Supreme Court New South Wales Medium Neutral Citation: Tourist Accommodation Pty Ltd v Independent Liquor and Gaming Authority [2022] NSWSC 1277 Hearing dates: 7 September 2022 Date of orders: 26 September 2022 Decision date: 26 September 2022 Jurisdiction: Common Law - Administrative Law Before: Griffiths AJ Decision: The further amended summons is dismissed, with costs. Catchwords: ADMINISTRATIVE LAW – Ground of review other than procedural fairness – Constructive failure to exercise jurisdiction – Whether defendant Authority misconstrued evidence – Whether applications determined on the basis of an incorrect factual assumption ADMINISTRATIVE LAW – Procedural fairness – Hearing rule – Disclosure – Whether defendant Authority required to disclose deliberative processes ADMINISTRATIVE LAW – Ground of review other than procedural fairness – Irrelevant and relevant considerations – Statutory construction ADMINISTRATIVE LAW – Hardiman principle – Role of the defendant Authority as the active contradictor – No impropriety Legislation Cited: Casino Control Act 1992 (NSW) Gaming and Liquor Administration Act 2007 (NSW) Gaming Machines Act 2001 (NSW) Gaming Machines Regulation 2019 (NSW) Liquor Act 2007 (NSW) Cases Cited: Commissioner for the Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 Cunneen v Independent Commission Against Corruption [2014] NSWCA 421 Henroth Investments Pty Ltd v Sydney North Planning Panel [2019] NSWCA 68 Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2009] NSWCA 300 R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 12; [1980] HCA 13 Re Minister for Immigration and Multicultural and Indigenous Affairs v Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 Texts Cited: Macquarie Dictionary (8th ed, 2020) Category: Principal judgment Parties: Tourist Accommodation Pty Ltd (Plaintiff) Independent Liquor and Gaming Authority (Defendant) Representation: Counsel: W G Muddle SC (Plaintiff) S Patterson (Defendant) Solicitors: Hatzis Cusack Lawyers (Plaintiff) Crown Solicitor's Office (Defendant) File Number(s): 2022/00075942 Publication restriction: Nil JUDGMENT 1. By a further amended summons filed on 19 July 2022, the plaintiff challenges by way of judicial review two related decisions made by the defendant, the Independent Liquor and Gaming Authority (Authority), on or about 19 January 2022 which refused the plaintiff's applications: 1. to increase the gaming machine threshold (GMT) of Hotel Licence Serial Number LIQH440019046 relating to premises known as the "Flemington Hotel" from 0 to 20 (GMT Increase Application) (the Flemington Hotel is located at the rear of 195 Parramatta Road, Homebush West, NSW); and 2. for approval of the plaintiff's Class 1 Local Impact Assessment (LIA) which accompanied the plaintiff's GMT Increase Application. 1. In brief, these decisions are challenged on the following grounds (as elaborated upon in oral address): 1. The Authority misconstrued the evidence before it and determined the applications on an incorrect factual assumption, namely that the plaintiff was unwilling to make a monetary contribution in accordance with guidelines issued by the defendant (ground 1). 2. Further and in the alternative, to the extent that the Authority concluded that the plaintiff's application incorporated a proposed monetary contribution less than the correct monetary contribution resulting from an assessment carried out in accordance with the guidelines, the Authority denied the plaintiff natural justice by failing to inform it of that conclusion and providing it with an opportunity to increase the proposed monetary contribution. Alternatively, the Authority could have approved the applications subject to a condition that the monetary contribution be the amount so determined by the defendant (ground 2). 3. In determining the applications, the defendant misconstrued its powers under s 36(3) of the Gaming Machines Act 2001 (NSW) (GM Act) and had regard to irrelevant considerations (ground 3). 1. For the following reasons, the further amended summons will be dismissed, with costs. The legislative regime summarised 1. The GM Act provides a comprehensive regime for regulating gambling activities involving gaming machines in this State. The objectives of the legislation are summarised in the objects, which are set out in s 3: (1) The objects of this Act are as follows— (a) to minimise harm associated with the misuse and abuse of gambling activities, (b) to foster responsible conduct in relation to gambling, (c) to facilitate the balanced development, in the public interest, of the gaming industry, (d) to ensure the integrity of the gaming industry, (e) to provide for an on-going reduction in the number of gaming machines in the State by means of the tradeable gaming machine entitlement scheme. (2) The Authority, the Minister, the Secretary, the Commissioner of Police and all other persons having functions under this Act are required to have due regard to the need for gambling harm minimisation and the fostering of responsible conduct in relation to gambling when exercising functions under this Act. (3) In particular, due regard is to be had to the need for gambling harm minimisation when considering for the purposes of this Act what is or is not in the public interest. 1. The legislation is administered by the Authority, which is constituted under s 6 of the the Gaming and Liquor Administration Act 2007 (NSW). 2. Part 4 of the GM Act is headed "Gambling harm minimisation measures". Division 1 of Pt 4 provides for the "Gaming machine threshold scheme". Under s 32(1) the Authority may, for each hotel, set the maximum number of approved gaming machines that may be authorised under Pt 5 to be kept in the hotel. That maximum number is known as the "gaming machine threshold" or "GMT" for that hotel (s 32(2)). In the case of a new hotel, the GMT for the hotel may be set at 0 (s 32(4)). The Authority is empowered by s 32(5) to increase or otherwise vary the GMT in accordance with the GM Act. 3. Pursuant to s 33(1), the Authority is required to classify each local statistical area of the State as either a "Band 1 LSA", a "Band 2 LSA" or a "Band 3 LSA". The legislation does not define the content of these three bands but it is evident from the second reading speech in the Legislative Council to the Liquor and Gaming Amendment Bill 2018 (Amendment Bill) (which proposed various amendments to the GM Act that were later enacted by the parliament) that the Authority would place all local statistical areas into one of three bands: Band 1 (low risk); Band 2 (medium risk); and Band 3 (high risk) (at p 51). The second reading speech further explained that the bands "will then be used to determine what increase to its gaming machine threshold a venue can apply for and what it is required to do as part of its local impact assessment" (p 51). 4. Section 34 is an important provision in this proceeding. It provides for a hotelier to apply to the Authority to increase the GMT: 34 Application to increase gaming threshold (1) A hotelier or club may apply to the Authority to increase the gaming machine threshold for the hotel or the premises of the club (a threshold increase application). (2) The hotel or club premises to which a threshold increase application relates is referred to in this Division as the relevant venue. (3) A threshold increase application must comply with the requirements of this Division and the regulations. (4) The Authority may approve a threshold increase application only if the Authority is satisfied that the requirements of this Division and the regulations have been complied with in relation to the application. (4A) The Authority must determine a threshold increase application within the time required by the regulations. (5) If the application is approved, the Authority may increase the gaming machine threshold for the relevant venue in accordance with the Authority's approval. (6) Nothing in this Division requires the Authority, if it approves a threshold increase application, to increase the relevant venue's gaming machine threshold by the number to which the application relates. (7) Without limiting subsection (1), a threshold increase application may be made by a person in relation to premises that are the subject of an application for a licence under the Liquor Act 2007 that has not yet been granted. 1. Section 35 is another important provision. It requires that certain GMT increase applications be accompanied by an LIA. There are two types of LIAs, namely a "Class 1 LIA" and a "Class 2 LIA" (ss 35(1), (3)–(4)). That classification depends upon the local statistical area in which the relevant hotel is located, and the size of the increase in the GMT which is sought. It is common ground in this proceeding that the plaintiff had to provide a Class 1 LIA. 2. The essential difference between a Class 1 LIA and Class 2 LIA is explained in the second reading speech to the Gaming Machines Bill 2001 (NSW) in the Legislative Assembly, where it is stated (noting that at that point LIAs were known as "social impact assessments" or "SIAs"): … SIAs will fall into two categories—class 1 and class 2. Class 1 SIAs will be required to provide basic information. Class 2 SIAs will require significantly more information, and will need to satisfy a net economic and social impact benefit test. Class 2 SIAs will also be required to satisfy prescribed consultation requirements. (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 30 November 2001 at 19278) 1. The GM Act provides for regulations to make provision for, or with respect to, various matters concerning an LIA, such as the information required to be provided and the matters to be addressed in a LIA (s 35(6)). Regulation 33 of the Gaming Machines Regulation 2019 (NSW) (GM Regulation) specifies the information which a Class 1 LIA applicant must include in its LIA: (a) if the threshold increase application to which the LIA relates is made in relation to a new hotel or a new club—a map showing the location of the venue and the location of any school, place of public worship or hospital within 200 metres of the venue, (b) details of the benefits that the venue will provide to the local community if the threshold increase application is approved, (c) details of any harm minimisation and responsible gambling measures that are in place at the venue (including specifying which of those measures are required by law and which of those are offered voluntarily by the venue), (d) details of any additional positive contributions by the venue (as referred to in section 36B of the Act) in connection with the threshold increase application, (e) any other information required by the Authority. 1. The information required of a Class 2 LIA applicant is different and far more demanding of an applicant, as is reflected in reg 34. Part of the difference reflects the additional information which the Authority requires in order to be satisfied of the criterion in s 36(3)(d)(i). 2. It is also relevant to note reg 37 of the GM Regulation, which provides (in the case of both a Class 1 and Class 2 LIA) that within 2 working days of making a GMT increase application, the applicant must provide a copy of the application to the local council and local police, and notify the local health district and local organisations that are involved in activities related to addressing gambling-related problems and inform each body and organisation that they may make a submission to the Authority in respect of the application. 3. Another important provision is s 36 of the GM Act. It provides for the circumstances in which the Authority may approve an LIA. It relevantly provides: 36 Approval of LIA by Authority (1) If an LIA is required to be provided with a threshold increase application, the application cannot be approved unless the Authority approves the LIA. … (3) The Authority may approve an LIA only if it is satisfied that— (a) the LIA complies with the requirements of this Division and the regulations in relation to the LIA, and (b) the LIA has demonstrated that gambling activities in the relevant venue will be conducted in a responsible manner, and (c) in the case of a class 1 LIA— (i) the proposed increase in the gaming machine threshold for the relevant venue will provide a positive contribution towards the local community where the venue is situated, and (ii) the relevant venue is not, if the venue is a new hotel or comprises new club premises, situated in the immediate vicinity of a school, hospital or place of public worship, and (iii) the LIA has adequately addressed any community concerns arising out of the consultation process under the regulations, and (d) in the case of a class 2 LIA— (i) the proposed increase in the gaming machine threshold for the relevant venue will have an overall positive impact on the local community where the venue is situated, and (ii) the relevant venue is not, if the venue is a new hotel or comprises new club premises, situated in the immediate vicinity of a school, hospital or place of public worship, and (iii) the LIA has adequately addressed any community concerns arising out of the consultation process under the regulations, and (e) it is otherwise appropriate that the LIA be approved. … (7) Without limiting any other provision of this Division, the approval of an LIA is subject to such conditions as may be specified by the Authority. The LIA has no effect if any such conditions are not complied with. 1. A community benefit requirement cannot be wholly or partly satisfied by a payment of money except by a payment to the Secretary of the Department of Customer Service under the Casino Control Act 1992 (NSW) for payment into the Responsible Gambling Fund as a "community benefit payment" under the GM Act (s 36A(1)). The Authority is required to take into account a community benefit payment in determining a GMT increase application as if it were a contribution to the local community where the hotel is situated (s 36A(2)). "Community benefit requirement" is defined in s 36A(3) as a requirement under s 36 that a proposed GMT threshold increase for a venue will: 1. provide a positive contribution towards the local community where the venue is situated (ie in respect of Class 1 LIAs); or 2. have an overall positive impact on the local community where the venue is situated (ie in respect of Class 2 LIAs) (see s 36A(3)). 1. Sections 36A, 36B and 36C were all inserted in the GM Act in 2018 following a review in 2017 of liquor and gaming legislation. One of the changes made by the 2018 amendments was to replace the concept of local government areas with local statistical areas. As noted in the second reading speech of the Amendment Bill in the Legislative Council at p 51, local statistical areas are much smaller than local government areas and switching to the smaller areas meant that the Authority could "utilise a more nuanced and sophisticated way to assess the impact of gaming machines on the community". 2. Under s 36B, the Authority is required to have regard to "additional positive contributions" by the venue in connection with a GMT increase application and may decide to treat those additional positive contributions as being in partial satisfaction of a community benefit requirement (with the effect of reducing what is required to satisfy a community benefit requirement: see s 36B(1)). The expression "additional positive contributions" is defined in s 36B(2). The definition includes actions taken by a venue to "[put] in place harm minimisation and responsible gaming measures that are in addition to measures already required by law" (s 36B(2)(a)). 3. Section 36C is another important provision. It empowers the Authority to publish guidelines about the operation of Div 1 of Pt 4 of the GM Act (which, as noted above, deals with the gaming machine threshold scheme). It provides as follows: 36C Guidelines for threshold increase applications (1) The Authority may publish guidelines about the operation of this Division for the purpose of providing guidance in respect of the requirements of this Division relating to threshold increase applications. (2) Without limitation, the guidelines may provide guidance about the following— (a) what the Authority considers to be a positive contribution towards a local community or an overall positive impact on a local community, (b) conditions that the Authority may impose on its approval of an LIA. (3) The guidelines do not limit the Authority's discretion when deciding in a particular case what constitutes a positive contribution towards a local community or an overall positive impact on a local community, or in deciding to impose conditions on an approval. 1. It is now common ground that the relevant guidelines applicable to this proceeding are the guidelines issued by the Authority and dated 13 October 2021. They are titled Class 1 Local Impact Assessment Process Guidelines (Guidelines) (noting that the further amended summons erroneously refers to "Guideline 11"). The Guidelines refer at page 2 to the concept of "Statistical Area Level 2s" (SA2s), which are geographical boundaries set by the Australian Bureau of Statistics. The Guidelines explain how each such statistical area is classified by the Authority into Band 1 (low risk), Band 2 (medium risk) and Band 3 (high risk) depending on the gaming machine density, gaming machine expenditure and the relative socio-economic disadvantage of the particular SA2. At page 7 of the Guidelines, there is a description of what constitutes a "positive contribution" for a Class 1 LIA. It is stated there that, in assessing whether a donation proposed to support a Class 1 LIA satisfies the Authority that the donation should be considered a positive contribution to the community, the Authority will have regard to a particular formula. In the case of a new hotel venue (as is the case here), the formula is: 15% of average annual profit of existing gaming machines before tax in existing hotels of the Local Government Area (avg profit), multiplied by the number of gaming machine entitlements to be added by the GMT increase per year over 5 years, ie – 15% x avg profit x GMT increase x 5. 2. It is notable that the Guidelines do not explicitly identify any particular period by which "average annual profit" is to be calculated under this formula. This is curious, not the least because it is evident that it can take several years for the Authority to determine a GMT increase application, as this case well illustrates. Nor is there any explanation as to why the formula uses the concept of "Local Government Areas" and not SA2s. 3. The Guidelines also address the conditions which the Authority may place on a successful GMT increase application. They state that the Authority "may impose conditions on a successful GMT increase that a venue must satisfy before the GMT can take effect" (p 15, emphasis in original). Factual background summarised 1. On or about 30 April 2019, the plaintiff lodged with the Authority a GMT Increase Application and an accompanying application for approval of a Class 1 LIA. These applications were made in the context of a then pending application by the plaintiff for a hotel licence under the Liquor Act 2007 (NSW). In response to the positive contribution requirement, the plaintiff proposed in its LIA to make a total positive contribution of $1 million in total (to be paid over 5 years into the Responsible Gambling Fund). At [5.4] of the LIA, the plaintiff said that the amount of $1 million "has been calculated having regard, among other things, to the formula set out in the LIA Guidelines …" (emphasis added). 2. The plaintiff's GMT Increase Application and LIA were lodged under cover of a letter dated 23 April 2019 from the plaintiff's solicitor. The letter explained that the plaintiff's proposed community benefit payment of $1 million had been calculated having regard to the figures published by the Authority for the period 1 January 2018 to 30 June 2018 (ie six months) in respect of licensed hotels in the Burwood-Strathfield LGA (ie these LGAs were aggregated). The plaintiff explained that it had adopted the average profits of existing gaming machines before tax in the Burwood-Strathfield LGA, multiplied that figure by 2 to give a yearly estimate of the average profit per machine in the LGA. This produced, by the plaintiff's calculation, a figure of $3,551,323.35. The plaintiff submitted in the letter that the amount "calculated in strict accordance with the formula" is "excessive in the circumstances of this case". The plaintiff then, in effect, asked the Authority to depart from using the formula in its particular circumstances having regard to such matters as: * the plaintiff proposed to provide a positive contribution to the local area by providing "much-needed short-term accommodation", with restaurants, bars and gaming facilities; * the proposed hotel would be an entirely new business and it would take several years to ramp up gaming revenue to anywhere near LGS averages; * the proposed hotel would only trade for standard hours, unlike its nearby competitors; * the plaintiff is related to the owner of the Wentworth Hotel and granting the GMT would diminish the revenue of the Wentworth Hotel; and * the plaintiff proposed to establish harm minimisation practices over and above the relevant legislative requirements. 1. By an email dated 11 February 2020, the Authority forwarded to the plaintiff a copy of a lengthy submission it had received from The Markets Hotel objecting to the plaintiff's liquor licence application, which also contained material relating to the GMT Increase Application and LIA. 2. By a letter dated 21 February 2020, the plaintiff's solicitor responded to that submission and provided the Authority with reports from Geotech Information Services (dated June 2019) (first Geotech report) and Pitcher Partners (dated December 2019) (first Pitcher Partners report). 3. Those reports, and a covering letter and submission from the plaintiff's solicitor, included analysis of the economic feasibility of the proposed new hotel, and also as to the likely transfer of gaming machine profit from other premises in the area (including from the Wentworth Hotel which was located adjacent to the Flemington Hotel and owned by a company in the same group of companies (the "Iris Group") as the plaintiff). As is apparent from the plaintiff's solicitor's letter and submission, this material was submitted in response to the submission provided to the Authority by The Markets Hotel. The plaintiff's submission also addressed aspects of its LIA and GMT Increase Application. 4. The Authority engaged BIS Oxford Economics (BIS) to consider the First Geotech Report and to advise the Authority on the plaintiff's proposed approach to the positive contribution requirement in s 36(3)(c)(i) of the GM Act. BIS provided its report to the Authority in December 2020 (BIS Report). The BIS Report addressed the Positive Contribution Formula in section 4 of its report. It noted that, using the Positive Contribution Formula, the Authority had calculated the positive contribution figure to be $4,604,115, while BIS had calculated the figure to be $4,762,708 (the difference relates to the fact that BIS used data from a slightly different period – the Authority's calculation was based on average profits of venues during the 2019 calendar year, whereas the BIS calculation relied upon data during the period 30 January 2019 to 29 January 2020). BIS explained that both the figures were greater than the figure calculated by the plaintiff because the plaintiff had used figures from both the Strathfield and Burwood LGAs, when only the Strathfield LGA was relevant (which is where the new hotel would be located). The BIS Report also addressed at some length why BIS disagreed with the plaintiff's arguments as to why the 15% profit figure under the formula was excessive. 5. On 21 December 2020, the Authority provided the BIS Report to the plaintiff for its consideration, and invited the plaintiff to respond to it. The plaintiff's solicitor responded by a letter dated 24 March 2021. The plaintiff made general observations on the BIS Report and provided further reports from Geotech (second Geotech Report) and Pitcher Partners (second Pitcher Partners Report). The plaintiff described an alternative analysis for calculating a "positive contribution", based upon its claim that, "[o]f the projected pre-tax gaming profits, Geotech project[ed] that 84.5% of projected revenues [were] likely to be transferred/drawn from other venues". It said: On the revised estimate of pre-tax gaming profits ($4,690,907 per annum), that represents a total of $3,963,816.41 per annum that will be diverted from other venues (including the Wentworth Hotel in the same ownership) to the new Flemington Hotel. 1. The plaintiff then proposed the following : In light of the matters put in all of the reports, the applicant proposes a "positive contribution" of $3,705,000, payable over 5 years, subject to adjustment up or down, in accordance with Guideline 11 (sic). That amount represents 75% of the "adjusted" projected gaming revenue for the venue and is reflected in Pitcher Partners' feasibility analysis. 1. On 30 June 2021, the Authority decided to refuse to grant the plaintiff's hotel licence application. The plaintiff sought review of that decision in the NSW Civil and Administrative Tribunal (NCAT). In late December 2021 and early January 2022, the plaintiff and the Authority engaged in without prejudice correspondence as to the terms on which the Authority's licence decision might be set aside and a hotel licence granted in respect of the premises on which the Flemington Hotel was proposed to be located. It was in that context that the plaintiff's solicitors referred in a letter dated 23 December 2021 (which is marked "without prejudice save as to costs") (23 December Letter)) to the plaintiff's outstanding LIA and GMT Increase Application, and made the following statement towards the end of the letter: The [plaintiff] understands that the [Authority] will, as a condition of any approval of the local impact assessment, require payment of a "positive contribution" which has regard to the most recent gaming machine profit figures for the local government area in which these premises are situated. 1. As will shortly emerge, this statement provides the basis for the plaintiff's complaint under ground 1 that the Authority failed to appreciate that the plaintiff was willing to make a monetary payment as a positive contribution in an amount calculated by the Authority. The Authority's reasons for decision summarised 1. On 8 April 2022, the Authority provided a detailed statement of reasons for its decision to refuse the GMT Increase Application, totalling 15 pages. It is necessary to summarise only those parts of the statement which are relevant to the plaintiff's judicial review challenge. 2. On the issue whether the plaintiff's proposed GMT increase would result in a positive contribution towards the community, and after noting the formula in the Guidelines for a new hotel, the Authority concluded at [23] that it was not satisfied that the positive contribution criteria was met "on the basis of the community benefit payment proposed by the [plaintiff], the harm minimisation measures proposed to be adopted and the short-term accommodation facility to be operated at the Proposed Premises". Thus there were three stated grounds why the positive contribution criterion referred to in s 36(3)(c)(i) was not established to the Authority's satisfaction. 3. The Authority noted, consistently with s 36C(3) of the GM Act, that the Guidelines did not limit its discretion in deciding what constitutes a positive contribution to a local community. It then said at [24] that, having regard to the merits and circumstances of the plaintiff's situation, it considered that the Guidelines were appropriate and should be applied in this case. 4. The Authority then noted that the plaintiff had originally proposed a community benefit payment in the amount of $1 million dollars and claimed that this was an appropriate amount in the circumstances (see [23] above). The Authority summarised the BIS Report, including the reasons why BIS rejected the plaintiff's contentions as to why the Authority should accept a reduced amount of $1 million. 5. The Authority then noted at [29] ff that after the plaintiff was provided with a copy of the BIS Report the plaintiff provided various materials in response. This involved a new proposal by the plaintiff to make a "positive contribution" of $3,705,000 payable over 5 years, representing 75% of the adjusted projected gaming revenue of $4,690,907 for the proposed venue, subject to an adjustment up or down in accordance with the Guidelines. 6. The Authority noted at [30] that it and BIS had arrived at different figures for a total financial contribution under the Guidelines. Significantly, the Authority concluded that the plaintiff's latest proposed financial contribution only "partially satisfied the relevant community benefit requirement". It is desirable to set out [30] in full: The total financial contribution applicable under the Class 1 LIA Guidelines as calculated by the Authority is $4,604,115 based on average profits during the 2019 calendar year. The BIS Report arrived at a slightly higher number of $4,762,708. Accordingly, the Authority considers that the Applicant's proposed financial contribution to the [Responsible Gambling Fund] only partially satisfied the relevant community benefit requirement. 1. The Authority explained at some length why it rejected the plaintiff's submission that the Authority should depart from the minimum level of financial contribution under the Guidelines. The Authority then reached the following conclusion at [42]: Having made the above observations, the Authority is not satisfied that reducing the financial contribution to an amount below that recommended by the Class 1 LIA Guidelines would enable it to be satisfied that granting the GMT increase sought will provide a positive contribution towards the local community. 1. The Authority also addressed the other criteria in s 36(3)(c)(ii) (location of the venue) and (iii) (adequate addressing of community concern) and concluded that those requirements were met. 2. The Authority then finally turned its attention to the criterion in s 36(3)(e), namely whether "it is otherwise appropriate that the LIA be approved". The Authority stated at [50] that this provision granted it a "degree of discretion" which, nevertheless, was confined by the subject matter, scope and purpose of the GM Act. It stated that, in considering paragraph (e), it had had regard to the objects in s 3(1) of the GM Act, including in particular the objects concerning the minimisation of harm associated with the misuse and abuse of gambling activities; fostering responsible conduct in relation to gambling; facilitating the balanced development, in the public interest, of the gaming industry; and ensuring the integrity of the gaming industry (the precise terms of these objects are set out at [4] above). 3. At [51] the Authority said it had also taken into account relevant research evidence relating to the balanced development, in the public interest, of the gaming machine industry, including the following matters: * 1% of the NSW population are problem gamblers and account for 36.7% of gambling expenditure; * moderate-risk and problem gambling was higher among unemployed gamblers and gamblers who spoke a language other than English at home; * use of electronic gaming machines stands out as the form of gambling which is of the greatest concern; * higher-risk gamblers are significantly more likely than others to be gambling after midnight and to be playing for longer periods overall; and * higher-risk gamblers represent a much greater share of people playing at night. 1. In circumstances where the Flemington Hotel would not have extended trading hours but was contiguous with the Wentworth Hotel, which had 30 gaming machines and extended trading hours, the Authority said that it had taken into account the possible impact that granting the GMT increase may have had in terms of providing an "additional funnel" to the gaming machines at the Wentworth Hotel (at [54]). 2. The Authority then stated at [59]: As noted previously, the Authority remains particularly concerned that visitors to the Flemington Hotel, including problem gamblers and "at risk gamblers", will simply move next door to the Wentworth Hotel when the proposed Flemington Hotel closes. The Authority's underlying concern is the cumulative impact of providing an additional 20 gambling machines in close vicinity to establishments that have extended trading authorisations in place. The Shutdown Periods Research 2019, notes that 22% of problem gamblers play gaming machines in hotels/pubs between midnight and 2am, and that there is an inflated representation of gaming machine players at the casino between 2am and 8am, which is suggestive of a movement of at least some gaming machine players from pubs and clubs to the casino after 2am. The Authority is particularly concerned about the possibility for migration from the patrons at the additional 20 gaming machines at the proposed Flemington Hotel to those available during extended hours at the Wentworth Hotel next door and Markets Hotel. 1. Accordingly, the Authority concluded at [61] that it was not satisfied that it was "otherwise appropriate" that the plaintiff's LIA be approved under s 36(3)(e) of the GM Act. 2. In the final paragraphs of its statement of reasons, the Authority confirmed that there were two separate reasons why it had decided not to approve the LIA (with the necessary consequence that it could not approve the GMT Increase Application). Those two separate reasons were stated to be: 1. the Authority was not satisfied that the GMT increase would provide a positive contribution towards the local community, as required by s 36(3)(c)(i) of the GM Act; and 2. the Authority was not satisfied that it was otherwise appropriate that the LIA be approved pursuant to s 36(3)(e), taking into consideration the relevant statutory objects (see [4] and [40] above), having regard to the concerns relating to the presence of 50 gaming machines between two adjacent properties, where the adjacent property already had an extended trading authorisation in place. Consideration and determination 1. It is convenient to address each of the three grounds of judicial review in turn. Ground 1 1. In oral address, Mr Muddle SC (who appeared for the plaintiff) clarified that ground 1 had the following two limbs: 1. a claim that the Authority fell into jurisdictional error because it misapprehended the nature of the plaintiff's application concerning a monetary contribution as set out in the 23 December letter; and 2. there was a constructive failure to exercise jurisdiction because the Authority failed to determine an amount of money which the plaintiff had to pay to the Responsible Gambling Fund in order for the Authority to be satisfied of the criterion in s 36(3)(c)(i). 1. For the following reasons, I reject both those limbs. 2. I do not accept that the Authority erred in not treating the penultimate paragraph of the 23 December letter as forming part of the plaintiff's applications. That paragraph is set out at [30] above. As the plaintiff pointed out, the 23 December letter is not referred to in the Authority's statement of reasons. This indicates that the letter was not taken into account by the Authority in making the decisions which are the subject of this judicial review challenge. 3. Having regard to the following matters, however, no error (let alone jurisdictional error) arises from the Authority's failure to address this aspect of the 23 December letter: 1. Significantly, the relevant paragraph appears towards the end of the letter which is expressly stated on page 1 to be "without prejudice save as to costs". The letter was primarily directed to the possibility of the parties agreeing to compromise the liquor licence proceeding in NCAT. Even if the relevant paragraph was not itself privileged, considering the broader and primary context of the letter in which the paragraph appears, it is understandable that the Authority did not view the paragraph as forming part of the plaintiff's applications. 2. All the more so having regard to the relevant terms of the paragraph, which refer to the plaintiff's understanding as to how the Authority will proceed. This falls far short of the plaintiff stating that, notwithstanding its previous proposals (which involved departing from the Guidelines), it was now willing to abide by a condition to make a payment in an amount determined by the Authority under the Guidelines. Reasonably read, the relevant paragraph was not stating that the plaintiff was willing to make a monetary payment as a "positive contribution" of a then unknown figure but one which the Authority would calculate using the formula in the Guidelines. It would have been an easy matter for the plaintiff to make clear to the Authority that, contrary to its earlier stated positions (which both involved the Authority agreeing to depart from the Guidelines), it was now belatedly prepared significantly to change its position such that it would pay into the Responsible Gambling Fund any figure which the Authority determined and imposed as a condition of approval. 3. Indeed, fairly read, the language used in the relevant paragraph suggests that the plaintiff was not contemplating that the Authority would calculate a figure by using the relevant formula in the Guidelines. That is reflected in the fact that the letter referred to the calculation of a payment "which has regard to the most recent gaming machine profit figures for the local government area in which these premises are situated" (emphasis added). That language does not reflect the terms of the formula in the Guidelines (see at [19] above). 1. As to the second limb of ground 1, I reject the plaintiff's submission that the relevant legislative scheme imposes a legal obligation on the Authority to calculate a precise figure which an applicant for a GMT increase is required to pay to the Responsible Gambling Fund in order for the Authority to be satisfied that the applicant's proposed increase in GMT will, as required by s 36(3)(c)(i) of the GM Act, "provide a positive contribution towards the local community where the venue is situated". The plaintiff contended that, under the Guidelines, the Authority was required either to disclose to it the precise monetary figure arrived at under the formula or, alternatively, approve the applications subject to a condition that the hotelier pay a specified monetary amount in order to meet the criterion in s 36(3)(c)(i). 2. The plaintiff's construction wrongly assumes that, for the purposes of s 36(3)(c)(i), the Authority's satisfaction that the GMT increase will provide a positive contribution towards the local community turns entirely and exhaustively on an applicant paying a precise monetary amount. That approach would leave no scope for the Authority to take into account proposed actions by the applicant which are relevant to the issue of "positive contribution" but which are not expressed in monetary terms. The plaintiff's approach is inconsistent with this aspect of the legislative scheme. 3. A second reason for rejecting this limb of ground 1 is that the plaintiff's construction is inconsistent with the express terms of s 36A(1) of the GM Act. That provision states that a community benefit requirement "cannot be wholly or partly satisfied by a payment of money except a payment to the Secretary … into the Responsible Gambling Fund …" (emphasis added). It is necessarily implicit in the phrase "wholly or partly satisfied" that, while in some cases a monetary payment to the Responsible Gambling Fund alone may suffice for the purposes of the Authority attaining the requisite satisfaction of the criterion in s 36(3)(c)(i), in other cases the criterion may be satisfied by the payment of money coupled with other proposed actions directed to providing a positive contribution towards the local community where the venue is situated. This sits very uncomfortably with the plaintiff's argument that the Authority has a legal obligation to calculate a precise monetary amount for an applicant to pay into the Responsible Gambling Fund and to divulge that figure to the applicant. The plaintiff's construction imposes a burden on the Authority which in truth is borne by the plaintiff itself as an applicant for approval. The position might be different if the data required under the formula was available only to the Authority, but that is not the case. It is common ground that the Authority publishes on its website gaming machine profit figures for local government areas. Indeed, the plaintiff relied on that data when it put forward its own proposals. 4. The legislative scheme does not prevent the Authority from discussing with an applicant the particular components of what might enable the Authority to reach the requisite satisfaction under s 36(3)(c)(i). However, in the context of the circumstances of a case such as the present (where the applicant has put forward two separate proposals for the payment of a monetary amount calculated other than in accordance with the Guidelines), there is nothing in that legislative scheme which legally obliges the Authority to determine the amount of a monetary contribution calculated in accordance with the Guidelines and either inform the applicant of that amount prior to making a decision on an application or, alternatively, simply imposing that amount as a condition of approval. 5. All the more so in circumstances where, as was made clear in [30] of the Authority's statement of reasons, the plaintiff's proposed financial contribution only "partially satisfied the relevant community benefit requirement". This was because both of the figures put forward by the plaintiff were well below the figures calculated by the Authority and BIS. In those circumstances, where the plaintiff's own proposals fell far short of the figures disclosed to the plaintiff in the BIS Report, there was no legal obligation on the Authority to do a fresh calculation under the Guidelines. 6. A third reason for rejecting this limb of ground 1 is that the plaintiff's construction fails to accommodate the unambiguous statement in s 36C(3) of the GM Act, which states that the guidelines do not limit the Authority's discretion when deciding in a particular case what constitutes a positive contribution towards a local community or in deciding to impose conditions on an approval. Ground 2 1. The plaintiff complains that it was denied procedural fairness because the Authority did not provide it with an opportunity to accept an increase to the monetary contribution required to satisfy the Authority that approval of the LIA would provide a positive contribution towards the local community before refusing the applications. The argument relies in part on the terms of the penultimate paragraph of the 23 December letter which the plaintiff contended had the effect of notifying the Authority that the plaintiff was prepared to pay whatever monetary contribution amount calculated by the Authority. For the reasons given above I do not consider that that is a reasonable reading of the paragraph. 2. Nor do I consider that the Authority was under any legal obligation to advise the plaintiff of a particular figure which the Authority considered would satisfy the criterion in s 36(3)(c)(i). As I have explained above, satisfaction of that criterion does not always depend entirely on an applicant's willingness to pay a particular monetary amount into the Responsible Gambling Fund. 3. On one view, parts of the plaintiff's procedural fairness argument are tantamount to a claim that the Authority was obliged to reveal its deliberative processes to the plaintiff and invite comment. This would be inconsistent with well-established authorities in Commissioner for the Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591–2 per Northrop, Miles and French JJ, as approved in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 at [29] per Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ. In my view, the Authority complied with its procedural fairness obligations in the particular circumstances of this case when it provided the plaintiff with a copy of the BIS Report and invited its comments. That report disclosed to the plaintiff two figures which had been arrived at by the Authority and the BIS, as well as the reasons why the Authority may not have been inclined to accede to the plaintiff's request that a monetary figure be calculated otherwise than in accordance with the Guidelines. The plaintiff took advantage of the opportunity and provided a detailed response to the BIS Report. There was no procedural unfairness. 4. There is another aspect of the plaintiff's procedural fairness complaint which is contrary to legal authority. The complaint is not one of mere process. It also has a substantive element. The complaint turns on the proposition that the Authority was both obliged to undertake a substantive step (namely calculate a precise monetary figure for the purposes of s 36(3)(c)(i)), and then disclose that figure to the plaintiff. It is well-settled in Australian law that procedural fairness does not have any such substantive element (see, for example, Re Minister for Immigration and Multicultural and Indigenous Affairs v Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [65]–[67] per McHugh and Gummow JJ). 5. Finally, even if the plaintiff were to succeed on ground 2, the Authority's decisions would only be set aside if it also succeeded on ground 3 because it provides a separate and independent basis for the Authority's refusal of the plaintiff's applications. Ground 3 1. It was common ground that resolution of this ground involved an issue of statutory construction, which requires consideration of text, context and purpose. In oral address, Mr Muddle SC said that ground 3 has two elements. The primary element is that, properly construed, s 36(3)(e) means that the Authority's state of satisfaction whether or not it is "otherwise appropriate" to approve the LIA must be based on matters other than matters which arise under any of s 36(3)(a) to (d). Mr Muddle SC described the plaintiff's "secondary submission" as a complaint that it was not open to the Authority to say that it was satisfied that the LIA adequately addressed community concerns arising from the various objections raised by The Markets Hotel for the purposes of s 36(3)(c)(iii) and yet rely upon the same matters in coming to an unfavourable determination under s 36(3)(e). The two elements are related. 2. In brief, the plaintiff submitted that the term "otherwise" in s 36(3)(e) meant that it was not open to the Authority to refuse approval of a Class 1 LIA under that specific provision with reference to any of the matters set out in paragraphs (a) to (d) of s 36(3). The plaintiff contended that the Authority's reasons revealed that in concluding that it was not satisfied that it was "otherwise appropriate" to approve the LIA it had taken into account "irrelevant matters", namely matters which would have fallen within an assessment of a Class 2 LIA as provided for in s 36(3)(d). The plaintiff claimed that there was a broader test under s 36(3)(d)(i) in respect of a Class 2 LIA where the relevant criterion upon which the Authority has to be satisfied is whether the proposed increase in the GMT "will have an overall positive impact on the local community where the venture is situated". The plaintiff contended that this necessarily involves a consideration of positive and negative effects in order to determine whether there would be an overall positive impact. The plaintiff contrasted this with what it says is a narrower test in s 36(3)(c)(i) in respect of a Class 1 LIA where the relevant criterion is whether the Authority is satisfied that an increase in the GMT will provide "a positive contribution towards the local community where the venue is situated". The plaintiff contended that this narrower test did not involve any balancing exercise of the kind intrinsic to an assessment of a Class 2 LIA. 3. In effect, the plaintiff's construction means that the Authority is precluded from considering under s 36(3)(e) any negative impacts on the local community of a GMT increase for a particular venue. Having regard to the list of objects in s 3(1) of the GM Act, which include the objective of gambling harm minimisation and facilitation of the balanced development, in the public interest, of the gaming industry, the plaintiff's construction seems most improbable. It unduly narrows the breadth of the criterion in s 36(3)(e), which was plainly intended to be a "catch-all" provision, confined only by the subject-matter, scope and purpose of the legislation. 4. It is important to note the structure of s 36(3) of the GM Act. Paragraphs (a), (b) and (e) apply to both Class 1 and Class 2 LIAs. Paragraphs (c) and (d) apply to Class 1 and Class 2 LIAs respectively. Sub-paragraphs (ii) and (iii) of both paragraphs (c) and (d) are identical. The only difference in paragraphs (c) and (d) appears in sub-paragraph (i) of both paragraphs. In the case of a Class 1 LIA, the Authority has to be satisfied that the proposed GMT increase will provide "a positive contribution towards the local community where the new venue is situated". In the case of a Class 2 LIA, the Authority has to be satisfied of a different and more demanding criterion, namely that the proposed GMT increase "will have an overall positive impact on the local community where the venue is situated". 5. The text of s 36(3)(e) is also important. The Macquarie Dictionary (8th ed, 2020) gives the following definitions of the word "otherwise": 1. under other circumstances (adv); 2. in another manner; differently (adv); 3. in other respects: an otherwise happy life (adj); 4. other or different; of another nature or kind (conj); and 5. or else: you'd better do it, otherwise I'll tell (adv). Having regard to the text and structure of s 36 and the objects of the GM Act, the most probable meaning of the phrase "it is otherwise" is the third of those meanings. 1. Section 36(3)(e) is on its face a broad provision. In the case of both a Class 1 and Class 2 LIA, the Authority can only grant its approval to the LIA if it reaches a level of satisfaction in respect to all the relevant criteria in s 36(3), including that in paragraph (e). Thus, in the case of a Class 1 LIA, if the Authority is satisfied of the criteria in paragraphs (a), (b) and (c), it cannot grant approval unless it is also satisfied that it is otherwise appropriate that the LIA be approved. Whether a particular matter is relevant or not to the Authority's assessment of paragraph (e) will depend upon the subject matter, scope and purpose of the GM Act. 2. Given the distinction drawn in s 36(3)(c)(i) and 36(3)(d)(i), it would be unlawful for the Authority to refuse to approve a Class 1 LIA because the Authority considered that it was not appropriate to do so on the basis that a proposed increase in the GMT for the relevant venue the subject of a Class 1 LIA would not have an overall positive impact on the local community where the venue is situated. That approach would involve error because the Authority will have wrongly applied the criterion in s 36(3)(d)(i) and not the criterion in s 36(3)(c)(i) to the Class 1 LIA. But that is not what the Authority did here. 3. As noted above, in determining that it was not satisfied that it was otherwise appropriate that the plaintiff's Class 1 LIA be approved, the Authority took into account relevant objects in s 3 of the GM Act. It was entirely proper for it to do so. The Authority also took into account relevant research evidence which supported its concerns arising from having 50 gaming machines on two adjacent properties, where the adjacent property already had extended trading hours. These matters underpinned the Authority's concern about the "funnelling effect". The Authority was correctly mindful of its obligations under ss 3(2) and (3) to have due regard to the need for gambling harm minimisation in exercising its functions and in considering the public interest. These considerations were relevant to the Authority's function in determining the plaintiff's Class 1 LIA application with particular reference to s 36(3)(e). I do not accept the plaintiff's contention that the taking into account of these matters means that the Authority was treating the Class 1 LIA as though it was a Class 2 LIA. 4. As to the "secondary submission", I do not accept the plaintiff's submission that the matters relied upon by the Authority in concluding that it was not satisfied that it was otherwise appropriate to approve the LIA reflected the same matters which were raised by The Markets Hotel in the context of the community concerns criteria under s 36(3)(c)(iii), which the Authority determined in the plaintiff's favour. 5. The Authority identified the concerns raised in The Markets Hotel objection at [47] of its statement of reasons: The concerns, as contained in the Markets Hotel Submission, which the Authority has had regard to, are set out as follows: a. That the local and broader communities are well served for gaming machines – 550 in Lidcombe CBD, 203 in Homebush, 15 in Olympic Park and another 500 in the venues immediately adjacent to the suburb boundary in Strathfield, Burwood and Concord. b. The immediately adjacent Wentworth Hotel already provides 30 gaming machines during extended trading periods beyond those proposed for the Flemington Hotel. c. The two closest hotels are amongst the most profitable based on gaming machine revenue in NSW. Of 1,460 NSW hotels with gaming machines, the Markets Hotel, which is nearly straight across Parramatta Road, is ranked 3rd in both overall net profit and net profit per gaming machine and the Wentworth Hotel is ranked 48th in overall net profit and 51st in net profit per gaming machine. d. While the SA2 (which includes Homebush West and Homebush) is ranked Band 2 (medium risk), the area immediately abuts a vast area ranked Band 3 (highest risk) that stretches west to Horsley Park – Kemps Creek. e. The population of Strathfield LGA can be characterised as highly culturally and linguistically diverse ("CALD"). Some 36.7% were born in Australia, compared with 65.5% for the overall NSW population. Less than one third (29.3%) spoke only English at home compared with more than two thirds (68.5%) for NSW. The most commonly spoken non-English languages are Mandarin, Korean, Cantonese, Tamil and Arabic. While CALD communities within Australia tend to participate in gambling less than the overall population, those who do gamble may be more likely to experience problems. Moreover, the Wentworth Hotel evidently targets Asian communities by promoting their "VIP lounge" gambling facilities with an Asian dragon motif and a red and gold colour scheme. f. The Officer of Responsible Gambling records show that a "large" number of people received counselling related to gambling in Homebush and surrounding suburbs in the period January 2013 to November 2018. 1. The matters which the Authority took into account with respect to the criterion in s 36(3)(e) are set out at [51] to [60] of its statement of reasons. It is evident from that material that the Authority was particularly concerned about a "funnelling effect" created by having a hotel with 20 gaming machine entitlements (as sought by the plaintiff) contiguous with another venue which had 30 gaming machine entitlements and extended trading hours. This concern is reflected at [59] of the statement of reasons (which is set out at [43] above). I accept the Authority's submission that the "funnelling effect" issue was not squarely addressed by the Authority at [47] of its statement of reasons. Accordingly, there is no inconsistency between these different parts of the Authority's statement of reasons. 2. I reject the plaintiff's claim that the matters relied upon by the Authority in concluding that it was not otherwise appropriate to approve the LIA were the same matters which were considered by the Authority in respect of the criterion in s 36(3)(c)(iii). It is unnecessary to determine whether the Authority would commit jurisdictional error if the same matters had in fact been considered. The Authority's role in the proceeding and the Hardiman principle 1. Although the Hardiman principle was not raised by the defendant, the Court raised the issue with Ms Patterson (who appeared for the Authority). In brief, Ms Patterson submitted that the principle did not apply in circumstances where there was no other contradictor and the Authority's active participation focused on assisting the Court in respect of the Authority's powers and procedures. 2. In R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 12; [1980] HCA 13, the High Court said the following at 35–6: There is one final matter. Mr. Hughes was instructed by the Tribunal to take the unusual course of contesting the prosecutors' case for relief and this he did by presenting a substantive argument. In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal. 1. The Court of Appeal has described the "Hardiman principle" as an "established principle" (see Henroth Investments Pty Ltd v Sydney North Planning Panel [2019] NSWCA 68 at [52] per Basten and Payne JJA and Sackville AJA). Their Honours also observed at [55] that, on a broad reading of the Hardiman principle, "it is more honoured in the breach than the observance in this jurisdiction". At [56] the Court noted that the just, quick and cheap resolution of the real issues in the proceedings would not have been achieved (contrary to s 56 of the Civil Procedure Act 2005 (NSW)) if the appellant in that case had objected to the active role played by the respondent. The Court added that it could hardly be said that a decision-maker necessarily endangers the appearance of its impartiality if it takes an active role in proceedings where no other party is available as a contradictor. It said that the risk of endangering the appearance of impartiality would increase if the decision-maker sought to cross-examine witnesses or call evidence (it may be noted that it was the conduct of a strong cross-examination on behalf of the Tribunal in Hardiman which gave rise to the High Court's statements referred to above). The Court of Appeal added that it is unlikely to create any material risk if a decision-maker takes a more limited role in judicial review proceedings of arguing points of law, particularly where the decision-maker is represented by independent counsel. To similar effect see Cunneen v Independent Commission Against Corruption [2014] NSWCA 421 at [45] and Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2009] NSWCA 300 at [80] per Basten JA. 2. Those observations of the Court of Appeal resonate with the circumstances of this particular case. The Authority's role was primarily directed to assisting the Court on points of legal principle appertaining to the powers and procedures of the Authority, with particular reference to relevant parts of the legislative regime. It is true that the Authority did provide evidence (in the form of two affidavits by the Authority's instructing solicitor from the Crown Solicitor's Office), but those affidavits simply annexed relevant documents and correspondence and the deponent was not required for cross-examination. Nor did the Authority cross-examine the plaintiff's only witness. Finally, it is also relevant to note that the Authority was represented by independent counsel. 3. Each case will necessarily need to be assessed in light of its particular facts and circumstances. I see no impropriety or inappropriateness in the role taken by the Authority in the present proceeding. I consider that the ordinary rule should apply, with the consequence that the plaintiff should pay the Authority's costs of the proceeding. Conclusion 1. For these reasons, the further amended summons will be dismissed, with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 September 2022