The Griffith Hotel Pty Ltd v Independent Liquor and Gaming Authority

[2021] NSWSC 933

Supreme Court

New South Wales

Medium Neutral Citation:

The Griffith Hotel Pty Ltd and anor v Independent Liquor and Gaming Authority [2021] NSWSC 933

Hearing dates:

18 March 2021

Date of orders:

3 August 2021

Decision date:

03 August 2021

Jurisdiction:

Common Law

Before:

Bellew J

Decision:

The defendant is to pay the plaintiffs’ costs as agreed or assessed.

Catchwords:

COSTS – Where plaintiffs made application to the defendant for the transfer of gaming machine entitlements – Application made on 14 May 2020 – Application undetermined as at 24 December 2020 – Where plaintiffs brought proceedings on that day seeking relief in the nature of mandamus – Where defendant subsequently granted the applications unconditionally – No issue left for determination leading the plaintiffs to discontinue the proceedings – Whether plaintiffs should have their costs – Significant delays on the part of the defendant in determining the applications – Where the defendant had been put on notice of commencement of proceedings – Plaintiffs entitled to an order for costs in their favour

Legislation Cited:

Gaming and Liquor Administration Act 2007 (NSW)

Gaming Machine Regulation 2019 (NSW)

Gaming Machines Act 2001 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Edwards Madigan Torzillo Briggs Pty Limited v Gloria Stack [2003] NSWCA 302

Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6

Texts Cited:

N/A

Category:

Costs

Parties:

The Griffith Hotel Pty Limited – First Plaintiff
North Rydge Pty Limited – Second Plaintiff
Independent Gaming and Liquor Authority – Defendant

Representation:

Counsel:
C Birch SC – Plaintiffs
S Robertson – Defendant

Solicitors:
Hatzis Cusack Lawyers – Plaintiffs
Crown Solicitor for NSW – Defendant

File Number(s):

2020/365573

Publication restriction:

Nil

Judgment

BACKGROUND

1. The plaintiffs’ commenced these proceedings on 24 December 2020 seeking an order in the nature of mandamus requiring the defendant to determine two applications in relation to gaming machine entitlements under the Gaming Machines Act 2001 (NSW). One of the bases of the plaintiffs’ application for relief was that there had been significant delay by the defendant in dealing with the applications.

2. On 9 March 2021, each of the plaintiffs’ applications was unconditionally approved by the defendant. As a consequence, the plaintiff discontinued the proceedings as it was no longer necessary to seek any substantive relief.

3. There remains an issue as to costs. The plaintiffs’ position is that the defendant should pay their costs of the proceedings. The defendant contends that the appropriate order is that each party pay its own costs.

THE RELEVANT CHRONOLOGY

4. In order to determine the costs issue, it is necessary to make reference to some aspects of the chronology of the relevant events.

5. The plaintiffs' applications were lodged with the defendant on 14 May 2020. On 28 May 2020, the plaintiffs’ solicitor, Mr Plowman, wrote to the defendant seeking advice as to the progress of the applications. The following day Ms Rahman, a Licencing Officer, responded in (inter alia) the following terms:

We are waiting for a response from the Authority in regards to the Office of Responsible Gambling’s recent release of the report “Shutdown period for electronic gaming machines”.

The report suggests:

● Problem gamblers may be over-represented amongst late night/early morning EGM players;

● The availability of EGMs at a venue may have impacts on problem gamblers in adjacent areas as problem gamblers are likely to travel further to play;

● Problem gamblers are more likely to travel to another venue to play if their current venue closes.

All applications with Extended trading authorisation are on hold. Gemini Hotel is licensed to trade past midnight on a number of nights a week, therefore the application is on hold. Please wait for my e-mail.

6. On 1 June 2020, in what could only be described as a comprehensive response, Mr Plowman took issue with the suggestion that any of the matters raised by Ms Rahman were in any way relevant to the applications. He also made the plaintiffs’ position clear that the matters raised by Ms Rahman did not warrant the delay which had already been experienced in determining the applications, and concluded with a request that they be granted.

7. On 19 June 2020, almost three weeks later, Mr Rivers, a Senior Licencing Officer, wrote to Mr Plowman in these terms:

We are currently preparing applications such as yours for the Authority’s consideration.

We will advise directly (sic) the Authority has determined your matter.

Please don't hesitate to contact me if you have any questions.

8. Mr Plowman responded immediately, enquiring of Mr Rivers whether he could give some indication of when the defendant would be likely to consider the applications. No immediate response to that correspondence was received. In fact, it was not until 21 July, more than one month later, that Ms Rahman responded by again making reference to the same report to which she had referred in her correspondence of 29 May. She concluded by offering Mr Plowman “the opportunity to comment on these reports in relation to [the plaintiffs’] application”. Mr Plowman, who had already been given that opportunity, responded on 24 July 2020.

9. On the evidence before me, nothing further occurred until 11 September 2020 when, in a lengthy letter to Mr Rivers, the plaintiffs’ solicitor Mr Hatzis pointed out (inter alia) that the plaintiffs were suffering ongoing losses in light of the defendant’s failure to determine the applications. Mr Hatzis also pointed out that it had not been suggested that the applications were deficient in any way, and that all previous issues raised by the defendant had been responded to promptly and comprehensively. Mr Hatzis also made reference to the provisions of Cl 40(1) of the Gaming Machine Regulation 2019 (NSW) which required that applications in the nature of those made by the plaintiffs be determined within 60 days. Mr Hatzis pointed out that almost 5 months had elapsed since the applications were lodged, and that 48 days had elapsed since his last correspondence of 24 July. Mr Hatzis also pointed to a Ministerial Direction made on 4 March 2016 pursuant to s 6(3) of the Gaming and Liquor Administration Act 2007 (NSW) which required applications pertaining to gaming machines to be determined within 120 days of the closure of the submission period. Mr Hatzis concluded by inviting Mr Rivers to inform him in the event that it was considered that the applications were deficient in any way, and asking that they be determined by 22 September. In making that request, Mr Hatzis specifically foreshadowed the likelihood of proceedings being commenced if the applications remained undetermined.

10. On the evidence before me, it was not until 27 November, some two and a half months later, that Mr Rivers wrote to Mr Plowman again. In doing so, he invited Mr Plowman to make submissions in relation to the contents of Guideline 16 issued by the defendant in relation to Late Night Gaming Applications. In light of the delay which had occurred up to that point, I find it somewhat ironic that Mr Rivers chose to conclude his correspondence by saying the following:

In order to speed processing of your application it would assist if you could lodge your submissions by 14 December 2020.

11. On 8 December 2020 Mr Hatzis responded to Mr Rivers. He submitted that the Guideline was of no application, and expressed the (not unreasonable) expectation that the applications would now be determined. Mr Hatzis also made it clear that if the applications were not determined within 14 days, proceedings would be commenced, accompanied by an application for an expedited hearing.

12. On 21 December, the defendant invited the plaintiffs to provide details of any current or planned gaming harm minimisation measures. That information was provided by the plaintiffs’ solicitor the following day, 22 December. In the absence of any determination, the plaintiffs commenced proceedings by the filing of a summons on 24 December 2020. That summons was returnable on 17 February 2021.

13. The plaintiffs’ applications went before the defendant at its meeting on 20 January 2021. On 2 February 2021 Mr Plowman enquired as to the status of the applications, and was informed by Ms Thompson, the Executive Officer of the defendant, that the defendant was “currently considering the matter” and was “intending to seek further information prior to making a determination”.

14. On 12 February 2021 the plaintiffs filed a notice of motion seeking an expedited hearing of the proceedings which had been commenced. That motion was made returnable on 23 February 2021.

15. On 16 February 2021, the Chairperson of the defendant, Mr Crawford, wrote to Mr Plowman advising that the defendant had “resolved to provide [the plaintiffs] with a further opportunity to provide information on the harm minimisation practices that are proposed to be applied in the event that the applications are approved”. The defendant sought that information by 2 March 2021, in circumstances where its next meeting was scheduled to take place on 17 March 2021.

16. In his response of 25 February 2021, Mr Hatzis advised that the harm minimisation measures implemented by the plaintiffs were those to which he had referred in his previous correspondence of 22 December 2020. He also advised that in circumstances where nothing over and above those measures were required, no additional measures would be put in place.

17. Four days later, on 26 February 2021, the defendant advised Mr Hatzis that it was “minded to approve” the applications but did not consider it appropriate to do so in circumstances where proceedings had been commenced. This prompted Mr Hatzis, in a response sent on the same day, to enquire whether this meant that the applications would be approved unconditionally. The defendant’s solicitor confirmed this to be the case in a response of 1 March 2020, prompting Mr Hatzis to advise, on 2 March, that the application for relief before this Court would not be pressed.

SUBMISSIONS OF THE PARTIES

Submissions of the plaintiff

18. The essence of the submission advanced by senior counsel for the plaintiffs was that the plaintiffs had, in effect, been forced into commencing the proceedings, in circumstances where there had been a number of requests made to the defendant to determine the applications one way or the other, and where those requests had effectively been ignored. In this context, senior counsel made specific reference to what he described as the “very long, substantial and prejudicial delay” in dealing with the applications. Senior counsel also pointed out, against a background of such delay, that the plaintiffs’ applications had ultimately been unconditionally approved. He submitted that in that sense, the defendant had capitulated.

19. Senior counsel also pointed out that from the time at which the applications were lodged until the time of their approval, there had been a delay of 10 months, in circumstances where plaintiffs’ solicitors had responded promptly and comprehensively to all requisitions made by the defendant. Senior counsel submitted that in all of the circumstances, and particularly in light of the protracted delay, the plaintiffs had had little choice but to commence proceedings, and that the decision to do so was justified by the fact that the defendant did not determine the applications until 9 March 2021. Senior counsel also relied on the fact that the plaintiffs had specifically pointed out to the defendant that they were suffering financial loss as a consequence of the delay.

20. Ultimately, it was submitted that, had the defendant determined the applications in a timely fashion, the plaintiffs would not have been required to commence proceedings, and would not have incurred the costs associated with doing so.

Submissions of the defendant

21. Counsel for the defendant submitted that r 42.19 of the Uniform Civil Procedure Rules 2005 (NSW) creates, in effect, a default position. It was submitted that as a consequence, there was an onus on the plaintiffs to firstly establish that such default position should be set aside, and secondly to establish that they should have an order for costs in their favour as opposed to an order being made that each party bear its own costs.

22. Counsel submitted that there had been no capitulation on the part of the defendant. In this regard, he emphasised that in exercising its functions, the defendant was under an obligation imposed by s 3(2) of the Gaming Machines Act 2001 (NSW) to have due regard to (inter alia) the need for gambling harm minimisation, and the fostering of responsible conduct in relation to gambling. It was submitted that, properly viewed, the defendant had carried out its functions by reference to that provision (as well as others).

23. Counsel for the defendant further submitted that the question of what order should be made as to costs was to be determined by applying a focus to the position as it stood when the proceedings were commenced. In emphasising that costs are not punitive, counsel submitted that as at 24 December 2020, the defendant was carrying out its statutory functions and taking into account relevant mandatory considerations.

CONSIDERATION

24. Rule 42.19 is in the following terms:

Proceedings discontinued

(1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1.

(2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.

(3) Despite subrule (2), the defendant's costs in an appeal to the District Court under section 91 of the Children and Young Persons (Care and Protection) Act 1998 are not payable by the plaintiff unless the court finds there are special circumstances to justify an order for their payment by the plaintiff.

25. Prima facie, pursuant to that rule, the plaintiffs must pay the defendant’s costs as at the time of discontinuance. However, the Court is given a discretion to order otherwise. I accept that the plaintiffs bear the onus of establishing that the court should exercise its discretion to make an order for costs in their favour.

26. In Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin,[1] McHugh J observed that in some cases where the moving party no longer wishes to proceed, the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. His Honour went on to observe that if it appears that both parties have acted reasonably in commencing and defending the proceedings, and the conduct of the parties continued to be reasonable until the further prosecution of the proceedings became futile, the proper exercise of the Court’s discretion will usually mean that the Court will make no order as to costs.

    1. (1997) 186 CLR 622; [1997] HCA 6 at 624-625.

27. The fact that the reasonableness of the conduct of the parties is a relevant consideration was referred to in Edwards Madigan Torzillo Briggs Pty Limited v Gloria Stack. [2]

    2. [2003] NSWCA 302 at [5] per Davies AJA, Mason P and Meagher JA agreeing.

28. In considering the question of reasonableness in the present case, and even accepting that some focus must be applied as to the position which had been reached at the time of the commencement of proceedings, it remains the case that I am entitled to take into account the entirety of the chronology to which I have referred. The position which existed at the time of the commencement of the proceedings cannot be divorced, as it were, from preceding events.

29. Even if it is accepted that the defendant did not ultimately “capitulate” in the sense in which that term is discussed in some of the authorities, the unreasonableness of its conduct was such that in my view, the plaintiffs should have an order for costs in their favour. Without intending to be exhaustive, the unreasonableness of the defendant’s conduct is reflected in the following aspects of the chronology that I have set out.

30. Firstly, on 19 June 2020, Mr Rivers informed Mr Plowman that he was “currently preparing applications such as [those made by the plaintiffs]”. Why, in those circumstances, the applications did not come before the defendant for consideration until approximately 7 months later is largely, if not entirely, unexplained.

31. Secondly, in her correspondence of 21 July 2020, Ms Rahman inexplicably sought the plaintiffs’ response to the contents of a particular report, which had (at least in part) been the subject of her previous request of 29 May. Significantly, the plaintiffs’ solicitor had comprehensively responded to that issue in his reply of 1 June. Having been given that response at that time, more than 9 months elapsed before the applications were determined.

32. Thirdly, having given the plaintiffs an opportunity on 16 February 2021 to further address the issue of harm minimisation measures, Mr Hatzis made it plain that the issue had already been addressed in his correspondence of 22 December 2020, and that no further measures would be put in place. Given that the defendant proceeded to unconditionally approve the applications without making any further requisition of the plaintiff, the only available inference is that it was satisfied with the position which had been set out by Mr Hatzis in his correspondence of 22 December. That begs the obvious question, namely why it was that the defendant considered it necessary to raise the issue for a second time. In those circumstances, it is no answer for the defendant to simply assert that it was carrying out its functions under the Act.

33. Fourthly, it was made clear to the defendants, as long ago as September 2020, that the plaintiffs were suffering financial loss as a consequence of the delay in determining the applications. Notwithstanding that, a period of almost six months elapsed before the applications were unconditionally approved.

34. Fifthly, all of these events occurred in circumstances where, without fail, those representing the plaintiffs responded promptly and comprehensively to any requisition made by the defendant.

35. In my view, the conduct of the defendant as I have outlined it, and the delay which occurred as a result, were entirely unreasonable. Whilst it may well be that the defendant was required to have regard to mandatory statutory considerations in reaching its determination, it should have carried out its statutory function in a far more expeditious, and far more efficient, manner. Given the delay which had occurred, the plaintiffs were entitled to commence the proceedings. Indeed in my view, they had little practical alternative but to do so. Had the defendant conducted itself reasonably, and determined the applications in a timely way, the commencement of proceedings would never have been required.

ORDER

36. For the reasons I have given, I make the following order:

1. The defendant is to pay the plaintiffs’ costs, as agreed or assessed.

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Endnotes

Decision last updated: 09 August 2021