Waterhouse v Racing Appeals Tribunal

[2002] NSWSC 1143

CITATION:	Waterhouse v Racing Appeals Tribunal [2002] NSWSC 1143
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 4585/02
HEARING DATE(S):	31/10/02
JUDGMENT DATE:	29 November 2002
PARTIES :	Robert William Waterhouse (P) Racing Appeals Tribunal (D1) Thoroughbred Racing Board of New South Wales (D2)
JUDGMENT OF:	Young CJ in Eq

COUNSEL :	P L G Brereton SC (P) S Rushton SC and J D Smith (D2) (1st defendant submits)
SOLICITORS:	Jeffreys & Associates (P) Watson Mangioni (D2)
CATCHWORDS:	ADMINISTRATIVE LAW [39]- Racing industry- Three tiered internal tribunal system- What type of appeal lies to final tier- Whether final tier only enabled to act if error at second tier- Whether final tier bound to give warning of serious possibility of intention to increase penalty. PROCEDURE [743]- Declaration- Whether appropriate to make declaration of invalidity of administrative appeal body's decision- Scope of remedy. WORDS & PHRASES- "Appeal"- "Bet"- "Legitimate".
LEGISLATION CITED:	Racing Appeals Tribunal Act 1983, s 15 Racing Appeals Tribunal Regulation 1999, reg 7 Thoroughbred Racing Board Act 1996, ss 42, 43(1), 45
CASES CITED:	Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 Attorney General v Luncheon & Sports Club Ltd [1929] AC 400 Australian Gas Light Company v Valuer General (1940) 40 SR (NSW) 126 Automatic Totalisators Ltd v Federal Commissioner of Taxation (1920) 27 CLR 513 Bourke v Hamilton [1977] 1 NSWLR 470 Briginshaw v Briginshaw (1938) 60 CLR 336 Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484 CDJ v VAJ (1998) 197 CLR 172 Chappell v TCN Channel 9 Pty Ltd (1988) 14 NSWLR 153 Chief of General Staff v Stuart (1995) 58 FCR 299 Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 Craig v South Australia (1995) 184 CLR 163 Davison Faulkner Pty Ltd v Totalisator Agency Board [1971] VR 274 De Lury v City of New York 371 NYS (2d) 964 (1975) DPP v Coster (Ashley J, Supreme Court of Victoria, 8.8.1994) Electricity Commission of NSW v Yates (1991) 30 NSWLR 351 Esler v Skill Ball Pty Ltd [1940] VLR 429 Ex parte Australian Sporting Club Ltd; Re Dash (1947) 47 SR (NSW) 283 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Hope v Bathurst City Council (1980) 144 CLR 1 House v The King (1936) 55 CLR 499 Ironmonger & Co v Dyne (1928) 44 TLR 497 Limako BV v Hentz & Co Inc [1979] 2 Ll LR 23 McManus v Beckham [2002] 4 All ER 497 Moran v McMahon (1985) 3 NSWLR 700 Parker v DPP (1992) 28 NSWLR 282 Petranker v Brown [1984] 2 NSWLR 177 Powell v Streatham Manor Nursing Home [1935] AC 243 Quirey v Queensland Principal Club [1995] 2 Qd R 535 R v Dunphy; Ex parte Maynes (1978) 139 CLR 482 Re Coldham; Ex parte Brideson (No 2) (1990) 170 CLR 267 Strange-Muir v Corrective Services Commission of NSW (1986) 5 NSWLR 234 Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545 Tote Investors Ltd v Smoker [1968] 1 QB 509 Trenerry v Trenerry (1966) 9 FLR 163 United States v Schenck 126 F (2d) 702 (1942) (Circuit Court of Appeal 2nd Circuit) Victims Compensation Fund Corp v Nguyen (2001) 52 NSWLR 213 Ward v Weeks (1830) 7 Bing 211; 131 ER 81 Warren v Coombes (1979) 142 CLR 531
DECISION:	See para 107.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 29 November 2002

4585/02 – WATERHOUSE v RACING APPEALS TRIBUNAL & ANOR

JUDGMENT

1 HIS HONOUR: The plaintiff is a licensed bookmaker. On 19 April 2002 the Stewards considered 16 charges against the plaintiff. Thirteen charges, numbers 1 to 13, related to alleged contravention of Local Rule of Racing 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."

A "book bet" is a bet otherwise than for cash.

2 The plaintiff was also found guilty of Charge 16, the gravamen of which was that on 6 February 2002, the plaintiff, while fielding at the Canterbury Park Racecourse engaged in conduct which in the opinion of the Stewards was prejudicial to the image of racing. The Stewards also found the plaintiff guilty of Charges 14 and 15 which are no longer relevant to the present proceedings as the plaintiff was acquitted on appeal.

3 The plaintiff appealed from the decision of the Stewards to the Appeal Panel. On 16 August 2002, the Appeal Panel, consisting of the Honourable T E F Hughes AO QC, Messrs J Fletcher, J Hiatt, D Leo and R Wicks confirmed the finding of guilt on Charges 1 to 13, but reduced the monetary penalty. On Charge 16, the Panel considered the dishonesty was not charged nor did the evidence support a finding of dishonesty, and that it was not an appropriate case for an imposition of a period of disqualification, but that there should be a suspension of the plaintiff's licence for a period of nine months from 16 August 2002.

4 Pursuant to s 15(a) of the Racing Appeals Tribunal Act 1983, the plaintiff alleged he was aggrieved by the decision of the Appeal Panel and appealed to the Racing Appeals Tribunal constituted by that Act. The Racing Appeals Tribunal was conducted before retired District Court Judge, Mr B R Thorley, who gave his decision on 6 September 2002. He confirmed the Panel's decision on Charges 1 to 13. As to Charge 16, he said that he did not share the view of the Appeal Panel, and that there should be an order for disqualification for nine months from 16 August 2002.

5 The plaintiff asks this Court to declare that the decision of the Appeal Panel on Charges 1 to 13 was void and that the decision of the Racing Appeals Tribunal with respect to Charge 16 is also void with an order, in the alternative, for certiorari to quash.

6 I heard argument on 31 October 2002. Mr P L G Brereton SC appeared for the plaintiff, the first defendant filed a submitting appearance, and Mr S Rushton SC appeared for the second defendant. I was assisted by both written and oral argument on that day.

7 I could not conclude the case on that day because of a number of reasons, one of which was that Mr Rushton quite reasonably wished to supplement his submissions which he duly did in writing a day or so later. Mr Brereton asked for a stay which, for reasons I gave on that day (see [2002] NSWSC 1040), I granted. I reserved my decision.

8 Various technical and procedural arguments were presented to me as to how far this Court could exercise its undoubted jurisdiction to supervise inferior tribunals. Mr Rushton put that the boundaries were mapped out by the law of certiorari, that I needed to find a jurisdictional error on the face of the record, and that what was the record with this sort of tribunal was severely circumscribed; see Craig v South Australia (1995) 184 CLR 163.

9 Mr Brereton, on the other hand, said that he was seeking a declaration of invalidity and this Court has a much wider scope for its supervisory jurisdiction.

10 There is certainly support for what Mr Brereton says in the well-known House of Lord's decision of Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, particularly per Lord Reid at 171. His Lordship made it clear that in his view there were many situations where a tribunal's decision might be declared to be void for lack of jurisdiction, even though it had jurisdiction to enter into the inquiry. This would occur, he said, if "it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive."

11 Australian courts have not given full force to these words in cases where there is an appeal from a court; see eg R v Dunphy; Ex parte Maynes (1978) 139 CLR 482, 495-6 and Electricity Commission of NSW v Yates (1991) 30 NSWLR 351, 357. However, when it is the decision of an administrative tribunal that is being questioned, the Anisminic principle has been more favourably considered.

12 However, there is still the problem that in Toowoomba Foundry Pty Ltd v The Commonwealth (1945) 71 CLR 545, 571-2, the High Court decided that a mere declaration of invalidity in respect of the decision of a tribunal was not able to be made. In Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437, Gibbs J discussed whether that view had been overtaken by subsequent decisions, but did not find it necessary to decide the point. Three other Judges in Jododex agreed with that view.

13 In Bourke v Hamilton [1977] 1 NSWLR 470, 484, Needham J ruled that properly construed there was nothing in the Toowoomba Foundry case which compelled the Court to refuse a declaration that the decision of an administrative tribunal was invalid in an appropriate case.

14 In my view I should follow Anisminic and Bourke v Hamilton and deal with the matter as one where this Court can exercise its supervisory powers by way of declaration. However, as will appear from later in these reasons, this decision on the procedural point is of no great moment to the parties in this proceeding.

15 I now pass to the question as to whether there was failure by the Racing Appeals Tribunal to such an extent that within the Anisminic principle as expounded by Lord Reid, the decision should be considered to be a nullity. However, before I do so I need to do two things, first, set out the scheme of dealing with breaches of the rules of racing, and secondly, set out the facts as found by the Panel and which are virtually undisputed.

16 Up until relatively recently, horse racing was controlled by the industry itself. In 1983, the Parliament passed the Racing Appeals Tribunal Act which provided an avenue of appeal in the ultimate to the Racing Appeals Tribunal. The Tribunal was set up to consist of a judge or retired judge or person who was eligible for appointment as a judge. Section 15 of the Act as originally enacted provided that any person who is aggrieved by the decision of the Committee of the Australian Jockey Club or under the rules of racing of the Australian Jockey Club might appeal to the Tribunal whose decision was to be final and conclusive and deemed to be the decision of the Committee of the Australian Jockey Club.

17 However, the industry was reorganised under the Thoroughbred Racing Board Act 1996. The jurisdiction of the Australian Jockey Club ceased and instead of the Committee having any jurisdiction, s 42 of the Act conferred on any person aggrieved by a decision of a racing authority to appeal to the Appeal Panel set up under the Thoroughbred Racing Board Act. Under s 45, the Appeal Panel was to consist of a legal practitioner of at least seven years' standing and for most purposes, not less than three members. It would seem from the Panel which considered the present matter that most, if not all, of the members of the Tribunal, have an intimate connection with the law and with horse racing though are not so intimately connected that there would be embarrassment over conflict of interests. The principal member who presided is a very senior silk.

18 The Racing Appeals Tribunal Act was amended so that s 15 now refers to appeals from the Panel instead of from the Committee. This produces the odd result that there is an appeal from a panel of three to five including a leading silk, and in the present case, a former stipendiary magistrate to a tribunal of one consisting of a retired District Court judge.

19 So far as the facts are concerned, they were found by the Panel to be as follows:

On the occasion of a race meeting held at Canterbury Park Racecourse on 6 February last, the [plaintiff] entered as book (ie credit) bets thirteen transactions recorded as win bets laid by him to Peter McCoy. The entries related to horses that raced that day at racecourses in other States; five related to horses starting at Sale (Vic); four to horses starting at Strathalbyn (SA); and four to horses starting at Eagle Farm (Brisbane). In each case McCoy's credit stake was recorded as $20 and the win dividend, including the stake, as 501. Ostensibly this gave rise to a recorded liability on the part of the [plaintiff] to pay to McCoy $10,000 if any horse the subject of an entry were to win.
Of the horses the subject of the entries, six won and seven lost. So as recorded, the entries resulted in a net win by McCoy of $59,860.00.
Each of the horses the subject of the impugned entries was a short-priced favourite. So the odds recorded were overly generous, indeed extravagantly so by ordinary bookmaking standards. This factor provoked the interest of the Stewards. The explanation provided to them by the [plaintiff] was that he had offered McCoy a credit facility to enable him to reduce an indebtedness of $500,000 that had arisen from earlier dealings between them quite unconnected with racing.
McCoy had been indebted to the [plaintiff] in a much larger sum – an indebtedness that long since had been discharged by his bankruptcy. The [plaintiff] gave evidence that on an occasion unspecified he and McCoy agreed to cap a pre-existing "indebtedness" at $500,000. As the [plaintiff] agreed before the Stewards, however, there was no legal debt owing by McCoy to him. There was no true debt to be "capped". Nevertheless he and McCoy told the Stewards of an arrangement between them that the [plaintiff] would choose horses upon which to place "bets" for McCoy, who neither was to nor did play any part in the selection of the horse or the fixing of the odds or of the amount of his stake or even in the selection of the race in which the "bet" was to be laid on a horse. The events of 6 February as recorded in the [plaintiff's] betting sheet effectuated this arrangement. The parties to it asserted in effect that out of deference to the paternal interest of Mr W S Waterhouse, the [plaintiff's] father, they conceived the arrangement as an honourable or dignified way of reducing a sum treated as owing.

20 The Panel then said two questions arose:

(1) Were the 13 entries records of bets within the meaning of Local Rule of Racing 91(q)? and

(2) If they were, were they "legitimate wagers" within the meaning of that Rule?

21 The same two questions arise before me though Mr Rushton says that the meaning of those words was a pure question of fact and this Court has no warrant to review the findings. I will deal with that matter first.

22 Both counsel referred me to the well-known decision of the Full Court in Australian Gas Light Company v Valuer General (1940) 40 SR (NSW) 126.

23 Mr Rushton relied on the well-known passage from the judgment of the Chief Justice at p 137 which, omitting reference to the authorities his Honour cited is as follows:

"(1) The question what is the meaning of an ordinary English word or phrase as used in the statute is one of fact not of law … (however) the meaning of a technical legal term is a question of law.
(2) The question whether a particular set of facts comes within the description of such a word or phrase is one of fact."

24 Mr Rushton says that here we have a finding of fact as to the meaning of the word "bet" and the phrase "legitimate wagers" and that is the end of the matter.

25 Mr Brereton, on the other hand, preferred what Davidson J said at 146, viz:

"(1) That the construction of a statute or any other instrument is always a question of law;
(2) That the first question for decision as a matter of construction is whether words in the instrument were intended to be used in their strictly legal sense or with their ordinary meaning;
(3) If it is determined as a matter of law that the strictly legal sense or the ordinary sense as the case may be was intended that sense must be applied by the Judge or Court;
(4) If it be determined that the legal or ordinary sense may not have been intended there is then a further question of law to be decided, namely whether there are particular circumstances requiring a determination of fact, firstly as to the nature of such circumstances and secondly as to the meaning which would be applied to particular words or phrases in the vernacular of people concerned in the occupation, trade, calling or circumstances dealt with by the statute;
(5) With the aid of findings on those points the statute must be construed as a question of law."

26 The third Judge, Halse Rogers J did not enter into the debate, he decided the question in the same way as the Chief Justice, but did not approve the method by which the Chief Justice had reached that result.

27 The difference between the two forms of expression is really more one of phraseology than of deep distinction. It is not necessary for me to delve into semantics because it is clear that "The question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law": Hope v Bathurst City Council (1980) 144 CLR 1, 7.

28 Courts have usually been very reluctant to define the word "bet" because of the fear that as soon as one does so, some smart individual will devise a scheme to avoid the gaming laws; see eg Ironmonger & Co v Dyne (1928) 44 TLR 497, 499. The approach generally has been to recognise something as a bet when one sees it, but as will be seen from the following discussion, in so doing courts have given a fair indication of what is covered by the word "bet". Most authorities indicate that there is very little difference between the meaning of the word "bet" and the word "wager". This was the view that the Panel took.

29 The Panel said that an essential feature of a wager or bet is that it is a bipartite transaction the parties of which profess different views about the outcome of an uncertain event. It rejected the argument as artificial and quite unreal that the plaintiff occupied two roles, (a) as a bookmaker offering odds to and accepting bets from Mr McCoy; and (b) as Mr McCoy's agent to select horses and accept the odds. It considered that the transactions were book entries recorded as bets which lacked that character because they were not based on truly bipartite dealings.

30 The Tribunal considered that the transactions were stamped with a considerable element of deviousness. It held that "The phrase legitimate bets is not a reference to lawful bets. It is a reference to bets which have the appearance of regularity and which would not otherwise be called into question."

31 The view of the Panel was obviously pronounced after consideration of the authorities.

32 One usually approaches this sort of case with the words of Hawkins J in Carlill v Carbolic Smoke Ball Company [1892] 2 QB 484, a case well known to all students of contract law. However, in the course of his judgment Hawkins J said at 490:

"It is not easy to define with precision what amounts to a wagering contract … but, according to my view, a wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake. … It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event, and, therefore, remaining uncertain until that issue is known. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.

"It is also essential that there should be mutuality in the contract … ."

33 Later cases have shown that indeed that definition was inadequate, though basically sound. As Macfarlan J said in Esler v Skill Ball Pty Ltd [1940] VLR 429, 436, there is no reason to confine wagering contracts to bipartite contracts and what Hawkins J meant by "two persons" was two or more parties. Martin J makes the same point at 440. In Automatic Totalisators Ltd v Federal Commissioner of Taxation (1920) 27 CLR 513, 518, three Justices of the High Court said that a transaction in which a member of the public "invests" in a totalisator "undoubtedly amounts to a bet, and substantially only differs from a bet made with a bookmaker in that in the one case the fund out of which the winner is to be paid is made up by mutual contributions of investors … while in the other case the winners are paid the amount of their winnings out of the money of the bookmaker …". Accordingly, with a bet on the totalisator, the totalisator can never lose because it takes, in the case dealt with by the High Court, 11% of all investments and pays the winners the other 89%. This has led Judges in subsequent cases to make the point that the winner is betting against all the losers; see eg Davison Faulkner Pty Ltd v Totalisator Agency Board [1971] VR 274, 281.

34 Accordingly, there is strong support for the view that two of the elements in Hawkins J's definition may need to be modified, but his basic proposition remains sound.

35 As to the modification required by the High Court's judgment in the Totalisator case, it is odd that outside Victoria the Totalisator case has been ignored. In Attorney General v Luncheon & Sports Club Ltd [1929] AC 400, the House of Lords was not referred to the Totalisator case and came to the opposite opinion, that is, that if a club operates a totalisator, it is not betting with the person who makes the investment. The same view was reached by the English Court of Appeal in Tote Investors Ltd v Smoker [1968] 1 QB 509. Again, the Totalisator case was not cited to the court. This line of case was followed in a lotto case in the New South Wales Court of Appeal in Petranker v Brown [1984] 2 NSWLR 177, again without any reference to the High Court or Victorian authorities in either arguments or judgment. I believe I have to follow what the High Court said and on this basis the definition given by Hawkins J has to be modified, but in this respect it does not affect the current case.

36 If there is an essential element in a bet, it is that "a bet is something staked to be lost or won on the result of a doubtful issue …": the Luncheon & Sports Club case at 405.

37 Accordingly, what one must look for is a situation where there are two sets of persons professing to hold opposite views touching the issue of a future uncertain event mutually agreeing that dependent upon the determination of an event one shall win from the other or from a pool and the other or the pool shall lose.

38 Mr Brereton accepts that there must be a bipartite transaction where the parties profess different views about the outcome of an uncertain event. As to professing he says that it was common ground before the Panel (although not before the Stewards), that it mattered not that the parties subjectively held the same view as the outcome, or probable outcome, of the event as the word "profess" connotes an assertion, not a belief. He cites Petranker v Brown at 181 and 195 to support this view, but I'm not too sure that it does. However, I would agree with the general proposition that when one is making a bet on a horse in a race one does not necessarily have to be convinced in one's heart that the horse is going to win. One may, if a punter, have picked the horse by intuition, or it may be that the betting on the horse is part of a system in order to control possible losses.

39 There are two prime dictionary meanings to the word "profess", the first is "pretend" which obviously does not fit in the current context, and the second is "to declare openly, announce or affirm, avow or acknowledge" (Macquarie Dictionary). Even if one does not subjectively believe in the validity of the cause, the word "profess" carries with it the idea that one must actually say it or acknowledge it. Indeed, this point was made by Priestley JA in the Petranker case at 195 that, for instance, a machine providing six numbers for a lotto coupon was not a bet because no-one was professing that those six numbers would win.

40 Mr Brereton says that there is no difficulty about the bookmaker as agent professing the opinion that a horse will win and the bookmaker as bookmaker professing that it will not and making a bet. He points by way of analogy to the decision of the English Court of Appeal in Limako BV v Hentz & Co Inc [1979] 2 Ll LR 23. That was a commercial case involving options to purchase cocoa on the cocoa market where the rules were that if certain things happened, a broker was able to buy from itself as agent for the principal in order to make a contract. The English Court of Appeal perceived no difficulty with that concept. I should add that it is certainly not unusual for a party such as a mortgagee to be given power of attorney by the mortgagor to act in certain events even though that may involve the mortgagee as principal making a contract with itself as agent.

41 Mr Brereton also draws attention to LR94 which contemplates that a bookmaker may take a commission or request for the placement of a bet on a horse. I do not think that this takes us very much further because the commission is to place a bet on a horse, not for the bookmaker as agent to be authorised to select the horse.

42 Mr Brereton then says that in DPP v Coster, Supreme Court of Victoria, Ashley J, 8 August 1994, his Honour held that a magistrate's dismissal of a charge of using premises for betting was correct in a case where a licensed bookmaker received phone requests to place bets on course. The punter provided the names of the horses and the amount, but was not provided with any odds or prices. Mr Brereton says this case shows it is unexceptional practice of a bookmaker placing with himself bets on behalf of a punter with the punter's authority when the odds are not known.

43 I appreciate the strength of all these arguments, but it does seem to me that to accept them would be to get completely away from the basal concept of a bet, that is where A professes that a certain event will happen and stakes money on his or her profession and B accepts that he or she will lose money to A if that event happens. I can understand the situation where the odds on which the bet is to be placed are left up to the bookmaker but I consider that where the event is left to the agent as well as the amount and the odds, then there is not a transaction that would come within the definition of bet. I do not consider that one can improve the situation by dealing with cases where an agent has authority to complete a transaction on behalf of a principal even though the transaction is with the agent himself.

44 Mr Rushton further says that this is not a transaction in any event where the punter could win because any gains credited to the punter in the bookmaker's books would be used to reduce a debt of honour owed to the Waterhouse family. Accordingly, there would never be a situation where the punter would ever receive real money and as he was not liable as a matter of law to pay the debt of honour, discharge of that debt of honour was not a win in any event. There is some force in this submission, but it does not seem to me that it is of value to discuss it exhaustively because for the reasons I have indicated, there is no bet in the instant transaction.

45 Even if I were wrong on this, I am of the view that the bet was not a legitimate bet.

46 Mr Brereton pressed the view that a legitimate bet merely meant a lawful bet. It seems to me that this construction robs the word "legitimate" of any semantic significance.

47 The word "legitimate" can, in appropriate cases, mean "lawful" but often it means "real" or "genuine". Examples are United States v Schenck 126 F (2d) 702 (1942) (Circuit Court of Appeal 2nd Circuit), where the court had to construe the words "legitimate expenses" and held that that meant real or genuine expenses. Again, in De Lury v City of New York 371 NYS (2d) 964 (1975), William Mertens J in the Supreme Court New York County, held that a legitimate reason to lay off city workers included an unprecedented financial crisis facing the city. Again this meant a genuine reason rather than merely a lawful reason.

48 The Panel said that "… the panel finds that even if the entries related to 'wagers', the 'wagers' were not legitimate because a truly bipartite character is a criterion of legitimacy in this area of discourse. There is a sound policy reason for denying legitimacy to the sort of transaction that is the subject of charges 1-13. Business between a bookmaker and his client should not be the product of a unilateral decision on the part of the bookmaker as to the details of which the client is kept in complete ignorance until the time of settlement arrives, as was the case here."

49 As I have already noted, the Tribunal said, "The phrase legitimate bets is not a reference to lawful bets. It is a reference to bets which have the appearance of regularity and which would not otherwise be called into question."

50 With great respect to the Tribunal, the Panel's interpretation of the phrase is far nearer the mark. The bet must not only have been a lawful bet, but one which was a real and genuine bet rather than something else or some fabrication.

51 In my view, there is no error shown by the Panel in respect of Charges 1 to 13 and even though I might disagree with some of its reasons, the decision of the Tribunal not to interfere with the Panel's decision on Charges 1 to 13 means that I need go no further.

52 I now pass to Charge 16.

53 The appeal attacks first, the finding of guilt, and secondly, the increase of penalty. So far as the first matter is concerned, the complaint is that the Panel erred in holding that the evidence was capable of establishing conduct prejudicial to the image of racing and that it failed to address and make findings in respect of the charge as it was framed and particularised and determined it on a basis which did not reflect the charges framed and particularised.

54 The charge was laid under Australian Rule of Racing AR174A which states:

"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."

55 The particulars given were that the plaintiff:

(a) placed 13 bets in his betting records on behalf of Peter McCoy at odds of 500-1 when the Australian Prices Network official price for such horses ranged between $1.70 and $3.80;

(b) placed those 13 bets in his records which were not legitimate wagers; and

(c) did not keep proper betting books in that he did display a debt of $500,000 attributable to Peter McCoy which had no association with his business as a licensed bookmaker.

56 Further particulars were sought and supplied and in relation to Charge 16, it was alleged that each of the three matters had an adverse effect on the image of racing because "The image of racing both to the members of the racing industry and the general public is a business which is conducted with a high standard of integrity and propriety has been adversely affected by the criticism and suspicion engendered by" the various charges. "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."

57 The Panel found that the odds recorded in relation to McCoy were such that a reasonable member of the racing public would regard with suspicion the extraordinary disparity. It also found that a member of the race going public, if apprised of the facts, would reasonably regard that conduct as reflecting adversely on the image of racing. "He or she, on those facts alone, would reasonably suspect that the laying by the [plaintiff] of such disparately favourable odds connoted some impropriety". The matter outlined in particular (b) would increase that suspicion and consequently prejudice and (c) would exacerbate it further. The Panel's view therefore was that the impact of those matters upon a reasonable member of the race going public would be prejudicial to the image of racing and found the charge proved.

58 The Tribunal said:

"I would accept for the purposes of these reasons the submissions that were urged by Mr Brereton SC that before a charge relating to prejudice to the image of racing can be sustained there has to be an element of public knowledge; and, secondly, that there is in fact a tendency to prejudice the sport as distinct from the individual involved; and lastly that the conduct in question can be labelled as blameworthy. All of these matters, however, I think were amply demonstrated in the evidence.
The betting sheets once in the hands of the Stewards, were clearly going to raise questions in their minds. The Stewards would not know of any antecedent financial arrangements between the Waterhouse interests and McCoy. Suspicions would immediately present to the minds of the Stewards. Suspicions might include money laundering or a possible avoidance of income tax. That sort of reaction would be more than likely and it would, as indeed happened, immediately prompt an inquiry by the Stewards into the reality of what had taken place. That was inevitable. The [plaintiff] Mr Waterhouse is a person who has a particular image in the world of racing and any attention paid to him by the Stewards' Panel, particularly in the light of his previous transgressions, would inevitably attract media attention in no minor way. I cannot see that the [plaintiff] can argue that there would not inevitably be public knowledge of what he did and the way in which it was done.
Once the media began to report, there would be damage to the image of racing.
I do not think that it can be argued that those members of the racing public would not entertain similar suspicions and bewilderment at the extravagance of these transactions. …
That the conduct has to be blameworthy, equally I think is demonstrable. I have no doubt, as indeed the Appeal Panel found, that these bets were not legitimate bets as that term is properly to be understood. If they were not legitimate bets they were breaches of the rules applicable to Mr Waterhouse and in that sense it is conduct, which was blameworthy."

59 Mr Brereton says that the mere fact that a bookmaker gives favourable odds to a punter is not objectionable and quotes situations where a bookmaker is endeavouring to increase his market share by giving "overs". It seems to me, however, that this argument fails to address the point that the odds were not slightly over, but were extravagantly over what was being offered by other bookmakers. The second point that the wagers were legitimate I have already considered. As to the third point, Mr Brereton puts that it was not inappropriate to enter the so-called debt by McCoy even though perhaps it was only owing morally on the client balance list which was simply a private record. He referred to the decision of the Queensland Court of Appeal in Quirey v Queensland Principal Club [1995] 2 Qd R 535 which recognises that in the racing industry a person is still in default of paying a bookmaker's debt even though he or she has gone into bankruptcy.

60 I have some doubt about the third of the matters particularised, but it does not seem to me that it has any effect on the outcome of the case. The next matter is whether the image of racing could be said to have been damaged by the relevant conduct. Mr Brereton says the misbehaviour must negatively affect the sport, not merely the accused's personal and financial interests. "An individual's behaviour may be classified as injurious to the sport if: (1) it has some negative bearing on the individual's capacity to perform his or her public duties or functions in the sport; or (2) the individual has been put forward to the public as subscribing to a particular standard, and that standard has been lowered in the eyes of the public." These words are taken from the conclusion reached by Martin Kosla in his article "Disciplined for 'Bringing a Sport into Disrepute' – A Framework for Judicial Review" (2001) 25 Melb ULR 654, 669. The learned author comes to that conclusion by analogous reasoning from Chappell v TCN Channel 9 Pty Ltd (1988) 14 NSWLR 153.

61 Kosla points out that there are some people in a sport whom the public never accepts as role models, and accordingly, that sort of person's misbehaviour can rarely cause the sport to be in disrepute. He says that there are "colourful" characters who bring diversity to a sport and "if such individuals engage in misbehaviour, it cannot necessarily be said that they have engaged in conduct injurious to a sport, as they were not held out as subscribing to a particular standard of behaviour in the first place." (page 677).

62 However, in the instant case, even if the plaintiff might be described as a colourful racing identity, he holds himself out as being a person of good character and a person who is honest and trustworthy as a bookmaker. Accordingly, conduct which shows that he falls below the standard yet might be allowed to continue to participate, may be conduct which affects the image of racing.

63 I consider, with respect, that Mr Kosla's tests as reiterated in Mr Brereton SC's submissions are probably as good a set of guidelines as any as how one approaches this aspect of the case. However, the question merges in with the next question as to whether there is any blameworthiness attaching to what the plaintiff did. Is it sufficient that there be publicity of a reasonably held suspicion that the bookmaker has fallen short of the standard, or has the matter got to go beyond reasonable suspicion to proof of fault?

64 As I have said, the Tribunal found there was blameworthiness in making the improper entries in the books in that they were not legitimate bets, that the plaintiff must have known this would cause suspicion, and that the suspicion must become widely reported.

65 It now seems accepted that where a person knew or reasonably should have appreciated that the press were likely to repeat what she said, she will be responsible in defamation for the damage caused by the press report of a defamatory statement: McManus v Beckham [2002] 4 All ER 497, 509 and see Ward v Weeks (1830) 7 Bing 211; 131 ER 81.

66 The facts were that Mr Waterhouse did do something blameworthy in that he did something wrong in recording other than legitimate bets.

67 However, it would seem to me that if one does look at blameworthiness, the raising of suspicion which suspicion may reasonably be expected to get publicity, may qualify as blameworthiness.

68 It must be remembered that the concept of blameworthiness originally came into military law in connection with charges of neglect. In those cases, one had to look at the duty that the soldier was under to take care for the article in question. Blameworthiness is not the equivalent of mens rea (per Black CJ and Davies J in Chief of General Staff v Stuart (1995) 58 FCR 299, 308). More perhaps to the point is Lockhart J's observation in the same case, an observation with which I would think Lee and Heerey JJ agreed, that the word "blameworthiness" itself is too ambiguous and imprecise to be of real value in a case of this nature. There are situations where to create suspicion could amount to blameworthiness. Thus, in the days when adultery was looked on much more seriously than it is today, a party cited whose conduct had given rise to reasonable suspicion that he had committed adultery with the wife, would be refused costs; see eg Trenerry v Trenerry (1966) 9 FLR 163.

69 I certainly would not, with respect, go as far as the Tribunal in saying that if a person might reasonably suspect from the conduct of a bookmaker that he might be money laundering or avoiding income tax, that that would be enough if in fact, as would appear to be the case here, he was doing neither. However, where there was some wrong conduct or where the conduct would give rise to suspicion in the minds of a reasonable observer, when the conduct was publicised (if the bookmaker could reasonably assume that it would be), then the offence could be made out.

70 In my view, the Panel and the Tribunal were justified in making the finding that Charge 16 had been made out.

71 Before dealing with penalty, I should note that there was some debate before me as to whether the matters dealt with in this case were being considered for the public protection or by way of penalty.

72 There is not a true dichotomy between the two concepts as penalty or punishment usually carries with it a deterrence to others and hence operates to protect the public from the commission of like offences.

73 However the vital difference is that where a professional body's activities are mainly protective, an incident warranting only a slap on the wrist may, in its context or added to other conduct not of itself a breach of the rules, lead to the conclusion that the person should not be permitted to prey on the public in that profession. Thus suspension is rarely an option for bodies whose prime aim is protective.

74 It seems to me that the scheme of the Rules of Racing involving precise charges shows that the present matter is a penal matter rather than primarily for the public protection.

75 In a penal matter, the rights of the accused are to be more tenderly considered. Particularly is this so whee the decision affects the right to work. However there was no cause for complaint here as the questions relating to the charges were considered under the higher standard from Briginshaw v Briginshaw (1938) 60 CLR 336, 362.

76 The next matter is the question of penalty. This is a very complex matter.

77 A series of preliminary matters needs to be considered.

78 There is no doubt at all that Mr Thorley, who constituted the Tribunal, made it clear to the parties that in his view he had jurisdiction to make any order he thought was appropriate and that the parties concurred in that view. Secondly, although there was no direct notice to the plaintiff that Mr Thorley was seriously considering awarding an increased penalty, he made it perfectly clear that that was always a possibility.

79 I have already set out the provisions of s 15 of the Racing Appeals Tribunal Act. The Act itself gives no guidance as to what sort of appeal is contemplated. However, it does empower the making of regulations to deal with procedures and the class of case in which an appeal will lie.

80 The Racing Appeals Tribunal Regulation 1999, by Regulation 7 requires a notice of appeal with grounds to be stated and provide that without the leave of the Tribunal, an appellant is confined to the grounds. Further, no further evidence is to be considered on the appeal except by leave, and then only if there is an excuse as to why it was not presented below.

81 The Act itself makes it clear that it is only the defendant who can appeal, that there is no right of appeal to the Board.

82 The appeal to the Tribunal is to be contrasted with the appeal to the Panel which is governed by s 43(1) of the Thoroughbred Racing Board Act 1996 which clearly states that an appeal to an Appeal Panel is to be by way of rehearing.

83 Mr Brereton says that this means that the appeal to the Tribunal must be an appeal in the strict sense, or alternatively, an appeal by way of rehearing, and in each case it is necessary for error to be established before the appeal tribunal can substitute its own view.

84 There is certainly a considerable amount of authority in favour of that general proposition, even on an appeal by way of rehearing; see eg Powell v Streatham Manor Nursing Home [1935] AC 243, 249 and CDJ v VAJ (1998) 197 CLR 172, 182 et sq and 230 et seq.

85 The proposition in the previous paragraph is an overstatement as there are some situations where on an appeal by way of rehearing the appellate court may in some defined situations reach its own conclusion in the absence of error below; see eg Warren v Coombes (1979) 142 CLR 531.

86 However in all cases where the court or tribunal below has formed a discretionary judgment or a judgment akin to a discretionary judgment, the appellate court can only act to correct error; see eg Moran v McMahon (1985) 3 NSWLR 700.

87 There is no doubt that a determination of a penalty is a discretionary judgment within this rule. Indeed the leading case of House v The King (1936) 55 CLR 499 is directly analogous being a case of an appeal from a sentence of imprisonment by the judge in bankruptcy. The oft quoted passage from that case at p 505, clearly states the principle that the appellate court or tribunal can only act if it appears that some error has been made in exercising the discretion.

88 Mr Rushton says that whilst what was put by Mr Brereton may be appropriate when courts are involved, a presumption arises that a body which has the power to review or hear an appeal from another administrative body, exercises original jurisdiction to determine the matter on the evidence and law applicable as at the date of the appeal proceedings. He cites Ex parte Australian Sporting Club Ltd; Re Dash (1947) 47 SR (NSW) 283 and Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616, 621. Neither of those cases are authority for that proposition. Each concerned itself with an appeal from an administrative tribunal to a court.

89 Indeed, the presumption is the reverse. In Strange-Muir v Corrective Services Commission of NSW (1986) 5 NSWLR 234, 250, McHugh JA said:

"There is a presumptive rule that in an administrative appeal to an administrative body the issue is whether the decision was correct when it was made. The hearing is not de novo. This is so whether or not the tribunal is empowered to hear additional evidence."

90 However, Mr Rushton is correct when he submits, based on Re Coldham; Ex parte Brideson (No 2) (1990) 170 CLR 267, 273-4, that:

"Whether the right of appeal against an administrative decision is given to a court or to an administrative body, the nature of the appeal must ultimately depend on the terms of the statute conferring the right."

91 This passage was taken up by the Full High Court in Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, 203, where the majority said:

"There is, thus, no definitive classification of appeals, merely descriptive phrases by which an appeal to one body may sometimes be conveniently distinguished from appeal to another.
It is common and often convenient to describe an appeal to a court or tribunal whose function is simply to determine whether the decision in question was right or wrong on the evidence and the law as it stood when that decision was given as an appeal in the strict sense. …
If an appellate tribunal can receive further evidence that its powers are not restricted to making the decision that should have been made at first instance, the appeal is usually and conveniently described as an appeal by way of rehearing. Although further evidence may be admitted on an appeal of that kind, the appeal is usually conducted by reference to the evidence given at first instance and is to be contrasted with an appeal by way of hearing de novo. In the case of a hearing de novo, the matter is heard afresh and a decision is given on the evidence presented at that hearing.
Ordinarily, if there has been no further evidence admitted and if there has been no relevant change in the law, a court or tribunal entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was error on the part of the primary decision-maker. That is because statutory provisions conferring appellate powers, even in the case of an appeal by way of rehearing, are construed on the basis that, unless there is something to indicate otherwise, the power is to be exercised for the correction of error."

92 Mr Rushton submits that the power to receive fresh evidence, the statement in the Regulation that the Tribunal may inform itself of any matter in such manner as it thinks fit, and to make such order in relation to the disposition of the appeal as the Tribunal thinks fit, is indicative of a hearing de novo.

93 However, the passage I have cited from the Strange-Muir case shows that the power to take further evidence does not, by itself, give rise to this situation and the power of the Tribunal to inform itself must be in like plight.

94 Although the power to "make such order as it thinks fit" was considered to be a key note in Re Coldham, the power in 15(d) of the Racing Appeals Tribunal Regulation 1999 in the instant case is not quite as strong. Indeed, the power in 15(c) to remit the matter to the Panel suggests that the hearing is not a hearing de novo.

95 Mr Brereton also appeals to the purpose of the statute which he says is clearly to give the accused person a right of appeal, the Tribunal was intended to provide a remedy for persons in effect deprived of their livelihood by the racing authorities to an independent body. There is no reason at all why the ordinary presumption should not apply and that the Tribunal was put in place to correct error. There is just no policy reason for a third tier tribunal to conduct a hearing de novo, particularly as the second tier tribunal had an appeal to it by way of rehearing.

96 In my view, Mr Brereton's submissions are to be preferred. The preferable view is that the appeal is by way of rehearing and the general proposition that the power is there to correct error is applicable.

97 Accordingly, before the Tribunal could exercise its power it had to find error. Moreover, it had to find error in respect of the matters brought to its attention in the grounds of appeal. The Tribunal clearly did not find that the Panel had made any error at all in any of the matters raised in the notice of appeal. Indeed it agreed with the view of the Panel on such matters. It was only on a matter not raised by the notice of appeal and on which the opposing party could not mount an appeal that error was discerned.

98 To my mind in these circumstances the Tribunal had to dismiss the appeal. It could not, especially in a case where there was no right in the Board to appeal, and the appellant made no complaint of any error so far as the "sentence" was concerned, substitute its own view on penalty.

99 Mr Rushton says that even if I were to come to this conclusion, this was an error committed by the Tribunal within jurisdiction. I doubt this. It may be that Mr Rushton and I are just using the word "jurisdiction" in different senses. The Tribunal only had power to make an order which corrected error below. It went beyond its power and exceeded its jurisdiction.

100 The next matter which now becomes otiose is whether the Tribunal should have specifically warned Mr Waterhouse that it was seriously considering increasing the penalty.

101 The general proposition which has been debated before me derives from Parker v DPP (1992) 28 NSWLR 282 where the Court of Appeal held that the failure by a trial judge to disclose that he was contemplating imposing a custodial sentence in lieu of a non-custodial sentence appealed from amounted to a denial of procedural fairness. The decision has been applied generally since; see for instance Victims Compensation Fund Corp v Nguyen (2001) 52 NSWLR 213. It is true that Mason P said in Nguyen's case at 219 that Parker's case was not authority for the proposition that a tribunal must always signal a specific intention. It depended on the particular circumstances. However, the practice in the racing industry does seem to follow Parker's case. This was the procedure adopted, for instance, by Mr Justice Perrignon in the Appeal of Buik before the Harness Racing Appeals Tribunal on 4 April 1997 and by Mr Tom Hughes QC in Appeal of Moffatt before the Appeal Panel on 16 May 2002.

102 In my view the Tribunal ought to have alerted the plaintiff to the fact that it was seriously considering increasing the penalty. The mere fact that all counsel knew or thought they knew that the Tribunal could increase the penalty or that counsel for the Board argued in favour of an increase of penalty does not seem to me to get over the barrier. Accordingly, had it been necessary, I would have found for the plaintiff on this ground as well.

103 It follows that the decision of the Tribunal must be declared to be void. This has the effect of restoring the decision of the Panel so that the plaintiff is suspended for nine months from 16 August 2002. I will, however, direct that the order I have just made not be entered for seven days so that if counsel considers that it is more appropriate to award certiorari to quash, that can occur.

104 So far as costs are concerned, the ordinary rule adopted by the Court of Appeal is that where an appellant has succeeded on appeal on a point not taken before the trial judge or where the trial judge has fallen into error induced by the acts or omission of counsel, the appellant does not get an order for his costs. Although I in no way intend to suggest that there was anything blameworthy in the way either counsel conducted himself before the Tribunal, it would seem that the present point was not seriously considered by the Tribunal and that the Tribunal was allowed to lull itself into a false sense of security in what it was doing.

105 Accordingly, in my view, there should be no order for costs of the appeal.

106 I should note again, to avoid any misunderstanding, that the decision of the Panel suspending the plaintiff for nine months from 16 August 2002 stands.

107 Accordingly I order that the decision of the Racing Appeals Tribunal on 6 September 2002 is void. I otherwise dismiss the amended summons and make no order for costs. I direct that the orders I have just made not be taken out for seven days after I have pronounced them.

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Last Modified: 12/02/2002