, the definition of “gaming operator’s licence” has no relevant content insofar as it is suggested that it applies to paragraph (b) of 3.4.33, at a point of time after the expiry of the trustees’ licence.  That must be so because this is a dependent definition, dependent on the existence of a power to grant and the power to grant has gone in 2009. 

One can go through all of the provisions of Part 3.  I went through four or five of them.  You can go through every part.  There is no operation to the definition except historically in relation to the trustees’ licence up to the date of expiry.  There is no provision in which this definition has an operation post‑expiry, nor could there be.  So, in our respectful submission, the critical reliance the Court of Appeal placed on the continuance of the definition post‑expiry was mistaken.  At page 688, towards the end of paragraph 51, the Court of Appeal said:

it seems to us inescapable that the expression ‘gaming operator’s licence’ has the same meaning in s 3.4.33(1)(b) as it does in –

these other provisions, starting with the grant provision, 3.4.29.  Now, it does not.  It cannot.  “Gaming operator’s licence” has no meaning in the grant provision because the grant provision ceased to operate.  In 3.4.32, which is the extension provision, it does not mean, it cannot mean anything else other than the trustees’ licence because that is pre‑expiry.

In 3.4.3, which the court last mentions, it is entirely redundant and circular to try and read it in a definition which is dependent on the existence of grant when the second limb of 3.4.3 says there can be no grant.  So it is meaningless to try and read in a definition of gaming operator’s licence into the second limb:

does not authorise the grant of any further –

and if you were to read in the definition –

licence granted under Division 3 of Part 4 –

Well, there cannot be such a licence. So, in our submission, the reliance on the definition is misplaced.  That means that 3.4.33 has to be construed without regard to a non‑applicable, in fact non‑existent definition as at the time post‑expiry.  If we turn to 3.4.33 at page 580, it is quite plain from the first limb of 3.4.3 that paragraph (a) applies to the trustees’ licence – that is the historical licence – because of the affirmation that 3.4.33 does apply to the trustees’ licence.  That is the licence that has just expired when we come to apply this provision.  But when (1)(b) then speaks of the grant of a gaming operator’s licence to another person, after that expiry, because it concludes with the words:

being a licence that commences within 6 months after that expiry -

it cannot be referring to a licence granted under that part because that has been impossible since 2009.  It must be referring generically to a licence of substantially similar kind, authorising the conduct of gaming operations of the kind conducted by the trustees.  That is the only available meaning on the explicit footing commanded by Parliament that you are to read this provision as continuing to operate. 

There is no negation of a prescribed condition precedent because the definition does not apply at all.  When the provision goes on to refer to the premium paid by the incoming replacement person, that covers any upfront payment.  We agree with Mr Archibald – “premium” is not defined, it is used in the ordinary sense of key money or upfront payment and such was required of venue operators to whom key and these were allocated.

FRENCH CJ:   It does not have to be a single replacement licence?

MR YOUNG:   No, it does not, for a number of reasons, your Honour, if I may give those now.  Both under the agreement and the Act, by force of the Interpretation of Legislation Act, the singular includes the plural.  Secondly, at all times from 1991 there has always been a linkage between gaming operator’s licences and venue operator licences.  There has also always been a multiplicity of the combinations. 

Can I explain that in more detail?  Linkage arises in this way.  The authority conferred by a gaming operator’s licence under the 1991 Act is to conduct gaming at a licensed venue.  A licensed venue is a venue operated by the holder of a venue operator’s licence.  Originally, from 1991 to 1995, Tatts – I should say the Trustees – had the option of holding both.  They could have held venue‑operating licences and their gaming‑operating licences, and the combination of two would allow them to locate gaming machines and conduct gaming in licensed venues. 

They had that option – Court of Appeal, paragraph 124.  They did not exercise it that way.  Instead, they entered into a multiplicity of contractual arrangements with venue operators under which they were given a contractual right to locate, install and operate gaming machines at other people’s venues.

But they still needed the combination with venue operators otherwise their licence was of no utility.  A gaming operator’s licence alone was of zero utility because it was only a licence to operate machines, conduct gaming, at a licensed venue.  From 1994 the Tabcorp amendments to the 1991 Act precluded dual ownership; you were confined to contractual rights.  The one exception to that was the casino which was treated as both a deemed venue operator and deemed gaming operator.  So something like the current regime applied to the casino at all times.

So we have always had gaming operator’s licence which is of no utility unless linked with a multiplicity of venue operator licences or arrangements, and we have always had an exceptional example of a combined venue operator gaming operator being the casino.  Now, the Court of Appeal observes that it was always on the cards that the 1994 restriction on dual ownership of the two licences might be removed and we might revert to the 1991/1994 scenario.  That is the Court of Appeal 190 at pages 729 to 730.

So we have always had a need for a combination of venue operating licences and gaming operator licences:  conduct gaming, operate the venues.  That multiplicity situation has always existed and effectively it is unchanged now.  So that is the first of my answers to your Honour, or the second of my answers to the Chief Justice.  There is a third answer which is that little has really changed in substance under the new regime.

The new regime operates on the basis that the relevant authority to conduct gaming is conferred on a venue operator holding a gaming machine entitlement.  So you need a combination of the two and that is manifest in all of the provisions concerning the new regime.  To give an example of the 2012 Act, page 532, 3.4.1.  The new regime is the subparagraphs with the double letters, so if we look at (ab) just as an example of 3.4.1:

while holding gaming machine entitlements, conduct gaming . . . in an approved venue –

So you need both as you always did to conduct gaming.

FRENCH CJ:   So how do we just plug the multiplicity of the gaming machine entitlements and the venue operator’s licences into the text of 3.4.33 as you would construe it?  I appreciate you have an Interpretation Act ‑ ‑ ‑

MR YOUNG:   Yes, we read (b) ‑ ‑ ‑

FRENCH CJ:   You do not rely upon the collectivity that all of these things be placed ‑ ‑ ‑

MR YOUNG:   No, no.

FRENCH CJ:   Your argument has to be good for one single ‑ ‑ ‑

MR YOUNG:   No, there are two steps in the argument, your Honour.  There is the construction issue, and then I moved ahead to effectively the application of the construction.

FRENCH CJ:   Yes, I understand.

MR YOUNG:   I am trying to save time.  But within 3.4.33, the Interpretation of Legislation Act would say that we can read “gaming operator’s licence” as licences:

to a person other than the former licensee –

and that person can be the holder of a venue operator’s licence ‑ ‑ ‑

FRENCH CJ:   So just stopping there for a moment at (b):

the Commission grants a gaming operator’s licence to a person other than the former licensee –

et cetera.

MR YOUNG:   Yes, and that person can be the holder of a venue operator’s licence within six months after expiry, and then it goes on below the subparagraphs:

the former licensee is entitled to be paid . . . the licence value . . . or the premium payment ‑ ‑ ‑

FRENCH CJ:   The licence value is then distributed across each of the entitlements which are issued?

MR YOUNG:   Yes, effectively it operated not machine by machine, but venue by venue, because the grants were to the licence ‑ ‑ ‑

FRENCH CJ:   Yes, it was a group of entitlements for each venue.

MR YOUNG:   Yes, so let us assume now two venue operators hold 40 per cent each of all of the available venue operator’s licences and gaming operator licences.  They need to hold both to conduct gaming and they have been allocated sufficient GMEs in respect of each of their venues to cover all of the existing machines in the venue.  So that is why it was a seamless transition, as the court found.  The machines stayed in the venues of the licence venue operators.  That licence venue operator for that venue was granted the same number of GMEs as there were machines in the venue.

FRENCH CJ:   Then we have got the licence value which you can attach to, what, the GMEs?

MR YOUNG:   GMEs, because there is a payment provision.  The Minister determines the upfront payment.

FRENCH CJ:   There is no premium?

MR YOUNG:   Well, there is an upfront payment ‑ ‑ ‑

FRENCH CJ:   Payment, yes.

MR YOUNG:   ‑ ‑ ‑ which is within the ordinary meaning of the word “premium”.

FRENCH CJ:   So you say that is a premium?

MR YOUNG:   Yes.

FRENCH CJ:   All right.

BELL J:   I am sorry, is not the licence value the licence value calculated by reference to Tatts?

MR YOUNG:   Yes, the licence value is.  I thought his Honour the Chief Justice was asking me about the premium.

FRENCH CJ:   Yes, I am sorry, I misstated the position.  Yes, I am asking about premium.

MR YOUNG:   The facts were that some $980 million was gathered as premiums from the incoming venue operators to whom GMEs were granted.  So there is no difficulty in construing it once the definition is rightly rejected as hollow, dead wood of no content past the 2009 amendments.

Now, there are a couple of other points can I quickly make?  The provisions of 3.4.1A and 4A are important.  These provisions have only one conceivable purpose, that is to say, they assume the generic meaning applies to 3.4.33 and they address and prevent the proposition that a grant of a venue operator’s licence is taken to be either a gaming operator’s licence under this part or a gaming licence.

Now, just focus on 3.4.1A, 4A is in similar terms about a monitoring licence.  Notice we have both (a) and (b).  So this provision is addressing not just a Tatts gaming operator’s licence, it is also addressing in (b) the Tabcorp licence under the different part of the Act.  So it is addressing both terminal payment provisions.  It only operates past the 2009 amendments and it says the grant of a venue operator’s licence after 2009 “is not to be taken to be” the grant of either of those licences – and it can only be aimed at the potential operation of 3.4.33. 

Now, if “gaming operator’s licence” had a strict meaning in 3.4.33, you could never arrive at the result that a venue operator’s licence is a gaming operator’s licence, and you certainly could not arrive at the result that a gaming licence of Tabcorp is within the terminal payment provision.  So this provision assumes a generic operation of the 3.4.33, and the State submits as much at paragraph 36 of their written submissions.  They concede it is aimed at the ongoing operation of the terminal payment provision.

Now, the important thing is there is no similar mechanism addressing the issuance of GMEs to an existing venue operator, and it is that combination which amounts to, in substance, the conferral of a statutory power to conduct gaming.  That is left at large.  That indicates that Parliament took the view that a generic meaning was open and there was no foreclosing of the possibility that it would not embrace the combination of a venue operating licence and a gaming operator’s licence.  Now, there is one other important provision.  It is concerned with compensation. 

BELL J:   Just before you leave 3.4.1A, what do you say is the purpose of the provision?

MR YOUNG:   The purpose is aimed at avoiding an operation of 3.4.33, on a generic reading, that might otherwise lead to the result of the grant of a gaming operator’s licence or a gaming licence triggers the terminal payment.  But it does not address – and its silence is eloquent ‑ ‑ ‑

BELL J:   With respect to GMEs?

MR YOUNG:   GMEs ‑ ‑ ‑

BELL J:   Yes, I understand that.

MR YOUNG:   ‑ ‑ ‑ combined with a venue operator’s licence.  So, if there is an intention to negate the possibility of the other provision operating, you would not do what you have done in 1A and 4A and not do the same thing in respect of a combination of a venue operating its licence and GMEs.  The compensation provision is significant too.  The 2009 amendments are replete with many provisions denying compensation.  There is one immediately preceding Division 3 at page 576.

GORDON J:   What section number is that?

MR YOUNG:   It is 3.4.28F, your Honour.  This is immediately prefacing a couple of provisions that lead into 3.4.33:

No compensation is payable by the State to any person because of the operation of this Division.

That is Division 2.  There is no comparable provision in Division 3 affecting the ongoing operation of 3.4.33.  The very proximity of that provision, and the differentiation between Division 2 and Division 3, again is eloquent that there is no intention to denude 3.4.33 of the operation it would have on a generic reading so as to deny compensation by destroying the trigger.  The opposite conclusion should be drawn.

BELL J:   Mr Young, I understand the points that you make in relation to 3.4.1A ‑ firstly, as to the suggested generic use of the expression “gaming operator’s licence”; secondly, to the omission of a similar provision relating to GMEs and venue operator’s licences.  Accepting those points, are you able to offer some submission as to the purpose to be divined by the provision having regard to the submissions that you make as to the ‑ ‑ ‑

MR YOUNG:   Well, beyond the proposition that it was aimed at avoiding a situation where the post‑2009 grant of a venue operator’s licence is asserted to be a trigger for 3.4.33 which would require a generic reading, I cannot identify any purpose for the provision, and nor has the State, might I say.

I was going to take the Court to the attention to create a particular appearance.  That is, in our respectful submission, anthropomorphic.  It is not an intention deduced from the terms the legislation properly construed and it is not the kind of intention that ought to be attributed to Parliament – certainly in the absence a very extraordinary foundation for it, yet that was another driver of the Court of Appeal’s approach.  One can, perhaps – perhaps I have a degree of cynicism – understand why it might have arisen – but in terms of construing the legislation, the appropriate course is one we have urged that recognises the inapplicability of the definition and the open availability of a generic construction.

Now, can I just note, we provided the Court when we handed up our proposition some extrinsic materials.  They are of some assistance, particularly the second reading speeches.  What they indicate is that Parliament was informed of the 10 April announcement that described the regime and the Court has that in the materials, and also the budget papers.  The budget papers were before Parliament and were referred to in debates when the 2008 and 2009 amendments were debated.

One can see that in the Hansard extracts we have provided.  What it does indicate, when one takes into account the budget paper, is that there was a declared intention by the Executive and then tabled in Parliament not to amend or alter the compensation provision.  There was no hedging that we are going to do it indirectly by a side wind or by an organisational provision.  There was a declaration of intention put before Parliament and so Parliament was told there is no intention to amend or alter the operation of the compensation provision.

There was a reference to a legal view which seems to be a view that the GME regime was sufficiently different that although 3.4.33 was operative, it would not apply to the new regime.  Now, we adopt our written submissions concerning the GMEs and the similarity for the reasons I gave earlier in answering concerning the linkage that always existed with venue operating licences; aggregation is in fact mandated.

You cannot approach this scheme without aggregating the authorities attributed to a venue operator and the authority that gives you the ability to conduct gaming.  It is inherent in the regime, and always has been, so there

is no error in that respect.  There were some other points I was going to make but time has got the better of me.

FRENCH CJ:   Thank you, Mr Young.  Ms Harris.

MS HARRIS:   If the Court pleases, a few matters in reply.  Central to Tatts’ argument on the proper construction of clause 7.1 was the proposition that as at the time of the agreement, no other licence could be issued under the 1991 Act, other than the one that was held by the trustees.  But what that submission overlooks is that clause 8.1.7, the parties’ agreement, contemplated that legislation would thereafter be passed which did a number of things, elevate the licence fee payment requirement into statute, the same with the payment entitlement, and do other things necessary to give effect to the parties’ agreement.

So it was that the legislation behind tab 6 of the legislation bundle was passed, and your Honours see among those amendments, sections 33 and 33A, which were inserted into the legislation alongside the terminal payment entitlement in 35A, alongside the licence fee entitlements in 135A to C and 33 now provides that:

the Trustees or any other person may apply to the Authority for a gaming operator’s licence.

Now, that prospect had been expressly contemplated in the parties’ agreement.  We saw it in the Treasurer’s letter in two ways.  Firstly, in the Treasurer’s letter it was stated that at the end of the trustees’ gaming operator’s licence, it was anticipated that a further licence would issue and that it would probably go to public tender and may or may not be awarded to the highest bidder.

Now, that was only possible if a section in the nature of section 33 were passed. Similarly, the Treasurer’s letter said at, I think paragraph 2, we do not intend presently to issue any further gaming operator’s licences to anyone else during the currency of your licence. That statement was redundant unless the legislation which was to be introduced made provision for other people to be granted such licences.

Similarly clause 5 - clause 5, your Honours will remember was the one that allowed the trustees to go to the Minister and say we want our licence to be held by a related entity and so the Minister agreed that he would use his best endeavours to ensure either a transfer or the issue of a fresh licence. Again, that was only possible if something in the nature of section 33 was inserted into the legislation.

So, while it is true that section 33 at the moment the agreement was entered into provided for gaming operator’s licence only to be issued to the trustees, it also contemplated in terms that the legislation which brought into existence in statutory form the various obligations to which clause 8 referred would include a provision that expanded the possibilities in terms of who might be a recipient of such a licence.

Might I correct one thing our learned friend said about the casino. It was not deemed to be the holder of a gaming operator’s licence under section 32. It held a casino licence under Part 2 of the Casino Control Act, but the deeming provision in section 32 deemed the authority that it had with respect to gaming to be that of a gaming operator.

Before we leave the Treasurer’s letter, our learned friends place reliance on what is said by the Court of Appeal at paragraphs 150, 153, 156.  In those paragraphs the Court of Appeal referred to the fact that the Treasurer’s letter said:  “We presently intend that any future gaming operator’s licence will be issued on conditions that are substantially the same as the trustees”.  They relied on that to show that whatever was issued after only had to be substantially the same. 

But the reasoning of the Court of Appeal and that our learned friends confuse conditions with authority, the conditions are the things which attach to the licence and which are set out in the licence itself at appeal book 221.  Those are the things which condition the exercise of authority under section 14, not which constitute the authority exercisable by a gaming operator’s licence. 

Section 14, which sets out the authority of a gaming operator’s licence says that that authority can be exercised subject to any conditions which attach.  The conditions are the ones at appeal book, 221.  So what the Treasurer’s letter was saying was, as and when we issue another one of these things, we intend to ensure that the conditions that one finds at appeal book 221 are substantially replicated in that new licence.

We did not understand our learned friend’s submission regarding the construction argument insofar as we submit to your Honours that as a matter of construction once the 1996 amendments were made, clauses 3 and 7 were discharged by agreement.  That argument was pleaded in terms in paragraph 11(b) of our defence at appeal book 35.  There was no concession by the learned Solicitor‑General in the passage to which our learned friends referred your Honours in the transcript that that was not pleaded. 

In response to the matters raised by your Honour Justice Keane, yes, the State’s contention is that clauses 3 and 7 were discharged by agreement and clause 8 by performance because once the legislation was passed there remained nothing else to do under that clause.  So that is one clause of the agreement which obviously dropped out of it.  Thereafter, it was no longer enforceable, similarly, clauses 3 and 7 for the reasons that we dealt with in‑chief.

KIEFEL J:   Why was clause 3 discharged by agreement?

MS HARRIS:   Clause 3 was discharged by agreement, your Honour, because clause 8 contemplated that it would be enacted in statutory form.  The obligation to pay a licence fee would be enacted in statutory form and that occurred.

KIEFEL J:   That is by performance then?

MS HARRIS:   Well, it is by performance of clause 8, and so it is implied in clause 8 that once clause 8 is performed in that manner, those clauses would be discharged by ‑ ‑ ‑

KIEFEL J:   You mean there is an implied term that clause 3 no longer has effect?

MS HARRIS:   Indeed, your Honour, in the Masters v Cameron sense that I addressed your Honours on earlier.  So in the Masters v Cameron scenario, the contract provides, we will join together to bring into existence a more formal or more elaborate contract.

KIEFEL J:   Yes, I understood your argument about that.

MS HARRIS:   Your Honours, the submissions around double compensation do not engage with the position put to the Court by the State because what we have here is not a single debt but two separate debts, and Mr Young was ready to concede, as indeed he must, that on Tatts’ argument, upon the 1996 amendments coming into force there existed two debts, in respect of the licence fee, and similarly in respect of the terminal payment. 

Now, the terminal payment is not properly characterisable as a compensation provision in the sense that it provides for compensation which is determined by the value of the infrastructure lost.  It provides for the payment of a sum certain and Tatts sued the State for payment of that sum certain, the one that is specified in the formula in clause 7.3.

So, the authorities that our learned friends rely on just do not engage with that.  It is also unhelpful to rely generically, or to refer generically, to authorities about State agreements where contractual provisions were able to exist alongside statutory provisions.  We could, doubtless, refer to an equal number where they could not, such as Sankey v Whitlam and the cases dealt with in footnotes 230 and 231 of our submissions.  At the end, it is not to the point.  The question for the Court is what these contracts mean and what the intersection between this contract and this piece of legislation is.

In terms of the purpose of the agreement, Tatts resiles in its submissions from what it put below in the sense that it now says, well, it was not all about equivalence with Tabcorp.  With respect, it was, and all of the matters that Mr Young put to your Honours engaged with this equivalence with Tabcorp.  We remind your Honours of what was said, found by the trial judge at paragraph 82 of his Honour’s reasons, about what had been put by Tatts as to the purpose and object of the contract.

As to paragraph 164 of the Court of Appeal’s reasons regarding the effect of clause 1.3 of the contract, with respect, our learned friends misstate the State’s argument.  The State said that clause 1.3 either has to only pick up definitions or meanings from the 1991 Act in which case the word “Act”, as it appears in the contract, can only mean the 1991 Act.

So, that “Gaming Operator’s Licence” – capital G, capital O, capital L - as defined in the agreement, can only be the one that is issued under the 1991 Act.  Now, that does not commend itself to the reasonable business person in 1995 in our respectful submission because it would put Tatts out of court as soon as the consolidation was passed.  Rather, the State’s submission was the natural meaning of the word “Act” in the contract is the Act as it might be replaced from time to time as it was in 2003. 

So, the “Gaming Operator’s Licence” – capital G, capital O, capital L - as it was defined in the Act became the gaming operator’s licence issued under the 2003 statute.  If one accepts that then one has to accept it for all of the definitions and the word “Act” has that meaning wherever it appears in the agreement.  It continues to pick up meaning supplied by the legislation including the 2003 statute and we see that the meaning supplied by that statute ‑ ‑ ‑

FRENCH CJ:   I think we are in submissions in‑chief or back to submissions in‑chief here, are we not?

MS HARRIS:   I will move on, your Honour.  Your Honour, on the notice of contention, our submissions appear at paragraphs 8 to 16 of our submissions.  The short point is that Tatts simply cannot navigate around the definition in clause 1.3.  That definition requires in terms that the words “gaming operator’s licence” in section 3.4.33 are given the meaning of a gaming operator’s licence issued under Part 4 of Chapter 3.

Now, our learned friends turn themselves inside out trying to find a way to demonstrate that that definition became redundant.  There are a number of submissions we can make to that, including that it was not redundant for other provisions of the legislation, including the ones that immediately follow 3.4.33.

But the core submission is there is a much simpler answer to this.  Clause 3.4.3 was not directed at nullifying definitions and the like.  It was directed at making sure that the only thing that could trigger the statutory payment entitlement was not issued.  In other words, section 3.4.3 took the legislation as it found it, and as it found it, it included that definition and it still includes that definition, and so that definition operated as it had and clause 3.4.3, as in the Tabcorp Case, prevented the issue of the very and only thing that could trigger the payment definition.

Tatts’ submissions on this seek to elevate what it had to a valuable right but for the reasons we have set out in our submissions in Tabcorp at paragraph 33, this is not a right.  It does not become a right until those conditions are satisfied.  It is always contingent upon the issue of a gaming operator’s licence as defined.  If the Court pleases.

FRENCH CJ:   Thank you, Ms Harris.  The Court will reserve its decision. The Court adjourns until 10.00 o’clock tomorrow morning.

AT 4.17 PM THE MATTER WAS ADJOURNED