Shoye Venture Ltd v Wilson - [2013] NZHC 658

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-007912 [2013] NZHC 658

BETWEEN SHOYE VENTURE LIMITED Plaintiff

ANDDONALD GORDON WILSON Defendant

ANDMANUKAU GOLF CLUB INCORPORATED
Third Party

CIV-2010-404-004422

BETWEEN MANUKAU GOLF CLUB INCORPORATED
Plaintiff

ANDSHOYE VENTURE LIMITED Defendant

Hearing: 11-14 June and 6 July 2012

Counsel: M R T Colthart for Plaintiff in Proceeding CIV-2009-404-007912 and for the Defendant in Proceeding CIV-2010-404-004422
A E Hansen for Defendant in Proceeding CIV-2009-404-007912 and for the Plaintiff in Proceeding CIV-2010-404-004422
I T F Hikaka and K L J Simcock for the Third Party in Proceeding
CIV-2009-404-007912

Judgment: 28 March 2013

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 28 March 2013 at 11.00 am, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

SHOYE VENTURE LTD v WILSON and ANOR HC AK CIV-2009-404-007912 [28 March 2013]

[1] Gambling is strictly controlled in New Zealand. Gambling that does not fit within the strict confines of permitted gambling is illegal and the contracts relating to it are also illegal. One of the permitted forms of gambling is by the provision of gaming machines. Such operations must conform with the requirements of the Gambling Act 2003 (the Act). Those requirements include maintaining a clear demarcation and independence between the holder of a licence to operate gaming machines and the operator of the venue at which such gaming takes place. A related control requires the manager of the venue where the gaming machines are in use to be a natural person. The Act places performance obligations on the holder of the licence to operate gaming machines, the venue operator and the venue manager. For these persons to be able to work with each other, they need to contract with each other for the performance of their respective roles. This is why the plaintiff (Manukau) and the defendant (Shoye) came to contract with each other.

[2] At all material times, Manukau was an incorporated society that operated as a golf club. It qualified as a corporate society under the Gambling Act. Like many sports clubs, Manukau sought to increase its financial resources through operating gaming machines. Shoye is a registered company. It was the lessee and operator of licensed premises at 276 Great South Road, Takanini, known as the Trophy Bar. Its sole director is Maurice Joyce.

[3] In late 2007, Manukau sought and obtained an operator’s licence and venue licence permitting class 4 gambling by way of gaming machines at the Trophy Bar. To obtain these licences, Manukau had to enter into a contract known as a venue agreement with Shoye, the terms of which met the Act’s requirements and so satisfied the Secretary of Internal Affairs (Internal Affairs). On the face of it, the contract that Manukau entered into with Shoye on 9 October 2007 met the relevant requirements of the Act and was approved by Internal Affairs.

[4] But Manukau and Shoye ran the gaming machine operation in a fundamentally different way from that contemplated by the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 658
Decision Date: 28 March 2013

CaseChat Overview and Summary

In Shoye Venture Ltd v Wilson, the High Court of New Zealand dismissed claims by Manukau Golf Club and Shoye Venture Ltd against each other in relation to the operation of off-site gaming machines at the Trophy Bar. The Court found that the operation of the gaming machines was conducted in a manner that contravened the Gambling Act 2003, resulting in illegal gambling. The Court held that the parties had implicitly abandoned their legally compliant contractual arrangements and had entered into illegal de facto arrangements instead. Consequently, the Court found that the illegality of the de facto arrangements precluded both parties from suing on their legitimate contractual arrangements. The Court also found that Shoye Venture Ltd could not rely on the illegal de facto arrangements to establish a breach of contract claim against Manukau Golf Club, as it had been a willing participant in the illegal operation. The claims by both parties were dismissed, and leave was reserved for the parties to file memoranda as to costs.

Orders