Dragon Community Trust Limited v Secretary for Internal Affairs
[2025] NZHC 507
•13 March 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2024-485-605
[2025] NZHC 507
UNDER The Judicial Review Procedure Act 2016, Part 30 of the High Court Rules IN THE MATTER OF
An application for judicial review
BETWEEN
DRAGON COMMUNITY TRUST LIMITED
Applicant
AND
AND
THE SECRETARY FOR INTERNAL AFFAIRS
First Respondent
THE GAMBLING COMMISSION
Second Respondent
Hearing: 17 February 2025 Appearances:
M S Smith & J True for Applicant
A W M Britton & B R McCook-Weir for Respondent
Judgment:
13 March 2025
JUDGMENT OF CHURCHMAN J
Introduction
[1] The Dragon Community Trust Limited (DCT) seeks judicial review of a decision of the Gambling Commission (the Commission) dated 24 July 2024 (the Decision). That decision declined an appeal by DCT of a decision by the Secretary for Internal Affairs (the Secretary) to decline DTC’s application for a class 4 venue gaming licence.
[2]The DCT seeks the remedies of:
DRAGON COMMUNITY TRUST LIMITED v THE SECRETARY FOR INTERNAL AFFAIRS [2025] NZHC 507 [13 March 2025]
(a)a declaration that the Decision was unlawful; and
(b)an order setting aside the Commission’s decision and requiring it to be remitted to the Commission to be considered in light of this Court’s judgment.
Grounds of review
[3]The applicant has advanced four grounds of judicial review, namely:
(a)the Commission made an error of law in concluding that s 67(1)(k) of the Gambling Act 2003 (the Act) was not satisfied in the circumstances;
(b)the Commission made an error of law in concluding that s 67(1)(s) of the Act was not satisfied in the circumstances; and
(c)the Commission made an error of law in misunderstanding and misapplying s 71(1)(g) of the Act.
Although it is not pleaded in the statement of claim, in submissions, counsel raised a further alleged error being a failure to cross-check its approach against the context in which the class 4 licensing regime operates.
[4]These grounds give rise to two primary issues to be determined:
(a)Whether the Commission erred in its assessment that it could not be satisfied that the venue would not be used mainly for gambling under 67(1)(k) and subsequently, whether the Commission erred in failing to grant the application subject to a condition under s 70(1)(i) to prevent class 4 gambling being conducted at the venue unless the primary activity of the venue (the sale of alcohol) is available at that time;
(b)Whether the Commission erred in its decision that the applicant could not comply with the regulatory requirements of s 71(1)(g) in its assessment under s 67(1)(s).
Background
[5] Gambling is regulated by the Act. The operation of gaming machines (commonly called “pokies”) is described in s 30 of the Act as being “class 4 gambling”.
[6] Section 31 of the Act provides: class 4 gambling may be conducted only by a corporate society that holds:
(a)a class 4 operator’s licence for gambling; and
(b)a class 4 venue licence for the place where the gambling is conducted.
[7] A class 4 venue licence allows class 4 gambling to be conducted via gaming machines at a venue.1 Between 2017 and 2023, the applicant held a class 4 venue licence allowing nine gaming machines to be operated at “The Muddy Farmer” venue (“the Venue”). When the Venue failed to comply with formal requirements to renew its alcohol on-licence (“alcohol licence”) in 2023, it could no longer operate class 4 gambling on its premises. The Auckland District Licensing Committee (ADLC) held that Mr Zhu, the operator of the Venue, was unsuitable due to his unsatisfactory compliance record. On 21 June 2023, the applicant surrendered its class 4 venue licence due to a 4-week period of inactivity.
[8] On 17 August 2023, the applicant applied for a new class 4 gambling licence for the Venue. The primary function of the Venue was a tavern. At the same time, the Venue applied for an alcohol licence. The Secretary considered the application for the class 4 venue licence to be incomplete due to the fact the venue did not then have an alcohol licence.
1 Gambling Act 2003, ss 20(1)(d) and 30.
[9] On 31 January 2024, the applicant advised the Secretary that its alcohol licence application had been declined.
[10] On 14 March 2024, the Secretary notified the applicant of his refusal to grant the class 4 Venue licence. The Secretary was not satisfied that:
(a)the Venue would not be used mainly for operating gaming machines under s 67(1)(k); and
(b)the proposed Venue manager and key person, Mr Zhu, was a suitable person under s 67(1)(c).
[11] On 27 March 2024, the applicant lodged an appeal to the Commission under s 77(1)(a) of the Act. The application was amended to include changes to the proposed key person responsible for operating the Venue. The applicant gave an assurance that the Venue would not operate before alcohol could lawfully be sold at the Venue pursuant to an on-licence and advised that a further on-licence application had been made and was pending a decision from the ADLC.
The Commission’s decision
[12] On 24 July 2024, the Commission dismissed the appeal. The Commission was not satisfied that the Venue, if licenced, would not be used mainly for operating gaming machines under s 67(1)(k). The Commission noted that the Venue could not operate its primary activity as a tavern without an alcohol licence issued under the Sale and Supply of Alcohol Act 2012, nor did the applicant put forward a suitable interim condition whereby the primary use of the Venue was not reliant on an alcohol licence.
[13] The Commission rejected the applicant’s submission that the requirement under s 67(1)(k) could be addressed by imposing a condition prohibiting gambling until an alcohol licence was issued. The Commission referred to the Secretary’s observation that the applicant should have arguably anticipated that the ADLC and the Secretary would decline the applicant’s earlier applications in light of Mr Zhu’s poor
compliance record. The Commission noted that the appellant ran the risk of an unfavourable outcome of the application in light of Mr Zhu’s record and intended to “buy time” when the Secretary refused to grant the licence due to Mr Zhu’s connection with the Venue.
[14] The Commission distinguished the applicant from the applicant in The Southern Trust Inc/Te Wheke Holdings Limited.2 In Te Wheke, the applicant successfully appealed a decision to decline an application for a gambling licence in circumstances where it had obtained an alcohol licence after the Secretary’s decision but prior to the Commission’s consideration of the appeal. The Commission noted that in the present case, the application for an alcohol licence had yet to be decided.
[15] In addition, the Commission was not satisfied that the applicant was able to comply with all regulatory requirements under s 67(1)(s). The Commission referred to s 71(1)(g) which requires a venue to surrender its gambling licence if class 4 gambling is not conducted within a 4-week period of granting the licence. The Commission was not satisfied that the applicant could comply with s 71(1)(g) due to the uncertainty regarding the timing and outcome of the alcohol licence application.
[16] On 12 September 2024, some six weeks after the Commission had dismissed the applicant’s appeal, the Auckland District Licence Committee granted an on-licence to the applicant for a period of one year subject to ten conditions.
Legal principles
[17] Section 9 prohibits gambling unless it is authorised under the Act, authorised under the Racing Industry Act 2020, or is private gambling. Sections 30 and 31 require that class 4 gambling may only be conducted by a not-for-profit corporate society that holds both a class 4 operator’s licence and a class 4 venue licence. These licences are issued by the Secretary.3
[18]Section 3 sets out the purposes of the Act:
2 The Southern Trust Inc/Te Wheke Holdings Limited Decision GC17/07.
3 Sections 52 and 65.
The purpose of this Act is to—
(a)control the growth of gambling; and
(b)prevent and minimise harm from gambling, including problem gambling; and
(c)authorise some gambling and prohibit the rest; and
(d)facilitate responsible gambling; and
(e)ensure the integrity and fairness of games; and
(f)limit opportunities for crime or dishonesty associated with gambling and the conduct of gambling; and
(g)ensure that money from gambling benefits the community; and
(h)facilitate community involvement in decisions about the provision of gambling.
[19] Under s 67 of the Act, the Secretary must refuse to grant a class 4 venue licence unless he or she is satisfied that the applicant can fulfil a list of factors. One of the considerations that the Secretary must be satisfied of is that the class 4 venue is not used mainly for operating gaming machines.4 Section 65(2)(j) provides that an application for a class 4 venue licence must include evidence that the class 4 venue is not to be used mainly for operating gaming machines. Section 67(1)(s) also provides that the Secretary must be satisfied the applicant is able to comply with all other applicable regulatory requirements.
[20] If the Secretary grants a class 4 venue licence, the licence must include a range of information and conditions under s 70(1). The Secretary must include conditions to prevent class 4 gambling being conducted at the venue unless the primary activity of the venue is offered and available at that time.5 Although not defined in the Act, a “primary activity” is onsite entertainment, recreation, or leisure focused on persons over 18 years of age.6 In other words, there must be a primary activity at the venue which is not gambling.
4 Section 67(1)(k).
5 Section 70(1)(i).
6 Gambling (Harm Prevention and Minimisation) Regulations 2004, reg 4(a).
[21] Section 71(g) provides that a corporate society that has not conducted class 4 gambling at the venue for a period of more than four weeks must surrender the licence under s 79(1)(a). However, the Secretary may agree that the venue may remain inactive for a further specified period. The Secretary may also require a corporate society to apply for an amendment to their licence under s 73 or suspend, cancel or refuse to amend the class 4 venue licence.7
[22] The case of Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs (FFNP) involved the construction of certain provisions in the Gambling Act.8 The plaintiffs challenged the provisions in the Gambling Act which allowed corporate societies to circumvent statutory requirements for the number of gaming machines that may be operated at venues and avoid the Act’s requirement for territorial authority consent. The issues were whether a class 4 licence was “held” for the purposes of ss 92 and 98, the breadth of the Secretary’s power to extend the inactivity period under s 71(1)(g), the relevant and irrelevant matters for decisions to extend an inactivity period, and whether the Secretary has the power to backdate the commencement of a class 4 venue licence.
[23] Grau J held that a class 4 venue licence is no longer “held” for the purposes of ss 92 and 98 of the Gambling Act 2003 if the obligation to surrender the licence under ss 71(1)(g) and 79(1)(a) had been triggered.9 She also held that the Secretary had the power to backdate commencement of a class 4 venue licence to a date on or after the date which the Secretary (or the Department) received a complete application for consideration.10
[24] In relation to the Secretary’s power to extend the inactivity period under s 71(1)(g), Grau J referred to guiding principles for statutory interpretation: “… a person upon whom statutory powers are conferred, and duties imposed, also has implied ancillary powers “which are reasonably and properly incidental to carrying out the statutory functions. Any such powers must be exercised bona fide for the
7 Section 71(4).
8 Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs [2024] NZHC 3719.
9 At [102].
10 At [102].
purposes of the statute”.11 A power will not be implied if to do so would be contrary to the legislative scheme.12 To determine the extent of unexpressed powers in legislation, the starting point is to look at the Act and determine if the implication of the power is necessary.13
[25] At [71], Grau J held that the starting point was that there was no statutory maximum on the length of an extension the Secretary may agree to. The extension must be for a genuine reason and its time period is logically linked to the reason for which it is sought. The Judge also stated that the extension of inactivity should not be a method of getting around the application of ss 92 and 98.14 Grau J noted that the Act suggests an intention to reward responsible licence holders and it would be unusual if a licensee had a good reason for an extension but nevertheless lost the protections that the Act provides.
[26] Importantly, the Judge noted that it should be expected the Secretary and Department decision-makers are acting lawfully and not granting extensions to “simply avoid the statutory scheme”. With reference to the Department’s Operational Policy, the Judge concluded that the Secretary would approach applications for extension with a healthy level of scrutiny and will seek to minimise inactivity periods as far as possible. The Judge noted that the Policy was alert to the potential for manipulation of the extension process to “work around territorial authority sinking lid venue policies”.
Whether the Commission erred in its reasoning under s 67(1)(k) and failed to grant a condition under s 70(1)(i)
Submissions
(a)Applicant
11 R v Aspinall HC Auckland CRI-2005-004-19057, 11 August 2006 at [19].
12 Commerce Commission v Telecom Corporation of New Zealand Ltd [1994] 2 NZLR 421 (CA) at 425.
13 New Health New Zealand Inc v South Taranaki District Council [2018] NZSC 59, [2018] 1 NZLR 948 at [283].
14 S 98 is relevant in the present case as it is the section that regulates when a territorial authorities’ consent is required. Among other things it provides that if an applicant for a class 4 venue licence has not held by any corporate society for that Venue for the last six months, the consent of the territorial authority is required.
[27] The applicant submits that the Commission erred in its reasoning that s 67(1)(k) was not satisfied due to the absence of an alcohol licence. The applicant submits that the Commission failed to correctly identify the purpose of s 67(1)(k). In reliance on the Select Committee report for the Responsible Gaming Bill 2002 (the Bill which preceded the Gambling Act), the applicant submits that the mischief that the provision intends to address is to ensure venues do not exist for the primary activity of running a gaming machine operation.15 The applicant emphasises that if gaming machines cannot be used in the Venue, then class 4 gambling will not be the Venue’s primary activity. The applicant refers to an affidavit of Ms Wang which provides evidence that the venue was intended to operate as an “Irish pub” and refers to the fact that DCT does not have a history of non-compliance with s 67(1)(k).
[28] The applicant submits that s 70(1)(i) ought to be closely read with s 67(1)(k), which addresses the same mischief. The applicant submits that the Commission overlooked the granting of a licence with a condition under s 70(1)(i) that prevented class 4 gambling in the absence of a liquor licence, citing authorities whereby licences have been granted with specific conditions.16 Ms Wang’s affidavit includes evidence of DCT’s six existing class 4 venue licences which all contain a s 70(1)(i) provision.
[29] The applicant submits that the Commission failed to consider the context in which the class 4 licensing regime operates. Namely, the purpose of granting a s 70(1)(i) condition is to prevent unreasonable delay for a class 4 venue licence application, due to a delay in processing an alcohol licence application. The applicant submits that the granting of the condition will be “economically better for the applicant” and help the applicant “recoup sunk investment costs”. Counsel has referred to resource management-related frameworks to demonstrate the use of conditions whereby another statutory permission must be obtained.
15 Responsible Gambling Bill 2002 (200-1) at 13.
16 These authorities included: Appeal by Grassroots Trust Ltd - Lucky's Barcade and Social (GC09/20, 9 April 2020); First Sovereign Trust & Anor v The Secretary for Internal Affairs HC Wellington CIV-2005-485-512, 22 March 2005; Riverside Casino Ltd v Moxon [2001] 2 NZLR 78 (CA); Solid Energy New Zealand Ltd v Minister of Energy [2009] NZRMA 145 (HC); British Railways Board v Secretary of State for the Environment [1993] 3 PLR 125 (HL); Ours Not Mines Ltd v Hauraki District Council [2024] NZRMA 267 (HC); and Re MacTiernan; ex parte McKay [2007] WASCA 35, (2007) 208 FLR 191.
(b) First respondent
[30] The respondent submits that the legislative scheme does not support the applicant’s interpretation that the Act “anticipates” a class 4 venue licence may be granted before other regulatory permissions are obtained. The respondent submits that the statutory criteria in ss 65(2) and 67(1) require formal “evidence” that the class 4 venue is not used mainly for operating gaming machines.
[31] The respondent also notes that s 67(1)(k) and (s) are drafted to assess compliance at the time of the application rather than a “possible future main use”. The respondent interprets s 70(1)(i) as imposing a mandatory licence condition to prevent class 4 gambling unless the primary use is “offered and available at that time”. The respondent submits that the primary use of the Venue must be lawfully established on grant of a class 4 venue licence. The respondent submits that the Commission was correct to assess that the “contingent nature” of DCT’s evidence could not satisfy s 67(1)(k).
[32] The respondent submits that the applicant’s interpretation of the provision would allow an “evidential deficiency” to occur whereby a venue may be granted a licence with no evidence of its primary use, contrary to 65(2)(j). The respondent refers to authority in the planning context, overseas investment scheme and alcohol licensing scheme to support the proposition that conditions may not be used to fulfil existing criteria in certain applications. The respondent submits that the applicant would otherwise be “circumventing” the statutory requirements to apply for a class 4 venue licence. The respondent factually distinguishes DCT’s case from the authorities relied on by the applicant, as the delay in DCT obtaining an alcohol on-licence was not attributable to the Secretary, the Commission or any third party. Rather, the respondent endorses the Commission’s decision that the DCT ran the risk of an unfavourable outcome by relying on a meritless application for an alcohol on-licence.
Analysis
[33] An error of law occurs if a decision-maker applies the wrong legal test, reaches a factually unsupportable finding, reaches a conclusion that was not reasonably open
to it on the evidence, takes into account irrelevant matters, or fails to take into account legally relevant matters.17
[34] The first step is to ascertain whether the Commission erred in its assessment that it could not be satisfied that the “venue would not be used mainly for gaming machines” under s 67(1)(k).
[35] I accept the respondent’s submission that s 67(1)(k) is drafted to refer to the type of activity that would occur at the time of granting the licence, rather than activity that could potentially occur in the future. This is supported by the fact that s 70(1)(i) is drafted to refer to a primary activity that is “offered and available at that time”. I accept the respondent’s submission that s 65(2)(j) reinforces the fact that applications must accompany “evidence” that the class 4 venue is not to be used mainly for operating gaming machines. I note that DCT provided written assurance to the Commission through an affidavit of Ms Wang, dated 16 May 2024, that the DCT would only operate the gaming machines once an alcohol licence had been obtained.
[36] As acknowledged by the applicant, it is not a legal requirement to hold a liquor licence to operate gaming machines. However, the vast majority of gambling licence- holders will also have an alcohol licence.18 Therefore, the existence of an alcohol licence provides effective evidence that a venue would not be used mainly for gaming machines.
[37] The second step is to consider whether the Commission erred in reaching the assessment that it could not be satisfied that the Venue would not be used mainly for gaming machines. If the Commission erred in reaching its decision, there would be a corresponding error of law.
[38] I consider that the Commission did not err in its decision that it could not be satisfied that the venue would not be used mainly for gaming machines. At the time of DCT’s application, DCT did not hold an alcohol licence, although one had been
17 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [24]–[27].
18 Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs [2024] NZHC 3719 at [87].
applied for, there was no certainty as to when or even if it would be granted. It was an opposed application so there was a real risk it might not be granted.
[39] If the Commission had concluded that an alcohol licence would be forthcoming but was not yet available at the time of the application, it could have granted consent subject to a condition. In Feed Families not Pokies19 the Court said:
A Corporate Society may apply for a venue licence in the 6-month period stipulated in s 98(b) even if it has concerns about the time it might take to obtain an alcohol licence. The Secretary can also address the issue by making an alcohol licence a condition of a venue licence.
[40] However, the fact that the Commission could do so does not mean that, in this case, it was obliged to do so or that it made an error of law in not doing so. If the licence had been granted on 24 July 2024, then, by virtue of the operation of s71(1)(g) it would have had to be surrendered four weeks later as no gambling would have occurred. There would have been no basis for extending the licence as the delays were neither unforeseen nor beyond the control of the applicant. Ultimately the ADLC did not grant an alcohol licence until 12 September 2024 some eight weeks after the Commission had declined ACT’s application for a class 4 gaming licence.
[41] The Venue could not have been used mainly for gambling if the class 4 venue licence had been granted on 24 July 2024 or at any time within four weeks of that.
[42] In the circumstance that s 67(1)(k) could not be satisfied, the secondary issue is whether the Secretary erred in its decision to decline granting a licence subject to a condition under s 70(1)(i) to prevent class 4 gambling being conducted at the venue unless the primary activity of the Venue is offered and available at that time. I must now consider whether the legislation allows the Secretary to grant a condition under s 70(1)(i) to address the non-fulfilment of s 67(1)(k).
[43] Section 67(1) is constructed in the negative, whereby the Secretary “must refuse” to grant a class 4 licence unless the list of corresponding factors are satisfied. The most relevant purposes from the Act in this case are to control the growth of
19 Above, n 17 at [82].
gambling and authorise some gambling and prohibit the rest. These factors indicate Parliament’s cautious approach on the grant of gambling licences.
[44] I do not consider the parties submission in regard to other contexts as helpful in relation to the imposition of conditions on the grant of class 4 gambling licences. The Gambling Act provides a specific framework governing any gambling activity and the grant of licences. Resource management schemes, overseas investment contexts and planning consents do not have sufficiently similar purposes to that of minimising the harm of uncontrolled gambling activities that the Act aims to minimise and regulate. However, I accept the respondent’s submission that the alcohol licensing scheme provides some assistance in interpreting whether a condition ought to be granted to a gambling licence to cure non-compliance with the Gambling Act. In Young v Lyger Investments Ltd, the Alcohol Regulatory and Licensing Authority found that non-compliance with the object of the Act could not be cured by the imposition of conditions and undertakings.20
[45] Similarly, I do not find that non-compliance with s 67(1)(k) can be cured by s 70(1)(i). If a licence subject to a condition was granted under s 70(1)(i), the gambling licence could not be utilised until the alcohol licence was granted. It would be contrary to the purposes of the Act that the Secretary could grant a gambling licence that would be ineffective for an unspecified amount of time. On that basis, I also reject the applicant’s submission that the Commission can grant a class 4 venue licence in the absence of an alcohol licence, when an alcohol licence is being sought and there is a licence condition preventing gambling from being conducted.
[46] Therefore, I do not consider that the legislation allows s 70(1)(i) to address the non-fulfilment of s 67(1)(k). There was no certainty that a primary activity would be offered at the time of granting the licence nor in the near future. I accept the respondent’s submission that the imposition of a condition of the type advocated by DCT will be ultra vires where its fulfilment is uncertain (as it was here).
[47] I am also mindful that granting a condition of the type sought by DCT would have the effect of circumventing s 98. The obvious reason why the applicant did not
20 Young v Lyger Investments Ltd [2018] NZARLA 299.
simply lodge a fresh application once it had been granted the alcohol licence on 12 September 2024 is because it would have had to obtain the consent of the Territorial Authority and, because of their sinking lid policy, that was unlikely to be forthcoming.
[48] For the reasons above, I find that Act does not allow the Secretary or the Commission to grant a condition under s 70(1)(i) to address non-compliance with s 67(1)(k).
Whether the Commission erred in interpreting 71(1)(g) and consequently misapplied s 67(1)(s)
Submissions
(a)Applicant
[49] The applicant submits that the Commission erred in its interpretation of s 71(1)(g), with reference to FFNP. The applicant submits that the Commission made three errors: the provision does not require a licence-holder to conduct gambling within four weeks, the obligation is one of notification; the provision allows the Secretary to exercise discretion to extend the period of inactivity; the provision operates after a class 4 venue licence has been granted and does not allow the Commission to utilise the provision to prevent the grant of a licence. The applicant refers to the affidavit of Ms Wotton whereby the Secretary has exercised its discretion to extend the period of inactivity for a few months for other licence-holders.
[50] The applicant refers to the affidavit of Ms Wang where she provides an assurance that if a licence had been granted, the DCT would have duly notified the Secretary of any inactivity or made a formal application to the Secretary to extend the period of inactivity.
(b) First respondent
[51] The respondent submits that s 71(1)(g) does not require class 4 gambling to be conducted immediately on the grant of a class 4 licence but is designed to avoid a period of more than four-weeks of gambling inactivity. The respondent submits that
s 71(1) supports the purposes of the Act, which is to control the growth of gambling,21 authorise some gambling and prohibit the rest,22 and facilitate community involvement in decisions about the provision of gambling.23 The respondent submits that the provision creates an obligation for a licence-holder to avoid gambling inactivity longer than four weeks.
[52] The respondent rejects the applicant’s claim that the Act together with the Sale and Supply of Alcohol Act provides an overlapping legislative scheme for the regulation of gambling. The respondent also rejects the applicant’s analogy to the consent framework in the Resource Management Act 1991 (RMA), by reason that the RMA provides an integrated regime for sustainable management of natural resources. The respondent distinguishes the conditions in s 70(1) and (2) which counsel claims are prescriptive and concern gambling activity and its compliance with the Act. The respondent further submits that the Act has a “use it or lose it” basis.24
[53] The respondent submits that while the Secretary has the discretion to extend the four-week period of inactivity, the exercise of that discretion occurs when a class 4 venue licence is already lawfully held and is to be exercised on a “principled basis”. The respondent refers to the affidavit of Ms Wotton which states that the Secretary may provide an extension where an application for an alcohol licence, “has been subject to delays … outside the control of the new venue operator”. The respondent notes that where a venue fails to “move quickly” to obtain the necessary permissions or is blameworthy in some other way, the venue risks losing the benefits of a gambling licence.
Analysis
[54] The second issue is whether the Commission erred in its decision that the applicant could not comply with the regulatory requirements of s 71(1)(g) in its assessment of s 67(1)(s). The first step is to consider the interpretation of s 71(1)(g).
21 Section 3(a).
22 Section 3(c)
23 Section 3(h).
24 Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs, above n 17, at
[24] and [65].
[55] Section 71(1)(g) imposes an obligation of notification and corresponding surrender of the class 4 venue licence unless the Secretary agrees to a further specified period of inactivity.25 I do not accept the applicant’s argument that the Commission misunderstood s 71(1)(g) and that the obligation in it was only to notify. The whole purpose of notification is because of the critical importance of gambling commencing within the four-week period.
[56] The fact that there is, in appropriate circumstances, a discretion to extend the Venue licence after notification does not assist the applicant either. As the applicant’s written submissions expressly acknowledge, the Department of Internal Affairs Operational Policy in relation to requests for an extension to the Non-Gambling Period relates to unforeseen circumstances with the example given in the Policy being:
A procedural delay or error by the Department, the Gambling Commission or another party, outside of the applicant’s control resulting in the applicant being unable to conduct gambling.
[57] In the present case the delays resulted not from anything unforeseen but the wholly predictable rejection by the Secretary of the original application by Mr Zhu. Section 71(1)(g) does not exist to address such circumstances.
[58] I also reject the appellant’s argument that because the obligations in s 71(1)(g) operate after the issue of a class 4 venue licence, they can not be relevant to prevent the grant of such a licence.
[59] Section 71(1)(g) exists to ensure that, if there is a gap of four weeks in gambling being undertaken, there are significant consequences.
[60] The facts of this case were unusual. The Venue had once held a liquor licence but had lost it as a result of non-compliance by Mr Zhu with his statutory obligations. The first application for a new liquor licence had been unsuccessful. Mr Zhu remains the proprietor of the premises. The substituted applicant for the liquor licence, Mr Tran, had no experience running a tavern. There were some concerns about his independence from Mr Zhu. The liquor licence application was opposed. It was the
25 Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs, above n 17, at [25].
uncertainty about the prospects of success in these circumstances that heavily influenced the Commission. They said at [62]:
In addition, uncertainty about the timing and outcome of the current application before the DLC leads to doubts about the ability of the appellant to comply with regulatory obligations, especially the obligation to conduct class 4 gambling within a four-week period under s 71(1)(g). Compliance with that obligation is highly uncertain, relying on various possible delays in the issue of a class 4 licence and the eventual grant of the alcohol licence before time runs out.
[61]The Commission made no error of law in arriving at that factual conclusion.
[62] The gambling scheme operates on a “use it or lose it basis”.26 It would be contrary to the purpose of controlling the growth of gambling for the Commission to grant a class 4 venue licence that would inevitably have to be surrendered after a four-week period of inactivity. As submitted by the respondent, the Operational Policy advises the Secretary to minimise inactivity periods as far as possible. Therefore, the Commission did not err in deciding that it could not be satisfied that s 67(1)(s) could be fulfilled, with reference to s 71(1)(g).
[63] I also find that in the circumstances of this case, imposing the type of condition sought, would subvert the purposes of s 98 of the Act to facilitate community input through obtaining the consent of the Territorial Authority27 to the granting of a class 4 venue licence.
[64] Had I found an error of law made out I would have exercised my discretion against remitting the matter to the Commission for recommendation. The applicant has, and always has had, the ability to file a fresh application for a class 4 venue licence now that it has a liquor licence. The fact that such an application would now be subject to s 98 does not justify remitting the matter back to the Commission.
Outcome
[65]The application is dismissed.
26 At [65].
27 See responsible Gambling Bill 2002 (Explanatory Note) at [2]–[3] and Gambling Act 2003 s 3(h).
[66] The parties are invited to agree to costs. If they are unable to do so within 14 days the respondents are to file a memorandum of no grater than three pages in length with the applicant having 14 days to file a memorandum in reply. I will then deal with the matter on the papers.
Churchman J
Solicitors:
True Legal, Hamilton for Applicant
Crown Law, Wellington for First Respondent Wilson Harle, Auckland for Second Respondent
0
4
1