Feed Families Not Pokies Aotearoa Incorporated v Secretary for Internal Affairs
[2024] NZHC 3719
•9 December 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-000548
[2024] NZHC 3719
UNDER the Declaratory Judgments Act 1908 and Part 18 of the High Court Rules 2016 IN THE MATTER OF
the Gambling Act 2003
BETWEEN
FEED FAMILIES NOT POKIES AOTEAROA INCORPORATED
Plaintiff
AND
SECRETARY FOR INTERNAL AFFAIRS
First Defendant
GAMING MACHINE ASSOCIATION OF NEW ZEALAND INCORPORATED
Second Defendant
Hearing: 21 October 2024 Counsel:
J B Orpin-Dowell and M R G van Alphen Fyfe for Plaintiff S Conway and N El Sanjak for First Defendant
M S Smith and J W True for Second Defendant
Judgment:
9 December 2024
JUDGMENT OF GRAU J
Table of Contents
Introduction [1]
Background [4]
Pokies and their regulation [4]
Venue licences [8]
Involvement of territorial authorities [12]
Maximum number of gaming machines [18]
FEED FAMILIES NOT POKIES AOTEAROA INCORPORATED v SECRETARY FOR INTERNAL AFFAIRS [2024] NZHC 3719 [9 December 2024]
The issues [29]
Is declaratory relief available in this case? [40]
Issue one: is a licence “held” if the Act requires the holder to
surrender it? [47]
Issue two: the Secretary’s power to extend the inactivity period
under s 71(1)(g) [66]
Issue three: relevant and irrelevant matters for decisions to extend
inactivity period [79]
Issue four: does the Secretary have the power to backdate the
commencement of a class 4 venue licence? [89]
Conclusion and relief [102]
Introduction
[1] The plaintiff, Feed Families Not Pokies Aotearoa Incorporated (FFNP), seeks declarations under the Declaratory Judgments Act 1908 regarding the construction of certain provisions in the Gambling Act 2003 (the Act).
[2] It is FFNP’s position that the first respondent, the Secretary for Internal Affairs (the Secretary), has adopted incorrect interpretations of the Act which, in 2003, imposed a new regime for the licencing of gambling activities in Aotearoa New Zealand. In particular, FFNP says that the Secretary’s incorrect interpretation of the Act allows corporate societies to circumvent statutory requirements for the (now lower) maximum number of gaming machines that may be operated at venues and avoid the Act’s requirement for territorial authority consent in some circumstances.
[3] The Secretary is responsible for administering the Act and the discharge of the statutory responsibilities it imposes. The second respondent, the Gaming Machine Association of New Zealand (GMANZ), is an incorporated society that represents the gaming machine sector in New Zealand. Both respondents dispute the suggestion that the Act has been incorrectly interpreted and applied. They oppose any declaratory relief.
Background
Pokies and their regulation
[4] Electronic gaming machines, or “pokies” as they are most commonly known, are devices designed for gambling. The Gambling Act regulates gambling activities in New Zealand, including in relation to pokies. It replaced the previous gambling regime by repealing the Gaming and Lotteries Act 1977 and the Casino Control Act 1990 to create a harmonised regulatory framework.
[5] The Responsible Gambling Bill 2002 set out in its explanatory note the underlying theme that gambling is usually prohibited unless it is conducted to raise money for community purposes.1 Although gambling generated considerable funds for community purposes, and there was general community support for this type of fundraising, there were also concerns about forms of gambling that had an associated high risk of problem gambling. It was also an opportunity for local communities, through their territorial authority, to exercise some control over the licencing and location of new gambling venues.2 Those competing policies were therefore reflected in s 3 of the Act as follows:
3 Purpose
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.
1 Responsible Gambling Bill 2002 (200-1) (explanatory note) at 1.
2 At 2–3.
[6] The Act is structured around six classes of gambling.3 The gambling at issue in this proceeding is categorised in the Act as class 4 gambling, that being gambling conducted via pokies outside of a licenced casino.4
[7] Class 4 gambling requires both a class 4 operator’s licence and a class 4 venue licence. The Act imposes a number of controls on class 4 gambling:
(a)Only a corporate society may conduct class 4 gambling, and it may only do so if it holds both a class 4 operator’s licence and a class 4 venue licence for the place where the gambling is conducted.5
(b)The net proceeds from gambling must be distributed for authorised purposes specified in the corporate society’s operator’s licence.6
(c)Unless the corporate society is also the venue operator, a corporate society must have a venue agreement with the venue operator, the form and content of which must be approved by the Secretary.7
(d)Key persons—including executives and others with significant management control of the corporate society, venue managers, and other venue personnel—are subject to suitability requirements.8
(e)Operator and venue licences may only be granted for a maximum of three years,9 and are subject to various continuing obligations, and renewal, suspension, cancellation, and notification requirements, all overseen by the Secretary.10
3 Gambling Act 2003, s 20(1).
4 Sections 20(1)(d) and 30.
5 Section 31. A “corporate society” is defined in the Act as a society that is: incorporated under the Incorporated Societies Act 1908; incorporated as a board under the Charitable Trusts Act 1957; a company incorporated under the Companies Act 1993 that does not have the capacity or power to make a profit; or a working men’s club registered under the Friendly Societies and Credit Unions Act 1982 (see s 4 definition of “corporate society”).
6 Section 106(1). “Authorised purposes” include charitable or non-commercial purposes of benefit to the community (see s 4 definition of “authorised purpose”).
7 Sections 67(1)(j) and 69.
8 Sections 51, 66–68.
9 Sections 53(1A) and 70(1A).
10 Sections 53A–64 and 69A–80.
(f)Statutory provisions limit the number of machines that may be licenced to operate at a venue.11
(g)Community input is enabled through the requirement for territorial authority consent when a corporate society wants to increase the number of gaming machines at a venue, applies for a class 4 venue licences where a venue licence has not been held in the last six months, or wants to relocate to another venue.12
Venue licences
[8] Of particular issue in this case are class 4 venue licences. The process for obtaining a class 4 venue licence is as follows:
(a)An application is made to the Secretary under s 65. It must include the relevant information including territorial authority consent, if required.
(b)The Secretary must then investigate whether the corporate society is eligible and suitable, and whether the venue operator and manager are suitable.13 Suitability involves a consideration of a number of factors, including the applicant’s past compliance with the Act, standards, rules, or licence conditions, or anything else considered relevant. 14
(c)The Secretary must refuse to grant a class 4 venue licence unless the Secretary is satisfied of a range of matters set out in s 67(1).
(d)The Secretary then issues a decision. If the Secretary decides to issue a licence, it must contain certain information and conditions, including the commencement date and expiry date of the licence and the number
11 Sections 92–94.
12 Section 98.
13 Section 66(1)(a); see also s 4 definition of “key person”.
14 Section 68 lists a number of matters the Secretary may take into account in determining whether a key person is suitable, including: convictions for a relevant offence; whether they were key persons in relation to licences that were cancelled, suspended or not renewed; financial position; credit history; and profile of past compliance with the Act.
of machines that may be operated.15 If the Secretary decides to decline to issue a licence, the Secretary is required to give reasons and notify the applicant of the right of appeal to the Gambling Commission under s 77.
[9] The Secretary may also suspend or cancel class 4 venue licences in certain circumstances, as set out in ss 74 and 75. Those circumstance include where the grounds for granting a licence in s 67 are no longer met or where the corporate society has failed to comply with all relevant requirements under the Act.16
[10] A corporate society may appeal to the Gambling Commission against certain decisions of the Secretary relating to a class 4 venue licence, as set out in s 77(1). These are decisions of the Secretary to:
(a)refuse to grant a class 4 venue licence to the corporate society; or
(b)amend or revoke a condition of the licence, or add a new condition to it; or
(c)refuse an application by the corporate society for the renewal of a class 4 venue licence; or
(d)refuse to amend a class 4 venue licence held by the corporate society; or
(e)suspend or cancel a class 4 venue licence held by the corporate society.
[11] Appeals must be made in writing within 15 working days after the date of notice of the Secretary’s decision (or any longer period that the Gambling Commission allows).17 The Gambling Commission may then confirm, vary, or reverse the decision of the Secretary, or refer the matter back to the Secretary with directions to reconsider the decision.18
15 Sections 70(1)(b) and (g).
16 Section 74(1)(a) and (b).
17 Section 77(2).
18 Section 61(4).
Involvement of territorial authorities
[12] The Act made two significant changes to the previous regime that governed gambling activity involving pokies. The first related to the involvement of territorial authorities in the class 4 licencing process. A territorial authority for the purposes of the Act is a city council or district council named in pt 2 of sch 2 of the Local Government Act 2002.19
[13] In keeping with the Act’s purpose in s 3(8)(h) of facilitating community involvement in decisions about the provision of gambling, s 98 sets out the circumstances in which consent from a territorial authority is required for a class 4 venue licence:
98 When territorial authority consent required
A territorial authority consent is required in the following circumstances:
(a)if a corporate society proposes to increase the number of gaming machines that may be operated at a class 4 venue (whether by way of an application for, or amendment to, a class 4 venue licence, and whether or not in association with an application for ministerial discretion under section 95 or 96):
(b)if a corporate society applies for a class 4 venue licence and a class 4 venue licence has not been held by any corporate society for the venue within the last 6 months:
(c)if a corporate society proposes, in accordance with a relocation policy of the territorial authority, to change the venue to which a class 4 venue licence currently applies.
[14] Accordingly, territorial authority consent is required to increase the number of gaming machines, or if there is an application for a class 4 licence and one has not been held for the venue within the last six months. Consent is also required for a proposal to change the venue to which a class 4 venue licence currently applies. If territorial authority consent is required, the Secretary may not grant a class 4 venue licence unless consent has been provided.20
19 Gambling Act, s 4 definition of “territorial authority”.
20 Section 67(1)(f).
[15] As set out in the explanatory note to the Responsible Gambling Bill, this requirement effectively allows the territorial authority to act as a veto:21
The introduction of a venue licensing regime for high-risk forms of gambling provides an opportunity for local communities, through their local territorial authority, to decide whether they wish these forms of gambling to be established in their area. Territorial authorities will be able to veto new sites (those created after 17 October 2001) and any expansion of those sites and, once the Bill becomes law, any expansion of sites that existed on that date.
[16] Each territorial authority is also required to adopt a class 4 venue policy.22 The policy must specify whether or not class 4 venues may be established in the authority’s district (and if so, where) and must specify any restrictions on the maximum number of gaming machines that may be operated at a class 4 venue.23 In adopting a policy, the territorial authority must have regard to the social impact of gambling within its district.24
[17] Many territorial authorities have adopted policies, sometimes referred to as “sinking lid” policies, permitting no new venues in their area. Under such a policy, a venue that has not held a class 4 licence for six months or more could not obtain territorial authority consent, and therefore could not obtain a new licence.
Maximum number of gaming machines
[18] Lowering the maximum number of gaming machines that may be operated at a venue was the other significant change brought in by the Act and is of particular relevance in this case. Before the Act the maximum number (which was set by policy) was 18. For class 4 venue licences granted after the Act’s commencement, the maximum number of gaming machines that can be operated is nine.25 That maximum is, however, subject to specific ministerial powers to permit up to 30 machines in a single venue when two clubs merge into a single club at a single venue,26 and the Minister may permit up to 18 machines for clubs that meet certain conditions.27 In
21 Responsible Gambling Bill (200-1) (explanatory note) at 20 (emphasis in original).
22 Gambling Act, s 101(1).
23 Section 101(3).
24 Section 101(2).
25 Section 94(2).
26 Section 95.
27 Section 96.
both cases, territorial authority consent must still be obtained for the number of gaming machines to be operated.28
[19] In the transition to the new regime under the Act a decision was made that the amendments to require territorial authority consent, and the new lower cap on the number of gaming machines, should not apply retrospectively to licences granted under the old Gaming and Lotteries Act.
[20] This Court has observed that the non-retrospective nature of the new regime was a recognition by Parliament that existing site owners and operators had likely invested in sites and machines based on existing statutory provisions, and there was a broad acceptance that these interests should be considered.29
[21] It was also recognised, however, that once the changes were publicly announced there would be an incentive for existing operators to increase the number of machines and for new operators to apply for licences to take advantage of the (then) greater 18 machine cap. To address this concern, the changes were publicly announced on 18 October 2001, well in advance of the Bill’s introduction to Parliament in February 2002, and the Act provided that the changes would apply retrospectively to the date of the announcement, that being to all licences granted after 17 October 2001, but not to licences granted before that date. In addition, all corporate societies applying for gaming machine licences after 18 October 2001 were told of the policy change and notified of the possible consequences.30
[22] Sections 92 to 94 gave effect to these decisions and set out limits (subject to exceptions) on the number of gaming machines that may be operated. The sections provide as follows:
92Limit on number of gaming machines for which class 4 venue licence held on 17 October 2001
(1)This section applies to a class 4 venue for which—
(a)a class 4 venue licence was held on 17 October 2001; and
28 Sections 95(4)(a) and 96(4)(a).
29 Air Rescue Services Ltd v Secretary for Internal Affairs (No 2) HC Wellington CIV-2010-485- 1919, 3 May 2011 [Air Rescue (No 2)] at [31].
30 Responsible Gambling Bill (200-2) (select committee report) at 17.
(b)there has not been a period of 6 months or more since 17 October 2001 when no class 4 venue licence was held.
(2)A corporate society must not operate more than 18 gaming machines at a class 4 venue.
(3)The number of gaming machines notified to the Secretary under section 89(1), and the models and serial numbers of the gaming machines, must be treated as a condition of the class 4 venue licence and the corporate society must not change the gaming machines, or operate more than that number of gaming machines at the venue, unless—
(a)a new class 4 venue licence is obtained that allows the change; or
(b)the licence is amended to allow the change.
(4)The limit in subsection (2) and the condition as to number imposed under subsection (3) may be overridden under section 95 or reduced by regulations made under section 314(1)(a).
93Limit on number of gaming machines for which class 4 venue licence granted after 17 October 2001 but before commencement
(1)This section applies to a class 4 venue—
(a)to which section 92 does not apply; and
(b)for which a class 4 venue licence is held that was granted after
17 October 2001 but before the commencement of this section.
(2)A corporate society must not operate more than 9 gaming machines at a class 4 venue.
…
(8)The number of gaming machines notified to the Secretary under section 89(1), and the models and serial numbers of the gaming machines, must be treated as a condition of the class 4 venue licence and the corporate society must not change the gaming machines, or operate more than that number of gaming machines at the venue, unless—
(a)a new class 4 venue licence is obtained that allows the change; or
(b)the licence is amended to allow the change.
(9)The limit in subsection (2) and the condition as to number imposed under subsection (8) may be overridden under section 96, or reduced by regulations made under section 314(1)(a).
94Limit on number of gaming machines for venue with venue licence granted after commencement
(1)This section applies to a class 4 venue—
(a)to which section 92 does not apply; and
(b)for which a class 4 venue licence is granted after the commencement of this section.
(2)A corporate society must not operate at a class 4 venue more than the greater of—
(a)9 gaming machines; or
(b)the number of gaming machines approved by the Minister under section 96.
(3)The limits in subsection (2) may be reduced by regulations made under section 314(1)(a).
[23] As can be seen, s 92 relates to existing licences as at 17 October 2001. It is generally described as a “grandfathering” or “grandparenting” provision, providing for the continuation of existing entitlements for “old” venues. A maximum of 18 machines is authorised if a licence was held at 17 October 2001, but only if there has not been any period of six months or more since that date when no class 4 venue licence was held.
[24] To prevent corporate societies holding on to venue licences they were not using, the Act also adopted what might be considered a “use it or lose it” approach. Section 71 provides as follows:
71Significant changes in relation to class 4 venue licence must be notified
(1)A corporate society holding a class 4 venue licence must notify the Secretary, and provide details, if any of the following things occur:
(a)a key person in relation to the class 4 venue licence is convicted of a relevant offence:
(b)a key person in relation to the class 4 venue licence is placed in receivership, goes into liquidation, or is adjudged bankrupt:
(c)a key person in relation to a class 4 venue licence breaches a rule of racing made under section 37 of the Racing Industry Act 2020:
(d)the venue manager ceases to be the venue manager or is incapable of performing the duties of his or her position:
(da) the venue manager changes:
(e)the venue operator changes:
(f)the nature of the class 4 venue changes:
(g)the corporate society has not conducted class 4 gambling at the venue for a period of more than 4 weeks (in which case the class 4 venue licence must be surrendered, under section 79(1)(a), unless the Secretary agrees that the venue may remain inactive for a further specified period).
(2)Notification must be made before, or as soon as practicable after, an event listed in subsection (1) occurs.
(3)The powers and obligations in section 66 apply to a notification as if the notification were an application for a class 4 venue licence.
(4)The Secretary may require the corporate society to apply for an amendment under section 73, or may invoke the suspension or cancellation provisions under sections 74 and 75, as a result of the notification.
[25] As s 71 sets out, a corporate society holding a class 4 venue licence must notify the Secretary and provide details of a number of matters. The majority relate to changes of personnel. One relates to a change to the nature of the venue. Of particular relevance is s 71(1)(g). It is the only matter that requires both notification (of inactivity for more than four weeks) as well as a corresponding action—surrender of the class 4 venue licence (unless the Secretary agrees to a further specified period of inactivity).
[26] Section 79(1)(a) in turn requires that a corporate society “must surrender a class 4 venue licence to the Secretary in the circumstances described in s 71(1)(g)”. A licence “may” also be surrendered at any other time.31
[27] Section 71(4) provides that the Secretary may, as a result of notification under subs (1), require a corporate society to apply for an amendment to their licence under s 73. Alternatively, the Secretary may invoke the suspension or cancellation provisions set out in s 74. Section 75 then sets out the procedure for suspending,
31 Section 79(1)(b).
cancelling, or refusing to amend or renew a class 4 venue licence. The Secretary must notify the corporate society of any proposal to do so and provide reasons.32 Corporate societies then have 20 working days to provide written submissions on the proposed decision.33 As noted above, s 77 provides a right of appeal to the Gambling Commission for certain decisions relating to the amendment, suspension, cancellation, or refusal to grant a class 4 venue licence. Section 78 provides for the consequences of an appeal, which include that the conditions of a licence remain unchanged pending the outcome of an appeal against amendment or revocation of a condition or addition of a new condition.34 A licence remains in force until the expiry of the period for an appeal, or the date the Commission specifies on appeals against refusals to renew, amend, suspend, or cancel.35
[28] In contrast, the Act does not provide any right of appeal against the obligation to surrender a licence in s 71(1)(g).
The issues
[29] In reliance on decisions of the Gambling Commission, FFNP submits that the Secretary has misinterpreted ss 92 and 98, which can lead to (inappropriately) avoiding the lower gaming machine limit and the requirement for territorial authority consent prescribed by the Act. FFNP seeks declaratory relief as to the proper construction of the relevant provisions. FFNP asks the Court to decide the following four issues.
[30] The first issue is whether a class 4 licence is “held” for the purposes of ss 92(1)(b) and 98(b) if the corporate society is obliged to surrender the licence following a four-week period of inactivity under ss 71(1)(g) and 79(1)(a).36 On the Secretary’s current approach, a licence is “held” even if the corporate society is in breach of its statutory duty to surrender it. The effect of this position is that corporate societies may continue to take advantage of the s 92 savings provision in circumstances where there has been no gambling at the venue for more than six
32 Section 75(1).
33 Section 75(2).
34 Section 78(1).
35 Section 78(2).
36 The issue raised by the fourth cause of action.
months. They can also avoid the requirement to obtain territorial authority consent. FFNP says that this is not what Parliament intended. Instead, FFNP considers the proper construction of the Act is that a licence is not “held” for the purposes of ss 92(1)(b) and 98(b) once a corporate society is obliged to surrender it.
[31] The Secretary and GMANZ say a licence is held and continues to be held until it has been surrendered as a result of a deliberate act by the corporate society, it expires or, it is cancelled. A “deemed” licence surrender is incompatible with the obligation to notify in s 71(1)(g) and the discretion to extend any period of inactivity under that subsection, as well as the wider scheme of suspension powers and appeal rights, under which a failure to surrender can lead to cancellation, which can be appealed, whereas a surrender cannot.
[32] The second issue is whether the Secretary’s power under s 71(1)(g)—to agree to a further period of inactivity where a corporate society has not conducted gambling at a venue for more than four weeks—is limited to circumstances where gambling activity will resume under the existing class 4 venue licence at the end of the inactivity period.37
[33] FFNP says that the power is so limited. If six months has passed after the end of the inactivity period, the venue is no longer entitled to the benefit of the savings provisions in ss 92(1)(b) and 98(b). The Secretary, however, routinely agrees to lengthy and repeated extensions beyond the period of the existing licence.
[34] The Secretary and GMANZ say s 71(1)(g) recognises that a venue might be inactive for a period, but no maximum period is stated and so (by necessary implication) it can exceed the four weeks of inactivity that triggers the notification obligation. Beyond that, what the maximum period of inactivity may be is left to the Secretary’s discretion. The focus is on whether there are good reasons (with sufficient evidence) to extend, and appropriate regard is had to whether such application is an attempt to work around a territorial authority policy.
37 The issue raised by the first cause of action.
[35] If the Court disagrees with FFNP’s position on the second issue, FFNP asks the Court to make declarations about the matters the Secretary must, and must not, take into account in deciding whether to agree to a further period of inactivity under s 71(1)(g).38 This is the third issue. FFNP says the relevant territorial authority venue policy is a mandatory consideration for the Secretary. It also argues that a venue’s difficulties in obtaining an alcohol licence within six months do not provide a lawful basis to agree to extend the inactivity period and thus are an irrelevant consideration. The Secretary and GMANZ say territorial authority policies are not mandatory considerations and alcohol licencing may in some cases be a relevant consideration in the Secretary’s exercise of discretion under s 71(1)(g).
[36] The final issue is whether the Secretary has the power to backdate the commencement date of a class 4 venue licence.39 FFNP observes that the power to backdate has been used to set a commencement date for a licence that predates the date on which the Secretary issued the licence. This practice has brought corporate societies within the s 92 savings provision when, at the date of the Secretary’s decision, they have not held a licence for more than six months. FFNP says this is wrong. If a power to backdate does exist, FFNP says this cannot be to a date before the Secretary received a complete application.
[37] The Secretary and GMANZ consider that s 70(1)(b) provides an implied ancillary power to the Secretary to backdate a commencement date in appropriate cases. That power is exercised on an appropriate basis. It protects applicants against the loss of a statutory opportunity to operate 18 gambling machines arising from unwarranted delay or error by the Department of Internal Affairs (the Department).
[38] As above, the Secretary and GMANZ disagree with FFNP and the interpretations of the Act it advances. GMANZ also objects to the declaratory relief sought by FFNP on the basis that it is inapt for hypothetical questions or general advisory opinions. It says judicial review would be a more appropriate avenue.40
38 The issue raised by the second and third causes of action.
39 The issue raised by the fifth cause of action.
40 The Secretary has not taken issue with FFNP seeking declaratory relief.
[39] I deal first with this preliminary issue regarding the suitability of declaratory relief.
Is declaratory relief available in this case?
[40] The starting point is the jurisdiction conferred on the Court under s 3 of the Declaratory Judgments Act, which provides a means by which parties can clarify and establish statutory (and other) legal rights and obligations:
3 Declaratory orders on originating summons
Where any person has done or desires to do any act the validity, legality, or effect of which depends on the construction or validity of any statute, or any regulation made by the Governor-General in Council under statutory authority, or any bylaw made by a local authority, or any deed, will, or document of title, or any agreement made or evidenced by writing, or any memorandum or articles of association of any company or body corporate, or any instrument prescribing the powers of any company or body corporate; or
Where any person claims to have acquired any right under any such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or to be in any other manner interested in the construction or validity thereof,—
such person may apply to the High Court by originating summons for a declaratory order determining any question as to the construction or validity of such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or of any part thereof.
[41] The jurisdiction is discretionary; the Court may “on any grounds which it deems sufficient, refuse to give or make any such judgment or order”.41 A declaration made under the Declaratory Judgments Act has the same effect as a declaration “in a judgment in an action”, and is binding on the parties as well as “on all other persons who would have been bound by the said declaration if the proceedings wherein the declaration is made had been in action”.42 A declaratory judgment may be given “by way of anticipation with respect to any act not yet done or any event which has not yet happened”.43
41 Declaratory Judgments Act 1908, s 10.
42 Section 4.
43 Section 9.
[42] The leading decision on the Court’s jurisdiction in this area is Mandic v Cornwall Park Trust Board (Inc).44 Chief Justice Elias explained that the discretionary nature of the jurisdiction is inappropriate when there are questions of fact to be determined.45 The jurisdiction is nevertheless a broad one that does not depend on there being an existing dispute or action.46 Rather, “[t]he jurisdiction under the Declaratory Judgments Act enables anyone whose conduct or rights depend on the effect or meaning of an instrument, including an agreement, to obtain an authoritative ruling”.47
[43] Mr Smith is nevertheless correct that declarations will not be given where they would lack utility, or where the question is purely abstract or hypothetical.48 The requirement that a declaration has utility means that it should be “fact-specific, efficacious and capable of practical application”.49 Neither will a declaration meet the utility requirement if it is in “general and non-specific terms”.50 Declarations may still be appropriate where not all interested and affected parties are before the court.51 In the present case, as Mr Smith observes, this decision may affect pending applications by current venue licence holders.
[44] I am satisfied, however, that declarations under the Declaratory Judgments Act can be granted in this case. In Feed Families not Pokies Aotearoa Inc v Secretary for Internal Affairs,52 another recent proceeding between the same parties, Palmer J granted declarations regarding the interpretation of ss 97A and 101(3) of the Gambling Act, which were inserted by the Gambling (Gambling Harm Reduction) Amendment Act 2013. The amendment followed a High Court decision (known as Waikiwi) which held that a class 4 venue did not require a new licence when there was a “minor change in location”.53 Justice Palmer found the effect of the amendment was that the Waikiwi
44 Mandic v Cornwall Park Trust Board (Inc) [2011] NZSC 135, [2012] 2 NZLR 194.
45 At [5].
46 At [9].
47 At [9].
48 Te Whakakitenga O Waikato Inc v Martin [2016] NZCA 548, [2017] NZAR 173 at [39].
49 The Department of Internal Affairs v The Whitehouse Tavern Trust Board [2015] NZCA 398, [2015] NZAR 1708 at [80].
50 The Department of Internal Affairs v The Whitehouse Tavern Trust, above n 49, at [86].
51 See, for example, Omaha Beach Residents Society Inc v Townsend Brooker Ltd [2010] NZRMA 53 (HC) at [40].
52 Feed Families not Pokies Aotearoa Inc v Secretary for Internal Affairs [2024] NZHC 217.
53 ILT Foundation v Secretary for Internal Affairs [2013] NZHC 1330 at [28].
approach was no longer open to the Department and granted declarations accordingly.54 His Honour was clear, however, that such declarations could not affect the validity of licences already granted by the Department since 2013 on the basis of the Waikiwi approach; instead those licences had to be specifically challenged by way of judicial review. That would avoid prejudice to third parties who had not participated in the hearing.55
[45] I see no reason to take a different approach in this case. Section 3 of the Declaratory Judgments Act confers a broad jurisdiction to cover any person who may “in any other manner be interested in the construction” of a statute. Like the proceeding before Palmer J, FFNP seeks declarations regarding the proper interpretation of the Gambling Act in light of what it says has been the Secretary’s consistently incorrect approach. It was not a barrier to the declarations sought in the previous case that FFNP was not challenging a particular decision of the Secretary nor litigating in respect of a particular set of facts. In the current proceeding FFNP accepts that any declarations granted would not affect existing licences and declarations could be crafted to avoid affecting licences that are currently under consideration by the Secretary. Prejudice to parties not before the Court would therefore be avoided. I agree with Mr Orpin-Dowell that systemic issues of incorrect statutory interpretation are arguably best dealt with by an application for declarations, given that the Secretary would in future be bound to follow the law as set out in the declaration, whilst also preserving the rights of existing licence holders and other third parties not currently before the Court.
[46] As a practical point, given that GMANZ appears in this proceeding as a representative of the gaming machines sector in Aotearoa, I consider the interests of current licence holders were comprehensively aired.
54 Feed Families not Pokies Aotearoa Inc v Secretary for Internal Affairs, above n 52, at [43].
55 At [46].
Issue one: is a licence “held” if the Act requires the holder to surrender it?
[47] As above, the first issue is whether a class 4 venue licence may still be considered as being “held” for the purposes of ss 92(1)(b) and 98(b) if the obligation to surrender the licence under ss 71(1)(g) and 79(1)(a) has been triggered.
[48] For ease of reference, I note again that s 71(1)(g) requires notification to the Secretary and the surrender of a class 4 venue licence when the corporate society has not conducted class 4 gambling at the venue for more than four weeks (unless the Secretary agrees the venue may remain inactive for a further specified period). This is an important matter because surrendering a licence would start the clock for the six- month period in which a licence holder has to apply for a new licence in order to retain the benefits of the grandparenting provision in s 92, and thus keep 18 machines, rather than having to reduce to nine, as well as avoid the need for territorial authority consent under s 98.
[49] I start with the words of the provisions. I agree with FFNP that they indicate a class 4 venue licence cannot be “held” for the purposes of ss 92 and 98 once the corporate society is required to surrender it. Section 71(1)(g) plainly says the licence “must” be surrendered. It provides not only an obligation to notify the Secretary of four weeks inactivity, but it also requires a concomitant action of surrender of the licence. That is in stark contrast to all of the other matters in the provision, which only require notification. This is reinforced by s 79(1)(a), which re-states the requirement for surrender of licence after more than four weeks inactivity, as compared with s 79(1)(b) which provides for a voluntary surrender at any other time. Thus, s 71(1)(g) cannot have been intended to have the same effect as those other matters in s 71(1), as the Secretary and GMANZ appear to suggest. In particular, it seems most unlikely it was intended only to result in notification, with the Secretary then being left to decide subsequently whether or not to suspend or cancel the licence. There would be no utility in triggering an obligation to surrender if it was of no immediate legal effect. Instead, once the obligation is triggered, there is no need for the Secretary to make any suspension or cancellation decisions because, as I explain further below, the Act provides that a corporate society would no longer “hold” a licence in respect of which any decision would be required. I consider the text is an unambiguous requirement to
“hand back” or relinquish the licence after there has been no gambling in the venue for a period of more than four weeks.
[50] Second, it must also be the case that “held” means “lawfully held”. A class 4 venue licence is a legal right to conduct gambling in a venue, that right being capable of protection in, for example, the Gambling Commission or the courts. It is a valuable right; licences are a species of property. The Secretary and GMANZ incorrectly conflate “holding” property with simple possession of it; where the former denotes a legal entitlement to the bundle of rights comprised by the property, but the latter does not always. It would be odd to consider that someone “held” other types of property, for example a motor vehicle or a residential property, when they are not legally entitled to it. By way of basic example, a person who steals a car certainly possesses it, but it is not “held” by them in the legal sense. The Secretary submitted that holding a licence is different to land or a car where a title is needed to prove ownership. I am unable to see a distinction. Much like the need for a title to prove ownership, which in turn demonstrates the title-holder’s entitlement to exercise the property rights resulting from that ownership, a class 4 venue licence is needed by a corporate society to enjoy the rights and benefits conferred by the Act.
[51] The effect of s 71(1)(g) is that the Act does not permit a corporate society to hold a licence after it has ceased conducting gambling activity for more than four weeks and the obligation to surrender the licence has been triggered. I agree with FFNP that it would be an unlikely intention to attribute to Parliament that a corporate society could simply refuse to surrender its licence, but nevertheless be deemed to continue to “hold” it, such that it could continue to enjoy the Act’s benefits whilst also circumventing other statutory requirements that would otherwise apply to applications for a new licence.
[52] The main focus of GMANZ’s and the Secretary’s interpretation of the Act was on the lack of appeal rights, to which FFNP says they are asking the wrong question. I agree. The assumption the Gambling Commission decisions cited appear to be based on is that Parliament overlooked a right of appeal against the requirement to surrender, thus s 71 must be read in a way that enables continuation of a licence until cancellation, which then has a right of appeal. That assumption is incorrect in my view.
[53] I agree with FFNP that the principal policy justification GMANZ and the Secretary appear to be putting forward to support their stance boils down to a complaint that it is simply unfair to licence holders to interpret s 71(1)(g) in the way that FFNP suggests where this would result in no right of appeal in respect of mandatory surrender. In my view, what the lack of appeal rights demonstrates instead is that Parliament has chosen to protect existing licences, but only up to a point. And the rationale for drafting s 71(1)(g) in this way is easy to decipher. If there has been four weeks of inactivity, the Act makes the rational assumption that the corporate society has decided to cease gambling activity at its venue. If there is no gambling activity, there is no need for a class 4 venue licence. The corporate society would then have no reason to appeal against a mandatory surrender of its licence. A corporate society may subsequently apply for a new licence in the event it wishes to resume gambling activity at the venue. An application made within six months enables the corporate society to retain the benefits of the old regime, under s 92. Otherwise, another class 4 venue licence can be granted, but under the new regime. This outcome may be less desirable to a licensee who would understandably prefer to retain the benefits of the prior regime, but it is not nearly as “draconian” as has been suggested.
[54] Nor is there any need for an appeal right when a corporate society has a concomitant ability to apply to extend its period of inactivity at the venue. As discussed below in relation to issue two, should the corporate society predict inactivity longer than four weeks, but it intends to resume gambling activity at that venue after that time (for example, because of renovations), the prudent corporate society may seek an extension of the four-week inactivity period from the Secretary under s 71(1)(g), allowing the licensee to retain the “grandparenting” of ss 92 and avoid 98. The point was made that unfairness would be caused by a surrender with the effect of cancellation if the four weeks of inactivity was caused by something out of the licensee’s control, for example a fire or natural disaster. However, if there was no venue left, there would be no reason for a venue licence. Alternatively (and assuming there is still a venue in existence), an extension of the inactivity period can be sought. I agree with FFNP there is no injustice in requiring a corporate society to move quickly to obtain a new licence within six months if it wishes to retain its pre-Act benefits. Rather, it promotes clarity and certainty.
[55] The legislative history of the Act supports my interpretation. When the Responsible Gambling Bill was introduced, it did not include the requirement in s 71(1)(g) to notify the Secretary of four weeks inactivity or to surrender a venue licence. Instead, it included only that a corporate society “may surrender” a licence at any time,56 and cl 68(1)(c) required an application to amend a venue licence if the corporate society proposed to cease conducting class 4 gambling at the venue.57
[56] A departmental report on the Bill recommended deletion of cl 68(1)(c) to remove the obligation to seek amendment if the corporate society proposed to cease conducting gambling.58 It recommended instead “the addition of a provision requiring notification and the surrender of the class 4 venue licence if the society proposes to cease conducting class 4 gambling at the venue”.59 A second departmental report also recommended cl 66(1)(g) (which became s 71(1)(g)) should refer to the venue licence being surrendered if the corporate society ceased to operate class 4 gambling at that venue.60 These recommendations were adopted in the version of the Bill reported back from the Select Committee. Accordingly, there was a change from giving a corporate society the discretion to choose whether to surrender a licence and requiring only an amendment to the licence when a corporate society ceased conducting gambling at a venue—both of which allowed the licence to continue—to mandatory requirements to notify and to surrender the licence. That was a significant change in my view.
[57] The second departmental report also addressed cl 74 of the Bill (which became s 79). It said:61
Clause 74 Surrender of class 4 venue licence
We believe this clause, and all other similar clauses, should make it clear that a surrender, whether voluntary or obligatory, has the same effect as a cancellation (but is not a cancellation and is therefore not subject to appeal). This is important in the case of venues that close down eg for a year to redevelop - it needs to be clear that such venues are new venues, and therefore subject to the local authority venue policy and the statutory 9 machine limit.
56 Responsible Gambling Bill (200-1), cl 74(1).
57 Clause 68(1).
58 Te Tari Taiwhenua | Department of Internal Affairs Responsible Gambling Bill: Clause by clause analysis (29 August 2002) at 152 and 156.
59 At 152.
60 Te Tari Taiwhenua | Department of Internal Affairs Further Report to Government Administration Committee (9 September 2002) at 17.
61 Further Report to Government Administration Committee, above n 60, at 17.
[58] FFNP says that this recommendation was adopted. The Select Committee amended cl 74 by replicating in it the consequences of cancellation found in what is now s 76(1). Subsequently Parliament, via supplementary order paper, further amended cl 74 by adding the requirement to surrender in what became s 71(1)(g) while also maintaining a lack of appeal rights following surrender. GMANZ disagrees, stating that, despite the recommendation, the change was not taken up and cl 74 was not altered in any way. GMANZ considers that the amendment to cl 74, which was described as a “technical amendment” in a supplementary order paper, cannot be said to be as a result of the departmental report.62
[59]The supplementary order paper described the amendments as follows:63
Clause 66(1)(g) is amended to provide certainty about when a corporate society ceases to conduct class 4 gambling.
Clause 74(1) is consequentially amended to reflect that a corporate society must surrender its class 4 venue licence in the circumstances described in clause 66(1)(g) (ie, if it has ceased conducting class 4 gambling at the venue for a period of more than 4 weeks).
[60] I am unable to find an explicit intention that a surrender has the same effect as a cancellation (but without appeal rights). That said, it is apparent the amendments to cl 74 did reinforce that a corporate society had to surrender its licence after inactivity. It also brought the consequences of surrender into line with those of cancellation, but without any consequential amendments to what became s 77, which sets out the decisions of the Secretary that may be appealed. Accordingly, while there is no explicit adoption of the departmental recommendations regarding cl 74, in substance the changes made throughout the legislative process are in accordance with those recommendations.
[61] The change to cl 66 (which became s 71) is, as I have said, more significant, when originally there was no requirement for notification and accompanying surrender, but when such requirements were included following departmental recommendation. I note too that the departmental recommendations appear to be
62 Supplementary Order Paper 2003 (132) Gambling Bill (200-3) at 58–59.
63 At 59.
consistent with a transition to a new regime that aimed (eventually) to lower the number of gambling machines at venues.
[62] GMANZ, perhaps as a fallback, also suggested there were “rule of law” issues with using the departmental reports, especially where such reports are not easily (if at all) accessible to the public. I do not accept that submission, given it is relatively commonplace for courts to consider such material.64 Although the reports in this case may not be readily available on the parliamentary website, as more recent reports would be, GMANZ is in a very different position to an ordinary member of the public who might not be able to find these particular reports online. Rather, GMANZ would be expected to be both aware of, and likely in possession of, such material, given its role as representative of the gaming machine sector. GMANZ can point to no prejudice to itself, and by extension, to those whom it represents. I also comment that, had the material instead supported GMANZ’s position rather than FFNP’s, I doubt the point would have been raised at all.
[63] Additional support for FFNP’s position comes from this Court, which considered the meaning of “held” in Air Rescue Services Ltd v Secretary for Internal Affairs (Air Rescue).65 The submission before the Court was that Parliament made a drafting mistake in enacting s 92(1)(b) such that the word “held” should be interpreted as not only the time when a licence was in existence, but should also include the time from the date of an application for a new venue licence (or appeal) until resolution, even if at that time no licence was in existence. Justice Ronald Young was not prepared to stretch the meaning of “held”. The word had a literal meaning; that a current class 4 venue licence was in existence.66 His Honour accepted that there were a number of ways in which a licence could be lost, and therefore not “held”, including:67
(a)Surrender (s 79(1)(b));
(b)“Forced” surrender (s 71(1)(g) and 71(1)(a));
64 See, for example, Trans-Tasman Mutual Resources Ltd v Taranaki-Whanganui Conservation Board [2021] NZSC 127, [2021] 1 NZLR 801 at fns 81, 101, 111, and 302; R v Harrison [2016] NZCA 381, [2016] 3 NZLR 602 at [71] and [93]; and Lawyers for Climate Action NZ Inc v Climate Change Commission [2022] NZHC 3064 at [148] and [245]–[254].
65 Air Rescue (No 2), above n 29.
66 At [25].
67 At [33].
(c)The operator’s licence with respect to the venue ends in some way and so must the venue licence (s 70(5));
(d)The licensing period expires and a renewal is not sought before licence expiry (s 72);
(e)Licence cancellation (as here) (s 75).
[64] I agree with his Honour’s interpretation. I acknowledge decisions of the Gambling Commission support the opposing view that a deliberate act of surrender is required before it can be said a licence is no longer “held”. I do not find them as persuasive as a decision of the High Court.
[65] FFNP’s interpretation of “held” as excluding a licence that has been retained in defiance of an obligation to surrender it better reflects both the text and the purpose of the Act, which included a new regime with reduced numbers of gambling machines and community input into the application process. Parliament clearly intended historic licence holders could retain their existing licences on the more favourable terms of the old regime, but that protection was never absolute. As I have said, it was a “use it or lose it” system. The contrary position advanced by the Secretary and GMANZ enables a corporate society to continue to hold an unused licence contrary to its obligations imposed by the Act. That a non-compliant corporate society could thus retain the benefits of the former regime, over 20 years after the new regime was introduced, is an unattractive proposition.
Issue two: the Secretary’s power to extend the inactivity period under s 71(1)(g)
[66] As above, under s 71(1)(g), a corporate society that has not conducted gambling at the venue for more than four weeks must surrender its class 4 venue licence unless the Secretary agrees to a further specified period of inactivity. The question in relation to this issue is the breadth of the Secretary’s discretion to extend the inactivity period beyond four weeks.
[67] FFNP says it is a narrow discretion that can only be used if activity will resume under the existing venue licence. It is not intended to facilitate periods of inactivity for matters such as renovations. The Secretary’s use of the discretion to date— routinely agreeing to lengthy and repeated extensions beyond the period of the existing
licence when it is not apparent gambling will recommence under that same licence— is otherwise for an improper purpose and is contrary to the intended operation of the Act. The only proper reason to agree to an extension of inactivity is when circumstances justify a “brief” extension to overcome a temporary barrier to operation and when gambling will resume under the existing venue licence with the existing operator and venue manager.
[68] The Secretary says the further inactivity period is not limited to the term of the current venue licence or current owner. Instead, there is a broad discretion to extend an inactivity period, which, under the Department’s policy, the Secretary evaluates on a case-by-case basis to determine whether there are good reasons to justify an extension for matters such as damage (either with natural or malicious causes) or through fault by the Department or Gambling Commission.
[69] GMANZ says it is notable that Parliament has not stated a maximum period of inactivity, only that the inactivity is for a specified period which is left to the Secretary’s judgement. FFNP’s assertion, that only a “brief” period of inactivity is available, is unhelpfully vague, thus any declaration would be abstract and of little utility. The exercise of the discretion to extend a period of inactivity to enable renovations is a proper purpose. Nor is there anything to suggest gambling must resume with the existing venue operator and manager. The venue licence is held by the corporate society, not the venue operator or manager; an extension only removes the society’s obligation to surrender the licence.
[70] It is a well-established principle of statutory interpretation that 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 purposes of the statute”.68 This general principle can be excluded as a matter of construction of the statute in question.69 A power will not be implied if to do so would be contrary to the
68 R v Aspinall HC Auckland CRI-2005-004-19057, 11 August 2006 at [19].
69 At [23].
legislative scheme.70 As expressed by Elias CJ in New Health New Zealand Inc v South Taranaki District Council:71
Unexpressed powers are not however treated as implicit in legislation simply because they would match reasonable assumptions or might be convenient. The power implied must be “fairly … regarded as incidental to, or consequential upon, those things which the Legislature has authorized”. The starting point is what Parliament has actually enacted. Any implication must reasonably be regarded as part and parcel of the authority expressly provided. The courts do not imply terms into statutes to fill in gaps in policy. Implication is “in order to make the statutory power effective to achieve its purpose”. If the implication affects the rights of others it is not enough if it is one “it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included”. It must be an implication that is necessary.
[71] The starting point is that there is no statutory maximum set on the length of an extension the Secretary may agree to. Nor do I consider the statutory scheme is contravened by a discretion to assess requests for extensions on a case-by-case basis, as long as the extension is for a genuine reason and its time period is logically linked to the reason for which it is sought. I do not agree that an extension for renovations is an improper use of the discretion; realistically, a venue will need work and/or renovation from time to time.
[72] I have also found the departmental reports of limited utility to determine this issue. I have found support there for FFNP’s position on issue one, but I do not find it clear enough to support FFNP’s position on this issue.
[73] Although I understand FFNP’s concern that the possibility of the Secretary granting an extension of over six months appears to contradict the six-month limits in ss 92 and 98, it is also possible to conceive of circumstances (for example, a requirement for earthquake strengthening) where such an extension may be required but a resulting loss of licence is unfair. That said, I agree with the other concern expressed by FFNP that an extension of inactivity should not be a method of getting around the application of ss 92 and 98. If that was the only reason to grant an extension, it would not be a “good reason” and such extension would be unlawful.
70 Commerce Commission v Telecom Corporation of New Zealand Ltd [1994] 2 NZLR 421 (CA) at 425.
71 New Health New Zealand Inc v South Taranaki District Council [2018] NZSC 59, [2018] 1 NZLR 948 at [283] (citations omitted).
Neither the Secretary nor GMANZ are advancing such use of the power to extend. As I have already observed, the scheme of the Act suggests an intention to reward responsible licence holders. It would therefore be incongruent if a licensee, with a good reason for an extension, nevertheless loses the protections the Act provides.
[74] An associated point is that it should be expected the Secretary and Department decision-makers are acting lawfully and not granting extensions simply to avoid the statutory scheme. The Department’s Operational Policy: Requests for an Extension to the Non-Gambling Period (the Operational Policy), which decision makers would also be expected to be follow, does appear to make that clear:72
4.Acceptable Reasons for Extension
The following are commonly accepted reasons for granting an extension:
• The venue has been damaged by fire, storm, earthquake, flood, accidental building collapse.
• The venue has suffered malicious damage like vandalism or theft.
• The venue is being rebuilt by clubs who are merging and have received Ministerial approval under section 95.
• The venue is being built as a new premise by a club which has received Ministerial approval under section 96.
4.1Other Unforeseen Circumstances
The Secretary has a discretion under this provision and must therefore consider all requests carefully. Each case will be considered against its particular circumstances and no precedent is set by previous decisions.
However, because an action was unforeseen by one of the parties, it does not mean that the case qualifies for an extended period of gambling inactivity. Circumstances that may be considered unforeseen include:
• 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.
• A procedural delay or error by the Department caused the applicant to reasonably presume that the licence would remain valid.
• The Department has determined that the period of a national or regional lockdown due to Covid-19 (i.e. Alert Levels 3 and 4) will be omitted in the calculation of the 4-week period of inactivity. If a venue stops
72 Te Tari Taiwhenua | Department of Internal Affairs Operational Policy: Requests for an Extension to the Non-Gambling Period (30 May 2023) at 4–5.
operating before a lockdown, the days prior shall count and be added to the days after the lockdown is lifted.
In circumstances where a venue is able to operate (e.g. Alert Level 2) but decides not to, the 4-week period is counted from the lifting of the lockdown. A venue must use the 4-week period of inactivity to address its problems with reopening and an extension will not be granted because a venue determines that opening doesn’t make business sense.
[75] While the Policy does not go so far as limiting the Secretary’s discretion as to the period of inactivity that may ultimately granted, it does suggest that the Secretary (and the Department) will approach applications for extension with a healthy level of scrutiny and will seek to minimise inactivity periods as far as possible. I note too that the Policy also alerts decision makers to the potential for manipulation of the extension process to “work around territorial authority sinking lid venue policies”.73
[76] Finally, I observe that a declaration along the lines FFNP seeks would be very difficult to craft when there may be a variety of reasons why a licensee may require an extension to the inactivity period. Any declaration would necessarily be relatively high level. A declaration that an extension should only be for a “brief” period would cause difficulty and lead to argument. An explicit time period—say, of three months, or four, or five or six—has the potential for arbitrariness. Six months might have some attraction, given the six-month period in ss 92 and 98, but has the potential for injustice in a deserving case.
[77] To the extent that FFNP considers extensions have been granted only to prevent the six-month time effluxion (and therefore not for a “good reason”), as Palmer J found in earlier proceedings—and as FFNP accepts here—any declarations the Court makes in this case cannot affect licences that have already been granted nor any extensions of inactivity periods granted based on the Secretary’s previous understanding. Particular decisions that FFNP considers as unlawful may be challenged via judicial review proceedings.
[78]For these reasons, I decline to make any declaration in respect of this issue.
73 At 7.
Issue three: relevant and irrelevant matters for decisions to extend inactivity period
[79] The third issue arises because I have not agreed with FFNP on issue two. FFNP says, in the alternative, that the Secretary must take into account the relevant territorial authority’s class 4 venue policy and must not take into account alcohol licencing issues when deciding whether to exercise its discretion to extend an inactivity period. The Secretary and GMANZ both contend that territorial authority policy is not a mandatory consideration and alcohol licencing matters are not irrelevant.
[80] The Act itself does not stipulate any matters that are relevant to the Secretary’s discretion to agree to extend a period of inactivity.
[81] FFNP’s position is that the purpose of the Act includes facilitation of community involvement, but the effect of an extension is to increase the time provided in s 98(b) under which a corporate society can apply for a new licence without territorial authority consent. The consequent potential to frustrate the mechanism for community input makes consideration of a territorial authority’s venue policy mandatory when the Secretary is considering an extension.
[82] With regard to alcohol licencing matters, FFNP says potential difficulties in obtaining an alcohol licence within six months does not provide a lawful basis on which the Secretary may agree to an extension of any inactivity period. The Act does not require a class 4 venue manager to sell alcohol or to hold an alcohol licence. A corporate society may apply for a venue licence in the six-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 the venue licence. When the time in s 98(b) cannot be extended, s 71(1)(g) cannot operate as a roundabout method of doing so.
[83] I do not agree with FFNP on this issue either. As above, with no statutory guidance about what the Secretary can or cannot consider in deciding whether to extend an inactivity period, or for how long, the starting point is that Parliament has conferred a broad discretion. Matters may nevertheless become mandatory considerations when Parliament must have meant them to be taken into account. The
test to determine whether a consideration is mandatory is best expressed in the case of
CREEDNZ Inc v Governor-General:74
What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the Court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the Court itself, would have taken into account if they had to make the decision. …
Questions of degree can arise here and it would be dangerous to dogmatise. But it is safe to say that the more general and the more obviously important the consideration, the readier the Court must be to hold that Parliament must have meant it to be taken into account.
[84] In my view a territorial authority’s venue policy is not a matter that would always need to be taken into account when the Secretary is deciding whether to extend an inactivity period. If, but for the extension, the requirement for territorial authority consent under s 98 would be triggered—for example, if extension is sought for (unforeseen) remedial building works that ends up taking longer than six months, during which time no gambling will be occurring at the venue—then I agree it could properly be a matter for the Secretary to take into account. This would particularly be the case if the territorial authority has adopted a “sinking lid” policy and so has expressed a desire to see a decrease in gambling activities the community. However, in the case of an extension for a shorter period of time, or for a reason that would not otherwise trigger the obligation for territorial authority consent under s 98, there does not appear to be any particular reason why the Department should have to consider the relevant venue policy.
[85] Although I accept that taking territorial authority venue policy into account would assist in furthering the Act’s purpose of facilitating community involvement, as the Secretary and GMANZ point out, the Act itself structures community involvement such that it is required or “triggered” only in certain circumstances; that is, when s 98 applies. That is the clearest indication from Parliament that, but for the circumstances in s 98, community involvement is not required. Thus, elevating territorial authority
74 CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 183.
venue policies to become mandatory relevant considerations potentially undercuts Parliament’s design of the licencing scheme.
[86] A further difficulty is that circumstances could arise where an extension, if declined, would lead the applicant to continue operating as before and not seek to do works that would result in inactivity for more than the four weeks allowed by s 71(1)(g). In such a case, the obligation for territorial authority consent under s 98 would of course not arise. Because the circumstances that may arise are so various, territorial authority venue policies, while being considerations that could properly be taken into account, do not reach the status of being mandatory relevant considerations in that I do not consider it could be said to be an “obviously important” consideration that Parliament would have “meant … to be taken into account”.
[87] For essentially the inverse reasons, my view is that other circumstances such as alcohol licencing are not irrelevant considerations for the Secretary when exercising the discretion to extend inactivity periods. Again, there is nothing in the statute expressly requiring that such a consideration is not to be taken into account. There is no reason to read in such an implied irrelevant consideration; not doing so does not prevent the Act from operating. On a theoretical level, I can accept FFNP’s position that serving alcohol is obviously not a statutory requirement for a class 4 venue licence, but the reality is that the vast majority (if not all) licensees who do operate gambling machines will also be serving alcohol. It follows that there must conceivably be some circumstances where the Secretary could properly have regard to the impact of refusing an extension on the liquor licence also held by the applicant.
[88] Again, I proceed on an assumption that the Secretary is exercising the statutory discretion in a principled manner and is not granting extensions for the sole purpose of enabling the retention of liquor licences. Similar to my discussion above on Issue two, to the extent that FFNP says that this has happened, such a decision can be specifically considered via judicial review. I also decline to make a declaration on this issue.
Issue four: does the Secretary have the power to backdate the commencement of a class 4 venue licence?
[89] This final issue also involves a question of statutory interpretation. Section 70(1) of the Act sets out the required content and conditions of a class 4 venue licence, which includes, in subs (1)(b), the commencement date and expiry date of the licence.
[90] On FFNP’s construction, the provision does not give the Secretary a power to backdate the commencement of a venue licence. It is an important matter because a power to backdate would mean the Secretary could specify a commencement date that avoids triggering the six-month continuity of licence requirement in ss 92(1)(b),75 allowing venues that have been without a licence for six months to nevertheless avoid the lower limit of nine gaming machines that the Act introduced. FFNP says the Gambling Commission’s jurisprudence is illustrative of the problems created by backdating. Instead of applying a fixed statutory test to determine the number of gaming machines that may be operated at a venue, there is a broad discretion being exercised to backdate licences and preserve their s 92 status (and the consequent benefits under the former regime) when this was not Parliament’s intention.
[91] The Secretary says s 70(1)(b) confers an implied ancillary power vested in the Secretary to backdate the commencement of a class 4 venue licence in appropriate cases, which is exercised on a case-by-case basis to protect applicants against the loss of a statutory opportunity to operate 18 gambling machines arising from unwarranted delay or error by the Department.
[92] GMANZ says the provision “on its face” grants the Secretary a discretion to set the commencement date. The section would have explicitly restricted backdating if that was the intention. The prescribed content of the application for a venue licence in s 65 does not include specifying a commencement date but, in contrast, the expiry date is prescribed in s 70(1A) as “not more than 3 years” after the commencement date. The fact that the expiry is pegged to the “commencement date” (rather than, say,
75 The same issue does not arise in respect of the six-month limit in s 98(b) because that section requires territorial authority consent if a licence has not been held by the venue for six months as at the date of application for a class 4 venue licence. In other words, unlike in s 92, the time limit is not related to the date of grant or expiry of a licence.
the date of the Secretary’s decision) supports the discretionary nature of the Secretary’s power. GMANZ also says the ability to backdate has a remedial and fairness function in appropriate cases, for example delay in the processing of an application or between a decision by the Secretary and a decision by the Gambling Commission on appeal.
[93] Although I agree there is no textual indication that the commencement date of a licence the Secretary is required to specify under s 70 can pre-date the Secretary’s decision, there is also no textual indication that it cannot. And although FFNP considers the presumption against retrospectivity supports its interpretation, in my view, the Secretary is correct that this issue is not about retrospective legislation but is rather about whether the Secretary has an implied power to act retrospectively.
[94] I have, as above, found the Secretary has an implied power to extend the inactivity period under s 71(1)(g). Applying the same reasoning to this issue when there is no prescribed commencement date in the Act, my view is that the ability to backdate is also an implied power that would not necessarily be contrary to the legislative scheme as long as it is exercised in a principled manner.
[95] First, as discussed, the Act on its face gives the Secretary a broad discretion to provide any commencement date for a licence. There is also no reason apparent to me to read this broad discretion differently.
[96] Second, it is clear that backdating will be necessary in an appropriate case to remedy any unfairness caused by delay or errors that are not the fault of the applicant, or to deal with unforeseen circumstances (such as a pandemic). A backdating power for such purposes would be fairly regarded as “incidental to” the Secretary’s function of setting licence commencement dates and would be “bona fide for the purposes of the statute”. Used in this way, I consider that backdating in accordance with the Department’s Guide: Backdating a New Class 4 Venue Licence appears broadly acceptable (the Guide). As the Guide states, a class 4 venue licence can be backdated when:76
76 Te Tari Taiwhenua | Department of Internal Affairs Guide: Backdating a New Class 4 Venue Licence (undated) at 1.
1.The application relies on section 92, to operate the number of machines the applicant intends to operate, and the venue does not currently hold a class 4 venue licence; and
2.The time between the venue last being operated as a class 4 venue and the date a complete application was received was not more than six months; and
3.A decision could have been made on the application, based on the information provided by the applicant, before the six months expired; and
4.The application was submitted with sufficient time to enable the Department to assess the application and reach a decision before the six-month period expired; or
5.The Department has intentionally or unintendedly given an undertaking that the licence can be backdated to preserve the entitlement under section 92; or
6.A procedural delay or error, outside of the applicant's control caused the six months to expire before a venue licence could be granted.
[97] I do not view the Department taking such an approach as contrary to the legislative scheme. That is only, however, if (as the Guide sets out) the approach is taken because there is no fault on the part of the applicant that the application for a licence/renewal was not determined in the six-month timeframe necessary for the s 92 “grandparenting” to apply. Further, if the Secretary (or Department) follows this approach, I cannot see why the Secretary would need to backdate the commencement of a licence to a date that is before the Department received the relevant application. I do have some reservations about point 5 of the Guide above, however. The Department should be expected to exercise a sufficient level of scrutiny of an application before giving any undertakings about backdating to preserve the entitlement in s 92, thus I am puzzled about how an undertaking could “unintendedly” be given. Nor can I see a reason for undertakings of this nature to be given, except in circumstances of procedural delay or error on the part of the Department. When Parliament has made it clear what the parameters are to retain the benefits of the former regime, it would be expected the Secretary would be very alert to any attempts to avoid those strictures.
[98] I can understand GMANZ’s hesitance about a requirement that backdating should not be to a date before a “complete application” is received, given this concept is not defined in the Act, and the Act does envisage an iterative licencing investigation
process. But it is apparent that the Department itself has a notion of what a “complete application” is, given this is a phrase used in the Guide. An implied ability to backdate a licence before a “complete” application (or, indeed, any application) has been received would, in my mind, run contrary to the statutory scheme.
[99] As Ronald Young J said in Air Rescue, the purpose of the Act’s licencing scheme is to “rewar[d] timely application”. And under s 72(6), an application to renew a class 4 venue licence before the expiry date permits the licence to continue after its expiry date until a decision is made.77 Similarly, s 92(1)(b) protects corporate societies who have lost their licence “as long as it can be applied for and obtained within six months”.78 The Act is clear that once an applicant exceeds the six month timeframe, the intention is that they must then apply for a new licence in terms of the current legislative scheme, with the nine machine cap and requirement for territorial authority consent in s 98. It would appear to me there is no reason—other than purely to evade the Act’s time limit and allow licence holders to retain their 18-machine limit and/or avoid territorial authority scrutiny—to backdate a licence to a date before the date of an application. As Brown J put it in another Air Rescue decision, backdating of such a nature would have “the sole object … to prevent the effluxion of a specified statutory time limit”.79 This would undercut the protections the Act provides for prompt and timely re-applications, as well as the express parliamentary intention that those who do not act in a timely way will not be protected.
[100] I do not agree with FFNP that backdating would result in licences having to be surrendered under s 71(1)(g). Applying for a new class 4 venue licence before the current licence expires enables the existing licence to continue until a decision is made under s 72(6). Therefore, provided a timely renewal application is made, a corporate society would still be operating under its old licence for the purposes of the Act. If the licence is then renewed, that new licence supersedes the old licence. The test under s 71(1)(g) is whether the corporate society “has not conducted class 4 gambling at the venue for a period of more than 4 weeks”. Where a corporate society has continued to operate under its old licence (as permitted) but is subsequently granted a renewed
77 Air Rescue (No 2), above n 29, at [34].
78 At [39].
79 Air Rescue Services Ltd v Secretary for Internal Affairs [2015] NZHC 741, [2015] NZAR 807 at [25].
licence backdated to the date of application, this test is not met, for there has been no period of inactivity of more than four weeks.
[101] It follows that I consider as appropriate a modified version of the alternative declaration sought by FFNP on this ground, being that the Secretary has the power to backdate the commencement of a licence but must not do so to a date before that which the Secretary (or the Department) received a complete application for consideration.
Conclusion and relief
[102] For the reasons set out above, there are issues of statutory interpretation in this case that can appropriately and accurately be addressed by way of declaration. Accordingly, I grant declarations on issues one and four, as follows:
(a)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) has been triggered.
(b)The Secretary has 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.
[103]I decline to make declarations on issues two and three.
[104] For the avoidance of doubt, the declarations apply from the date of the release of this decision. This decision does not invalidate licences or applications granted by the Secretary in accordance with its previous practice and does not apply to any applications (complete or not) currently before the Secretary for consideration.
[105] All parties have had a measure of success. I have granted two declarations of the four that were sought. It is my preliminary view, therefore, that costs should lie where they fall. If the parties take a different view, they may file memoranda (no more than five pages) within 15 working days of receipt of this decision and I will determine costs on the papers.
Grau J
Solicitors:
Izard Weston, Wellington for Plaintiff Crown Law, Wellington for First Defendant True Legal, Hamilton for Second Defendant
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