MENDONCA v SOUTH SYDNEY JUNIOR RUGBY LEAGUE CLUB LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER and BEAZLEY JJA and GILES AJA 11 September 1996, 11 October 1996 [1996] NSWCA 359 S45 Registered Clubs Act, 1976 (NSW) — statutory illegality — refusal of club to pay poker machine winnings to non-members — whether contract between club and non-member valid despite breach of Act. FACTS: The appellants entered the South Sydney Junior Rugby League Club to use the club's poker machines. Neither of the appellants were members of that club. Upon entering, one of the appellants showed the doorman his badge to another registered club although neither of the appellant's were asked to sign the visitors' book. In addition, the club's constitutive documents did envisage temporary membership of the club. Whilst using the poker machines, the appellants won the jackpot. Because the appellants were not members of the club, the club refused to pay the appellants the jackpot money. At trial, Sully J held that for the club to have paid the money would have been to contravene s45 of the Registered Clubs Act, 1976 (NSW). HELD: By Meagher, Beazley JJA, and Giles AJA agreeing: A breach of s45 of the Registered Clubs Act, 1976 (NSW) did not invalidate any contract between the registered club and the appellants. ORDERS: 1. Appeal allowed. 2. Orders of Sully J be set aside. 3. In lieu thereof, judgment be entered for the second appellant in the sum of $97,328.33 together with interest from 23rd April, 1989. 4. The respondent to pay the appellants' costs of the hearing below and in the appeal and to have a certificate under the Suitors Fund Act, 1951. 5. The parties by consent abandon the interest part of O3 and will make an application to the Registrar to list this issue for hearing. Meagher JA This is an appeal by two plaintiffs, Messrs Helder Mendonca and Julio Santiago, against a decision of Sully J. On 23 April 1989 these two gentlemen entered the premises of the defendant in Anzac Parade, Kensington in order to enjoy the facilities which that club offered, chief of which was some poker machines. They did not sign the Club's visitor's Book, and they were not asked to do so. Neither gentleman was a member of the Club. However, Mr Mendonca was a member of the Portugal Madeira Sydney Social and Sports Club and Mr Santiago was a member of the Spanish Club Ltd. When they entered the respondent Club, Mr Santiago showed the doorman his badge of membership of the Spanish Club. At the trial before Sully J much attention was paid to the question of whether the plaintiffs were lawfully upon the Club premises. Sully J eventually held they were; and on this appeal the Club's learned senior counsel Mr Coles QC has expressly stated that he did not wish to challenge his Honour's finding in this regard. When the plaintifFs entered the Club premises, they bought drinks, and then exchanged about $250 into 20c pieces. With this change they were in a position to play the poker machines, and in particular one with the majestic title of "The 2 UNREPORTED JUDGMENTS Grand Rapid Jackpot Ltd Poker Machine." They did play the poker machines. While Mr Santiago was playing the "Grand Rapid Jackpot Ltd Poker Machine" at about 6pm he won a jackpot prize of $97,328.33. Omitting a number of steps which do not really matter, the Club has refused to pay either of the plaintiffs this sum of money. The reason proferred is that neither of them were members of the Club at the relevant time. It was the Club's refusal which led to the plaintiffs' commencing this litigation to recover their winnings. If one of the plaintiffs is entitled to win the litigation, that person is the second appellant, Mr Santiago, who pulled the winning number on the machine. Mr Mendonca is therefore an unnecessary plaintiff, but nothing depends on this. At the trial before Sully J, the Club relied on a small notice which was displayed on the Club premises saying: "1. Jackpots and Cancel Credits will only be paid to members, Honorary Members, Guests of a Member (in the company of that Member), members of other Registered Clubs who have signed the Visitors Register and Interstate and Overseas Visitors, who have also signed the Visitors Register." His Honour found that the notice never came to the attention of either plaintiff, not that their command of English would be sufficient to digest it if it had. This finding has not been challenged. The Club's defence to the plaintiff's case was a defence of illegality. In this regard the linchpin of the Club's argument is s45 of the Registered Clubs Act. That section says: "(1) If - (a) a person uses any of the accommodation, facilities or amenities provided on the defined premises of a registered club; and (b) that person is not a member of that registered club or a guest of such a member, then - (c) that person; (d) the registered club; and (e) the Secretary of the registered club, are each guilty of an offence and liable to a penalty not exceeding $200." A question arose as to whether the plaintiffs might be considered "temporary members" of the Club, and hence "members" within the meaning of s45(1)(b). One does not gain much enlightenment on this question from the definitions contained in s4 of the Act. They are as follows: "member" in relation to a club means a full member, an honorary member or a temporary member of that club. "Full member" in relation to a club means a person who is an ordinary member or a life member of that club. "ordinary member" in relation to a club, means a person who is elected to membership of that club in accordance with the rule of that club referred to in s30(1)(g). "Life member" in relation to a club means a person who is elected to membership of that club for life. "Honorary member" in relation to a club, means a person who, under the rules of that club, is an honorary member of that club. "Temporary member', in relation to a club, means a person who, under the rules of that club, is a temporary member of that club." S30(1)(f) of the Act says: "(f) A person shall not be admitted to membership of the Club except as an ordinary member,...., life member, honorary member or temporary member." URUENDONCA v SOUTH SYDNEY JUNIOR RUGBY LEAGUE CLUB LTD (Meagher JA) 3 S30(2)(c) provides that the following rule must be deemed to be included in the Club's rules: "2(c) A person shall not be admitted as an honorary member or as a temporary member of a club unless: (1) he is admitted I accordance as an honorary member or as a temporary member of a club unless: (i) he is admitted in accordance with the rules of the club; and (ii) he has the qualification, as specified in the rules of the club, requisite and appropriate in relation to the purposes of the club for honorary membership or as the case may be, temporary membership of the club; The Club's Articles of Association envisage Ordinary Members, Honorary Members and Life Members, but is silent on other classes of Membership. The Club's by-laws, on the other hand, envisage members, associate members and prospective members; no other category. Thus, although the Act seems to assume that all Clubs will have temporary members, the Club's constitutive documents do not. It is against this background that one must examine the practice of the Club. It was proved that the Club admitted any person into it if he (a) was a member of another registered Club, and (b) produced his badge of that Club to the doorman, and (c) he signed the visitor's book. Both of the plaintiffs fulfilled requirements (a) and (b), and would have fulfilled requirement (c) if they had been asked to. On behalf of the plaintiffs it has been suggested that they were "temporary members" of the Club. Two comments are called for in this regard. The first is, as his Honour found, they could not be "temporary members" because they had never been elected as such according to some Club rule. The second is, as Mr Rayment QC, learned senior counsel for the plaintiffs, pointed out, that if the Club had only put its rules in order, so that they reflected what was actually practised by the Club, they would have been "temporary members". The club conducted its affairs as if persons who fulfilled the three criteria I have mentioned were really members. Once it is perceived that the plaintiff s were not temporary members, it follows ineluctably that they, the Club and the Secretary of the Club were guilty of an offence. But it does not necessarily follow from that fact that the contract between the Club and the plaintiffs constituted by them playing the poker machines was either void or unenforceable. This involves an exploration of the murky depths of the law of statutory illegality. The leading authority in this regard is the High Court decision in Yango Pastoral Co Pty Ltd and Ors v First Chicago Australia Ltd and Ors [1978] 139 CLR 410. That case indicates that there are really three questions to be asked in a case such as the present: (a) is the contract expressly made illegal or void?, (b) is it impliedly made so? and (c) is the contract in any event void as being contrary to public policy? Sully J applied this analysis and answered questions (a) and (b) in the negative, but (c) in the affirmative. The plaintiffs submit that his Honour was in error in his answer to question (c); the Club submits that whilst his Honour was right in his answer to (a) he was wrong in his answer to (b). Thus, no party was prepared to defend his Honour's reasoning. Mr Coles QC, learned senior counsel for the Club, relied heavily on the principle which he said he derived from cases like Cope v Rowlands [1836] 150 ER 707 and Anderson v Daniels [1924] 1 KB 138, that when a penalty is inflicted 4 UNREPORTED JUDGMENTS by statute for particular conduct in the making of a contract, that will be construed as an implied prohibition of the making of such a contract. However, this cannot be an absolute rule, otherwise the Yango Case would have been decided differently. The ultimate question must be whether, as a matter of construction, the purpose of the Act is adequately served by the imposition of a pecuniary penalty. In my view the purpose of the present Act (whatever that may be) would be adequately served. I am justified in this view by these further considerations. First, it would been both easy and appropriate for the Act to state, if Parliament had asked it to be the case, that any such contract was illegal and/or void. Secondly, the practical implications of holding the contract void would be extraordinary. It would mean that the plaintiffs (or persons in their position) would not have to pay for any food or drink consumed. It would also mean, for example, that if the Secretary invited an electrician into his room to negotiate a contract for the renewal of the wiring in the Club, if the electrician (not being a member) used the Club's computer or Email equipment the contract between him and his club would be void, because the prohibition is against use of any of the facilities, not merely the poker machines. Thirdly, the plaintiffs were a species of de facto temporary members. I am therefore of the view that the following orders should be made. 1. Appeal allowed. 2. Orders of Sully J be set aside. 3. In lieu thereof, judgment be entered for the second appellant in the sum of $97,328.33 together with interest from 23 April 1989. 4. The respondent to pay the appellants' costs of the hearing below and in the appeal and to have a certificate under the Suitors Fund Act, 1951. Beazley JA I have read the judgments of Meagher JA and Giles AJA and agree with them both. Giles AJA Meagher JA has set out the relevant facts and legislation, and I do not repeat them. Mr Santiago was lawfully upon the Club's premises, and is entitled to the jackpot prize unless his playing the poker machines was illegal and the illegality precludes its recovery. The Club relied on s45 of the Registered Clubs Act 1976 for the illegality. On appeal it sought also to rely on s17(1) and s16 of the Gaming and Betting Act 1912, but those provisions were not pleaded and whether the operation of the Gaming and Betting Act was excluded by s77 of the Registered Clubs Act turned on the conditions of the Club's certificate of registration which were not in evidence, so that the Club can not now go beyond 45. Mr Santiago submitted that, having been admitted upon display of his Spanish Club badge, he had become a temporary member of the Club, or at least that the Club was estopped from saying otherwise. He could not have been a temporary member of the Club because it had no such category of membership and its practice did not create such a category of membership, nor could an estoppel overcome s30 and s45 of the Registered Clubs Act. Thus in playing the poker machines Mr Santiago was guilty of an offence because, not being a member of the Club or a guest of a member, he was using facilities or amenities provided on its premises. The Club was also guilty of an offence. Did this preclude recovery of the jackpot prize? There was a contract between the Club and Mr Santiago under which he played the poker machines and the Club was obliged to pay the jackpot prize to him. When a statute says that particular conduct is an offence, the question will URMENDONCA v SOUTH SYDNEY JUNIOR RUGBY LEAGUE CLUB LTD (Giles AJA) 5 arise of the effect, if any, on a contract involving that conduct. When s45 said that Mr Santiago's use of the Club's facilities or amenities was an offence, did that make illegal or unenforceable the contract under which he played the poker machines and the Club was obliged to pay the jackpot prize to him? S45 did not expressly make the contract illegal or unenforceable: any effect was by implied prohibition of the contract, in itself or in the manner of its performance, or because public policy required that a contract involving the relevant conduct be held unenforceable: Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410. Sully J held that public policy required that the contract be held unenforceable. The public policy was that gaming and wagering should be legal only on strict conditions, the prohibition in s45 was seen as a manifestation of the public policy because it restricted access to poker machines, and in his Honour's view to permit Mr Santiago to profit from conduct contravening s45 would "strike a serious blow against the integrity of the public policy previously discussed." With respect to Sully J, I do not think that public policy requires that contravention of s45 result in unenforceability. That provision is concerned with much more than restriction of access to poker machines, and does not rest upon antipathy to gaming and wagering. There is no public policy requiring that in respect of all occasions on which a person not a member of a registered club or a guest of a member uses any of the accommodation, facilities or amenities provided on the club's premises, neither the person nor the club be able to sue, or be sued, in relation to that use. As Meagher JA has noted, the Club did not seek to uphold his Honour's judgment in this respect. Sully J held that s45 did not impliedly prohibit the contract, and the major matter in the appeal was whether he was correct. The effect of s45 on a contract involving the relevant conduct is a question of statutory construction, decided by regard to the language used and to the scope and purpose of the statute, from which may be inferred the legislative intention as to the extent and effect of the proscription of the conduct: St John Shipping Corporation v Joseph Rank Ltd (1957) 1 QB 267 at 286; Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd at 413-4, 423. It must be asked whether the intention was only to create an offence for which there was a criminal penalty, or also to make a contract involving the proscribed conduct illegal or unenforceable. And as was said by Mason J in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd at 429, there is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished, and it would be a curious thing if the offender is to be punished twice, civilly as well as criminally. The language of s45 does not suggest an intention that a contract involving the use of the accommodation, facilities or amenities provided on the premises of a registered club by a person not being a member of the club or a guest of a member be illegal or unenforceable. It addresses conduct of great potential width, and it is unlikely that offenders - not only the person using the accommodation, facilities or amenities but also the registered club and its secretary, who may not know anything about the impermissible use - were to be deprived of their contractual rights and remedies. The purpose of s45 is by no means clear. It was suggested that it was to protect members of registered clubs by ensuring that the assets of a club were used only for the benefit of its members. From the ready availability of temporary membership if the registered club makes appropriate rules, there can hardly have been a deep commitment to the interests of ordinary, UNREPORTED JUDGMENTS life and honorary members, but if the purpose be accepted it is not easy to see why (for example) the registered club should be unable to enforce as against a non-member a contract under which there is a use proscribed by s45. Had that been intended, one would expect clear statement rather than obscure implication, and to imply it would prejudice members as much as protect them. In my opinion Sully J was correct in holding that s45 did not impliedly prohibit the contract. Since the ground on which Sully J decided in favour of the Club can not stand and no alternative ground for the same result can be made out, Mr Santiago is entitled to the jackpot prize. I agree with the orders proposed by Meagher JA. 4. 5. 1. Appeal allowed. 2. 3. In lieu thereof, judgment be entered for the second appellant in the sum Orders of Sully J be set aside. of $97,328.33 together with interest from 23rd April, 1989. The respondent to pay the appellants' costs of the hearing below and in the appeal and to have a certificate under the Suitors Fund Act, 1951. The parties by consent abandon the interest part of O3 and will make an application to the Registrar to list this issue for hearing. Counsel for the appellant: B Rayment QC/JRJ Lockhart Solicitors for the appellant: Connery and Partners Counsel for the respondent: B Coles QC/B Debuse Solicitors for the respondent: Heaney Richardson and Nemes