CASTELLORIZIAN CLUB LTD v DIRECTOR OF LIQUOR AND GAMING SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, SHELLER and COLE JJA 3 April 1996, 7 June 1996 [1996] NSWCA 95 S17 and s79 Registered Clubs Act — Character of offences contemplated — grounds of complaint insufficient to make out alleged offence. FACTS: Whether the appellant, a registered club, could be asked pursuant to s17 of the Registered Clubs Act to show cause why its certificate of registration should not be cancelled because of an alleged breach of s79(5) of the Registered Clubs Act, 1976, which regulates the financing, keeping, manufacture and sale of poker machines. HELD: (1) By Cole JA, Meagher, Sheller JJA agreeing - the grounds of complaint contemplated by s17(1AA) are of a more serious character than those contemplated by a breach of s79(5). (3) By Meagher JA, Sheller JA agreeing - The summons alleges non-payment within the contractual time which cannot constitute an offence under s79(5). Accordingly, it comes within s17(1AA)(e), power to dismiss a complaint that is frivolous. vexatious or not a proper ground of complaint. ORDERS: (1) Appeal allowed (2) Order of Sully J of 19 May 1995 be set aside. (3) Order dismissing the complaint be restored. (4) Order that the appellant pay the respondent's costs of the appeal. Meagher JA In this matter I have read in draft the judgment of Cole JA. The appeal must be allowed. I should merely like to add what in my opinion is an additional reason for reaching the same conclusion. On 24 January 1995, the first respondent, Mr JJ Lynch, complained to the principal registrar of the second defendant, the Licensing Court of New South Wales, who issued a summons against the appellant requiring it to appear before the Licensing Court "to answer the above complaint and show cause why the Certificate of its Registration should not be cancelled in accordance with the provisions of the Registered Clubs Act 1976." The complaint is quite specific. The particulars of that complaint were set out in the summons served on the appellant. They should be recited in full: "Pursuant to s79(5) of the Registered Clubs Act, 1976, a registered club shall not acquire or modify a poker machine unless the property in the poker machine passes to the club unconditionally and free from encumbrances after being paid for in full by the club without the club having obtained financial accommodation in order to make the payment; or the poker machine is acquired or modified in accordance with financial and other arrangements approved by the Board under a written contract that includes prescribed terms and conditions. 2 UNREPORTED JUDGMENTS "a) The defendant Club agreed to acquire 23 poker machines in November 1991 from International Gaming Technology (Australia) Pty Ltd ("IGT") (Invoice number A26268 costing $189,972) with full payment for these poker machines to be made within 90 days." "The approval for that acquisition was granted by the Liquor Administration Board on 28 October 1991. This was contained in Application Statutory Declarations numbered 4286, 4288, 4290 and 4332 all dated 21 October, 1991. The poker machines were approved to be installed on 28 October 1991. This debt was discharged on 30 April 1993." "b) The Defendant Club modified 8 poker machines in December 1992 from IGT (Invoice number 34785 costing $13,800) with full payment for the modification to be made within 90 days." "The approval for modification was granted by the Liquor Administration Board on 3 December 1992 and was contained in Application Statutory Declaration number 18448 dated 30 November 1992. The poker machines were approved to be modified on 3 December 1992. This debt was discharged on 5 August 1993." It is apparent from the Summons that what was alleged against the appellant Club was that its slowness (if it matters, excessive slowness) in paying its bills for the acquisition of certain poker machines and the modification of others constituted an offence under s79(5) of the Registered Clubs Act 1976. S79(5) is in the following terms: "A registered club shall not acquire or modify a poker machine unless: (a) the property in the poker machine passes to the club unconditionally and free from encumbrances after being paid for in full by the club without the club having obtained financial accommodation in order to make the payment; or "(b) the poker machine is acquired or modified in accordance with financial and other arrangements approved by the Board, under a written contract that includes prescribed terms and conditions." The learned Magistrate dismissed the summons, and Sully J reversed him. The issue on which both proceedings proceeded was whether an offence under s79(5) could constitute a valid ground for a summons under s17(1AAA). The learned Magistrate said that it could not; Sully J held to the opposite effect. The issue which I wish to address is whether the facts charged in the summons could, if true, possibly constitute an offence under s79(5). Before us, learned senior counsel for the appellant alleged they could not. I quite agree. The summons alleges non-payment within the contractual time. It does not allege anything else. It does not allege that either the acquisition or the modification of any machine was not supported by a written contract. It does not allege that when the machines were acquired they were acquired conditionally or subject to encumbrances. It does not allege financial accommodation was required to enable either the acquisition or the modification in question. It does not allege that "the financial or other arrangements" made by the Club for the acquisition or modification of the machines were not approved by the Board. There is thus no allegation of any behaviour which could possibly be an offence under s79(5). The learned senior counsel for the first respondent, Miss Murrell SC, submitted that the appellant should not be permitted to raise this point, because it had not been raised before. In my view this submission should not be rejected, as the point could not be cured by calling any additional evidence. Where a summons sets out a series of facts and alleges that they constitute an offence URGASTELLORIZIAN CLUB LTD v DIRECTOR OF LIQUOR AND GAMING (Sheller JA) 3 under a nominated subsection of an Act, it defies belief that a defendant cannot demonstrate they could not justly do so. In the present case, it is not as if there is a minor failure in accuracy in formulating a charge; there is a precise formulation of certain facts coupled with an untenable assertion that those alleged facts amount to a legal conclusion which they manifestly do not. If it is wished to issue a new summons on quite different facts there is no reason why that should not be done. Sheller JA On 24 January 1995 the first respondent, the Director of Liquor and Gaming, laid a complaint in the Licensing Court under the Registered Clubs Act 1976 (the Act) against the appellant, the Castellorizian Club Ltd. The complaint stated: "This is a ground not frivolous or vexatious (s17(1AA)(e))". The complaint then recited what the first respondent claimed were breaches of s79(5) of the Act. S79 is found in Pt10 of the Act which, with Ptl1. was introduced by the Registered Clubs (Amendment) Act 1986 and regulates the keeping, manufacture and sale of poker machines and related matters. S79(5) provides that a registered club shall not acquire or modify a poker machine unless the property in the poker machine passes to the club unconditionally and free from encumbrances after being paid for in full by the club without the club having obtained financial accommodation in order to make the payment or the poker machine is acquired or modified in accordance with financial or other arrangements approved by the Liquor Administration Board under a written contract that includes prescribed terms and conditions. S17(1) of the Act provides that upon a complaint made as provided by, inter alia, subs(1AA), a licensing or stipendiary magistrate may issue a summons calling on a registered club to show cause why its certificate of registration should not be cancelled. The question posed for the Court was whether an alleged contravention of s79(5) could furnish a ground of complaint under s17(1AA)(e) of the Act, which provides that a complaint for the purposes of subs(1) may be made on any one or more of the following grounds, which include: "(e) on any other ground that the person issuing the summons is satisfied is not frivolous or vexatious." The Licensing Court held that it could not and dismissed the complaint. Sully J upheld an appeal by the first respondent. The appellant appeals from this decision. In Seagulls Rugby League Football Club Ltd v Superintendent of Licences (1992) 29 NSWLR 357 at 369 Kirby P said of the legislation in an earlier and substantially identical form that it was not enough that the matter of complaint was not frivolous or vexatious. The ground must be relevant to the potentially drastic consequences which s17(2) of the Act permits where the "matter of complaint" is determined adversely to the club, it must fulfil the purposes of the Act, read as a whole, it must be relevant to the discipline of a club which the Act is designed to ensure and which the subsection enforces and it must not be a ground which duplicates or contradicts grounds already stated in para(a) to para(d) of the subsection. The first respondent did not submit that every breach of s79(5) however minor would necessarily provide a proper basis for a complaint under s17(1AA)(e). The Director's point was that the Licensing Court would need to hear evidence of the circumstances giving rise to a breach or breaches before determining whether those circumstances provided a proper ground of complaint. In the present case no evidence was called before the Magistrate and, it was submitted, the ground 4 UNREPORTED JUDGMENTS was not "frivolous" or "vexatious" on its face. Meagher JA in his judgment, which I have had the benefit of reading, demonstrates that it was. No more is alleged than that the appellant failed to abide by the terms of payment in the approved contracts for acquisition and modification. However the point brought before the Court was whether, however formulated, a complaint grounded on a breach of s79(5) lay pursuant to s17(1AA)(e). I agree with Cole JA for the reasons he has given that the grounds of complaint s17(1AA) contemplates are of a far more serious character than a breach of s79(5). In the words of Kirby P in the Seagulls Rugby League Football Club Ltd Case the ground asserted is not one relevant to the potentially drastic consequences which s17(2) permits where the "matter of complaint" is determined adversely to the club. Accordingly I agree with the orders that Cole JA proposes. Cole JA The issue on this appeal is whether an allegation that a registered club which, contrary to s79(5) of Registered Clubs Act acquired and modified certain poker machines prior to property free from encumbrances in the poker machines passing to the Club can constitute a ground for issuing a complaint against the licensed club pursuant to s17(1AA)(e). That subsection provides that complaint may be made: "(e) on any other ground that the person issuing the summons is satisfied is not frivolous or vexatious." Sully J held that such an allegation could constitute a complaint within s17(1AA)e). I respectfully disagree. It is apparent from s17(3A), which confers upon the Licensing Court hearing a complaint made on the grounds referred to in subs(1AA)(e) a power to dismiss the complaint if it considers that: "(a) The complaint is frivolous or vexatious; or (b) the ground is not a proper ground of complaint.", that there is a distinction to be drawn between a proper ground of complaint and a ground which although proper is nonetheless frivolous or vexatious.! What constitutes a 'proper ground of complaint' can be distilled from s17(1AA). Put generally, it is any complaint which would justify the Licensing Court entertaining an application calling upon the registered club to show cause why the certificate of registration of the club should not be cancelled. It is thus a serious matter which, even if there be no cancellation of registration, may attract significant penalties up to 2500 penalty units.2 The legislative scheme displays a symmetry between grounds of a complaint in s17 and grounds of objection to the grant of a certificate of registration of a club specified in s25. In addition certain grounds of complaint nominate specified sections for the breach of which a complaint may be laid. It is apparent that the legislature regarded that section as of such importance as to justify calling upon the registered club, after a complaint for breach, to show cause why its license should not be cancelled. The symmetry to which I refer may be illustrated by comparing the relevant provisions in s17 on the one hand and s25 and other sections on the other. 1. See Seagulls Rugby League Football Club Ltd v Superintendent of Licences and Anor (1992) 29 NSWLR 357 at 369. 2. S17(2). URASTELLORIZIAN CLUB LTD v DIRECTOR OF LIQUOR AND GAMING (Cole JA) 5 Complaint s17(1AA) Objection s25 or other statutory requirements s17(1AA)(a)(@i) s25(i)(a) s17(1AA)(a)(ii) s25(i)(c) s17(1AA)(a)(iii) s25(i)(d) s17(1AA)(a)(iv) s25(i)(e) sl17(1AA)(a)(v) s25(i)(i) sl17(1AA)(a)(vi) s25(i)(k) s17(1AA)(a)(vii) s25(i)(1) s17(1AA)(a)(viii) s46(2)(3) s17(LAA)(a)(ix) s17(1LAA)(a)(x) 837, s39, s40, s48, s49, s17(1AA)(a)(xi) s30 s17(1AA)(a)(xia) s15(8) s17(1AA)(a)(xii) s25(i)(h) s17(1AA)(a)(xiii) s25(i)(G) s17(1AA)(a)(xiv) s9A(1),(3A),(6) s17(1AA)(a)(b) Division 2(s17A-s24) s17(LAA)(a)(d) s17(1AA)(a)(e) s25(1)(m) SI701AA)(d) relates to the club ceasing to exist. There is thus no corresponding ground of objection. In my opinion it is clear from the above comparison that a ground, to constitute a proper ground of complaint within s17(1AA), must be a ground which would justify calling on the registered club to show cause why its licence should not be cancelled. Breach of s79(5) attracts a maximum penalty of 50 penalty units. It thus attracts a maximum monetary penalty equivalent to 2% of that attracted by a complaint sustained under s17(1AA). It is thus in a much less serious class or category than those matters which would justify either sustaining a ground of objection to an initial grant of a licence, or sustaining a complaint sufficient to call upon the club to show cause why the licence should not be cancelled. That being so, in my opinion the subject matter of the present complaint cannot be a proper complaint within the meaning of s17(1AA). ORDERS I would propose the following orders: 1. Appeal allowed. 2. Order of Sully J of 19 May 1995 be set aside. 3. Order dismissing the complaint be restored. 4. Order that the appellant pay the respondent's costs of the appeal. Appeal allowed. Order of Sully J of 19 May 1995 be set aside. Order dismissing the complaint be restored. Order that the appellant pay the respondent's costs of the appeal. RYN 6 UNREPORTED JUDGMENTS Counsel for the Appellant: B Twoomey QC and P Clay Solicitors for the Appellant: JN Adams and Associates Counsel for the Respondent: HG Murrell Solicitors for the Respondent: Crown Solicitor