Supreme Court New South Wales Medium Neutral Citation: CrownBet Pty Ltd v State of New South Wales [2017] NSWSC 1470 Hearing dates: 16 – 18 October 2017 Decision date: 27 October 2017 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Declaration refused Catchwords: EQUITY – remedies – declarations – whether court should declare that proposed conduct of bookmaker and licensed club would contravene Unlawful Gambling Act 1998 (NSW) – whether exceptional circumstances shown so as to justify the making of such a declaration; GAMING – bookmaker – whether proposed conduct would contravene Unlawful Gambling Act – whether court should so declare Legislation Cited: Betting and Racing Act 1998 (NSW) Racing Administration Act 1998 (NSW) Racing and Betting Act 1993 (NT) Thoroughbred Racing Act 1996 (NSW) Totalizator Act 1997 (NSW) Unlawful Gambling Act 1998 (NSW) Cases Cited: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd (2007) 164 FCR 487 Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 Brightwater Care Group (Inc) v Rossiter (2009) 40 WAR 84; WASC 229 Commissioner for Corporate Affairs v Sansom [1981] WAR 32 Commonwealth of Australia v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 Crane v Gething (2000) 97 FCR 9 Imperial Tobacco Ltd v Attorney-General [1981] AC 718 Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136 Tom & Bill Waterhouse Pty Ltd v Racing New South Wales [2008] NSWSC 1013; 72 NSWLR 577 Category: Principal judgment Parties: CrownBet Pty Ltd (Plaintiff) State of New South Wales (First Defendant) TAB Limited (Second Defendant) ClubsNSW Pty Ltd (Third Defendant) Warners Bay Bowling Club Co-Op Ltd trading as Warners Bay Sports Club (Fourth Defendant) ClubsNSW Digital Services Pty Limited (Fifth Defendant) Representation: Counsel: B W Walker SC with P D Herzfeld and K Boettcher (Plaintiff) P J Brereton SC with R C A Higgins SC and B Lim (Second Defendant) Solicitors: Minter Ellison (Plaintiff) Crown Solicitor's Office (First Defendant) Herbert Smith Freehills (Second Defendant) Baker & McKenzie (Third & Fifth Defendants) Henry Davis York (Fourth Defendant) File Number(s): SC 2017/157108 Judgment 1. The plaintiff, CrownBet Pty Ltd, is a corporate bookmaker licensed by the Northern Territory government under the Racing and Betting Act 1993 (NT). 2. On 20 December 2016, CrownBet entered a Master Services Agreement with the third defendant, ClubsNSW Pty Ltd. ClubsNSW is the peak representative body for clubs in NSW and represents some 1,200 clubs throughout New South Wales. That agreement was amended on 8 June 2017, and a wholly owned subsidiary of ClubsNSW, ClubsNSW Digital Services Pty Ltd was substituted for ClubsNSW as the counterparty to CrownBet. Nothing turns on this change. I will refer only to ClubsNSW. 3. By the Master Services Agreement, ClubsNSW appointed CrownBet as its "Official Digital Wagering Advertising Partner". For its part, CrownBet agreed to provide ClubsNSW with the "CrownBet Investment" (being, in effect, the cost of supplying the equipment and services to which I refer below) and to deliver the "Digital Wagering Advertising Solution" (being the provision of that equipment and those services) to "Participating Licensed Venues" (being clubs who choose to enter into Individual Licensed Venue Agreements with CrownBet). 4. On 27 April 2017, CrownBet entered into an Individual Licensed Venue Agreement (which the parties referred to as the "ILVA") with the fourth defendant, Warners Bay Bowling Club Co-Op Ltd (trading as Warners Bay Sports Club). The ILVA is expressed to have a commencement date of 1 July 2017 and refers to the "Roll Out Plan" of the "Digital Wagering Advertising Solution" in two phases: "Phase 1" and "Phase 1.1". 5. Pursuant to the ILVA, by the proposed Phase 1 roll-out, CrownBet agreed to provide the Club with the equipment and services that I describe below, to be installed at a particular location within the Club described in the ILVA as the "CrownBet Advertising Zone". 6. CrownBet seeks a declaration that the provision by it of this equipment and these services and certain other related matters, "would not" contravene various sections of the Unlawful Gambling Act 1998 (NSW). 7. No other club has yet entered an ILVA with CrownBet. By the Master Services Agreement, CrownBet and ClubsNSW have agreed to a "standard form ILVA" which participating clubs may enter. There are six such "standard forms". Those forms cater for three sizes of clubs (small, medium and large) and, for each such sized club, for clubs in a "Standalone" category (that is, having no retail wagering facility using cash or a TAB account) or in a "Co-Existence" category (that is, having such a facility alongside the proposed CrownBet facility). 8. Despite ClubsNSW's endorsement of the CrownBet proposal, member clubs are not obliged to enter an ILVA with CrownBet and, if they do, may appoint any other wagering operator. 9. Liquor & Gaming NSW is the agency responsible in NSW for the regulation of wagering. 10. On 13 April 2017, the Deputy Secretary, Liquor, Gaming and Racing from the Department of Industry, wrote to CrownBet and ClubsNSW: "I confirm that Liquor & Gaming NSW does not object to the proposed application for declaratory relief [that is, the relief being sought in these proceedings], however, does wish to be heard on any such application". 1. In order that Liquor & Gaming NSW be given an opportunity to be heard, CrownBet joined the State of NSW as a defendant to these proceedings. 2. The State has, however, entered a submitting appearance. Thus, despite the Deputy Secretary's letter of 13 April 2017, the regulator has not sought to be heard. 3. CrownBet also joined ClubsNSW and the Club as defendants. Each has also entered a submitting appearance. 4. The remaining defendant, TAB Ltd, holds a licence under the Totalizator Act 1997 (NSW) to offer off-course totalizator and fixed odds wagering in NSW. That licence is for a period of 99 years commencing on 6 March 1998 and expiring on 5 March 2097. The licence is exclusive until 23 June 2033. 5. TAB's retail network includes TAB owned outlets as well as, relevantly, agency outlets within certain licensed venues, such as the Club. 6. TAB had a presence within the Club until 30 June 2017. That presence comprised an area dedicated to TAB off-course wagering facilities, together with multiple screens showing racing and other events and TAB betting odds, and benches and stools from which members could view the screens and complete betting slips and the like. 7. On 28 April 2017, the day after it entered the ILVA, the Club notified TAB that it wished to terminate these arrangements. The TAB wagering facilities were removed from the Club on or about 29 June 2017; two days before the ILVA was due to commence. 8. Before me, only TAB played the role of contradictor. 9. TAB is not a disinterested contradictor. It has an obvious interest of protecting its position as a wagering agency outlet within licensed venues such as the Club. As I discuss below, it has made public statements to the effect that the arrangements CrownBet proposes are likely to be unlawful. 10. Finally, by way of introduction, it is important to emphasise what this case is not about. This judgment does not concern the social utility or desirability of gambling, or of encouraging people to gamble. 11. It is about whether the Court should make a declaration that future conduct on the part of CrownBet and the Club would not contravene the relevant provisions of the Unlawful Gambling Act, as those provisions should be properly construed. Decision 1. The conclusion to which I have come is that I should not make the declaration sought. The declaration sought 1. Although the declaratory relief referred to in the Amended Summons was expressed more widely, as developed in final submissions, the declaration sought by CrownBet was: "A declaration that the provision by [CrownBet] to [the Club] of the Phase 1 equipment and related advertising services specified in items 1A and 2A of schedule 1 to the Individual Licensed Venue Agreement between [CrownBet] and [the Club] executed on 27 April 2017, the operation of the CrownBet Advertising Zone in respect of that equipment and those services in accordance with that contract with respect to Phase 1, and the performance by [the Club] of its related obligations under that contract would not contravene ss 9, 11, 11A, 15 or 31-33 of the Unlawful Gambling Act...". Jurisdiction to make the declaration sought 1. This Court has inherent power to grant declaratory relief. 2. The prerequisites for such relief were summarised by the High Court of Australia in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 as follows: "It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which 'it is neither possible nor desirable to fetter…by laying down rules as to the manner of its exercise'. However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have 'a real interest' and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' or if 'the Court's declaration will produce no foreseeable consequences for the parties'." [Citations omitted] 1. The Court has discretion to withhold relief. Thus in Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136, the Privy Council said at 1155: "When considering an action claiming relief in the form of discretionary remedies only it is thus important to distinguish between the jurisdiction of the court to entertain the action at all, i.e., to embark upon the inquiry whether facts exist which would entitle the court to grant the relief claimed, and a settled practice of the court to exercise its discretion by withholding the relief if the facts found to exist disclose a particular kind of factual situation. The application of a discretion to refuse relief even though this may be pursuant to a settled practice is an exercise of jurisdiction, not a denial of it." 1. The circumstances where a court would be inclined to refuse declaratory relief include where to grant relief would have no practical utility and would not finally resolve a justiciable controversy (see, for example, Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 at [45]). 2. The Court has jurisdiction to grant a declaration that proposed conduct is not unlawful. 3. Thus, in Commonwealth of Australia v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297, Barwick CJ said (at 305): "The jurisdiction to make a declaratory order without consequential relief is a large and most useful jurisdiction. In my opinion, the present was an apt case for its exercise. The respondent undoubtedly desired and intended to do as he asked the Court to declare he lawfully could do. The matter, in my opinion, was in no sense hypothetical, but in any case not hypothetical in a sense relevant to the exercise of this jurisdiction. Of its nature, the jurisdiction includes the power to declare that conduct which has not yet taken place will not be in breach of a contract or a law. Indeed, it is that capacity which contributes enormously to the utility of the jurisdiction." [See also Bass v Permanent Trustee Company Ltd at [47] (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ)] 1. However, the Court will only grant such relief in exceptional circumstances. 2. Thus, in Brightwater Care Group (Inc) v Rossiter (2009) 40 WAR 84; WASC 229 Martin CJ said at [18]-[20]: "The court will only grant declaratory relief in respect of the criminality of a proposed course of conduct in exceptional circumstances: Imperial Tobacco Ltd v Attorney-General [1981] AC 718 at 742. That approach is taken for a number of sound reasons, including the fact that whether or not conduct is criminal may depend critically upon a range of precise facts and circumstances which cannot always be accurately estimated in advance. Another reason for this approach is that in our system, the determination of whether particular conduct is criminal or not is, in serious cases, generally left to a jury, not a Judge. But the cases recognise that in exceptional circumstances, declarations may be made in respect of conduct that could be the subject of criminal charges: Commissioner for Corporate Affairs v Sansom [1981] WAR 32 at 36. Those cases also establish that in this respect there is a vital distinction between making a declaration with respect to the lawfulness of conduct which is proposed but has not occurred, and making a declaration as to whether or not conduct which has occurred constitutes a criminal offence. Declarations in respect of proposed future conduct add to the practical utility of this jurisdiction, but a declaration in respect of conduct which has occurred has little practical utility and would usurp the jurisdiction and role of the criminal courts, and for those reasons, will not be made: Commonwealth v Sterling Nicholas Duty Free Pty Ltd…at 305. The exceptional nature of the jurisdiction I am exercising imports two significant constraints. They are: 1. I should only answer questions directly and explicitly raised by the facts of this particular case, and refrain from making any observations with respect to any other hypothetical scenarios; and 2. I should only grant declaratory relief if I am satisfied that I have received all the evidence which is relevant to the issues to be determined, and all the facts necessary to determine the issues which arise have been established to an appropriate level of satisfaction." 1. My attention has been drawn to only a small number of cases where a court has been persuaded to make a declaration as to the criminality of proposed conduct. 2. In Brightwater, Martin CJ was persuaded to make a declaration that a quadriplegic in residential care had the right to determine whether or not he would continue to receive the services and treatment provided by the entity conducting the residential care facility in which he resided and that the entity would act unlawfully by continuing to provide treatment contrary to his wishes (at [23]-[31] and [32]). 3. In Tom & Bill Waterhouse Pty Ltd v Racing New South Wales [2008] NSWSC 1013; 72 NSWLR 577, Palmer J was persuaded to make a declaration that amendments made to the Racing Administration Act 1998 (NSW) did not oblige a bookmaker, as it presently conducted its business, to pay a particular fee. 4. His Honour said (at [74]): "The Court is less reluctant to make a declaration involving questions of criminal law where the facts are clear and undisputed, there are no criminal proceedings pending, and there is a pure question of law to be decided: see, for example, Crane v Gething (2000) 97 FCR 9 at 22 [30]; Australian Securities and Investments Commission v HLP Financial Planning (Aust) Pty Ltd (2007) 164 FCR 487 at 504 [58]." 1. His Honour found that the facts before him were "clear and undisputed." That is unsurprising, as those facts concerned the manner in which the bookmaker in question was then conducting its business. The future conduct under consideration was the continued operation of the business in that fashion. 2. Unlike this case, the active contradictor before Palmer J was Racing NSW, a body corporate established under the Thoroughbred Racing Act 1996 (NSW) to supervise and regulate horse racing in NSW. It was, in effect, the regulator. 3. I see this case as being quite different from those two cases. The legislative context 1. In NSW, gambling is regulated, relevantly to this case, by the Unlawful Gambling Act, the Totalizator Act, and the Betting and Racing Act 1998 (NSW). 2. CrownBet is not a "licensed bookmaker" for the purposes of the Unlawful Gambling Act or the Betting and Racing Act because it is not authorised by Liquor & Gaming NSW to carrying on bookmaking in NSW. 3. However, CrownBet is a "licensed betting service provider" for the purpose of the Betting and Racing Act because it is the holder of a licence under the NT Racing and Betting Act (s 4 of the Betting and Racing Act). 4. CrownBet is also, and for the same reason, a "legal bookmaker" for the purposes of the Unlawful Gambling Act (s 8(4)). 5. Because CrownBet is a "licensed betting service provider" it is exempt from prohibitions in ss 29 and 30 of the Betting and Racing Act against: 1. publishing any "betting information" (being information or advice as to the betting or betting odds on any race held at a race meeting or at a declared betting event); or 2. publishing advertisements: 1. indicating that it is prepared to provide betting information; 2. designed to induce a person to obtain betting information; or 3. inviting any person to make, or take a share in, a bet on a declared betting event. 1. Further, because CrownBet is a "licensed betting service provider" a party, such as the Club, is exempt from the prohibition contained in s 31 of the Betting and Racing Act against using premises for the purposes of publishing betting information or any advertisement relating to any betting services. 2. Further, by reason of ss 8(3) and (4) and s 8(6)(d1) of the Unlawful Gambling Act, and because CrownBet is authorised by NT law to conduct bookmaking activities, punters are exempt from the prohibition contained in s 8(3) of the Unlawful Gambling Act against placing a bet with CrownBet by telephone or electronically by means of the internet, subscription TV or other online communication systems. 3. Wagering by telephone with CrownBet (or indeed any other licensed betting service provider) is lawful wherever a punter is situated. The equipment and services to be provided 1. The equipment and services to be provided by CrownBet to the Club in Phase 1 are set out in items 1A and 2A of schedule 1 to the ILVA. 2. In summary, it is proposed that CrownBet will install within what is described in the ILVA as the "CrownBet Advertising Zone": 1. a panel of nine television screens which will display live sports and racing events from free to air and subscription providers as well as promotional content from CrownBet and a "countdown ticker" (giving notice of forthcoming sporting events in respect of which CrownBet is prepared to take wagers); 2. electronic form guides or touch screens which will display CrownBet's odds, race field information and promotional content; and 3. a mobile phone charging station which will enable patrons of the Club to charge their personal devices. 1. In the ILVA, the CrownBet Advertising Zone is described as a "wagering area". The Zone is proposed to be set up in a dedicated space within the Club. The concept designs in evidence suggest that what is planned is that the Zone will comprise a wall on which the panel of nine television screens will be displayed together with a bench on which the touch screens and the mobile phone chargers will be located and adjacent to which will be stools, or perhaps lounges, facing the video wall. The Zone will feature, prominently, the CrownBet logo and getup. 2. However, as CrownBet has emphasised, none of the equipment it proposes to install will accept wagers or in any way allow wagers to be placed. Nor will the equipment allow a wagering account to be opened or allow a deposit or withdrawal of funds into or from a wagering account. To wager with CrownBet from the proposed CrownBet Advertising Zone, or to open a wagering account or deposit or withdraw funds into or from an account, Club patrons will need to use their personal devices, such as their mobile telephones. 3. Under proposed Phase 1, CrownBet will also provide to the Club (and its members) the following services: 1. SMS notifications and other notifications to be "pushed" to a CrownBet customer who has downloaded the CrownBet mobile app to their personal device; 2. "CrownBet Data", being CrownBet promotional content and odds, to be displayed on the television and touch screens; 3. contribution to the cost incurred by the Club of its existing Wi-Fi service, to be renamed "CrownBet" but to be available to all patrons at the Club and for any purpose (that is, not just betting); and 4. training of staff as to the operation and functionality of the equipment in the CrownBet Advertising Zone. The relevant sections of the Unlawful Gambling Act Section 9 1. Section 9 of the Unlawful Gambling Act provides that: "A person must not carry on bookmaking unless the person is a licensed bookmaker." 1. It is common ground that the proscription in s 9 is against carrying on bookmaking in NSW. 2. It is also common ground that CrownBet is not a "licensed bookmaker" in NSW (see [40] above). 3. Thus, what CrownBet seeks is a declaration that, by engaging in the conduct to which I have referred, it would not be carrying on bookmaking in NSW. Section 11(1) 1. Section 11(1) of the Unlawful Gambling Act provides: "A person who has a financial interest in a bookmaking business, knowing that the business is being conducted in contravention of this Act, is guilty of an offence." 1. It is common ground that this is a derivative offence, in that its contravention would follow from a contravention of, for instance, s 9, and that neither CrownBet nor the Club would contravene this section unless they also contravened one of the other specified sections. Section 11A 1. Section 11A(1) of the Unlawful Gambling Act provides: "A person must not make a remote access betting facility available in a public place for use by persons frequenting that place." 1. It is common ground that the Club is a "public place" for the purposes of s 11A(1). 2. Section 11A(3) defines "remote access betting facility" as: "[A]ny device (such as a computer terminal or telephone) that is for use primarily or exclusively for betting on any event or contingency or for facilitating betting on any event or contingency." 1. Thus, CrownBet seeks a declaration that, if CrownBet were to make available the equipment and services to which I have referred, neither it nor the Club would be making available within the Club a "device" that is for use primarily or exclusively for betting on an event or contingency or facilitating such betting. Section 15 1. Section 15(1) of the Unlawful Gambling Act provides, relevantly, that: "(1) A person must not: … (b) permit the use or operation of a prohibited gaming device." 1. Section 6(1)(b) defines a "prohibited gaming device" as, relevantly, a device that: "[I]s designed or used for the purposes of gambling". 1. CrownBet thus seeks a declaration that implementation of Phase 1 would not involve either it or the Club permitting the use of a "device" which is either designed or used for the purpose of gambling. Sections 31 to 33 1. Section 31 of the Unlawful Gambling Act provides: "A person who is the owner or occupier of any premises must not knowingly allow the premises to be used as gambling premises." 1. Section 32 creates a similar offence for the "operator" of premises. Section 33 makes it an offence to organise, or conduct, or assist in organising or conducting "gambling premises". 2. The expression "gambling premises" is defined in s 4 as, relevantly, premises that are: "[U]sed for or in connection with bookmaking carried on by or on behalf of a person who is not a licensed bookmaker." 1. CrownBet thus seeks a declaration that implementation of Phase 1 would not have the effect of rendering the Club, or at least that part of the Club at which the CrownBet Advertising Zone is to be located, as "gambling premises"; that is, premises used for or in connection with bookmaking to be carried out by CrownBet (which, as I have mentioned, is not a "licensed bookmaker" for the purposes of the relevant legislation). 2. I have heard detailed submissions from both CrownBet, and TAB as to whether implementation of Phase 1 would cause CrownBet or the Club (or both) to contravene any one or more of these sections. 3. Those arguments were put with great skill and accounted for a good deal of the hearing time before me. 4. However, as my conclusion is that, as a matter of discretion, I should not make the declaration sought, it is not appropriate for me to express an opinion as to the merits of those arguments. The reasons advanced by CrownBet as to the why the declaration should be made 1. CrownBet submitted that I should exercise the Court's jurisdiction to declare that the implementation of Phase 1 would not involve either it or the Club contravening the relevant sections of the Unlawful Gambling Act to resolve what it describes as the "present state of uncertainty" about that question. 2. That state of uncertainty is said to arise from two matters. "Uncertainty" arising from statements by Tabcorp 1. The first is statements that TAB's parent company, Tabcorp Holdings Ltd, has made to ClubsNSW, and to some other clubs, directly to the effect that CrownBet's proposals are unlawful. 2. Thus, for example, on 14 February 2017, Tabcorp wrote to ClubsNSW as follows: "Tabcorp's position is that it is the only entity that is authorised under NSW wagering legislation to provide wagering services off-course in NSW (including in registered clubs). We believe that the CrownBet Arrangement constitutes a form of off-course wagering service and that it is therefore unlawful. Tabcorp intends to work with Liquor & Gaming NSW to preserve and enforce the existing legislative framework. Consistent with this, Tabcorp is not prepared to negotiate with venues on a non-exclusive basis in a manner that would give credence to what we consider to be a business model that contravenes the legislative framework." 1. Similarly, on 24 February 2017, Tabcorp sent a letter to clubs as follows: "As previously advised, Tabcorp does have genuine concerns that both the overall Arrangement and particular elements of the Arrangement are unlawful. Tabcorp does not intend to allow its wagering services to be accessible in licensed venues on a non-exclusive basis in a manner that would give credence to what we consider to be a business model that contravenes the legislative framework. We understand that you may take a different view. If you are prepared to share the basis for that view with us, we will happily consider it." "Uncertainty" arising from lack of regulatory guidance 1. The second is that the regulator, Liquor & Gaming NSW, "despite months of consultations" "did not confirm its position, one way or the other, as to whether the arrangements were lawful". 2. As I have mentioned, although on 13 April 2017 Liquor & Gaming NSW said that it wished to be heard on this application it has, through the State, entered a submitting appearance (see [11] and [12] above). 3. CrownBet drew attention to a letter it had sent to the Deputy Secretary, Liquor, Gaming and Racing on 28 June 2017 as follows: "In the [letter sent by the Deputy Secretary to ClubsNSW on 13 February 2017], you advised that [Liquor & Gaming NSW] had commenced a review of the CrownBet Offering ([Liquor & Gaming NSW] Review) and confirmed that you would communicate with affected parties when you had further considered the matter. In indicating that the New South Wales Government would express a view on the legality of the CrownBet Offering, the [Liquor & Gaming NSW] February Letter created a reasonable expectation amongst New South Wales registered clubs that [Liquor & Gaming NSW] would provide timely, considered and practical guidance on this critical matter. Some five months after it commenced, the [Liquor & Gaming NSW] Review has not yet been completed. No guidance has been issued by [Liquor & Gaming NSW]. This scenario has, and continues to, cause substantial damage to CrownBet, ClubsNSW and licensed venues in New South Wales. The delay has even put at risk the CrownBet Offering being made available at all due to the costs being borne by CrownBet and ClubsNSW whilst in this 'holding pattern'." 1. The letter continued: "Given the period of time which has now elapsed, the status of the [Liquor & Gaming NSW] Review belies [Liquor & Gaming NSW's] published Compliance and Enforcement Policy, which states: ● We commit to provide guidance to stakeholders on our regulatory position. This is our preferred approach in novel or complex matters. It improves certainty, encourages industry to manage its regulatory risk and assists stakeholders in making informed decisions. ● We commit to conducting investigations, regulatory activities and enforcement action as efficiently as possible to minimise disruption and provide certainty to stakeholders. Further, [Liquor & Gaming NSW's] published "Strategic Approach", states that [Liquor & Gaming NSW] will adopt a regulatory approach that is 'responsive to community and industry expectations' and that it aims to provide 'timely and authoritative information and guidance'." [Emphasis in original] 1. I caused my Associate to enquire of the parties whether it was common ground that Liquor & Gaming NSW's "Compliance and Enforcement Policy" and stated "Strategic Approach" were, at the relevant time, as set out in this letter. Curiously, CrownBet's solicitor informed my Associate that this was not common ground between the parties. I think it hardly likely that CrownBet would make assertions to Liquor & Gaming NSW as to the content of its published policy and strategic approach which did not accurately reflect what that policy and strategic approach was. It was not suggested to me that CrownBet had, in its letter, misstated the position. There is no evidence before me of any dispute raised by Liquor & Gaming NSW about this aspect of CrownBet's letter. In those circumstances, I propose to proceed on the basis that CrownBet did not misstate the position and that Liquor & Gaming NSW's policy and strategic approach included the matters stated in CrownBet's letter. 2. CrownBet contended that "this state of uncertainty prejudices CrownBet's ability to attract clubs". 3. Thus, Mr Nicholas Tyshing, the Chief Operating Officer of CrownBet, gave this evidence: "Under the ILVA, representatives of the parties are to meet within thirty business days of 1 July 2017 to discuss, amongst other things, the timetable proposed by CrownBet for the Roll Out Plan. This meeting cannot meaningfully proceed in the present state of uncertainty. This is because neither CrownBet or Warners Bay intends to commence program works until there is greater certainty around the lawfulness of the operation of the advertising zone (particularly having regard to the various statements made by Tabcorp referenced above). For the same reason, Crownbet and Warners Bay cannot agree the Launch Marketing Plan (as defined). The Launch Marketing Plan is the marketing plan for the launch of the Digital Wagering Advertising Solution, which will include (among other things as set out in the ILVA) direct electronic communications being sent by Warners Bay to an agreed segment of their member database, promoting the ODWAP. Further, until there is a resolution in respect of the legality of the arrangements, CrownBet cannot meaningfully progress its negotiations with other clubs in relation to its Digital Wagering Advertising Solution. As set out below, representatives of a number of clubs have told me that they are not prepared to entertain the CrownBet offer until this uncertainty is resolved." 1. In submissions, CrownBet put the matter this way: "As a result of these matters, to pursue the contractual arrangement it has entered into with ClubsNSW, CrownBet is either forced to the present course, seeking a declaration in advance about the proposed conduct, or persuading a club to 'roll out' the equipment and services and thereby put itself (and CrownBet) at risk of prosecution. The latter course is self-evidently undesirable, not only for the club and CrownBet, but also for the administration of justice. It is in the interests of all clubs in New South Wales to know whether the proposed conduct is lawful. The institution of the present proceeding reflects a proper concern on the part of CrownBet not to engage in unlawful conduct and to resolve the question of unlawfulness, propagated by TAB, without any contravention taking place." 1. CrownBet's reference to the "interests of all Clubs in New South Wales" reflects its position that these proceedings should be seen as a "test case". As I have mentioned, so far only the Club has entered into an ILVA with CrownBet. 2. However, it is clear from the terms of the Master Services Agreement that CrownBet proposes to enter similar ILVAs with as many of ClubsNSW's member clubs as possible. Exceptional circumstances not established 1. I see the dilemma facing CrownBet and the Club (see [84]). However, that dilemma is of their own making and the result of their decision to enter the ILVA despite not having obtained clearance from the regulator. 2. There is much at stake here for CrownBet, the Club (which has already committed itself to the ILVA and, for that reason, I would infer, terminated its relationship with TAB), and for those other clubs that may be contemplating entering into similar arrangements. 3. From the point of view of CrownBet and the Club, it is, no doubt, "undesirable" that, absent regulatory guidance, and in the context of Tabcorp's commercially hostile response, those parties run the risk that CrownBet's "Offering" is unlawful and may render one or both liable to prosecution. 4. However the conclusion to which I have come is that, in the circumstances which CrownBet and the Club now find themselves, this is a risk they will have to run, if they are determined to proceed. 5. For this reason, and those that follow, I am not persuaded that these matters amount to "exceptional circumstances" such as to warrant the Court granting CrownBet the declaration it seeks. The generality of the declaration sought 1. CrownBet seeks a declaration that each of the following matters "would not" contravene the identified sections of the Unlawful Gambling Act: 1. the "provision" by it to the Club of the Phase 1 equipment and services specified in schedule 1 to the ILVA; 2. the "operation" of the CrownBet Advertising Zone "in respect of" that equipment and those services in accordance with the ILVA; and 3. the performance by the Club of its "related obligations" under the ILVA. 1. CrownBet submits that it has disclosed "in minute detail", the specifics of its arrangements with the Club. 2. It is true that, in evidence, CrownBet has to a very large extent identified the facts and circumstances that will pertain to the Club once Phase 1 is rolled-out. 3. But the declaration does not, on its face, disclose that "minute detail". 4. The declaration identifies the equipment and services to be provided (namely that specified in items 1A and 2A of schedule 1 to the ILVA). 5. But the declaration does not specify what is to be the "operation" of the CrownBet Advertising Zone in respect of that equipment and services "in accordance with" the ILVA and does not specify what "related obligations" of the club under the ILVA, the "performance" of which would not contravene the Unlawful Gambling Act. 6. CrownBet's position appears to be that the "operation" and those "related obligations" are to be determined by reference to the ILVA as a whole. 7. Thus, it was submitted on behalf of CrownBet: "The evidence utility and concreteness [of the proposed declaration] is shown by the very terms of the agreement to which attention has already been drawn [that is, the ILVA]. The content of our rights and obligations and the club's rights and obligations will be supplied by your Honour's answer to our request for a declaration, because our obligation to do something is expressly subject to it being lawful to do so." 1. The reference in that submission to "our obligation to do something is expressly subject to it being lawful to do so" was evidently a reference to clauses such as 5.1 of the ILVA , which is in the following terms: "Subject to any Regulatory Requirements and Applicable Laws, CrownBet will provide the Services to [the Club] during the Term". 1. "Applicable laws" is defined with effect to include the Unlawful Gambling Act. 2. The question is addressed more comprehensively in cl 15.1 of the ILVA which is in the following terms: "15.1 Applicable Laws and Regulatory Requirements upon implementation The parties agree and acknowledge: (a) the provision of the Services and the Equipment must comply with all Applicable Laws including the Unlawful Gambling Act 1998 (NSW); (b) nothing in this Agreement is intended to require a party to undertake any action which does not comply with any Applicable Laws or is contrary to any Regulatory Requirements. If either party reasonably anticipates that any such non-compliance may occur, it will notify the other party immediately and the parties will discuss in good faith the basis upon which the parties will ensure that such non-compliance does not occur; (c) it is the intention that CrownBet and ClubsNSW will together approach any relevant Regulatory Authority to satisfy any and all Regulatory Requirements relevant to the provision of the Services (or any part thereof) and/or the installation of the Equipment; (d) in circumstances where a relevant Regulatory Authority does not provide consent, approval or comfort as to the compliance of a relevant Service or any equipment under any Applicable Laws: (i) CrownBet is released of its obligations to provide the relevant Service or Services and/or supply the Equipment; and (ii) the parties agree to work together in good faith to: (A) minimise to the extent possible the impact on the Services, the Digital Wagering Advertising Solution and the ODWAP; and (B) achieve an alternative workaround at minimal cost to the parties." 1. Thus the obligations of CrownBet and the Club under the ILVA are, in substance, conditional upon those arrangements complying with, amongst other laws, the Unlawful Gambling Act. 2. In substance the agreement is that, relevantly, the CrownBet Advertising Zone must be "operated" in a manner that complies with the Unlawful Gambling Act and the Club must perform its "obligations" under the ILVA (including in relation to the "operation" of the CrownBet Advertising Zone) in a manner that complies with the Unlawful Gambling Act. 3. Thus, what is sought is a declaration that performance of obligations under a contract, under which performance is conditional upon compliance with the Unlawful Gambling Act, would comply with the Unlawful Gambling Act. 4. As was submitted on behalf of TAB, that assumes what must be proved and thus lacks utility. A commercial arrangement 1. CrownBet and the Club have entered into a commercial arrangement which they must have considered to be in their financial interests (and, in the case of the Club, in the interests of its members). 2. CrownBet is very well represented and has, before me, offered confident submissions to the effect that it is clear that the roll-out of Phase 1 will not contravene any of the nominated sections of the Unlawful Gambling Act. According to those submissions, there is no uncertainty about CrownBet's position; nor that of the Club. If those submissions are correct, neither CrownBet nor the Club has any reason to be concerned about the lawfulness of the proposed conduct. 3. In CrownBet's letter of 28 June 2017 to the Deputy Secretary, to which I have already referred, CrownBet refers to having shared with Liquor & Gaming NSW the "advice it received from Senior Counsel regarding the CrownBet Offering" and stated that it had received "clear advice supporting the legality of the CrownBet Offering". 4. The mere fact that this is a proposed commercial arrangement is not of itself a reason to decline to make the declaration sought. 5. But here, it is clear that the commercial arrangement is one that has been entered into by well-resourced parties after careful consideration of its potential unlawfulness (and, presumably, its potential financial reward) and on the basis of legal advice of the highest quality. The Court should, in my opinion, be cautious about making a declaration as to the lawfulness of such an arrangement in those circumstances. Provision within that arrangement for potential unlawfulness 1. Further, the parties have made specific provision in cl 15.1 of the ILVA (set out at [102] above) for the possibility that what is contemplated by the ILVA, including Phase 1, may not comply with the Unlawful Gambling Act. 2. CrownBet has approached the relevant "Regulatory Authority" (Liquor & Gaming NSW). 3. That Regulatory Authority has not (at least yet) provided: "…consent, approval or comfort as to the compliance of a relevant Service or any Equipment under any Applicable Laws" for the purposes of cl 15.1(d)(i). 1. It may be, in that circumstance, CrownBet is already "released of its obligations" to provide the relevant services and equipment by reason of cl 15.1(d)(i). 2. However that may be, the point is that the ILVA makes specific provision for the possibility that regulatory approval will not be forthcoming. 3. Further, cl 15.3 of the ILVA provides: "15.3 Applicable Laws In circumstances where any Applicable Laws or Regulatory Requirements prevent all, or substantially all, of the subject matter of this Agreement from being implemented and conducted, and provided that the parties have met to seek a resolution acting reasonably (and no commercially feasible resolution can be found), each party shall have the right to terminate the Agreement by providing 10 Business Days' notice to the other party. The parties agree that in such circumstances neither party will be liable to the other for any cost, expense or Loss arising from or otherwise connected to the termination of the Agreement." 1. The parties have thus made provision, in terms, for the possibility that an "applicable law" might prevent the implementation of the ILVA. In effect, the parties have agreed on a right of termination if that matter cannot be resolved. 2. Thus, in substance, CrownBet and the Club have reached what I would infer to be a mutually satisfactory means by which to deal with the possibility that the proposal is unlawful. 3. In substance, if the proposal is unlawful, neither will be obliged to proceed. 4. I see that as a further reason not to make the declaration sought. A regulated industry 1. A further reason is that the declaration is sought in the context of an industry that is regulated. 2. According to CrownBet's letter of 28 June 2017 (set out at [79] - [80] above and which, for the reasons set out at [81] I am assuming to be accurate), the regulator, Liquor & Gaming NSW, has a declared policy of "providing guidance to stakeholders on our regulatory position", including any "novel or complex matters" and so as to encourage the industry to "manage its regulatory risk" and assist "stakeholders making an informed decision". According to Liquor & Gaming NSW's published "Strategic Approach" it aims to provide "timely and authoritative information and guidance". 3. CrownBet's letter also asserted that Liquor & Gaming NSW had in February 2017 "commenced a review of the CrownBet Offering" and had stated it would "express a view on the legality of the CrownBet Offering". Again, absent a suggestion to the contrary, I see no reason to doubt that these statements are accurate. Evidently, for reasons not disclosed to the Court, Liquor & Gaming NSW has decided not to express any view on the subject. 4. Consistent with its stated policy, prior to the commencement of these proceedings, Liquor & Gaming NSW stated that it wished to be heard. And yet it has chosen not to be heard. 5. The result is that I do not have the benefit of submissions from the regulator: a disinterested contradictor. In effect, the role of giving the "guidance" to "stakeholders", that Liquor & Gaming NSW states to be its policy, is left to the Court. 6. CrownBet submitted that the fact that Liquor & Gaming NSW had chosen to express no view to the Court about the lawfulness of CrownBet's "Offering" was a compelling reason for the Court to make the declaration sought. On reflection, the conclusion to which I have come is that the better view is the one which CrownBet itself expressed to Liquor & Gaming NSW in its letter of 28 June 2017 in which it said: "CrownBet and ClubsNSW have exhausted all steps available to them to resolve this matter. We are now entirely in the hands of [Liquor & Gaming NSW] and the Supreme Court for guidance. Given that a decision in [these proceedings] will not be forthcoming in the short term, we take this opportunity to urge [Liquor & Gaming NSW] to expeditiously complete the [Liquor & Gaming NSW] Review. With respect, we do not consider that the commencement of [these proceedings] abrogates [Liquor & Gaming NSW's] responsibilities to complete its regulatory investigation." 1. The fact that there is a regulator in this industry which has the policies I have described and that has been approached by the parties for guidance and that, for reasons unexplained, has not given that guidance points, strongly in my opinion, to the inappropriateness of the Court intervening. Potential uncertainty as to the facts 1. Further, the declaration sought is that the proposed conduct "would not" contravene the nominated sections of the Unlawful Gambling Act. CrownBet accepted that, in order to come to that conclusion, I would have to be actually persuaded that the proposed conduct (assuming it could be sufficiently identified) would not contravene those provisions (as those provisions should properly be construed). 2. As Martin CJ emphasised in Brightwater (see [31] above), a sound reason for not making a declaration as to the criminality of future conduct is that the question of whether conduct is criminal may depend, perhaps critically, upon a range of precise facts and circumstances which cannot always be accurately predicted. 3. As I have said, CrownBet has, to a very large extent, provided detail of the proposed Phase 1 roll-out. 4. However, there is no statement of agreed facts and there is at least a possibility that, in some respects, the question of whether there would be a contravention of any one of the sections of the Unlawful Gambling Act might depend upon the particular circumstances at the Club (or indeed, at other clubs, assuming this should be seen as a test case). 5. One example is whether the contribution by CrownBet to the Wi-Fi service at the Club might amount to the making available (by the Club) of a "device" (being the "device" that causes the Wi-Fi to operate) for use primarily or exclusively to facilitate betting, for the purposes of s 11A of the Unlawful Gambling Act. 6. The evidence before me is that, at the Club, there is already a Wi-Fi service which operates throughout the Club. What is proposed is that that service be rebadged as a "CrownBet" service but that, otherwise, it continue to operate as it did prior to the Club entering into the ILVA. 7. But the manner in which the Club announces to its members the continued operation of the (now rebadged) Wi-Fi service might be relevant to whether a contravention of s 11A has occurred. 8. And so far as this is said to be a "test case", the position may also be different at a different club, if that club established a Wi-Fi service only when the CrownBet Advertising Zone was established or which only operated within that Zone, for example. 9. Another example is whether the provision by CrownBet of a mobile phone charging station would constitute the making available of a device for use primarily or exclusively to facilitate betting. The ILVA does not specify where the mobile charging station is to be installed. It simply states that CrownBet will make one available to the Club. The precise location of the charging station may be relevant to the question of whether there is a contravention of s 11A. Location of the device in a bench where Club members can eat, drink and watch events and access odds (rather than, say, on the floor in the corner of the CrownBet Advertising Zone) may well be relevant to whether there is such a contravention. 10. This is a further factor tending against the making of the declaration. CrownBet is bound to provide equipment and services beyond Phase 1 1. The declaration sought by CrownBet concerns only Phase 1 of the roll-out proposed under the ILVA. 2. The ILVA also contemplates a Phase 1.1 pursuant to which further equipment (external signage) and further operational services (described as "Draftstars Live Events" and "CrownBet Rewards Integration") will be provided. 3. CrownBet's obligation overall under the ILVA is to provide the "Services" (defined to mean the services necessary to "offer the Digital Wagering Advertising Solution") to the Club as set out in the whole of schedule 1 to the ILVA (that is, including Phase 1.1 as well as Phase 1). 4. CrownBet submitted that the declaration, confined as it is to Phase 1 "does reflect the scope of what CrownBet [and the Club] have contracted, at this stage, to do". 5. CrownBet's submission continued: "Of course, CrownBet may, in the future, consider proceedings with phases of the equipment and services specified in the contract not the subject of the declaration sought in this proceeding". 1. In my opinion, this understates the position somewhat. CrownBet's obligation to provide its "Offering" is expressed in the ILVA to be subject to "any Regulatory Requirements and Applicable Laws" (see cl 5.1). But, subject to that, CrownBet is obliged to provide the Club with all of the services set forth in schedule 1 (that is, Phase 1 as well as Phase 1.1). 2. Further, in the Master Services Agreement, CrownBet has agreed with ClubsNSW that its intention is that all participating clubs will have their "roll-out" completed within three years of the date of the Master Services Agreement; that is, by 20 December 2019. 3. The expression "roll-out" is stated to be the "installation of all Equipment". 4. "Equipment" is defined to mean: "The equipment and related advertising services necessary to offer the Digital Wagering Advertising Solution provided by CrownBet under the Individual Licensed Venue Agreement". 1. By cl 7.2(c) of the Master Services Agreement, CrownBet agreed to use its best endeavours to roll-out 26 "large Participating Licensed Venues", 96 "medium Participating Licensed Venues" and 369 "small Participating Licensed Venues" by 20 December 2018. 2. Thus, CrownBet is only seeking declaratory relief in respect of part of its proposed roll-out with the Club and clubs generally. 3. In this way, and as TAB submitted, "the contract does not mirror the modesty of the declaration and it must be performed according to its terms". 4. This is a further factor which points against the utility of making the declaration. Is this truly a "test case"? 1. As I have mentioned (see [7] above) the Master Services Agreement contemplates six forms of "Template Individual Licensed Agreements". 2. The ILVA between the Club and CrownBet is in the "small/standalone" category. 3. The forms of ILVA designed for "medium" and "large" clubs contemplate that, in addition a Phase 1 and Phase 1.1, there will be a "Phase 2", pursuant to which, "additional equipment and related advertising services" will be rolled-out. 4. As with Phase 1 in the ILVA, the roll-out of Phase 2 in these agreements is said to be "following consultation with each applicable Regulatory Authority" and subject to CrownBet's satisfaction that the installation of such equipment would comply with "Applicable Laws and Regulatory Requirements". 5. The equipment proposed to be rolled-out under Phase 2 includes something called a "Multi-Purpose Terminal" and a "Sign-Up Station". 6. As the declaration is only sought in respect of Phase 1 of the CrownBet/Club ILVA, and as the ILVAs proposed for many other clubs will roll-out more extensive equipment and services, the extent to which it can be said that this is a "test case" is diminished. 7. I find this a further factor pointing to the lack of utility in making the declaration. Potential for any declaration to be misunderstood 1. Finally, I will deal with the matter that TAB emphasised, but which in my view does not weigh heavily in the exercise of discretion to make the declaration. 2. TAB submitted that a reason to refuse to make the declaration is that there may be some misapprehension as to its effect. 3. In that regard, TAB drew attention to statements made by ClubsNSW and by the Club which might suggest that those parties apprehend that the declaration, if made, would have wider significance than in fact would be the case. 4. Had I been persuaded to make the declaration, I would have set out the reasons the basis upon which I came to that conclusion. 5. I would expect that any party seeking to conduct itself on the basis of the making of the proposed declaration, or of commenting on the fact and the significance of the making of the declaration, would give careful attention to the reasons given. Conclusion 1. The amended summons should be dismissed. 2. I will hear argument as to costs. ********** Amendments 27 October 2017 - Typographic errors corrected on coversheet and in [25], [40], [43](b) and [81]. 27 October 2017 - Typographical error corrected in [43](b) 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: 27 October 2017