Skycity Auckland Ltd v Gambling Commission [2007] NZCA 407; [2008] 2 NZLR 182 (11 September 2007)

Last Updated: 2 February 2018

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA199/06
[2007] NZCA 407

BETWEEN SKYCITY AUCKLAND LIMITED
First Appellant

AND SKYCITY CASINO MANAGEMENT LIMITED
Second Appellant

AND THE GAMBLING COMMISSION
Respondent

Hearing: 27 June 2007

Court: O'Regan, Arnold and Ellen France JJ

Counsel: A R Galbraith QC and G M Coumbe for Appellants
C P Browne and J A Browne for Respondent

Judgment: 11 September 2007 at 3 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.

B The appellants must pay to the respondent costs of $6,000 plus usual disbursements.

REASONS OF THE COURT

(Given by O’Regan J)

Table of Contents

Para No
Issue [1]
Declaration sought [2]
Skycity’s arguments [8]
(a) Ordinary meaning [10]
(b) Arguments based on context
(i) Noscitur a sociis and ejusdem generis [17]
Wide words associated with more specific words [18]
Examples form a class [20]
Examples do not exhaust class [22]
No contrary legislative intention [24]
Conclusion on ejusdem generis [25]
(ii) Other provisions in the 2003 Act [27]
(iii) Interpretative presumptions [29]
Presumption against taking property without compensation [30]
Presumption that penal statutes are construed strictly [33]
(c) Legislative history [38]
Should we consider Cabinet papers? [39]
The legislative process in this case [43]
(d) Unworkable or undesirable consequences [56]
(i) Unworkable or absurd consequences [57]
(ii) Overlap of functions of Commission and Secretary [67]
(iii) Commission deciding its own jurisdiction [72]
Overall assessment [75]
Result [79]
Costs [80]

Issue

[1] This appeal concerns the meaning of the term “opportunities for casino gambling” which appears in ss 11, 12 and 139(2)(d) of the Gambling Act 2003 (the 2003 Act). This has particular importance for the appellants (to which we will refer collectively as “Skycity”) because the prohibition in s 11 of the 2003 Act of any increase in gambling opportunities significantly affects Skycity’s casino business. Skycity says that the phrase “opportunities for casino gambling” relates only to the number of casino games and/or the number of player positions associated with casino games in a particular casino. The Gambling Commission, which is the body charged with the regulating of casinos under the 2003 Act, contends that “opportunities for casino gambling” has a much broader meaning. The issue for determination is whether the narrow interpretation suggested by Skycity is correct.

Declaration sought

[2] In the High Court, Skycity sought a declaration in terms supporting its interpretation. Cooper J declined to make the declaration: Skycity Auckland Ltd & Anor v The Gambling Commission HC AK CIV 2005-404-1369 24 August 2006. Skycity appeals against that decision.
[3] In this Court Skycity amended slightly the form of the declaration from that which it sought in the High Court. The declaration it now seeks is in the following terms:

The words “opportunities for casino gambling” in ss 11, 12 and 139(2)(d) of the 2003 Act are limited to the number of casino games, and/or the number of player positions associated with casino games, as set out in paragraphs 32(a) to (e) of the amended statement of claim, and the additional factors set out in paragraphs 33(a) to (g) of the amended statement of claim are not relevant and may not be taken into account by the Commission in exercising its decision-making power under s 12(1) of the 2003 Act.

[4] Paragraphs 32 and 33 of Skycity’s amended statement of claim of 7 July say:

32. The Commission has adopted a wide definition of the words “increase in the opportunities for casino gambling” and has not accepted submissions made to it by [Skycity] that those words are limited to an overall increase in gambling activities offered at a casino resulting from one or more of the following facilities:

(a) an increase in the number of gaming machines;

(b) an increase in the number of table games;

(c) an increase in the total player spaces at table games;

(d) the introduction or substitution of a new form of gambling activity not being, or involving, a gaming machine or table game; or

(e) an increase in player positions in relation to any such new form of gambling activity.

33. Instead, the Commission has determined that the factors that may, as a matter of interpretation, be relevant in determining whether there is an “increase in the opportunities for casino gambling” may include, in addition to the factors listed in subparagraphs 32(a) to (e) hereof, the following additional factors:

(a) an increase in rates or speeds of play consequent on (i) the substitution of one kind of game for another, or (ii) the making of changes of an existing game, or (iii) the substitution or introduction of ancillary gambling equipment.

...

(b) an increase in the total floor area of the gambling area of a casino.

...

(c) measures to alleviate congestion or queuing or capacity constraints in the gambling area of a casino.

...

(d) an increase in the size of tables (without any increase in player spaces) used in table games.

...

(e) the addition of facilities such as smoking decks.

...

(f) an increase in the number of wagering options offered with a game.

...

(g) the making or amendment of game rules by the Secretary [of Internal Affairs] pursuant to section 367 of the 2003 Act.

[5] We have omitted the particulars specified after each of the subparagraphs of paragraph 33, which refer to specific paragraphs of decisions of the Commission. None of these decisions has been the subject of an appeal to the High Court, probably because the applicants have, in every one of the cases mentioned, succeeded. Many (but not all) decisions of the Commission are subject to a right of appeal to the High Court: s 235 of the 2003 Act.
[6] The Commission took issue with Skycity’s allegation in paragraph 33. It pointed out that it had decided that the factors mentioned in subparagraphs (b), (c), (e) and (f) did not increase the opportunities for casino gambling on the facts of the particular cases, and had not decided whether the factor in subparagraph (d) did.
[7] All of this highlights the difficulty of dealing with the issues raised in this appeal in the context of declaration proceedings, without the backdrop of specific factual circumstances. We will revert to this problem later. Rather than focus on what the Commission has or has not decided, we intend to consider the issue in general terms. The essence of the dispute between the parties is that Skycity says ss 11 and 12 deal only with increases in player positions and/or tables, whereas the Commission says those sections may also cover aspects such as rates of play and the number of wagering options, ie that casino gambling opportunities can be increased even where there is no increase in the maximum number of people who may lawfully be gambling in a casino at a particular time.

Skycity’s arguments

[8] Skycity’s arguments in support of the proposed declaration are:

(a) The ordinary meaning of the phrase “opportunities for casino gambling” is inherently ambiguous;

(b) The phrase must be interpreted in its statutory context, in particular:

(i) by application of the maxims noscitur a sociis and ejusdem generis to s 12(2);

(ii) by reference to other provisions in the 2003 Act;

(iii) by application of interpretative presumptions, namely the presumption against taking property without compensation and the presumption that penal provisions are construed narrowly;

(c) The legislative history supports Skycity’s narrow interpretation;

(d) The Commission’s broad interpretation produces an outcome which is not workable, reasonable or sensible and which has other undesirable consequences.

[9] We will deal with these arguments in the order in which they appear above.

(a) Ordinary meaning

[10] We begin by setting out the sections which require interpretation. Sections 11 and 12, and the relevant provisions of s 139 provide as follows:

11 No increase in casino gambling

A person must not increase the opportunities for casino gambling.

12 What is increase in casino gambling

(1) Decisions on what constitutes an increase in the opportunities for casino gambling are a function and responsibility of the Casino Control Authority, until section 297 of this Act comes into force, and of the Gambling Commission after that.

(2) An increase in the opportunities for casino gambling includes but is not limited to—

(a) an increase in the number of gaming machines unless the increase is accompanied by a reduction in the number of table games that the Casino Control Authority, or the Gambling Commission, believes is proportionate.

(b) an increase in the number of table games unless the increase is accompanied by a reduction in the number of gaming machines that the Casino Control Authority, or the Gambling Commission, believes is proportionate.

(c) an increase in total player space at table games unless the increase is accompanied by a reduction in other opportunities for casino gambling that the Casino Control Authority, or the Gambling Commission, believes is proportionate.

(3) Opportunities for casino gambling are not increased—

(a) by increases, in the Auckland casino, that comply with the Order for the Variation of Conditions of Casino Premises Licence dated 6 December 2002.

(b) by gambling conducted by the New Zealand Racing Board referred to in section 120.

139 Conditions of casino licence

(1) The Gambling Commission may specify the conditions of a casino licence or vary or revoke the conditions of a casino licence in the following circumstances:

...

(d) on application by the holder of the casino licence.

(e) on its own initiative or on the request of the Secretary.

(2) A condition of a casino licence specified under subsection (1)—

...

(d) must not permit an increase in the opportunities for casino gambling.

[11] It is notable that the headings of both ss 11 and 12 refer to “increase in casino gambling”: the word “opportunities” is omitted.
[12] In fact, it is the word “opportunities” which is the problematic element in the phrase “increase the opportunities for casino gambling”. “Gambling” and “casino gambling” are defined terms (in ss 4 and 34 respectively). There is no dispute about the application of those definitions. The term “increase” is also clear. However, the word “opportunities” does not have a statutory definition, nor does the composite term “increase in casino gambling”.
[13] Senior counsel for Skycity, Mr Galbraith QC, referred to a number of dictionary definitions of the term “opportunity”, indicating a variety of meanings. He said this confirmed that the term “opportunities” is inherently ambiguous. Cooper J considered these definitions and expressed the view that one of the definitions suggested in the New Zealand Oxford Dictionary, “a chance or opening offered by circumstances”, seemed the most apt. He noted that this was similar to the reference in the Oxford English Dictionary’s entry for “opportunity”, “occasion, chance”. We agree with Cooper J’s assessment.
[14] That conclusion does not take matters much further however because the use of synonyms for “opportunity” such as “chance” or “occasion” do not provide any greater certainty than the word “opportunity” itself.
[15] Counsel for the Commission, Mr Browne, said that the ordinary meaning of opportunity was “chance”, and that opportunity therefore referred to “the potential to do something”. He said that, logically, opportunity could be increased by the following:

(a) An increase in table games, gambling machines or player spaces, which would all increase the opportunities to wager;

(b) If changes were made to a game enabling more games to be played per hour;

(c) If changes to game rules were made which allowed more opportunities to wager per hour;

(d) If there were an increase in operating hours (though this factor is academic in New Zealand because, subject to very limited exceptions, casinos are permitted to be open 24 hours a day seven days a week).

[16] Skycity’s argument does not directly engage with the Commission’s interpretation. Rather, Skycity’s argument is that “opportunities” cannot be given a “plain meaning” interpretation. Therefore Skycity invited us to use other interpretative aids, such as the legislative history and contextual arguments and statutory maxims. We therefore proceed to consider those aspects of the case.

(b) Arguments based on context

(i) Noscitur a sociis and ejusdem generis

[17] Skycity argued that the meaning of the phrase “increase in opportunities for casino gambling” is modified by the context in which those words appear in s 12. To use the latin phrase, the principle of noscitur a sociis (“it is known by the company it keeps”) applies. Skycity relied particularly on the principle of ejusdem generis (“of the same class”), which is a subset of noscitur a sociis. The argument was that the four requirements for the application of the maxim ejusdem generis apply in this case.

Wide words associated with more specific words

[18] The first requirement is that there must be wide words in the text, associated with more specific words. This was said to be met in the present case because the three examples in s 12(2)(a)-(c) are preceded by words which indicate that an increase in the opportunities for casino gambling includes those examples, but is not limited to them. Counsel conceded that the more common format in cases where ejusdem generis applies is that the list of specifics is followed by a wider, catch-all term, whereas here the wider words precede the specific examples. Cooper J said that this drafting approach “effectively precludes the applicants’ ejusdem generis argument” (at [58]). Mr Galbraith said the Judge erred, because the formulation “increases but is not limited to” still indicated an intention to limit the general phrase, increases in opportunities for casino gambling, to items of the generic class or genus set out in s 12(2)(a) – (c).
[19] We do not consider that the form of wording in s 12(2) necessarily rules out the application of ejusdem generis. In any event, as Mr Galbraith noted, ejusdem generis is a sub-set of noscitur a sociis. If there were reason to exclude ejusdem generis, it would still be legitimate for the essential principles guiding the application of ejusdem generis to be applied where the context in which general words appear leads properly to a conclusion that those general words should be read down by reference to specific words appearing in the same provision. However, we accept Mr Browne’s point that the words “not limited to” do not provide a very auspicious context for an argument that seeks a limited interpretation of a generic phrase.

Examples form a class

[20] The second requirement is that the specific examples must form a class or genus. In this case Mr Galbraith argued that the examples in s 12(2)(a) – (c) had two dominant features, namely that they are all numerical, and that they all related to the number of casino games and player positions within casino games. The appearance of the words “or other opportunities for casino gambling” in paragraph (c) did not detract from that class because the appearance of those words did not signal an expansion of the concept or a wider class than the specific numerical examples given. Mr Galbraith said that the argument that the examples constituted a class was reinforced by the exemptions set out in 12(3) because each of these fell within the generic class, and would, but for the exemption, be prohibited.
[21] We have some difficulties with this argument. If, indeed, there is a class, it is an unusual one. It is true that all three examples are numerical, but paragraph (b) deals with the number of table games even in circumstances where an increase in the number of table games does not signal an increase in the number of players of table games – for example where one table accommodating 14 players is replaced by two tables accommodating six players each. Nevertheless, we will proceed on the basis that there is a class which is numerical in character, and examine the next requirement.

Examples do not exhaust class

[22] The third requirement is that the specific examples do not exhaust the class. It was argued that, in the present case, that was true because other games could be played at casinos, such as bingo, keno, the racing game, jai alai and royal ascot. Cooper J noted that these additional games were not of the same nature as gaming machines and table games, but Mr Galbraith said this was incorrect because they were nevertheless casino games. Some of them already have casino game rules made by the Secretary of Internal Affairs under s 367 of the 2003 Act and are therefore currently permitted in New Zealand casinos. Mr Galbraith said that an increase in the number of casino games, for example an increase in the number of bingo games, would be much more similar to the examples in s 12(2)(a)–(c) than speeding up existing games or increasing the wagering options within existing games.
[23] We accept the point made by Mr Galbraith, but in our view the fact that the additional games are so different in quality from table games and gaming machines weakens the argument to a considerable extent.

No contrary legislative intention

[24] The fourth requirement is that there is no contrary legislative intention, ie that the ejusdem generis principle is not overridden by other indications of parliamentary intent. Mr Galbraith submitted that this was met in this case because the application of the ejusdem generis principle was consistent with the general statutory purposes set out in s 3 of the 2003 Act, particularly the purposes of controlling the growth of gambling (s 3(a)), harm minimisation (s 3(b)) and facilitating responsible gambling (s 3(d)). This argument is, at best, neutral, because it could equally be said that the wider interpretation meets those objectives and, arguably, meets them more effectively.

Conclusion on ejusdem generis

[25] We are mindful of the truism that ejusdem generis is a guide, not a rule. As Professor Burrows QC puts it in Statute Law in New Zealand (3ed 2003) at 158:

The ejusdem generis rule is only a guide. As already stated it gives way readily enough to other indications of parliamentary intent, and must not be allowed to override the clear purpose of the legislation. Since the ascendancy of the purposive approach to interpretation, its influence has lessened.

[26] In our view ejusdem generis and, for that matter, noscitur a sociis, provide little assistance in interpreting the phrase “increase in opportunities for casino gambling”. Section 12(2) is a far cry from the more common cases of an application of the ejusdem generis maxim, where a series of individual words or concepts are followed by generic wording, which is then read down by reference to the specific words preceding it. In this case it is at best debatable that any discernible class can be identified, and the remaining, unidentified members of the class identified by Mr Galbraith are so different in character from those which are identified that it is doubtful that any real guidance as to statutory intention can be derived by applying ejusdem generis in this case. Even if the argument is given its most favourable interpretation, it adds little assistance to the interpretative task which must be undertaken in this case.

(ii) Other provisions in the 2003 Act

[27] Skycity argued that a number of other provisions of the Act supported its interpretation of s 12(2). In essence, its argument was that those other provisions dealt explicitly with activities which, on the Commission’s interpretation are covered by ss 11 and 12, and that it was therefore likely that Parliament did not intend to deal with similar subject matter in the context of ss 11 and 12. The provisions said to support this argument were:

(a) Section 313(1)(e), which authorises regulation of the intensity of gambling. It is clear from the explicit wording of this provision that it deals separately with the number of player positions on the one hand and the speed of games on the other. Similar explicit language could have been used in ss 11 and 12 if the speed of play was intended to be covered by the phrase “opportunities for casino gambling”. We accept that this provides some support for Skycity’s interpretation.

(b) Section 10, which prohibits new licences for casinos, and s 172 which regulates operating hours. Skycity argued that the broad interpretation of the phrase “opportunities for casino gambling” would encompass both of these aspects, yet the fact that there were specific provisions dealing with them meant that ss 11 and 12 could not apply to them. In particular it was argued that operating hours fell outside the class or genus in s 12(2) and the specific regulation of operating hours in s 172 led to the presumption that the general wording of s 12(2) did not cover it. We agree with that submission, but we do not see the point as materially assisting Skycity’s case. All that is established is that the opening of new casinos and the increasing of operating hours could, theoretically, come within the phrase “increase in opportunities for casino gambling”, but that the specific regulation of those aspects makes it unnecessary to bring them within the phrase. That does not lead to a conclusion that other activities coming within the general phrase must therefore have been intended to be excluded as well, even though they are not specifically dealt with elsewhere in the 2003 Act.

(c) Sections 94 to 97, which impose limitations on the number of gaming machines that may be operated in venues such as pubs and clubs. These provisions expressly deal only with numbers of gaming machines and with rates of play or wagering options, ie they take the approach which Skycity says applies also to casinos under ss 11 and 12. We accept Skycity’s submission that, if the Commission’s interpretation is correct, this indicates that Parliament has taken a different approach to pubs and clubs from that which it has taken to casinos. On the other hand, if the restrictions on casino operations in ss 11 and 12 were intended to be limited to numerical increases, it is puzzling that the drafter did not adopt that strictly numbers-based approach in s 94.

(d) Section 101(4)(d), which uses the phrase “additional opportunities for gambling” in a context which deals with additional gaming venues and additional gaming machines. Skycity argued that this use of a very similar phrase in a context where a simple numerical approach is being taken supports its interpretation. We do not accept that that is the case. The context of s 104 is clearly limited to numbers of gaming venues and numbers of machines, and the phrase “additional opportunities for gambling” directs the regulatory bodies to an overall determination of numbers of venues, and of the gaming machines in each venue in a particular area. The position in relation to casinos is far more complex because of the presence of gambling activities other than gaming machines, and the netting of one activity against the other. It is equally arguable that, if the strictly numerical approach for which Skycity contends was intended by Parliament, language indicating the focus on numbers would have been used in ss 11 and 12, as it is in s 101.

(e) Other provisions which expressly regulate the operation of gaming machines such as ss 84 and 180 of the 2003 Act and Regs 7 and 8 of the Gambling (Harm Prevention and Minimisation) Regulations 2004 indicate a focus by the legislature on specific measures dealing with the rate of play on gaming machines. Skycity argued this meant that rates of play must be excluded from ss 11 and 12. That is one possibility, but it is clearly not the only one.

[28] We accept that these contextual arguments provide some support for Skycity’s position, but they are far from decisive and, in a number of cases, ambiguous.

(iii) Interpretative presumptions

[29] Skycity said that two presumptions applied in this case: the presumption against taking property without compensation and the presumption that penal statutes are to be construed strictly.

Presumption against taking property without compensation

[30] Skycity argued that the incidental rights enjoyed by a casino licence holder to operate its business can be characterised as property rights, and the effect of s 11 is to restrict those rights. Section 13 rules out payment of compensation in respect of ss 10 – 12. Skycity therefore argued that we should apply the presumption that Parliament does not intend to take away the property of a subject without a legal right to compensation for the loss unless clear words to the contrary are used: Central Control Board (Liquor Traffic) v Cannon Brewery Company Ltd [1919] AC 744 (HL); Cooper v Attorney-General [1996] 3 NZLR 480 (HC).
[31] Cooper J rejected this argument at [63]. He noted that, while casino operators are prevented from increasing opportunities for casino gambling in their premises, they have the benefit of s 10, which ensures that no new casino venue licences can be granted. Mr Galbraith argued that Skycity had invested substantial capital in obtaining a casino licence and establishing its business, against the regulatory environment of the Casino Control Act 1990 (the 1990 Act), which included the right to apply to vary a casino licence to increase the number of games and player positions. That right has now been taken away, with no provision for compensation.
[32] We do not see how this argument assists Skycity. We agree with Cooper J that the 2003 Act provides some benefits to Skycity, as well as detriments: in effect it now has a monopoly position in the areas in which it operates. In any event, in an area of business which has always been very closely regulated, there cannot be an expectation that the regulatory regime will not change in the future. In the present case, there has been a change of regulatory regime which, on any interpretation, is intended to preserve the level of gambling opportunities at the level that was permitted before the 2003 Act came into effect. All that has been “taken” is the possibility of future expansion. On either interpretation that possibility is foreclosed. If such foreclosure is a “taking”, Parliament has clearly intended it. Equally, Parliament has clearly stated its intention that no right of compensation should arise. In those circumstances we do not see the presumption as assisting the interpretative exercise in this case.

Presumption that penal statutes are construed strictly

[33] Skycity argued that s 11 contains an absolute prohibition on increasing opportunities for casino gambling, and the consequence of a breach was that Skycity would commit an offence under s 19, for which there are significant penalties. Thus, it argued, s 11 is a penal provision, and should be strictly construed.
[34] Cooper J rejected this argument: he said (at [64]) that this was not a case of ambiguity, and that the best approach in interpretation was to interpret the provision in light of the purposes of the Act: s 5(1) of the Interpretation Act 1999 and R v Karpavicius [2004] 1 NZLR 156 (PC).
[35] It is not at all clear that s 11 is a penal provision. Rather, it appears more as a statement of principle, amplified by s 12(1), which specifically says that decisions on what constitutes an increase in the opportunities for casino gambling are a function and responsibility of the Commission. Mr Galbraith argued that s 11 was a criminal provision, because any failure to comply with it would trigger the prohibition on illegal gambling in s 9(1), which says gambling is prohibited and illegal unless authorised under the 2003 Act and compliant with any relevant licence, game rules and minimum standards. The sanction for a breach of s 9(1) is contained in s 19, which makes it an offence to conduct illegal gambling.
[36] The scheme of the 2003 Act is such that issues requiring determination of what amounts to an increase in opportunities for casino gambling will normally be decided by the Commission in the context of an application for a variation in the conditions of a casino licence. If the Commission permits the variation, on the basis that it considers that the proposed changes will not infringe s 139(2)(d) (ie will not permit an increase in the opportunities for casino gambling), then the operation of the casino will be in accordance with its licence and therefore not in breach of s 9(1). In those circumstances, it seems inappropriate to describe s 11 itself as a criminal sanction.
[37] We need not decide the point finally, however, because it is clear to us that the drafting approach outlined by the Privy Council in R v Karpavicius would apply in the present case anyway. As their Lordships noted in R v Karpavicius at [15], the modern approach to statutory drafting is a purposive approach, one which is expressly mandated by s 5(1) of the Interpretation Act. We therefore reject Skycity’s argument based on the strict construction of penal statutes.

(c) Legislative history

[38] Skycity contends that the legislative history, as exhibited in both Cabinet papers and parliamentary materials, confirms that the intent of Parliament in enacting ss 11, 12 and 139(2)(d) was to do no more than limit the expansion of casinos, as measured by the capacity of the casino measured in the number of persons who could be gambling in it at any given time. In the High Court, Cooper J accepted that the legislative history up to the point at which the Bill was reported back to the House supported the contention that only numerical expansion was intended to be covered. But he said that the words actually enacted were those contained in a Supplementary Order Paper (SOP), which differed considerably from those contained in the Bill as reported back from the select committee. This, he considered, indicated that Parliament may not have accepted the select committee’s position.

Should we consider Cabinet papers?

[39] Ms Coumbe, who argued this aspect of the case for Skycity, asked us to consider not only parliamentary material, but also Cabinet papers. Mr Browne objected to the reference to Cabinet materials, on the basis that they did not constitute parliamentary materials of the kind to which courts have been prepared to refer in cases of statutory interpretation in the past. We were referred to two High Court decisions in which the Court has been asked to refer to Cabinet papers: R v Rada Corporation (No 2) [1990] 3 NZLR 453 at 477 - 478, where Barker J declined to admit a Cabinet paper for this purpose, but without giving reasons, and Elliott v Chief Executive of the Department of Work & Income New Zealand HC WN AP 143/02 18 December 2002. In the latter case, Wild J referred to a Cabinet paper as an aid to interpretation, but again no reasons were given.
[40] It is true that, as Mr Browne pointed out, Cabinet materials are not “parliamentary”, in that they are not placed before Parliament and are not part of the parliamentary processes like, for example, select committee reports or explanatory notes are. Nevertheless they are now often in the public domain and obtainable under the Official Information Act. That was so in this case. However, we doubt that reference to Cabinet papers and reports to Cabinet will ever be of much assistance to Courts involved in interpreting specific statutory provisions. They may provide some indication of the overall purpose of the legislation, but that will normally be apparent from the text of the Bill itself or, if not, from the explanatory memorandum or other parliamentary material. In the present case the two possible interpretations of ss 11 and 12 are both broadly consistent with the overall purpose of preventing any expansion of gambling activities, which is one of the general purposes of the legislation identified in the Cabinet material.
[41] Another factor is that, while Cabinet papers may reveal the intention of the executive at the time of the relevant Cabinet meeting, that may differ from Parliament’s intention when a Bill is passed. That is particularly so in an MMP environment, where the government of the day may well need to seek support from minor parties, and make trade-offs to obtain that support.
[42] For these reasons, we do not consider that the extensive references to Cabinet materials by counsel for the appellants was advisable in this case. We would not encourage counsel in future cases to do so. Having said that, we heard extensive submissions on the parliamentary history, which was supported by references to a combination of parliamentary and other material, and it is not easy to do justice to those submissions without considering all of the material to which we were referred. So we have decided to consider the Cabinet materials to which counsel referred us in this case. That should not be taken as an invitation to counsel in future cases to refer the Court to non-parliamentary materials.

The legislative process in this case

[43] The Bill which became the 2003 Act was initially called the Responsible Gambling Bill. It reflected a change in policy from the facilitative nature of the 1990 Act to a policy of prohibiting the licensing of new casinos and preventing the expansion of existing casinos. This change had been signalled by the moratorium placed on the issuing of new licences for casinos in the Casino Control (Moratorium) Amendment Act 1997. That moratorium was extended by the Casino Control (Moratorium Extension) Amendment Act 2000.
[44] Ms Coumbe pointed to the Cabinet Policy Committee papers preceding the introduction of the Responsible Gambling Bill, in which reference is made to the decision of the Casino Control Authority to allow Skycity to increase the size of the Auckland casino by adding a number of extra gaming machines and gaming tables. She said the policy objective was to prevent this kind of expansion of casinos in the future. She noted that the minutes of the decision of Cabinet of 30 July 2001 recorded Cabinet’s agreement in principle to the proposition that casinos would be prohibited from varying their gaming operations, but with an express exception for “the introduction of new technology in ways that could not be construed as expansion”.
[45] The theme of “expansion” is reflected in the explanatory note to the Responsible Gambling Bill. The Bill as introduced contained no outright prohibition on the expansion of casinos, but included provisions which were aimed at preventing licences from being amended in a way which would be likely to result in “an increase in casino gambling at the [casino]”: cls 116(4) and 118(4) of the Responsible Gambling Bill.
[46] Both Skycity and the Commission’s predecessor, the Casino Control Authority, made submissions to the Select Committee, pointing out that an increase in casino gambling could occur without any expansion to the casino, and might simply reflect the greater popularity or attractiveness of the particular casino. Skycity submitted that the policy decisions taken by government prior to the introduction of the Bill appeared to indicate only a desire to prohibit an increase in the number of gaming positions, and that if this was so the Bill needed to be amended. The Casino Control Authority’s submission was to similar effect, and these submissions derived support from the Department of Internal Affairs in its report to the Select Committee.
[47] When the Bill was reported back to the House by the Select Committee, the majority of the Select Committee recommended that the term “increase in casino gambling” be defined. The proposed definition was contained in cl 119(3) of the Bill as reported back, which provided:

(3) An increase in casino gambling, as referred to in subsection (2)(d), includes, without limiting the ambit of that concept,—

(a) an increase in the number of gaming machines; or

(b) an increase in total player space at table games; or

(c) anything that the Gambling Commission considers will facilitate either of the outcomes in paragraph (a) or paragraph (b).

[48] Mr Browne accepted that, if the clause as proposed by the Select Committee had been enacted, there would have been no doubt that the limited interpretation contended for by Skycity would have been correct. However, cl 119(3) was never enacted.
[49] The reason for this was that the government introduced an SOP at the Committee of the Whole House stage on 2 September 2003. This introduced, at cls 8A – 8D the provisions which became ss 10 – 13 of the 2003 Act. For the first time the prohibition on more casinos and increases in casino gambling was expressed directly, rather than as a prohibition on changes to casino licences, and for the first time the term “increase in the opportunities for casino gambling” was defined, albeit in inclusive rather than definitive terms. The rationale for these amendments is not disclosed in the SOP, but Ms Coumbe referred us to the departmental recommendation to the Cabinet Policy Committee considering the proposed SOP, in which reference was made to the decision of Cabinet that there “will be no new casinos and no expansion of existing casinos” and referred to the proposed new wording in the SOP as being intended to allow flexibility to casinos.
[50] Similarly, the paper presented to the Cabinet Policy Committee considering the SOP by the Minister of Internal Affairs recorded the fact that the Bill prohibited existing casinos “from expanding their gambling activities” and described the amendments contained in cls 8A to 8D in these terms:

Cabinet has decided that there will be no new casinos and no expansion of existing casinos... The SOP ensures that the Bill expresses these decisions clearly and more directly than the Bill as reported back. The new clauses allow Sky City Casino to complete an expansion already approved by the Casino Control Authority. They also allow casinos some flexibility to reorganise their gambling activities without actually expanding them.

[51] Ms Coumbe asked us to accept the proposition that the SOP was intended merely to express more clearly the intentions that had been reflected in the Select Committee’s Report, and in cl 119(3) of the Bill as reported back to the House. Thus, she suggested, we should read down the wording of ss 11 and 12 to reflect that intention.
[52] The difficulty we have with Ms Coumbe’s submission is that that is, in effect, a request that we read the Act as if it were enacted in the form selected by the Select Committee, when that is not in fact what happened. It also requires us to accept the explanation in the Cabinet committee paper as determinative. This triggers the concern expressed by Lord Steyn in his article “Pepper v Hart; A Re-Examination” (2001) 21 OJLS 59 at 68 in these terms:

To give the executive, which promotes a Bill, the right to put its own gloss on the Bill is a substantial inroad on constitutional principle, shifting legislative power from Parliament to he executive. Given that the ministerial explanation is ex hypothesi clear on the very point of construction, Pepper v Hart treats qualifying ministerial policy statements as canonical. It treats them as a source of law. It is in constitutional terms a retrograde step: it enables the executive to make law.

[53] Lord Steyn’s article was cited with approval by Lord Hoffmann, joined by Lord Hobhouse of Woodborough and Lord Millett, in Robinson v Secretary of State for Northern Ireland [2002] UKHL 32 at [40].
[54] As McGrath J said in Christchurch District Licensing Agency Inspector v Karara Holdings Ltd [2003] NZCA 96; [2003] NZAR 752 at [36] (CA):

When considering legislative history or passages in Hansard as a guide to the meaning of a statute... it is important to have a clear focus on the statutory language that is to be interpreted. The Working Party’s view, like that of the proposing Member of the House of Representatives in 1999, is no more than an indication of how they each contemplated a power of suspension itself might be applied by the Licensing Authority. They do not control the scope of the power of suspension which ultimately is to be ascertained from the statutory language in its context: R v Secretary of State for the Environment, Transport and the Regions, ex parte Spath Holme Ltd [2000] UKHL 61; [2001] 2 AC 349 (HL), 392 B to D, per Lord Bingham.

[55] In this case the words actually enacted by Parliament differ so significantly from those proposed by the Select Committee as reflecting its limited objectives, that we are unable to attribute the intentions expressed by the Select Committee to the legislation that was passed. If Parliament’s intention was that expressed by the Select Committee, we can only say that the drafter of the provisions which were finally enacted failed to express that intention.

(d) Unworkable or undesirable consequences

[56] Skycity argued that the Commission’s interpretation had led or would lead to a number of undesirable consequences, which could be avoided if Skycity’s narrow interpretation prevailed. These were: (i) the unworkable or absurd exercises which the Commission had to undertake in reaching its decisions; (ii) the potential overlap of functions of the Commission and the Secretary; and (iii) the Commission’s interpretation meant it was deciding its own jurisdiction. Skycity argued that, given the inherent ambiguity of the phrase “increase in opportunities for casino gambling”, the Court should prefer the interpretation which accords best with common sense, ie that which avoids these undesirable consequences. We will consider each of the consequences identified by Skycity before evaluating the “common sense” argument.

(i) Unworkable or absurd consequences

[57] In the High Court, Skycity relied on affidavits from expert witnesses to the effect that the broad approach taken by the Commission was unworkable, and would lead to absurd consequences. Although there was no pleading that the Commission’s interpretation would lead to unworkable consequences, Skycity argued that the evidence was relevant because of the rule of interpretation that Parliament is presumed not to have intended to legislate in a manner which is absurd: Frucor Beverages Ltd v Rio Beverages Ltd [2001] 2 NZLR 604 at [28] (CA).
[58] We do not intend to review the expert evidence adduced by Skycity, or that adduced in reply by the Commission in any detail. In summary, the argument for Skycity is that the Commission’s interpretation of “increase in the opportunities for casino gambling” results in a test that is unworkable in the following respects:

(a) It involves assessing the speed of play, which is difficult to quantify owing to the number of variables;

(b) Different speeds of play of different games cannot be compared realistically;

(c) The Commission’s emphasis on speed of play is misplaced, given that an increase in the number of player positions, which is deemed to be an increase in gambling opportunities under s 12(2)(c), will slow down a game;

(d) It is not realistic to compare different games on the basis of the relative number of wagering options that each of them offer. There are huge variations in the number of wagering options in each game.

[59] Cooper J accepted that it was difficult to quantify with any degree of precision the speed of play of a particular table game. He also accepted that it was not meaningful to compare different games on the basis of the relative number of wagering options offered within each game. He referred to a Commission decision, holding that the deployment of electronic card shufflers on poker tables did not increase rates of play in the light of the reduction of available player spaces. In that decision, the Commission had used a highly complex methodology for determining relevant rates of play. The Judge described the assessment of rates of play as an “inherently problematic factor (sometimes likely to be unreliable) for assessing whether there has been an increase in opportunities for casino gambling” (at [50]).
[60] However, the Judge said that, notwithstanding these difficulties, the meaning contended for by the Commission did not lead to an absurdity. The Judge reached this conclusion by reference to his view that s 12 was not strictly limited to “numerical” increases in gambling opportunities.
[61] The Commission’s response to Skycity’s arguments was to the effect that the Commission’s decisions in cases involving the interpretation of ss 11 and 12 have shown that these difficulties have been resolved in a sensible and pragmatic manner, and that the outcome has not been “absurdity” as Skycity suggests. The Commission pointed out that, in almost every case, the Commission had accepted that the net effect of the changes proposed by the applicant did not have the effect of increasing the opportunities for casino gambling. Mr Browne said the Commission should be permitted to continue to develop its thinking in the context of specific applications made to it, and to develop a body of case law, without a predetermination of the scope of its inquiry in proceedings such as the present case. He relied on the fact that the Commission’s decisions in individual cases are subject to a right of appeal to the High Court if the Commission should fall into error in its interpretation of the Act, or its application to particular circumstances.
[62] Mr Browne said that the Commission did not underestimate the difficulties in applying ss 11 and 12 to individual circumstances, but said that the legislation had entrusted this role to the Commission (as s 12(1) specifically states) and the Commission should be allowed to get on with the job. He said that Skycity’s submission improperly characterised what the Commission recognised were difficulties as absurdities, and argued that the Court should not presume that the outcome of a particular interpretation led to absurdity in circumstances where it simply imposed difficult issues of interpretation and judgement on the decision making body.
[63] Skycity accepted that the Commission’s decisions had, in most cases, led to an acceptable outcome from the point of view of the applicant. But it argued that this missed the point of its submission, namely that casinos were forced to make applications to the Commission in circumstances where, on Skycity’s interpretation, this would be unnecessary. It argued that, if its simple numerical approach were adopted, this would prevent what it described as the Commission’s “micro-management” of Skycity’s operations.
[64] We see this aspect of the case in the same way as Cooper J did. We acknowledge that the broader interpretation requires the Commission to undertake difficult and uncertain assessments, and requires an intense level of supervision of casino operations by the Commission. The Commission’s assessment of proposals involves undertaking broad judgments based on its assessment of the impact of particular changes based on sometimes incomplete information, some of it based on averages rather than actual rates of play. It is an inherently uncertain exercise, but one which is able to be arrived at if a broad brush approach is adopted, as the Commission has done in practice.
[65] Ultimately, we accept the submission of Mr Browne that the legislature has entrusted a role to the Commission which is difficult and involves a number of uncertainties, but that this falls short of the “absurdity” suggested by Skycity. In summary, we agree with Cooper J that this is not a case of the kind described in Frucor, where a purposive interpretation has to be adopted in preference to the plain meaning of the words used by the legislature in order to ensure that an absurd consequence is avoided.
[66] Mr Browne suggested that Skycity’s interpretation would, itself, lead to absurd circumstances. He said it would allow unrestricted “virtual” expansion of casinos. Technology changes that doubled the number of wagers that players could make in any given period would be uncontrolled. He argued that these consequences supported the Commission’s interpretation. We do not see these matters as assisting us, apart from acknowledging that both suggested interpretations have the potential to create difficulties.

(ii) Overlap of functions of Commission and Secretary

[67] Skycity argued that the Commission’s approach means that there is now an overlap between its functions and those of the Secretary under the 2003 Act.
[68] Skycity argued that the Commission’s interpretation involved the Commission assuming jurisdiction to determine whether changes in game rules proposed by the Secretary under s 367 of the 2003 Act would increase opportunities for casino gambling. Cooper J said that he considered the better view was that the Commission did not have such jurisdiction, and that a change in game rules could not, of itself, constitute an increase in the opportunities for casino gambling. However, he refrained from deciding the point (at [78]). Skycity argued that this Court should make a finding that the Commission did not have such jurisdiction because:

(a) The wording and content of the game rules is a matter exclusively within the Secretary’s jurisdiction under s 367, which is not subject to ss 11 and 12;

(b) What is prohibited under ss 11 and 12 is a net increase in gambling opportunities in a particular casino, whereas game rules have effect as delegated legislation and apply uniformly to all casinos, presumably with different effects on individual casinos depending on their particular gaming mixes;

(c) It is only when games are played in accordance with new or amended rules in an individual casino that any question of an increase in gambling opportunities could arise. Only then would the Commission have any power to make a determination under s 12, presumably in the context of an application by the licence holder for approval of the game mix.

[69] Skycity’s concern arose from the Commission’s decision GC 17/05 4 July 2005. In fact that was a decision on a reference to the Commission by the Secretary, in which the Secretary sought the Commission’s views as to whether the amendments he was being asked to consider would constitute an increase in the opportunities for casino gambling in terms of s 12. The Commission treated the reference from the Secretary as a reference under s 12(1), and decided that it had jurisdiction to determine this under ss 12(1) and 224(1)(q) of the 2003 Act. The latter provision says that the Commission’s functions include those given to it by the 2003 Act or another enactment. Skycity made submissions to the Commission to the effect that a change to game rules cannot ever, as a matter of law, increase the opportunities for casino gambling. The Commission rejected the legal submission, but a majority found on the merits that the proposed rule changes could not be said to result in an increase in opportunities for casino gambling, taking into account the effect of the likely reductions in games speed if the increased wagering options resulting from the rule change were exercised. Two Commissioners took the view that there was an increase, although it was not substantial.
[70] We have some difficulties with this aspect of the case: it is not necessary to determine this issue in order to resolve the issues arising from the application for declaration made by Skycity. The effect of what Skycity is requesting appears to be the issuing of another, unspecified, declaration limiting the Commission’s powers in relation to rule changes. In our view, the High Court Judge was right to refrain from deciding the point. Skycity is, in effect, attempting to mount an appeal against one aspect of the decision which was otherwise favourable to its interests. We do not think the Court should permit that to occur, particularly when the Secretary is not a party to the present proceedings.
[71] We do not see Skycity’s argument about the relationship between ss 11 and 12 on the one hand and s 367 on the other as assisting its case for a limited interpretation of s 12. Even on the limited interpretation suggested by Skycity, the Secretary could still take the view that a change in the rules of the game could lead to an increase in opportunities for casino gambling, for example where the rule increased the minimum number of players required for a particular game and that game continued to be played in a casino under the new rules without any corresponding reduction in any other aspect of the casino’s operations. In our view it is unwise for the Court to express a view about a particular application of a section in the Act in the absence of a factual context, particularly when actual decisions can be subject to appeal to the High Court if a casino is dissatisfied with the outcome.

(iii) Commission deciding its own jurisdiction

[72] Skycity argued that Cooper J had failed to articulate any “meaningful limits on the Commission’s power to determine what might be an increase in opportunities for casino gambling”, because he had not prescribed any limits on the area of inquiry by the Commission. Skycity argued that this was tantamount to suggesting that it was for the Commission to decide the meaning of “opportunities for casino gambling” as it goes along, subject only to the constraint of extreme Wednesbury unreasonableness. Skycity argued that this meant the Commission was left to determine the limits of its own jurisdiction. It was argued that this was inconsistent with the decision of this Court in Bulk Gas Users Group v Attorney-General [1983] NZLR 129, in which Cooke J said that the courts would be slow to conclude that the power to decide conclusively a question of statutory interpretation had been conferred on a statutory authority.
[73] This submission involves a misunderstanding of what was decided in Bulk Gas. The Court’s observations about the powers of the Secretary for Energy in that case were made in the context of legislation containing a privative clause. The Court simply said that if the Secretary made an error by applying the wrong legal test to the facts before him or her, the privative clause would not stop the Court from intervening.
[74] In the present case, the job of the Commission is to determine whether any particular factual situation placed before it will lead to an increase in opportunities for casino gambling. That involves the Commission applying the statutory tests to the facts. If the Commission were to apply the test wrongly, either because it misunderstood the test or because it misapplied it to the facts, that would be a matter for correction by the High Court on appeal. Ultimately the Commission’s activities are subject to High Court supervision because of the existence of the appeal right. In those circumstances, there is no question of the Commission determining its own jurisdiction: ultimately, the Court has control over the Commission’s determinations which affect the extent of its jurisdiction.

Overall assessment

[75] The striking feature of this case is the puzzling language which has been used in s 12. If Parliament’s intention was simply to prevent expansion of casinos, as measured by the maximum number of persons permitted to be gambling in the casino at any given time, it is hard to see why Parliament did not say so in words to that effect. On the other hand, if it was intended that a much broader inquiry was required, taking into account matters such as the number of wagering options and the speed at which a game was played, it is puzzling that the examples used in s 12(2) did not include an example of that kind. The net result is something of a conundrum, and we have considerable sympathy for Skycity’s position. It appears to have convinced the Select Committee of the need to be explicit in the expression of Parliament’s intention to prevent expansion of casinos, only to have that explicit language altered by a Supplementary Order Paper, the purpose of which is elusive.
[76] Having carefully evaluated all of the arguments put to us by Skycity, we are unable to conclude that Parliament’s intention in outlawing any increase in the opportunities for casino gambling can be read down as meaning simply a freezing of the maximum number of persons permitted to gamble in a casino at any one time, (and the maximum number of gaming tables). The term “opportunities” is vague, but it strains the language of the provision too far to say that a change such as the speeding up of a game so that many more hands per hour occur than previously did is not, in conceptual terms, a increase in the opportunities for gambling. We do not underestimate the difficulties which the Commission will face in assessing such matters, when it has no statistical base from which to make the assessment, nor do we underestimate the degree to which this involves what Skycity called “micro-management” by the Commission. On the other hand, if the legislature had intended only to prevent any increase in the maximum number of persons gambling in a casino at any one time, it is hard to see what role could have been envisaged for the Commission, other than a purely arithmetic one: s 12(1) would be redundant, because no “decisions” by the Commission would be required.
[77] Ultimately, we are unable to accept Skycity’s contention that matters other than the maximum number of persons permitted to gamble at any one time in a casino (and the maximum number of table games) should be excluded from consideration. We would not go as far as Cooper J in saying that anything could be relevant to an inquiry as to whether there has been an increase in the opportunities for casino gambling.
[78] As we noted at [7] above, there are real difficulties in dealing with issues of statutory interpretation in a factual vacuum. That is a factor which militates against granting declaratory relief. That concern is accentuated in this case by the fact that the body which has primary responsibility for the assessment required under s 12 is the Commission. In effect the Court is being asked, in the context of an assessment made in the abstract, to limit the factors that the Commission is entitled to consider in individual cases. We prefer to leave it to the Commission to deal with individual cases on the basis that any errors in interpretation can be corrected on appeal to the High Court and, if necessary, on further appeal to this Court on a question of law. In the context of these proceedings, we do not think that it would be helpful or appropriate to make a definitive ruling as to the exact ambit of s 12.

Result

[79] We dismiss the appeal.

Costs

[80] We award costs of $6,000 plus usual disbursements to the Commission.

Solicitors:
Lowndes Jordan, Auckland for Appellants
Wilson Harle, Auckland for Respondent