Waterhouse v New South Wales Thoroughbred Racing Board

[2003] NSWSC 541

CITATION:	Waterhouse v New South Wales Thoroughbred Racing Board [2003] NSWSC 541
HEARING DATE(S):	6 June 2003
JUDGMENT DATE:	20 June 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Davies AJ
DECISION:	Show cause proceedings stayed.
CATCHWORDS:	Prerogative Relief - whether proceedings on show cause notice should be stayed - whether reasonable apprehension of bias on the part of members of the Thoroughbred Racing Board - principles of natural justice
LEGISLATION CITED:	Thoroughbred Racing Board Act 1996, ss 6, 13, 14, 15, 24, 42, 44
CASES CITED:	Johnson v Johnson (2000) 201 CLR 488 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 Walton v Gardiner (1993) 177 CLR 378
PARTIES :	Robert William Waterhouse (Plaintiff) New South Wales Thoroughbred Racing Board (Defendant)
FILE NUMBER(S):	SC 2990/03
COUNSEL:	P Brereton SC / A Vincent (Plaintiff) S Rushton SC / J Smith (Defendant)
SOLICITORS:	Jeffreys & Associates (Plaintiff) Watson Mangioni (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

DAVIES AJ

Friday, 20 JUNE 2003

Robert William Waterhouse v New South Wales Thoroughbred Racing Board

REASONS

1 HIS HONOUR: The plaintiff, Robert William Waterhouse, is a licensed bookmaker whose licence was suspended for nine months from 16 August 2002. Various appeals from that order of suspension were finalised by a judgment of the Court of Appeal of this Court on 16 April 2003. On 2 May 2003 the defendant, the New South Wales Thoroughbred Racing Board (“the Board”) served notice upon Mr Waterhouse requiring him to show cause why it should not cancel his licence as a bookmaker pursuant to Local Rule 51(2) or alternatively revoke his licence as a bookmaker pursuant to Australian Rule of Racing 7(b) upon the basis that he is not a fit and proper person to hold such a licence. Mr Waterhouse seeks an order of the Court restraining the Board from embarking upon or continuing with the hearing proposed to be held pursuant to that notice. The hearing is presently fixed for 24 June 2003.

2 Mr P Brereton SC, with him Mr Vincent of counsel, appeared for Mr Waterhouse. Mr S Rushton SC, with him Mr J Smith of counsel, appeared for the Board.

3 The Board was established by the Thoroughbred Racing Board Act 1996 (“the Act”). The membership of the Board is prescribed by s 6 of the Act and includes persons nominated by organisations such as the Australian Jockey Club and the Sydney Turf Club and other organisations having an interest in the thoroughbred racing industry. The Chief Executive, Mr Mervyn Hill, is a member of the Board but does not have a vote at meetings of the Board.

4 Section 13 of the Act specifies the functions of the Board and they include all the functions of the principal club for New South Wales and the committee of the principal club for New South Wales under the Australian Rules of Racing and the function of controlling, supervising and regulating horse racing in the State.

5 Section 14 of the Act specifies powers of the Board, including the following:-

“(b) register or licence, or refuse to register or licence, or cancel or suspend the registration or licence of, a race club, or an owner, trainer, jockey, stablehand, bookmaker, bookmaker's clerk or another person associated with racing, or disqualify or suspend any of those persons permanently or for a specified period,
(c) supervise the activities of race clubs, persons licensed by the Board and all other persons engaged in or associated with racing,
(d) inquire into and deal with any matter relating to racing and to refer any such matter to stewards or others for investigation and report and, without limiting the generality of this power, to inquire at any time into the running of any horse on any course or courses, whether or not a report concerning the matter has been made or decision arrived at by any stewards,
(l) impose a penalty on a person licensed by it or on an owner of a horse for a contravention of the Rules of Racing.”

6 The Act does not establish “stewards of the Board” but their existence is recognised in para (d) of s 14 and in s 42(2). The Act specifically recognises the existence of the Australian Rules of Racing, which are rules which have been developed and approved by racing bodies throughout Australia for application to horse racing in Australia. The Act does not refer to the Local Rules of Racing. These are rules which have been developed and approved by racing bodies in New South Wales for application in this State.

7 Both the Australian Rules and the Local Rules provide for the licensing of persons involved in the racing industry, such as jockeys, trainers and bookmakers, and for the control of racing and the disciplining of persons who breach the Rules. The Australian Rules provide that the committee of a principal club shall have the control and supervision of racing within its territory and they confer upon the committee appropriate power such as the power to licence jockeys, trainers and others, to inquire into and to deal with any matter relating to racing and to punish for contraventions of the Rules and like matters.

8 Both the Australian Rules and the Local Rules provide for the appointment of stewards. AR 8 provides, inter alia:-

“To assist in the control of racing, Stewards shall be appointed according to the Rules of the respective Principal Clubs, with the following powers:-
…
(d) To regulate and control, inquire into and adjudicate upon the conduct of all officials and licensed persons, persons attendant on or connected with a horse and all other persons attending a racecourse and to punish any such person in their opinion guilty of improper conduct or unseemly behaviour.
(e) To punish any person committing a breach of the Rules … “

9 The Local Rules provide, inter alia:-

“LR 10(1) The Board may from time to time appoint a Chairman of Stewards, Deputy Chairman of Stewards, and Stewards of such categories as it thinks fit.
LR 15(2) The Stewards my punish any person, or persons, found guilty of any misconduct, or any breach of the Rules, or any breach of regulations or conditions, laid down for the conduct of any organised trial or the use of any training track, and may also take any action deemed necessary in respect of any horse.
LR 17 The Board, an Association, or the Stewards, may punish any person who by any act or omission in any way prejudices the proper conduct of any race meeting or the affairs of the Board, or Association, or any Club.”

10 The precise relationship between the Board and the stewards need not be determined. The Act speaks of them as “stewards of the Board”. However, stewards have a traditional part to play in the control of racing. This function is recognised by both the Australian Rules and the Local Rules, whose operation is contractual rather than statutory, although the Board’s actions under the Australian Rules are given statutory effect by the Act. The Act provides that appeals from certain decisions of the stewards may be taken to the Appeal Panel and that the function and determination of appeals against decisions of the stewards is the function of the Appeal Panel and not the function of the Board.

11 Section 44 of the Act provides that, “The decision of the Appeal Panel on an appeal is to be given effect to.” The section must be given substantive application. If the Appeal Panel takes a particular view of the actions of a licensed person and imposes a penalty which, in its view, is appropriate to the gravity of the offence, the Board is bound to accept the Appeal Panel’s decision. It would be wrong for the Board to instigate other proceedings of its own against the licensed person because it was dissatisfied with the decision of the Appeal Panel. The Appeal Panel is established under the Act and the Board is bound to give effect to its rulings.

12 If the Board were dissatisfied with a decision of the Appeal Panel, it would be wrong for the Board to instigate proceedings for itself under the functions and powers conferred by ss 14 and 15 of the Act with a view to substituting what it regards as a penalty more appropriate to the offence. Thus, if an offence occurred on a racecourse which the Board considered might justify the infliction of a penalty on some person, the Board would have the power under ss 14 and 15 to institute an inquiry or disciplinary proceedings with a view to ensuring the penalty was imposed. The Act gives it that power. However, if the Board stands back and permits the stewards to make the inquiry and impose the penalty, then the matter is out of its hands. The Board is bound to accept the decision of the Appeal Panel.

13 Mr Waterhouse was granted a no. 2 bookmaker’s licence on 1 August 1975 and he was granted a no. 1 bookmaker’s licence on 6 December 1979 effective from 1 January 1980. In 1984, Mr Waterhouse was “warned off” as a result of the “Fine Cotton” affair. This affair, which involved the substitution of one horse for another, involved grave dishonesty. Moreover, the affair involved the telling of lies by Mr Waterhouse to the stewards of the Australian Jockey Club and to the committee of the Australian Jockey Club and false swearing before the Racing Appeals Tribunal. Mr Waterhouse was not only warned off, he was prosecuted and convicted and was sentenced by a Judge of the District Court of New South Wales to periodic detention for a period of eight months. This was a very serious affair indeed.

14 In September 1998, the warning off was lifted. In August 2001, Mr Waterhouse was again granted a bookmaker’s licence. On 6 February 2002, Mr Waterhouse was involved in what counsel have referred to as the “Extravagant Odds” affair. Mr Waterhouse had assisted a friend, Mr McCoy, to pay off a debt of $500,000 which he owed to the Waterhouse family by entering into his betting book supposed bets which Mr McCoy had made with Mr Waterhouse at outrageously generous odds. Needless to say, to use a betting book for this purpose was improper.

15 After inquiry, the stewards of the Board charged Mr Waterhouse with 13 breaches of LR 91(q) which provides:-

“Every bookmaker must:
…
(q) enter accordingly all book bets in a recognisable name of the person with whom they are made and none but legitimate wagers must be so entered.”

Mr Waterhouse was also charged with two offences under AR 175(g) which provides:-
“The Committee of any Club or the Stewards may punish;
…
(g) Any person who gives at any inquiry or appeal any evidence which in their opinion is false or misleading in any particular.”

Finally, he was charged under AR 175A which provides:-

“Any person bound by these Rules who either within a racecourse or elsewhere in the opinion of the Committee of any Club or the Stewards has been guilty of conduct prejudicial to the image, or interests, or welfare of racing may be punished.”

16 Mr Waterhouse’s history, including his involvement in the “Fine Cotton” affair, was a relevant matter in the hearing of these charges. Particulars given of the charges under s 175A said, for example:-

“This adverse effect on the image of racing was exacerbated by the fact that Mr McCoy and Mr Waterhouse had both been previously warned off due to the notorious “Fine Cotton” affair and the knowledge of the members of the industry and the general public of that fact.”

In delivering the decision of the stewards, the Chairman said:-

“We further find that the adverse effect to the image of racing was exacerbated by the fact Mr McCoy and Mr Waterhouse had both been previously warned off due to the notorious Fine Cotton affair and the knowledge of the members of the industry and the general public of that fact.”

17 Moreover, the stewards took Mr Waterhouse’s history into account on the aspect of penalty. The transcript of the hearing before the stewards contains the following:-

“CHAIRMAN: On the matter of being of good character, could I ask you this? Would the Stewards in your view be entitled to give regard to the fact that you were found guilty in the Fine Cotton affair, perhaps the most notorious chapter in Australian racing history, of prior knowledge and involved in betting on that particular scam? …

R. WATERHOUSE: I would also like to submit respectfully to you that you can’t use character against me, you can’t use the Fine Cotton matter to increase penalty on the basis that you think I am not of good character.

CHAIRMAN: We would accept that. We are not entitled to increase the penalty because of what happened in the past. Again it amounts to what dispensation a person appearing before us who comes with a spotless character might be entitled to over and above what the Stewards may assess you are entitled to.”

18 Mr Waterhouse was found guilty by the stewards of each of the 16 charges and, on 19 April 2002, the stewards ordered that he pay a fine of $6,000 on each of the offences under LR 91(q). A penalty of one year’s disqualification was imposed on the first charge under AR 175(g) and a penalty of two year’s disqualification was imposed for the other offence under that Rule. Both periods of disqualification were to be served concurrently. On charge 16 under AR 175A, it was ordered that Mr Waterhouse be disqualified for one year, the disqualification to be served concurrently with the other disqualification periods.

19 Mr Waterhouse appealed to the Appeal Panel. Before the Appeal Panel, Mr Rushton appeared on behalf of the stewards. He tendered the following additional material:-

(1) Licensing Record of Robert William Waterhouse.
(2) Reasons for Decision of the Australian Jockey Club of 30 November 1984.
(3) Reasons for Judgment of the Racing Appeals Tribunal of 24 January 1985.
(4) Reasons for Decision on Penalty and Costs of the Racing Appeals Tribunal of February 1985.
(5) Remarks on Sentence in Regina v Waterhouse of 22 June 1992.
(6) Statutory Declaration of Mr Waterhouse of 8 September 1998.
Mr Rushton submitted in relation to charge 16 that, having regard to the overall gravity of Mr Waterhouse’s conduct, an increase in the period of disqualification may be called for. He submitted that the offence under AR 175A was extremely serious.

20 The Appeal Panel allowed Mr Waterhouse’s appeal against the finding of guilt on charges 14 and 15 under AR 175(g). With respect to the first 13 offences under LR 91(q), the Appeal Panel substituted a fine of $1,500 on each charge. On charge 16, the Appeal Panel referred to the fact that dishonesty was not charged and that the evidence did not support a finding of dishonesty. The Appeal Panel reduced the penalty of one year’s disqualification to a suspension of nine months from the day of its decision, 16 August 2002.

21 Mr Waterhouse appealed to the Racing Appeals Tribunal (“the Tribunal”) from the penalties imposed by the Appeal Panel. The Board itself lodged two appeals with the Tribunal, one being against the finding of not guilty on charge 15 and the other being against the reduction of the penalty on charge 16 from 12 months disqualification to suspension for nine months.

22 The Tribunal held that the Board had no standing to appeal. However, the Tribunal considered that, as the issue of penalty was before it, the penalty could be increased if that was appropriate. The Tribunal substituted an order of disqualification for nine months from 16 August 2002 in substitution for the period of suspension ordered by the Appeal Panel.

23 From that decision, Mr Waterhouse appealed to this Court. On 29 November 2002, Young CJ in Eq held that the Tribunal had no power to increase the penalty on charge 16. His Honour declared that the decision of the Tribunal was void. From that judgment the Board appealed to the Court of Appeal. Mr Waterhouse cross-appealed seeking a ruling that the subject bets of 6 February 2002 were legitimate bets. On 16 April 2003, Handley, Hodgson and Santow JJA dismissed the appeal and Mr Waterhouse’s cross-appeal save that, in lieu of the declaration that the decision of the Tribunal was void, their Honours ordered that the decision, insofar as it varied the penalty imposed by the Appeal Panel, but not otherwise, be quashed. That left standing the order of the Appeal Panel that Mr Waterhouse’s bookmaker’s licence be suspended for nine months from 16 August 2002. That period expired on 15 April 2003.

24 On 2 May 2003, the Board issued the show cause notice which is the subject of the present proceedings. The notice reads inter alia:-

“Dear Mr Waterhouse,

The NSW Thoroughbred Racing Board (“the Board”) requires you to show cause as to why it should not cancel your licence as a bookmaker pursuant to Local Rule 51(2), or alternatively revoke your licence as a bookmaker pursuant to Australian Rule of Racing 7(b), upon the basis that you are not a fit and proper person to hold such licence.

The Board requests that you address it upon the hearing on the following matters:

· your record as a licensed bookmaker;

· your failure to honour an undertaking given to the Board by your statutory declaration made 8 September 1998 in connection with your application for the lifting of the order in relation to your being warned off, that if given the opportunity to return to the track you would conduct yourself in an exemplary manner and never come under adverse notice;

· your failure to honour the assertion made in your statutory declaration made 8 September 1998, that you can be trusted to act honestly and appropriately;

· your failure to honour an undertaking given to the Board on 15 June 2001 in connection with your application for a licence as a bookmaker that the Board would not have any trouble from you in any way, shape or form;

· your failure to adhere to your agreement with the Board made 15 May 2001, that you would observe the Rules of Racing in force from time to time during the currency of your licence; and

· any other pertinent material which you wish to put before the Board.”

25 In the record of Mr Waterhouse as a licensed bookmaker there are some discreditable entries other than the “Fine Cotton” affair and the “Extravagant Odds” affair but they appear to be of quite a minor nature. I need not discuss them.

26 There are two principal complaints about the process which the Board has instigated. The first is that the Board is using the show cause process for an improper purpose, that it has undertaken proceedings for the cancellation of the licence as another means of achieving adequate punishment for Mr Waterhouse’s action on 6 February 2002 because it regards the penalty of nine months suspension imposed by the Appeal Panel as inadequate. The second ground is that the actions of the Board and of its Chief Executive Officer, Mr Hill, have been such as to give rise to a reasonable apprehension of bias on the part of the Board. Mr Waterhouse is fearful that he will be unable to obtain a fair hearing in relation to his licence. In order to consider these issues it is necessary to look further into the facts.

27 On 19 August 2002, three days after the decision of the Appeal Panel, the Board resolved to “appeal as much of the decision handed down on 16 August 2002 by the Appeal Panel that Counsel gives possibility of succeeding.” This was the first time on which the Board had appealed from a decision of the Appeal Panel.

28 On 15 November 2002, before Young CJ in Eq had handed down his judgment, the Board resolved that, “in the event of an adverse judgment in the matter of RW Waterhouse that the Board explore avenues of appeal if legal advice indicated there were substantive grounds for appeal.“

29 On 16 December 2002, after his Honour had given judgment, the Board resolved that an appeal against his Honour’s decision be commenced. The minutes also recorded:-

“The Board noted that during the currency of the appeal it may be inappropriate for Mr Waterhouse to hold a bookmaker’s licence. It was also concerned that Mr Waterhouse, having been found guilty of rule breaches at four levels, had breached the terms of verbal undertakings given by him and included in transcripts of the Licensing Committee interview with him to consider his application for a licence. Consideration is to be given to have Mr Waterhouse explain the apparent breaches. Further, consideration is also to be given to the status of his licence should the appeal to the Court of Appeal be extant at the date of expiration of his current suspension.”

30 The minutes of 16 December 2002 are an indication that Mr Waterhouse may not gain a fair hearing of the proceedings with respect to the cancellation of his licence. The first sentence shows that members of the Board hold at least a strong prima facie view that it is inappropriate for Mr Waterhouse to hold a licence. Yet, no proceedings had been instituted by the Board to inquire into the suitability of Mr Waterhouse to hold a bookmaker’s licence. Had the Board held the view that the events justified an inquiry into Mr Waterhouse’s licence, the Board could have instituted proceedings at any time. It had not done so. It allowed the charges to proceed and took part in the appeal proceedings which eventuated, even to the extent of lodging its own appeals from the decision of the Appeal Panel and from the judgment of Young CJ in Eq.

31 The record of 16 December 2002 is also an indication that the Board was dissatisfied with the penalty imposed on Mr Waterhouse and that it was turning its attention to other means of achieving what it regarded as a satisfactory result should its appeal to the Court of Appeal be unsuccessful.

32 The show cause notice was issued on 2 May 2003 without any further discussion about the matter. The minutes of the Board of 19 May 2003 record:-

“It was noted that the Board had issued a Show Cause notice in accordance with its earlier decision and discussions and resolved that the full Board hear the matter. ”

33 The impression given by the minutes of the Board is confirmed by remarks made by the Chief Executive Officer, Mr Hill. On 15 April 2002, after Mr Waterhouse had been found guilty by the stewards but no penalty had been issued, Mr Hill said:-

“I think the board would be very disappointed given all the assurances it was given by Mr Waterhouse when it reconsidered his … his warning off, I think the board would be rightfully disappointed.”

34 On 15 April 2002, again before penalty had been decided, Mr Hill said:-

“The board might consider warning off Mr Waterhouse. So there are a large range of penalties involved ranging from fines through to disqualification, warning off.”

35 In another radio interview on 15 April 2002, Mr Hill said:-

“Well, we have to wait for Friday to see what the penalty is and subsequent to that it is, of course, further open to the TRB at the board level to make any further determinations along the way as to whether he’s the right sort of person to be a bookmaker.”

36 On the following day, 16 April 2002, Mr Hill said:-

“Oh certainly there have been lifetime bans. As I say there’s a range of options open to the stewards here ranging from fines to disqualifications, suspension of Mr Waterhouse’s licence as a bookmaker and obviously that’s the thing that’s concerning him most. He’s only got that licence back some six months ago. He got it back after making a range of undertakings to the Thoroughbred Racing Board and putting it to them that in the Australian way he should be given a fair go. He’d done seventeen years for a previous transgression and he convinced the board it was time to give him another go. The Board have done that. I think the board would be very disappointed in his subsequent actions.”

37 On 19 April, after the announcement of Mr Waterhouse’s disqualification, there was this passage in a radio interview:-

“REPORTER: Waterhouse has already lodged an appeal. As to whether he’ll ever be allowed back as a bookie after his suspension …
HILL: I wouldn’t be giving you five hundred to one that’s for sure.”
Mr Hill’s reference to odds of 500 to 1 was widely quoted in the press at the time as was his comment that the Board would be disappointed by Mr Waterhouse’s actions.

38 The Sydney Morning Herald of Saturday, April 20 reported the following:-

“Hill said the ban (disqualification) was “a heavy penalty, [but] not too heavy under the circumstances”.
He said the TRB would “have to carefully assess” any application after the bookie’s ”sorry history”. Readmitting him would be “a decision that will not be taken lightly”.”

39 In a radio interview on 26 July 2002, after the Appeal Panel had dismissed charges 14 and 15, Mr Hill said:-

“It’s not a matter of being disappointed, I mean, the appeal process is there and, I mean, it has a little way to go as yet.”

40 On 30 November 2002, after the judgment of Young CJ in Eq setting aside the decision of the Tribunal, the Age reported the following:-

“Asked if he was disappointed not to see Waterhouse forced to reapply for his licence, Hill replied: “It’s not a matter of disappointment, it’s just a matter of getting the right result”.”

41 On 16 April 2003, after the judgment of the Court of Appeal, Mr Hill said in a radio interview:-

“We were (indistinct) at the end of the legal process in relation to those particular charges, and we’ll see where we go from there.”

42 On the same day in another interview, Mr Hill said:-

“The board will have to consider this judgment and decide what might occur next.”

43 These comments of Mr Hill are important for he was the Chief Executive Officer of the Board and he was a member of the Board. When he spoke in radio interviews or spoke to reporters he did so in an official capacity. He would not have spoken as he did had he considered that the Board would not approve of his statements. What these statements show is that Mr Hill considered that Mr Waterhouse should be disqualified, that he was not a person fit to hold a bookmaker’s licence. By 15 April 2002, the Board’s power to warn off or to deal with the licence was mentioned as possibilities. However, the proceedings continued with the Board seeking at least an order of disqualification. When disqualification appeared unlikely, the Board turned its mind to other means of achieving a like result.

44 The Australian Rules define “punishment” as including suspension, disqualification and the imposition of a fine. Cancellation of licence is not an available punishment for a breach of the Rules. Suspension is a temporary withdrawal in whole or in part of a licence. Disqualification effects a cancellation of the licence. A person who is disqualified may reapply for a licence at the end of the disqualification. Disqualification and a warning off carry the same disabilities. A person disqualified or warned off may not enter a racecourse or any training complex or be employed or engaged in any racing stable or race or have trained any horse whether as an owner, trainer, lessee or otherwise or share in the winnings of any horse. Understandably, as the Appeal Panel considered that Mr Waterhouse’s offences of 6 February 2002 involved no dishonesty and were merely a foolish attempt to assist Mr McCoy, the Panel considered that disqualification was inappropriate.

45 Once the stewards and the Board became aware, on 6 February 2002, of the extraordinary entries in Mr Waterhouse’s betting sheets of that day, the Board had a choice. The Board was entitled to exert its authority and to inquire into Mr Waterhouse’s conduct, to punish him if it was satisfied of his guilt and to cancel his bookmaker’s licence if it considered that he was not a proper person to hold a licence. Or the Board could stand back and let the matter proceed before the stewards and to hold its consideration of the matter until such time as the proceedings before the stewards and the appellate process thereafter had concluded. Had the Board done the latter and had the Board retained an open mind on the matter until after the Court of Appeal had handed down its judgment, there could have been no criticism of its actions. I agree with Mr Rushton that the function of cancelling a licence, like the function of warning off, is a function of the Board, not a function of the stewards. The Board was entitled to stand back until Mr Waterhouse had exhausted his appeals against conviction and his penalty had been decided.

46 However, the Board did not do that. It took the extraordinary course of interfering actively in the proceedings which were initiated by the steward’s inquiry. It lodged three appeals. It sought an order of disqualification. Counsel on its behalf took an active part in submitting that Mr Waterhouse’s offences were extremely serious and justified disqualification. The Board did not stand aside from the fray. It actively participated in it.

47 This one factor makes it almost impossible for the Board to say that it can now come to the show cause hearing with an open mind. The Board has expressed its views with respect to Mr Waterhouse’s conduct and its dissatisfaction with the penalty imposed by the Appeal Panel. The Board’s Chief Executive Officer, Mr Hill, did not stand back saying that the Board would consider the matter when the proceedings before the stewards and all appeals had run their course. Rather, he constantly expressed the view that the Board would be frightfully disappointed with Mr Waterhouse and that disqualification or cancellation would be appropriate.

48 During the course of a preliminary hearing of the show cause proceedings on 12 May 2003, there was this passage:-

“J.COSTIGAN: Could I put this to you. Whilst Mr Rushton has outlined to you that the matters he relies upon extend as far back as 1 August 1972 when your client was first registered as a bookmaker’s clerk. It seems pretty obvious to me that you can take it that this Board found your client a fit and proper person to hold a bookmaker’s licence when it granted to him a bookmaker’s licence on 1 August 2001. So that matters before that in effect are matters of record only.
…
J. COSTIGAN: That is not to say, of course, that we put from our minds any positive finding in favour of your client prior to 1 August 2001 or any action taken by a licensing authority in that same point of time. But it is to be assumed, unless Mr Rushton wants to convince me otherwise, that as of 1 August 2001 your client was found by this Board to be a fit and proper person to have issued to him a bookmaker’s licence. The rest of the matters in my mind make up an historical matrix.

P. BRERETON: If I can be comforted that this is a unanimous view of the Board and Mr Rushton is not going to argue for any alternative position, then that is very comforting and limits the scope of what I have to do. But I am sure members of the Board would understand that I would need that to be the confirmed position of the Board.

S. RUSHTON: There is no doubt that the Board decided at the particular point in time that Mr Waterhouse was a fit and proper person. In my respectful submission, one should not then proceed to deal with the matter in a vacuum. There is a history to the matter and those matters may have little or, indeed, no real significance at the end of the day, but they are there. That is why when we delivered the documents sought to be relied upon, the record was by and large a new record.”

49 It is difficult to understand what the comments of Mr Costigan were intended to convey. If only offences after 1 August 2001 were to be examined, the only significant event would be that of the “Extravagant Odds” affair. If that were the only event taken into account, then Mr Waterhouse would surely retain his licence for the Appeal Panel has ruled that the conduct of 6 February 2002 justified no more penalty than nine months suspension. However, the reality is that, when Mr Waterhouse’s fitness to hold a bookmaker’s licence is examined, it will be necessary for the Board to take into account the “Fine Cotton” affair, any relevant undertaking which Mr Waterhouse may have given in his application for a licence and the events and circumstances of the “Extravagant Odds” affair.

50 I should perhaps add that Mr Waterhouse’s undertakings would not seem to be of great moment. They were:-

“… I undertake that if given the opportunity to return to the track, I will conduct myself in an exemplary manner and never again come under adverse notice.
… However, I think I have been punished enough, and that I have demonstrated now that I can be trusted to behave honestly and appropriately as I have for the last fourteen years.
… I give an undertaking you will not have any trouble from me in any way, shape or form.
In the event of this or any future licence being granted, I agree:
1. To observe and be bound by the by-laws of the Association, Rules of Betting Regulations and Rules of Racing of the NSWTRB/ACTRC in force from time to time being and amendments appearing in the Racing NSW Magazine and subject to any resolutions or requirements of the Committee of the Association or NSWTRB.”

51 These undertakings may be of some significance but every applicant for a bookmaker’s licence puts himself or herself forward as a person of good character and presumably agrees to abide by the Rules. It is Mr Waterhouse’s conduct as a bookmaker which is of paramount importance to his fitness to hold a bookmaker’s licence.

52 Mr Brereton submitted that there would be an abuse of process if the Board used the show cause proceedings as a means of overcoming the deficiencies which it saw in the result of the prosecution initiated by the stewards. Mr Brereton referred to s 44 of the Act and submitted that the Board must accept that Mr Waterhouse has been fully and justly punished for his offences of 6 February 2002 and that it would be an abuse for the Board to substitute its own view of those offences.

53 However, Mr Brereton could establish this ground only if he satisfied the Court that the Board was acting deliberately to impose upon Mr Waterhouse what it regarded as appropriate punishment for his offences. There is evidence on which a submission to that effect could be based, but I did not understand Mr Brereton to go that far. Such a finding would involve actual bias on the Board’s part. Mr Brereton has submitted that there is a reasonable apprehension of bias. The establishment of that ground would not support a finding of abuse of process, being the exercise of power for an improper purpose.

54 Mr Brereton further submitted that it would be an abuse for the show cause proceedings to go ahead, for Mr Waterhouse would be placed in double jeopardy. Mr Brereton relied upon the decision of Walton v Gardiner (1993) 177 CLR 378. The application of the principle of double jeopardy would not have been available had the Board kept an entirely fresh mind about the matter until such time as the course of the prosecution and the appeals had concluded. It is unfortunate that many of the matters which the Board now wishes to raise with Mr Waterhouse were actively raised in the proceedings before the stewards, the Appeal Panel, and the Tribunal. Nevertheless, I agree with Mr Rushton’s submission that proceedings with respect to the cancellation of a licence are different in nature and ramification from proceedings with respect to an alleged breach of the Rules. Perhaps not exclusively, but in the vast majority of cases, the stewards deal with breaches of the Rules. The Board, as the licensing authority, deals with issues such as the propriety to hold a licence.

55 Mr Brereton also submitted that there would be an abuse of process because there was a reasonable apprehension of bias on the part of members of the Board.

56 The ground of bias relied upon is that a fair-minded observer would reasonably apprehend that the members of the Board, or some of them, had already prejudged the particular issue which is the subject of the show cause proceedings. In Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, Deane J said at 91-2:

“Inevitably, all or some of the members of the Tribunal will, over a period of time, form general views about such licensees and about the character, responsibility and standards of at least some individuals engaged in the broadcasting of television or radio programmes. The fact that some or all members of the Tribunal entertain such general views about a licensee or an individual involved in broadcasting would not of itself constitute disqualifying bias for the purposes of a s 17C inquiry concerning the conduct of particular broadcasting activities by that licensee or individual. That follows, in my view, from the need to adjust the content of the requirements of procedural fairness to what is appropriate to the circumstances of the particular case. Even if the requirements of procedural fairness were not to be so adjusted, it would nonetheless be possible to discern in the Act an overriding statutory intent that preconceived general views of a type which must almost inevitably result from the performance by members of the Tribunal of functions under the Act should not, of themselves, constitute disqualifying bias.

On the other hand, such preconceived general views about a licensee or an employee of a licensee must be distinguished from prejudgment of the very issue involved in an inquiry under the Act. Subject to the question of the operation of the rule or doctrine of necessity, there is nothing in the overall provisions of the Act or in the circumstances in which the Tribunal must function which would warrant the conclusion that prejudgment of the actual issue involved in an inquiry does not constitute disqualifying bias. That being so, the actuality or the appearance of prejudgment of the primary issue involved in the Tribunal's proposed fresh inquiry is inconsistent with the requirements of procedural fairness which the Tribunal must observe. If the Tribunal as a whole is affected by the actuality or the appearance of such prejudgment, the Tribunal will, subject to the possible operation of the doctrine of necessity, be precluded from embarking upon that proposed inquiry. If the Tribunal as a whole is not so affected but some of its members are, those members will, subject again to the possible operation of the rule of necessity, be disqualified.”

In that case, it was held that there was a reasonable apprehension that three members of the Australian Broadcasting Tribunal, but not all the members thereof, had pre-determined the issue which was the subject of inquiry.

57 That approach has been followed in Johnson v Johnson (2000) 201 CLR 488 and Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507. In that latter case at 563-4, Hayne J observed:

“To examine those questions it is necessary to consider more closely what is meant by "bias" and "apprehension of bias". "Bias" is used to indicate some preponderating disposition or tendency, a "propensity; predisposition towards ; predilection; prejudice". It may be occasioned by interest in the outcome, by affection or enmity, or, as was said to be the case here, by prejudgment. Whatever its cause, the result that is asserted or feared is a deviation from the true course of decision-making, for bias is "any thing which turns a man to a particular course, or gives the direction to his measures". This matter concerns only bias by prejudgment and I confine my reasons to that subject. The questions that may be presented by an allegation of bias for other reasons do not arise and are not considered.

The development and application of a test of reasonable apprehension of bias avoids any need for a court, which is asked to prohibit a decision-maker from going further or to set aside a decision which has already been made, to attempt some analysis of the likely or actual thought processes of the decision-maker. It objectifies what otherwise would be a wholly subjective inquiry and it poses the relevant question in a way that avoids having to predict what probably will be done, or to identify what probably was done, by the decision-maker in reaching the decision in question. As was said in Ebner v The Official Trustee in Bankruptcy , "[t]he question is one of possibility (real and not remote), not probability".

Saying that a decision-maker has prejudged or will prejudge an issue, or even saying that there is a real likelihood that a reasonable observer might reach that conclusion, is to make a statement which has several distinct elements at its roots. First, there is the contention that the decision-maker has an opinion on a relevant aspect of the matter in issue in the particular case. Secondly, there is the contention that the decision-maker will apply that opinion to that matter in issue. Thirdly, there is the contention that the decision-maker will do so without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case. Most importantly, there is the assumption that the question which is said to have been prejudged is one which should be considered afresh in relation to the particular case.”

58 The Board has already indicated in very clear terms, by its appeal from the decision of the Appeal Panel to the Tribunal, by its defence of Mr Waterhouse’s appeal to Young CJ in Eq, insofar as it related to penalty, and by its appeal to the Court of Appeal, that it is of the view that Mr Waterhouse should be disqualified. An order of disqualification would achieve cancellation of the licence. The Board has already sought actively to achieve the result which is the precise issue in the show cause proceedings.

59 Moreover, the comments of the Chief Executive of the Board and the sequence of events strongly suggest that the Board is seeking to achieve that which it was unsuccessful in achieving by its appeal from the decision of the Appeal Panel and its appeal from the judgment of Young CJ in Eq, namely, cancellation of the bookmaking licence. I refer to the sequence of events because we have the curious position that the Board is to sit on 24 June 2003 to consider the cancellation of a licence which will expire six days later. This suggests that the Board seeks to take strong action against Mr Waterhouse.

60 My view of the facts is that a fair-minded observer would reasonably conclude that the Board had already prejudged the issue.

61 It is necessary to keep in mind that the Board is the body which has the function of controlling racing in this State. It has responsibility to act in the public interest. It is not in dispute that, by its present actions, the Board is taking such steps as it considers necessary to take in the interests of the racing public.

62 Nevertheless, this is not a case where the doctrine of necessity applies. In Laws v Australian Broadcasting Tribunal, at 96, Deane J described the doctrine in this way:

“I agree with Mason CJ and Brennan J that the rule of necessity is, in an appropriate case, applicable to a statutory administrative tribunal, as it is to a court, to prevent a failure of justice or a frustration of statutory provisions. That rule operates to qualify the effect of what would otherwise be actual or ostensible disqualifying bias so as to enable the discharge of public functions in circumstances where, but for its operation, the discharge of those functions would be frustrated with consequent public or private detriment. There are, however, two prima facie qualifications of the rule. First, the rule will not apply in circumstances where its application would involve positive and substantial injustice since it cannot be presumed that the policy of either the legislature or the law is that the rule of necessity should represent an instrument of such injustice. Second, when the rule does apply, it applies only to the extent that necessity justifies.”

63 In the present case, it was not necessary for the Board to initiate the show cause proceedings. By the time the matter comes on for hearing on 24 June 2003, Mr Waterhouse’s licence will have only six days to run before its expiry. Secondly, the Board has power under s 24 of the Act to delegate its function of inquiring into licences to a committee of the Board. It has not done that, although, apparently, after objection to his doing so, Mr Hill will not sit as a member of the Board in the inquiry.

64 Taking all these factors into account, it seems to me that an order should be made staying further proceedings in the inquiry. It is not necessary for me to consider Mr Brereton’s submission that individual members of the Board may be disqualified from sitting by reason of prior involvement in Mr Waterhouse’s affairs.

65 Mr Brereton submitted that the Board was estopped from proceeding with the show cause notice by reason that, after the offences of 6 February 2002, the Board renewed Mr Waterhouse’s licence for twelve months from 1 July 2002. Mr Brereton submitted that the Board had exercised its power and had determined that Mr Waterhouse was a fit and proper person to hold a licence. However, the renewal did not involve the Board in any substantive consideration of the issue. The licence was renewed so as to hold the status quo pending final determination of Mr Waterhouse’s guilt. I do not see any facts which would support a finding of estoppel.

66 Mr Rushton submitted that, by agreeing to be bound by the Rules. Mr Waterhouse had waived his entitlement to natural justice. I do not accept that submission.

67 Mr Rushton also submitted that it would be futile to grant any relief to Mr Waterhouse for the licence which he holds is an annual licence which expiries on 30 June 2003. He submitted that the Board would have to consider an application by Mr Waterhouse to renew his licence whether or not it proceeds with the show cause notice. In my view, a procedure calling upon a bookmaker to explain why his licence should not be cancelled is a process different in substance from that under which an application to renew an annual licence is considered. I would not refuse relief on the ground of inutility.

68 Accordingly, I shall order that further proceedings on the show cause notice of 2 May 2003 be stayed. I make no comment with respect to the renewal of Mr Waterhouse’s licence. That is not the issue which is the subject of the show cause proceedings. And, I make no comment with respect to the merits of the issue between the Board and Mr Waterhouse. This application is concerned solely with matters of process and procedure, particularly with the requirements of natural justice.

69 I am of the view that both parties should abide their own costs of the proceedings. Both parties contributed to the present state of affairs. Although Mr Waterhouse has been successful, it was his foolish actions which provoked the Board’s response.

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Last Modified: 06/24/2003