Tabcorp Holdings Limited & Tatts Group Limited v The Treasurer of Victoria
[2013] VSC 324
•24 June 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
S CI 2013 2464
BETWEEN
| TABCORP HOLDINGS LIMITED ABN 66 780 709 | Plaintiff |
| v | |
| THE TREASURER OF VICTORIA | Defendant |
S CI 2013 2703
AND BETWEEN
| TATTS GROUP LIMITED ACN 108 686 040 | Plaintiff |
| v | |
| THE TREASURER OF VICTORIA | Defendant |
---
JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11 June 2013 | |
DATE OF JUDGMENT: | 24 June 2013 | |
CASE MAY BE CITED AS: | Tabcorp Holdings Limited & Tatts Group Limited v The Treasurer of Victoria | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 324 | |
---
STATUTORY INTERPRETATION – Whether provision giving Treasurer power to determine a ‘levy calculated in accordance with’ a formula conferred a discretion on the Treasurer – Held: Discretion conferred.
WORDS AND PHRASES – ‘determine’; ‘in accordance with’; ‘calculated in accordance with’; ‘conform’.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff, Tabcorp Holdings Limited | Mr N J Young QC with Dr C G Button | Allens |
| For the Plaintiff, Tatts Group Limited | Mr N J Young QC with Mr N P De Young | Clayton Utz |
| For the Defendant in each proceeding | Mr M K Moshinsky SC with Dr O Bigos | Corrs Chambers Westgarth |
TABLE OF CONTENTS
The legislation.................................................................................................................................... 3
Applicable principles........................................................................................................................ 9
Did the Treasurer have a discretion?........................................................................................... 11
HIS HONOUR:
For about 20 years, pursuant to legislation described below, Tatts Group Limited and Tabcorp Holdings Limited, or their predecessors, held the only two licences to operate gaming machines in Victoria outside of Crown Casino. Their duopoly came to an end when their gaming machine licences expired on 15 August 2012. From that time, the right to operate gaming machines in Victoria outside of Crown Casino was replaced with a system of ‘gaming machine entitlements’, which were allocated to the operators of gaming venues. Neither Tatts nor Tabcorp were allocated any gaming machine entitlements under the new licensing system.
From 1 July 2000, Tatts and Tabcorp were each obliged by statute to pay an ‘annual levy’, for each financial year, on gaming machines operated by them in Victoria. The levy became known as the ‘health benefit levy’, and was determined each year by the defendant, the Treasurer of Victoria, pursuant to a statutory formula.
This case concerns the amount of the levies for that part of the 2013 financial year commencing 1 July 2012 and ending on 12 August 2012, a period of 46 days. Tatts and Tabcorp each contend that their levy for this period should have been determined by the Treasurer, in the exercise of a discretion under the applicable statute, on a basis which recognised the fact that they only operated gaming machines for the 46 day period in the financial year; for example, by pro-rating the annual levy by reference to the 46 day period as a proportion of a levy calculated for the full financial year. The Treasurer contends that he had no discretion under the relevant statute. In his notices of determination, he stated that the statute compelled him to determine the levies by a strict arithmetical calculation in accordance with the statutory formula, in the sum of about $42 million each.
The financial difference resulting from the two rival contentions is large. If a pro-rata approach is adopted, a levy of between about $5.3 million and about $7.3 million is payable by each of Tabcorp and Tatts.[1] So the disputed amount in each case is about $35 million.
[1]Tabcorp and Tatts contend for about $5.3 million. But, as appears below, that figure may be understated. The $7.3 million figure is about 46/365ths of the levies paid for the previous financial year.
The issue for determination is one of statutory interpretation: was the Treasurer obliged to exercise a discretion in determining the levies payable by Tatts and Tabcorp for the 2013 financial year? Tatts and Tabcorp have raised the issue by originating motions, seeking declarations to the effect that the Treasurer had the power or discretion to determine the amount of the levies, including by pro-rating the amount which might otherwise have been determined if they had held licences, and operated gaming machines, for the full financial year. If these declarations are made, they seek orders in the nature of certiorari quashing the Treasurer’s decisions that he had no discretion. The Treasurer would then need to re-determine the levies in the exercise of his discretion. The result of that re-determination would not necessarily be that the levies would be recalculated in the amounts put forward by Tatts and Tabcorp; for example, because their suggested pro-rating applies to about 75 per cent of a full year’s levy and not to an assumed full year levy.
For the reasons given below, I accept the contentions made by Tabcorp and Tatts and reject those advanced by the Treasurer. On a proper interpretation of the relevant statutory provisions, the Treasurer erred in deciding that he had no discretion in determining the amount of the levies for the 2013 financial year. Orders quashing his decisions will be made.
In these circumstances, it is unnecessary to consider an alternative basis for relief put forward by Tatts; concerning the extension of its licence from an expiry date in April 2012 until 15 August 2012, so as to coincide with the expiry of Tabcorp’s licence.
The legislation
Each of Tabcorp and Tatts, or their predecessors, was at relevant times a ‘gaming operator’ within the meaning of the relevant legislation applying from time to time. From 1994, they held different licences, with Tabcorp holding a ‘gaming licence’ and Tatts holding a ‘gaming operator’s licence’. Both licences conferred the same authority.[2] No-one else was entitled to apply for a gaming operator’s licence, and only one gaming licence could exist at any time.[3] So the duopoly was established.
[2]Gaming Machine Control Act 1991, s 33; Gaming and Betting Act 1994, ss 7, 8.
[3]Ibid.
The levy was originally called the ‘gaming machine levy’. It was introduced by s 135A of the Gaming Machine Control Act 1991, which commenced on 1 July 2000.[4] I will refer to this Act as the ‘1991 Act’.
[4]Gaming Acts (Gaming Machine Levy) Act 2000, s 5.
Section 135A of the 1991 Act relevantly provided:
135A Gaming machine levy
(1)A gaming operator must pay to the Director for payment into the Consolidated Fund each financial year a levy of $333.33 in respect of each gaming machine of the gaming operator that is operating at an approved venue on 30 September in that year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on 30 September in a financial year if, at any time on that day, the machine –
(a)is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system
(3)The Treasurer, in consultation with the Authority, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after 30 September in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.
By s 135B of the 1991 Act, the gaming machine levy was hypothecated from consolidated revenue ‘into the Hospitals and Charities Fund’.
Section 135A of the 1991 Act was amended on 27 June 2001. The amount and manner of calculation of the gaming machine levy was varied, and it was renamed the ‘health benefit levy’.[5] The amended s 135A relevantly provided:
[5]State Taxation Acts (Taxation Reform Implementation) Act 2001, s 4.
(1)A gaming operator must pay to the Director for payment into the Consolidated Fund each financial year a health benefit levy calculated in accordance with the following formula—
where—
L is the levy payable by the gaming operator;
GM is the sum of the number of gaming machines of the gaming operator that are operating at an approved venue on the first Saturday in each month from and including December in the preceding financial year to and including November in the financial year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on the first Saturday in a month if, at any time on that day, the machine—
(a)is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system.
(3)The Treasurer, in consultation with the Authority, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after the first Saturday in November in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.
The principal effect of these amendments was to insert a formula for calculation of the levy which, instead of depending upon the number of gaming machines operating on 30 September in the financial year in question, calculated the levy by reference to the average number of gaming machines operating on the first Saturday in each of 12 specified months - seven months in the previous financial year and five months in the present financial year subject to the levy. The date for notification of the amount of the levy was altered to account for this change. By s 135B, the health benefits levy remained hypothecated from consolidated revenue into the Hospitals and Charities Fund.
There is no helpful extraneous material in the Explanatory Memorandum prepared for the purposes of the amending Bill. In the second reading speech, however, the Treasurer described the purpose of the amendments as being ‘to minimise opportunities for avoidance’.[6] Opportunities for tax avoidance were minimised by the amendments, because a tax based on a state of affairs at a particular date may be more easily manipulated by the taxpayer. There is no question of tax avoidance raised in this case, either before or after the amendments.
[6]Hansard Report for the Legislative Assembly, 17 May 2001, page 1310; Minister for Energy and Resources, Hansard Report for the Legislative Council, 12 June 2001, page 1307.
The Gambling Regulation Act 2003 (‘the Act’) repealed the 1991 Act and replaced s 135A with s 3.6.3 of the Act, which provides:
3.6.3Health Benefit Levy
(1)A gaming operator must pay to the Commission for payment into the Consolidated Fund each financial year a health benefit levy calculated in accordance with the following formula—
where—
L is the levy payable by the gaming operator;
GM is the sum of the number of gaming machines of the gaming operator that are operating at an approved venue on the first Saturday in each month from and including December in the preceding financial year to and including November in the financial year.
(2)For the purpose of sub-section (1), a gaming machine is taken to be operating at an approved venue on the first Saturday in a month if, at any time on that day, the machine—
(a)is available for gaming at the approved venue; or
(b)would be available for gaming at the approved venue if the machine were connected to the electronic monitoring system.
(3)The Treasurer, in consultation with the Commission, is to determine the amount of the levy on each gaming operator for a financial year and must notify each gaming operator of his or her determination as soon as practicable after the first Saturday in November in that year.
(4)The levy is payable in two equal instalments each financial year, due on 15 December and 15 June.
As the expiry of the two licences approached, s 3.6.3A was inserted in the Act:
3.6.3AHealth benefit levy – financial year 2012 to 2013
(1)In respect of the financial year beginning on 1 July 2012 and ending on 30 June 2013, a gaming operator must pay to the Commission a health benefit levy calculated in accordance with the formula set out in section 3.6.3(1).
(2)The Treasurer, in consultation with the Commission, is to determine the amount of the levy on each gaming operator in respect of the financial year and must notify each gaming operator of his or her determination as soon as practicable after making the determination.
(3)The levy is payable in two equal instalments within the financial year, due on dates determined by the Treasurer in consultation with the Commission.
(4)The Treasurer must notify each gaming operator of his or her determination under subsection (3) as soon as practicable after making the determination, but at least 15 business days before the first instalment is due.
(5)In this section, gaming operator includes a person who held a gaming operator's licence or a gaming licence.
Section 3.6.3A was introduced by s 11 of the Gambling Legislation Amendment (Transition) Act 2012 (the ‘Transition Act’).
The explanatory memorandum for the Bill which became the Transition Act is in the following terms:
[section] 11inserts a new section 3.6.3A of the Act that applies to the payment of the Health Benefit Levy for the financial year beginning on 1 July 2012 and ending on 30 June 2013. This section is required because of the expiry of the gaming operator’s licence and the gaming licence.
Section 3.6.3A is intended to provide additional flexibility for the Treasurer to determine when he or she can determine the quantum of the Health Benefit Levy and when the levy is payable.
This section is not intended to increase the quantum of the Health Benefit Levy that would have been payable by the gaming operators for the relevant period determined by the Treasurer if the gaming operator’s licences had not expired.
The gaming operator’s licence and the gaming licence expire on 15 August 2012.
In my opinion, there is no assistance to be gained from this explanatory memorandum. It does no more than confirm the context of the impending expiry of the licences, summarise timing consequences, and adds the neutral statement, accepted by all parties, that s 3.6.3A was not intended to increase the amount of the levy from that which would have been payable if the two licences had not expired.
The Transition Act was enacted in the following context. On 10 April 2008, the Premier of Victoria had issued a media release, announcing that the State had decided to adopt a new regulatory model for the conduct of gaming in Victoria when the licences held by Tatts and Tabcorp expired in 2012. Following this announcement, the Gambling Regulation Amendment (Licensing) Act 2009 (the ‘2009 Act’) was enacted. In essence, the Government determined: (1) to bring an end to the system of having only two gaming operators, Tatts and Tabcorp, by allowing their licences to expire; and, (2) to establish a new system under the 2009 Act, under which gaming operations in Victoria would be conducted by ‘venue operators’ who held ‘gaming machine entitlements’ under that Act. Under the new system, a licensed venue operator holding gaming machine entitlements had the same power to operate gaming machines as was previously enjoyed by Tatts and Tabcorp under their licences.
Following legislation which it is unnecessary to detail, the gaming operator’s licence held by Tatts was extended until 15 August 2012, so as to expire on the same day as Tabcorp’s gaming licence. When those licences expired, the new system established by the 2009 Act came into operation. Neither Tatts nor Tabcorp obtained a venue operator’s licence or gaming machine entitlements under that the 2009 Act. They ceased operating gaming machines in Victoria from 15 August 2012.
Applicable principles
As the High Court has repeatedly stated, the process of statutory construction involves beginning with the words of the statute and then considering those words in light of their context and the purpose of the provision to be interpreted. It is unnecessary to go further than quote from a recent High Court decision, Federal Commissioner of Taxation v Unit Trend Services Pty Ltd.[7] In that case, French CJ, Crennan, Kiefel, Gageler and Keane JJ stated:[8]
As French CJ, Hayne, Crennan, Bell and Gageler JJ said in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd: ”This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text”. Context and purpose are also important. In Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross French CJ and Hayne J said:
The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority, “[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute” ... That is, statutory construction requires deciding what is the legal meaning of the relevant provision “by reference to the language of the instrument viewed as a whole”, and “the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed”. (emphasis of French CJ and Hayne J)
[7][2013] HCA 16; (2013) 87 ALJR 588.
[8]Ibid [47] (citations omitted; emphasis added).
Consistent with these general principles, s 35(a) of the Interpretation of Legislation Act 1984 (Vic) provides that ‘a construction that would promote the purpose or object underlying the Act … shall be preferred to a construction that would not promote that purpose or object’.
In addition to these general principles of statutory interpretation, there are some specific principles which are relevant to this case.
First, all words in a statute must prima facie be given some meaning and effect. This principle may be more compelling if the word or phrase in question has been added by amendment.[9]
[9]Pearce & Geddes, Statutory Interpretation in Australia (2011, Seventh Edition), [2.26] and the cases there referred to.
Second, a court may depart from the literal meaning of the words in a statute if an alternative construction is reasonably open and more closely conforms to the legislative intent.[10] This principle is often applied in circumstances where the court considers that the literal operation of the statute leads to absurd, extraordinary, capricious or irrational results, such that ‘the legislature could not have intended such an operation and that an alternative interpretation must be preferred’.[11]
[10]CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384, 408.
[11]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320-1.
Third, while statutes imposing levies or taxes do not form a class of their own, and must be construed in accordance with general principles of statutory interpretation, the fact that a levy or tax is imposed is a relevant contextual matter.[12] In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue,[13] the plurality referred to earlier High Court statements, to the effect that the imposition of a tax must be in plain terms,[14] that penal statutes should be construed strictly,[15] and that ambiguity in tax statutes should be resolved in favour of the taxpayer.[16] Their Honours said they did not need to decide whether ‘rules’ of construction to this effect may still be relied upon. As a single judge, I must of course apply the law as stated in High Court cases supporting such principles, or ‘rules’. Although I have done so, I do not believe that it was necessary to resort to those principles in reaching the result I have. Specifically, my conclusion would be the same in the absence of such principles or rules applying.
[12]Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, [57].
[13]Ibid.
[14]For example, Anderson v Commissioner of Taxation (1937) 57 CLR 233, 243.
[15]For example, Waugh v Kippen (1986) 160 CLR 156, 164.
[16]The plurality referred to an American ‘rule of lenity’ in this regard. See also Anderson at 243, Western Australian Trustee & Executor Co Ltd v Commissioner of State Taxation of WA (1980) 147 CLR 119, 126-7.
Against the background of these applicable principles, I proceed to consider the issue for determination.
Did the Treasurer have a discretion?
The Treasurer contends that ss 3.6.3 and 3.6.3A of the Act do not provide him with a discretion to determine the levy for the 2013 financial year on any basis other than a strict arithmetical application of the formula to the facts he finds as a result of his consultation with the Commission. He contends that the words of these provisions are so clear that no alternative construction is open to the Court, and questions of unreasonableness of the result do not therefore arise for consideration. His principal contentions may be summarised as follows.
First, the levy has always been imposed in mandatory language, requiring payment in accordance with a specified formula:
(1) s 135A(1) of the 1991 Act provided from its inception that a gaming operator ‘must pay’ a levy for each financial year in which it operates gaming machines, calculated in accordance with a particular formula;
(2) s 3.6.3(1) provided that: ‘a gaming operator must pay … a health benefit levy calculated in accordance with the following formula’ (emphasis added); and
(3) s 3.6.3A carried this mandatory language forward into the 2013 financial year, by providing that, for that year: ‘a gaming operator must pay to the Commission a health benefit levy calculated in accordance with the formula set out in section 3.6.3(1)’ (emphasis added).
Second, the Treasurer’s determinations under s 135A(3) of the 1991 Act, and s 3.6.3(3) of the Act, were in each year limited to a precise arithmetical application of the formula to the facts found by him, in consultation with the Commission,[17] in relation to the integers of the formula. In this regard, it was submitted that the Treasurer was required to determine, as a fact-finding exercise, the number of gaming machines that were operating on the first Saturday of each specified month by each operator.
[17]Previously, consultation with ‘the Authority’.
Third, the basis of the determination provided for in s 3.6.3A(2) of the Act is in the same terms as applied previously, and is similarly limited to determining a levy which reflects a precise arithmetical calculation of the formula.
Fourth, building on these three contentions, Parliament made a choice in enacting the Transition Act to impose the same formula and determination procedure as had previously applied under s 3.6.3 of the Act. It was contended that s 3.6.3A addresses three matters only: (1) to make it clear that the formula in s 3.6.3(1) continues to apply to the 2013 financial year; (2) to make some timing adjustments, to the dates for notification of the levy determinations and the dates for payment of the levies; and (3) to make it clear that the levy is imposed upon a person who ‘held’ a gaming operator’s licence or a gaming licence – an amendment required because of the definition of ‘gaming operator’ in the Act as a person who is ‘the holder’ of one of those licences.
Fifth, there is no suggestion in the Transition Act, or in the admissible extrinsic material, that Parliament intended to change the formula. It was contended that if Parliament had intended a different result to that which obtained under s 3.6.3 of the Act for prior years, it would have changed the formula for calculating the levy. For example, by providing that an annual levy be calculated, divided by 365 and then multiplied by 46 to achieve a pro-rata levy for the financial year. It was submitted on behalf of the Treasurer that Parliament chose to do ‘the exact opposite’ and, instead, ‘confirmed the formula’ for the 2013 financial year.[18]
[18]T61.
I do not accept the Treasurer’s contentions, which involve a narrow approach to the words used. In my opinion, the preferable construction of s 3.6.3A(2) of the Act is that it conferred a discretion on the Treasurer to determine the levies for the 2013 year, by adjusting the arithmetical result of the application of the formula in s 3.6.3(1) of the Act to account for the fact that Tatts and Tabcorp did not operate any gaming machines after 15 August 2012. My reasons follow.
First, s 135A of the 1991 Act and s 3.6.3 of the Act imposed a levy or tax for each financial year to which they applied. Section 3.6.3A of the Act imposed a levy or tax for the 2013 financial year. So, the principles or rules concerning the interpretation of taxing statutes, discussed above, are engaged.
Second, each of s 135A of the 1991 Act and s 3.6.3 of the Act contained an implicit assumption that Tabcorp and Tatts, as the only two persons licensed to operate gaming machines during the whole of the financial years in which the levy was imposed, would continue to operate gaming machines during the whole of the financial year. This is supported by the context that there was a duopoly, no more licenses could be issued, and they each held a long-term licence.
Third, in a statute imposing a levy for a full financial year, it was always possible that something might occur which could make imposition of the full levy, resulting from the arithmetical application of the statutory formula, manifestly unfair, unreasonable or capricious. For example, adopting the initial formula under s 135A of the 1991 Act, the number of gaming machines operating on 30 September in the financial year may be significantly disproportionate to the average number of machines in operation throughout the course of that year. This could occur for a variety of reasons, including damage to a large number of machines operating at a particular venue, because of fire, flood or other circumstances; or because Tabcorp or Tatts lost or surrendered its licence during the course of the year and ceased operating gaming machines from that time. When the new formula containing averaging provisions was introduced in the next financial year, the capacity for unfairness as a result of damaged or inoperable machines was reduced, but there could still be significant periods after the first Saturday of a relevant month where gaming machines were not being operated as a matter of fact. The possibility of loss or surrender of a licence remained. In these circumstances, in order to avoid unfair or unreasonable results, there was always objective good sense in providing the Treasurer with a discretion in determining the amount of the levy for a particular financial year.
Fourth, the levy has always been imposed by a two-stage process: (1) calculating the levy in accordance with a formula; and then (2) determination of ‘the amount of the levy’ by the Treasurer after consultation with Commission. Each aspect of the process was separate. As appears below, other provisions of the Act support this point.
Fifth, the only express limit on the Treasurer’s power to determine the amount of the levy was that his determination be ‘in accordance with’ the formula applying from time to time.
Sixth, s 3.6.3A was introduced when it was known that Tabcorp and Tatts would cease to have any entitlement to operate gaming machines under the Act when their licences expired on 15 August 2012. In other words, Parliament knew that Tabcorp and Tatts would only be operating gaming machines for a period of 46 days in the 2013 financial year. This is expressly recognised in the Transition Act, which states that one of its purposes is ‘to make further transitional and consequential amendments in relation to the expiry of the gaming operator’s licences … in August 2012’.[19]
[19]Transition Act, s 1(a)(iv).
If the Treasurer’s contentions are correct, Parliament intended by s 3.6.3A to impose a tax calculated on the assumption that Tabcorp and Tatts had operated gaming machines for nine months in the 2013 financial year, and not 46 days. Nine months is the relevant assumption because, in calculating ‘GM’ in the formula for the 2013 year, the number of gaming machines in operation on the first Saturdays in September, October and November 2012 must, following expiry of the licences held by Tabcorp and Tatts on 15 August 2012, be zero.
It was submitted on behalf of the Treasurer that this intention was a fair and reasonable option open to Parliament:
We would submit that it’s a logically available option, particularly because the number of gaming machines operated for the months from December 2011 to June 2012 had never entered into the calculation of any previous health benefit levy. So that’s the option we submit Parliament chose.[20]
[20]Emphasis added.
I reject that submission. Reliance on the fact that the months of December 2011 to June 2012 had not previously been used to calculate ‘GM’ in the formula is not logical or rational. The formula does not calculate ‘GM’ by using the actual 12 months in the financial year in question, but uses a mix of months in the previous and current years to levy an annual tax. The levy for the 2011/2012 financial year was paid in full.
In my opinion, the Treasurer’s contentions would attribute to Parliament an intention to knowingly legislate for a tax or levy which is unfair and unreasonable. Such an intention should not be attributed to Parliament if there is an alternative construction, reasonably open, which gives the Treasurer discretion to adjust the levy calculated by an arithmetical application of the formula.
Seventh, when construed in the context of the statutory scheme, the language of s 3.6.3A is in my opinion consistent with the Treasurer having a discretion when determining the levy for the 2013 financial year. My reasons for this conclusion appear below.
In previous years, when s 135A of the 1991 Act or s 3.6.3 of the Act applied, the Treasurer was likely to be determining the amount of the levy in circumstances where Tabcorp and Tatts operated gaming machines for the full financial year. On this basis, these provisions provided for the formula to be applied ‘for … each financial year’,[21] and for the Treasurer’s determination of the amount of the levy on each gaming operator to be ‘for a financial year’. In contrast, s 3.6.3A of the Act is concerned with a particular financial year, when it was known that Tabcorp and Tatts would only operate gaming machines for a period of 46 days. In these circumstances, Parliament has used different language. Instead of providing that the formula is to apply ‘for’ the relevant financial year, s 3.6.3A provides that the formula is to be applied ‘in respect of the financial year beginning on 1 July 2012’, and s 3.6.3A(2) provides that the Treasurer’s determination is to be ‘in respect of’ that financial year. This change in language is consistent with Parliament recognising that it was imposing a levy in respect of a 46 day period only, and not for the full financial year.
[21]1991 Act, s 135A(1); s 3.6.3 of the Act.
The word ‘determine’ may indicate a deliberative process, resulting in a decision. The Macquarie Dictionary defines ‘determine’ as including: ‘to settle or decide by an authoritative decision’; ‘to conclude or ascertain, as after reasoning’; ‘to come to a decision or resolution’; and other like meanings.[22] Although the dictionary definitions of ‘determine’ and ‘determination’ also include ‘to fix’, or the act of ‘fixing’, which may be consistent with a mere arithmetical calculation, the context here supports giving the word a meaning consistent with a deliberative process beyond mere arithmetical application of the formula.
[22]Macquarie Dictionary, 5th ed (2009).
In this respect, I reject the Treasurer’s contention that the purpose of the determination provisions was to give him a specific power to determine the relatively simple factual, or arithmetical, matter of how many gaming machines were in operation on the first Saturday of each of the relevant months. A determination power for that purpose only is, in my opinion, inconsistent with other provisions of the Act, which distinguish between the separate concepts of calculation and determination. For example, under s 3.6.6 of the Act, venue operators using gaming machines owned by Tabcorp or Tatts were required to pay the Commission, to be paid into the Consolidated Fund, ‘24.24% of the total daily net cash balances during the period of all gaming machines of the gaming operator at approved venues’.[23] There is an element of fact finding in determining the amount payable to the Commission, but there is no provision for any determination process of the amount payable, in contrast to the provisions imposing the health benefit levy.[24]
[23]Section 3.6.6(2)(d) of the Act.
[24]See also, s 3.6.6A of the Act (tax obligations payable by venue operators to the Commission, calculated by reference to a formula involving ‘average revenue per gaming machine’, without any separate determination process); s 3.6.6B (tax payable to the Commissioner in respect of ‘average revenue per gaming machine’ and other factual matters, with no separate determination process); s 3.6.5(2) (superannuation charge payable as the Treasurer determines after consultation with the Minister, having regard to specified criteria).
Moreover, where the Act provides for a determination process which is to be limited by reference to specific criteria, it says so. For example, s 3.6.5(2) provides that the Treasurer may determine a ‘supervision charge’ after consultation with the Minister ‘having regard to’ specified matters. The separate provisions for determination of ‘the amount of the levy’ include no criteria upon which the determination is to be made. The only limit on the determination is found in the words used in s 135A(1) of the 1991 Act, and ss 3.6.3(1) and 3.6.3A(1) of the Act, which mandate that the levy must be ‘calculated in accordance with’ the statutory formula applying from time to time. The process of determination is otherwise at large.
The fact that the levy must be calculated ‘in accordance’ with the specified formula does not, as a matter of ordinary language, mean that the amount of the levy must be determined by the Treasurer as equalling the arithmetical result of application of the formula. The word ‘according’ is defined in the Macquarie Dictionary in the following terms:
according adj. 1. agreeing. … 2. according as, conformably or proportionately as. 3. according to, a. in accordance with: according to her judgment. b. proportionately with. c. on the authority of; as stated by.[25]
[25]Macquarie Dictionary, 5th ed (2009) (original emphasis).
The Concise Oxford Dictionary defines ‘according’ as including that which is ‘in a manner corresponding or in proportion to’ something else; and ‘accordance’ as ‘in a manner conforming with’.[26]
[26]Oxford University Press, Concise Oxford English Dictionary, 11th Ed.
The Macquarie Dictionary definition of ‘conform’ includes: ‘to act in accord or harmony’ and ‘to bring into correspondence or harmony’; and the definition of ‘conformity’ includes that which is in ‘congruity, or accordance’ with something else.[27]
[27] Macquarie Dictionary, 5th ed (2009).
In my opinion, it is reasonably open to construe the phrase ‘levy calculated in accordance with’ the applicable formula as meaning a levy which is calculated ‘conformably’ with the arithmetical result of the application of the formula, including a levy calculated ‘in proportion’ to that result. A construction to this effect gives content to the determination process to be undertaken by the Treasurer, is consistent with that process involving a discretion to adjust the arithmetical result produced by the formula, and is more likely to lead to a rational result; as opposed to one which is unfair and unreasonable, and therefore unlikely to have been intended by the legislature.
Eighth, in the context of unreasonableness of result, the interpretation advanced by the Treasurer would lead to a doubling-up of tax on the same gaming machines. This is because, from 15 August 2012, the same gaming machines which were previously the subject of the licenses held by Tabcorp and Tatts have been operated by venue operators with gaming entitlements, and those operators are being taxed by reference to their operation of those machines. On the Treasurer’s interpretation, the Government would also be receiving levies from Tabcorp and Tatts attributable to the period from 16 August 2012 to 30 June 2013. That is another unfair and unreasonable result which ought not be attributed to Parliament.
Ninth, the unreasonableness of the result contended for by the Treasurer, and my consequent reluctance to attribute such a result to the Parliament, is supported by the budget papers presented by the Treasurer to Parliament in May 2012, while the Bill which became the Transition Act was still being debated. Those budget papers record the total of the health benefit levies for the 2011/2012 financial year at $114.7 million (about $57 million per operator) and forecast only $15.7 million in health benefit levies for the 2013 financial year. This is recorded as a variation of 87.3 per cent.[28] This variation reflects the receipt of pro-rata levies for the 2013 financial year at the rate of 46/365ths of the 2011/2012 year levies (12.6 per cent). The recorded variation accords with both reasonableness and common sense, and was likely assumed by the Treasury officers who prepared the forecasts. Unsurprisingly, other members of Parliament also assumed this would be the result of the expiry of licences held by Tabcorp and Tatts. For example, the Hon. Mr O’Brien, Minister for Gaming, when moving that the Transition Bill be read for a second time said:
The prescription of specific dates for calculating the quantum of the levy … is inappropriate at the end of the gaming operator’s licences and creates uncertainty with respect to determining how the levy will be calculated … for the final financial year.[29]
And, after the budget papers were before the Parliament, the Hon. M P Pakula said during the course of the debate on the second reading of the Transition Bill that, as a consequence of the duopoly ending, Tabcorp and Tatts would make ‘part-payment of the health benefit levy for the first six or so weeks of the 2012/13 financial year’.[30]
[28]Treasurer of Victoria, Victorian Budget: 2012-2013 Statement of Finances (Budget Paper No 5), May 2012 – Table A.4 ‘Consolidated Fund Payments – Special Appropriations’.
[29]Hansard Report for the Legislative Assembly, 18 April 2012, 1709.
[30]Hansard Report for the Legislative Council, 5 June 2012, 2803.
For the above reasons, in combination, I prefer a construction of s 3.6.3A which gives the Treasurer a discretion to adjust the arithmetical result of the formula in s 3.6.3 to take account of the fact that Tabcorp and Tatts only operated gaming machines in Victoria for 46 days in the 2013 financial year. That interpretation is reasonably open, and must be preferred to the unfair and unreasonable result contended for by the Treasurer. I conclude that the Treasurer was wrong to decide that he had no discretion. His decision must be set aside. I will hear the parties as to the form of the declarations and orders to be made.