Pub Charity Incorporated v Secretary for Internal Affairs
[2014] NZHC 2146
•4 September 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-485-011181 [2014] NZHC 2146
BETWEEN PUB CHARITY INCORORATED
Applicant
AND
THE SECRETARY FOR INTERNAL AFFAIRS
First Respondent
THE GAMBLING COMMISSION Second Respondent
Hearing: 4 September 2014 Appearances:
M S Smith for Applicant
K G Stephen and S V McKechnie for First Respondent
S E Kuper for Second RespondentJudgment:
4 September 2014
ORAL JUDGMENT OF GENDALL J
Background
[1] This proceeding involves an application for interim relief pending final disposition of a substantive judicial review application brought by the applicant (“Pub Charity”). It involves a matter of utmost urgency for reasons which will become apparent later in this judgment; hence the oral decision I now give. The history leading to this point is complex which for convenience I propose to set out in a chronology I will annex to this judgment.
[2] For present purposes it is sufficient to record that in the 12 month period ending 31 July 2009, Pub Charity exceeded the financial limit it was permitted to pay to venues (of which there were 148 venue operators containing 1735 gaming or
“pokie” machines) as a “Class 4” gambling licensee. This limit was promulgated
PUB CHARITY INCORORATED v SECRETARY FOR INTERNAL AFFAIRS [2014] NZHC 2146 [4 September 2014]
pursuant to s 116 of the Gambling Act 2003 and gazetted on 17 July 2008. The limit was exceeded by 0.46%, some $286,275. As punishment for this excess the first respondent (“the Secretary”) imposed upon Pub Charity a one day suspension of its Class 4 operator’s licence. This suspension was originally to be served over three years ago on 25 July 2011 and then later on 16 April 2012. The suspension has still not as yet been served and all this has triggered a series of events. These have culminated in the present proceeding and have spanned multiple tribunals and Courts over a period exceeding the last three years. The events in question have occurred in an endeavour to resolve disputes over issues between the parties to this proceeding.
[3] This complex history resulted in a 22 August 2014 decision of the Secretary deciding to set a new date for the one day suspension to be served. This new date is to be next Monday 8 September 2014 and would result in all 148 venue operators associated with Pub Charity effectively being unable to trade with respect to activities conducted pursuant to the Gambling Act 2003 (“the Act”).
[4] Pub Charity has a not insignificant financial interest in challenging the Secretary’s decision. When Pub Charity was last audited, as I understand the position, its average daily gaming machine profit was $245,209.71 representing a total annual gaming machine profit of over $89.5 million. These figures are according to paragraph 19 of the affidavit of Martin Cheer dated 29 August 2014 filed on behalf of Pub Charity in this proceeding. All this has undoubtedly contributed in providing some impetus for the interim relief now sought.
This application
[5] Taken from the application for interim orders filed herein on 29 August 2014 the grounds upon which interim relief is sought by Pub Charity are:
(a) The judicial review proceeding challenges the decisions of the first and second respondents setting the penalty of a one day suspension and nominating 8 September 2014 as the date for serving the suspension.
(b)The application for judicial review will be rendered moot and the applicant will bear significant financial and reputational damage with no remedy, if required to serve the one day suspension penalty pending the outcome of the applicant’s judicial review proceeding.
(c) The applicant has a strong prima facie case that the respondents have erred in law and acted with procedural impropriety in setting the penalty of a one day suspension and nominating the date of
8 September 2014 for serving that penalty.
(d)The applicant has sought the first respondent’s agreement to amend the penalty date to allow the judicial review application to be determined in exchange for the applicant’s agreement that the challenge be brought on urgently, but the first respondent has declined to agree to this.
(e) The respondents experience no loss of rights or other prejudice should the order which is sought be granted.
[6] This application for interim relief is opposed by the Secretary. I now set out the grounds of opposition verbatim:
3.1The applicant does not have a position arising from the decisions of the first and second respondents under review that the orders are necessary to preserve:
(a) The applicant seeks reconsideration by the first respondent of the appropriate penalty, if any, for its breach of Limit D in accordance with the Court of Appeal's judgment.
(b) The reconsideration was ordered by the Court of Appeal, who remitted the matter back to the second respondent for reconsideration. Before that reconsideration could occur, however, and against the submissions of the first respondent, the applicant voluntarily withdrew its appeal to the first respondent’s reinstated decision.
(c) The applicant now seeks the very thing it has abandoned.
(d) The applicant is not seeking to preserve its position by way of the application for interim orders, but rather is seeking to
avoid serving a suspension penalty properly imposed on it in accordance with the Gambling Act 2003.
3.2 The Court should exercise its discretion to decline relief sought as:
1.The proceeding is an abuse of process, including on the grounds that it is:
(a) An attempt to achieve a collateral purpose; and
(b) An attempt to review or re-open a decision, where the applicant chose to withdraw their appeal in respect to that decision.
2. The substantive merits of the claim are weak.
3. To grant the order would undermine the scheme of the
Gambling Act 2003.
4. To grant the order would be inconsistent with the purpose of interim relief under s 8 of the Judicature Amendment Act 1972.
5. No prejudice will be caused to the private interests of the applicant if interim orders are not granted. In comparison, significant prejudice may arise if such an abuse of process is permitted and further funds, that would otherwise be applied or distributed in accordance with the Gambling Act, are consumed in this and further proceedings concerning the first respondent’s decision of 22 June 2011.
3.3 The application is contrary to the public interest and the interests of justice.
[7] The second respondent (“the Gambling Commission”) has filed a memorandum stating that it will abide the decision of the Court and will not play an active role in this proceeding.
Decision
[8] While I understand the quite valid points made in opposition to the present application by the Secretary, taking a pragmatic approach to this issue I have decided that the interim relief should be granted. I need to make clear that this decision in no way seeks to predetermine the substantive proceeding or even to engage its merits any more than is absolutely necessary here. The reasons I come to this conclusion are as follows:
(a) The application before me is made pursuant to s 8(1)(c) of the
Judicature Amendment Act 1992 which provides that at any time
before the final determination of an application for review the Court may “if in its opinion it is necessary to do so for the purpose of preserving the position of the applicant” make an interim order:
…
(c) Declaring any licence that has been revoked or suspended in the exercise of the statutory power, or that will expire by effluxion of time before the final determination of the application for review, to continue and, where necessary, to be deemed to have continued in force.
(b) Subsection (3) authorises the Court when making any order under s
8(1) to impose such terms and conditions as the Court thinks fit. The Supreme Court in Ministry of Fisheries v Anton’s Trawling Company Ltd1 has confirmed that the principles outlined in Carlton & United
Breweries v Minister of Customs2 are applicable. In that case the
Court said:
…the Court must be satisfied that the order sought is necessary to preserve the position of the applicant for interim relief which must mean reasonably necessary. If that condition is satisfied…the Court has a wide discretion to consider all the circumstances of the case including the apparent strength or weakness of the claim of the applicant for review and all the repercussions public or private of granting interim relief.
(c) Interim orders have previously been made by this Court in reliance upon s 8(1) (c) to allow a suspended motor vehicle dealer’s licence to remain in force pending the outcome of an application for judicial review (Auto Stable Ltd v Motor Vehicle Dealers Licensing Board)3 and also to delay the coming into effect of a decision cancelling a Class 4 operator’s licence until determination of a judicial review challenge (such as the present) to that decision (Bluegrass Holdings Ltd v Gambling Commission & Anor.4
(d)In the present case before me as I see it, if relief is not granted and the merits are ultimately seen to be in Pub Charity’s favour, I am satisfied
1 Ministry of Fisheries v Anton’s Trawling Company Limited [2007] 18 PRNZ 754 (SC) at 8.
2 Carlton & United Breweries v Minister of Customs [1986] 1 NZLR 423 (CA) at 430.
3 Auto Stable Ltd v Motor Vehicle Dealers Licensing Board [1986] 1 NZAR 289 (HC).
4 Bluegrass Holdings Ltd v Gambling Commission & Anor [2014] NZHC 1942.
Pub Charity will be left wholly without a remedy. Thus, interim relief is necessary in this case to preserve Pub Charity’s position (Woodhouse v Auckland City Council5 and Squid Fishery Management Co Ltd v Minister of Fisheries).6 However in saying this, I recognise that this outcome, were I to refuse to grant the leave
sought, rests substantially upon Pub Charity’s own shoulders. It is Pub Charity that itself withdrew it appeal, an appeal which arguably would have continued to provide a simple avenue to challenge the Secretary’s decision here.
(e) Related to the above point is that if relief is not granted in the interim to preserve Pub Charity’s position, not only in my view will it be left without a remedy, but its substantive proceeding will become nugatory.
(f) The Secretary was given the opportunity here to defer for a short time the date on which the suspension penalty was to come into effect. It elected not to take this opportunity. Though this is one factor that has in part driven me to the conclusion to grant interim relief, the points put forward by the Secretary as grounds for refusing to defer are not unmeritorious.
(g)This dispute has been ongoing for a significant period of time with both parties having a measure of success throughout the various proceedings. As I see it very little prejudice would arise to the Secretary by again delaying the final resolution of this matter for a short time. After all, the acknowledged breach has already occurred some time ago and, as I understand the position, there are no ongoing breaches of the Gaming Act. What remains to be resolved is penalty.
(h)Pub Charity before me maintained that it was eager to have the substantive judicial review proceeding heard as expeditiously as
possible. To this end a two day hearing is available in this Court without significant delay. This hearing is to take place on 24 and 25
November 2014. Any interim relief granted here would not therefore be required to remain in force for an excessive period of time. A full reasonably fast-tracked consideration of the merits of this case can be determined in what is a little over two months which, in my view, is a significant point. On this issue of duration of any delay, see the
decision in Voss v Minister of Agriculture.7 And, as I see the position
there is no real prejudice to the Secretary or to anyone else in a further short delay in this matter.
(i)Finally, before me both parties raised some valid points in support of and in opposition to the substantive application which is before the Court. Mr Stephen for the Secretary argued strongly that, when properly analysed, Pub Charity’s present case for substantive relief is in fact a hopeless one with no substantive merit, that the present interim application is simply seeking to further delay matters, a delay which in the past has already been, in his words, “outrageous”, and all this simply represents an abuse of process. While I am inclined to the tentative view that Pub Charity’s substantive claim here is not overly strong, and indeed once a full analysis is undertaken at the substantive hearing some of Mr Stephen’s claims may well be borne out, it does seem to me that Pub Charity could have some potential basis for review. In this respect I have not reviewed in any detail the merits and have adopted a rather low threshold. This is within the discretion conferred by s 8 of the Judicature Amendment Act 1972 and is perhaps analogous to a finding of a reasonably arguable case (see
Petherick v Commissioner of Inland Revenue)8 although I prefer not
to fetter the discretion by reference to set benchmark tests. In my view it is important here that this matter proceed substantively so the dispute can be finally resolved.
[9] I need to say at this point however that I do have some serious reservations about the way Pub Charity has conducted itself in this whole dispute. The Court of Appeal decision in December 2013 has effectively resulted in reinstatement of the first decision of the Secretary, but with a new penalty date set. This had the unequivocal effect of re-imposing the one day suspension. Pub Charity immediately after that Court of Appeal decision in December 2013 chose to give notice withdrawing its appeal, it says because a June 2013 formal warning issued by the Secretary had replaced the suspension. It then also chose not to participate as an appellant in the Commission’s August 2014 decision which preceded the Secretary’s latest decision. The Court of Appeal had earlier in its decision given the Commission standing to reconsider the whole matter and in my view Pub Charity, in withdrawing its original appeal, must have known the inevitable result was likely to be that the one day licence suspension would be re-imposed.
[10] But generally it is the other factors I have outlined above, driven by a need for a pragmatic response, that has led me to exercise my wide discretion in the way I have. In that respect I refer to Carlton & United Breweries Ltd v Minister of Customs.9 It is somewhat of an indulgence here but in my view a necessary one to provide a short extension to preserve the status quo.
Result
[11] The applicant Pub Charity before me in this interim application has succeeded.
[12] The following orders are now made:
(a) Suspension of Pub Charity’s Class 4 operator’s licence issued under the Gaming Act 2003 shall not take effect until determination of the substantive judicial review application.
(b)The substantive judicial review application is now set down for hearing before this Court (two days are allowed) on 24 and
9 Carlton & United Breweries v Minister of Customs [1986] 1 NZLR 429 (CA).
25 November 2014. This hearing is to commence at 10 a.m. on
24 November 2014.
[13] The following additional timetabling directions are now made:
(a) The Secretary is to file and serve a statement of defence to the substantive proceeding by Friday 19 September 2014.
(b)Pub Charity is to file and serve any further affidavits in support of the substantive judicial review application by Friday 10 October 2014.
(c) The Secretary is to file and serve any further affidavits in opposition to the substantive judicial review application by Friday 24 October
2014.
(d) Pub Charity is to file and serve any affidavits in reply by Friday
31 October 2014.
(e) Pub Charity is to file and serve its legal submissions by Tuesday
4 November 2014. In addition, by that date, Pub Charity is to file and serve a case book containing the pleadings, affidavits and all exhibits which is indexed and paginated and copies of all authorities referred to, plus a chronology that complies in principle with r 9.9(2) High Court Rules.
(f) The Secretary’s legal submissions are to be filed and served by Friday
14 November 2014. In addition, by that date, the Secretary is to provide copies of all authorities referred to plus a response to Pub Charity’s chronology in accordance in principle with r 9.9(3) High Court Rules.
(g)The second respondent, the Gambling Commission, is to file and serve its submissions by Wednesday 19 November 2014.
(h) Leave is reserved for any party to approach the Court further on 48
hours’ notice to seek further directions on any matter that cannot be resolved by agreement between counsel.
Costs
[14] As to costs in this matter, they are reserved. If the parties are unable to reach agreement between themselves on issues of costs which are outstanding, that may be the subject of memoranda filed sequentially, which are to be referred to me and in the absence of either party indicating they wish to be heard on the matter I will decide that question based on the material then before the Court.
Post script
[15] After the luncheon adjournment today, 4 September 2014, Mr Stephen counsel for the Secretary brought to the attention of the Court a letter which had just been made available to him, which seemed to be of some concern. This letter dated also today, 4 September 2014, was from Mr M D Hayes, the Chairman of Pub Charity, to Mr Raj Krishnan described as “Gambling Compliance” in the Department of Internal Affairs.
[16] Mr Stephen noted that there were serious allegations made in this letter by
Mr Hayes and that strong language had been used.
[17] Before me however, both Mr Stephen and Mr Smith for Pub Charity agreed that this letter and matters raised within it were of no relevance to my decision today. The complaints contained in the letter, as I understand it, may be relevant however if this matter, as now appears, proceeds to a substantive hearing.
[18] That said, I direct the Registrar of the Court to refer this 4 September 2014 letter from Mr Hayes to the Judge allocated to hear the substantive judicial review application on 24 and 25 November 2014, for any further consideration that may be appropriate.
...................................................
Gendall J
Solicitors:
Matthew Smith, Wellington
Crown Law Office, Wellington
Wilson Harle, Auckland
Chronology
| Date | Event |
| 31 July 2009 | In the 12 month period ending on this date the total of Pub Charity’s reimbursement payments to its 148 venue operators was $10,243,666.20. This amount exceeded the prescribed Limit D (16 per cent of net gaming machine profit in any 12 month period) by 0.46 percent, or $286,275. |
| 27 June 2011 | The Secretary for Internal Affairs decided to suspend Pub Charity’s Class 4 operators license for one day as a result of it exceeding the prescribed limit. |
| 25 July 2011 | The date originally nominated by the Secretary on which Pub Charity would serve its suspension. |
| 7 July 2011 | Pub Charity appealed the Secretary’s decision to suspend its licence for one day. |
| 16 March 2012 | The Gambling Commission released a decision concluding that a one day suspension remained appropriate, but no replacement suspension date was nominated. |
| 4 April 2012 | The Secretary on this date nominated the date of 16 April 2012 as the replacement date on which the one day suspension would be served. |
| 26 April 2012 | Pub Charity issued judicial review proceedings in the High Court at Wellington. The application challenged the decisions of both the Secretary and the Commission. |
| 19 December 2012 | The High Court sitting as a Full Court upheld Pub Charity’s application for judicial review. |
| 8 February 2013 | The Secretary appealed the High Court decision to the Court of Appeal. |
| 23 May 2013 | In a meeting between the Secretary and Pub Charity a formal warning was issued to Pub Charity amongst other things for exceeding the Limit D in the period ending 31 July 2009. |
| 7 June 2013 | A letter was sent by the Secretary to Pub Charity putting in writing the formal warning given orally on 23 May 2013. |
| 8 July 2013 | A letter was sent by the Chairman of Pub Charity to the Secretary in response to the warning letter sent by the Secretary. Pub Charity stated that as the matter was still before the Court, it considered the Secretary was unable to take any action at this time. |
| 1 August 2013 | Another letter was sent by the Secretary to Pub Charity explaining the effect of the formal warning. |
| 5 November 2013 | Hearing in Court of Appeal. |
| 10 December 2013 | The Court of Appeal released its decision in respect of Pub Charity’s appeal. Relevantly, this decision departed from the finding of the High Court that s 58(1)(b) Gambling Act 2003 could not be used to impose a penalty for past non-compliance with the Act. The Court also held that the Commission had erred in its decision making. The result was that the matter was remitted back to the Commission for fresh consideration and to decide the appeal. To enable the Commission to do so, |
| the Secretary’s first decision was reinstated so the Commission had jurisdiction to hear the appeal. | |
| 12 December 2013 | Gambling Commission wrote to Secretary and Pub Charity seeking submissions for Commission’s reconsideration. |
| 13 December 2013 | Pub Charity wrote to the Commission giving notice that it was withdrawing its appeal on the basis that the formal warning referenced above (23 May 2013 and 7 June 2013) had replaced and superseded the one day suspension. |
| 18 December 2013 | Email letter on behalf of the Secretary, informed Pub Charity that it was of the view that if the appeal was withdrawn, the original suspension would remain in force. The email also recorded explicitly that the formal warning was not given in substitution for the suspension penalty and the suspension would stand. |
| 7 January 2014 | Pub Charity responded to the Secretary’s email by a letter. The letter simply confirmed the view that the withdrawal of an appeal was possible. It did not respond to the Secretary’s view as to the consequence of such withdrawal. |
| 22 January 2014 | The Secretary advised by email that he no longer supported the withdrawal of the appeal. |
| 24 January 2014 | The Commission sought responses from Pub Charity in respect of a number of questions in relation to the withdrawal of the appeal. Pub Charity responded the same day. |
| 10 February 2014 | The Secretary filed and served a memorandum opposing the proposed withdrawal of the appeal. |
| 21 February 2014 | The Commission responded to the parties advising that it had decided to proceed with the rehearing in accordance with the Court of Appeal’s direction. It stated it would need to consider the potential for abuse of the statutory appeal right. |
| 25 February 2014 | Pub Charity refused to engage the appeal process and stated that the right to lodge an appeal was its, as was the right to withdraw. |
| 9 April 2014 | Secretary files submissions in accordance with timetable. |
| 1 August 2014 | The Commission notified its decision accepting the withdrawal of Pub Charity’s appeal. The Commission confirmed that the Secretary had the power to reset the date on which the suspension was served. The appeal was brought to an end. |
| 20 August 2014 | Pub Charity wrote to the Secretary following the release of the Commission’s decision of 1 August 2014. It implored the Secretary to impose no penalty additional to the formal warning received. |
| 22 August 2014 | The Secretary wrote to Pub Charity nominating 8 September 2014 as the date on which Pub Charity would serve its one day suspension. The letter rejected the suggestion that a formal warning was sufficient. |
| 8 September 2014 | The third date nominated by the Secretary on which Pub Charity would serve its suspension. |
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