Air Rescue Services Limited v Secretary for Internal Affairs HC Wellington CIV 2010-485-1919 [2011] NZHC 441 (3 May 2011)

Last Updated: 17 June 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV 2010-485-1919}

UNDER The Judicature Amendment Act 1972

IN THE MATTER OF an application under the Gambling Act

2003

BETWEEN AIR RESCUE SERVICES LIMITED Plaintiff

AND THE SECRETARY FOR INTERNAL AFFAIRS

Defendant

Hearing: 6 April 2011

Counsel: M A J Elliott and S T Cottrell for Plaintiff

K Muller and S Cohen-Ronen for Defendant

Judgment: 3 May 2011

_{JUDGMENT OF RONALD YOUNG J}

Introduction

[1] In September 2010 I refused the plaintiff’s application for an interim order to issue a class 4 venue licence under the Gambling Act 2003 to Air Rescue Services

_{Ltd for one day. I gave my reasons on 8 October 2010.}

AIR RESCUE SERVICES LIMITED V THE SECRETARY FOR INTERNAL AFFAIRS HC WN CIV 2010-

485-1919 3 May 2011

[2] At paragraph [3] I summarised the case in this way:

[3] The plaintiff’s case was that such an order was necessary to preserve its appeal rights from the defendant’s refusal on 23 September 2010 to grant its application for a class 4 venue licence under the Gambling Act 2003. On

30 March 2010 the venue licence for the premises was cancelled. Unless by

30 September 2010 (six months later) a new licence was granted then the potential licensee would lose the chance for a class 4 venue licence with

18 gaming machines at TCKL. In that event at best the venue licence at The

Crossing would be limited to nine machines. This will cause a substantial loss of income for the plaintiff who is the ultimate beneficiary of the profit

from the gaming machines.

[3] At the end of my judgment, when refusing the one day licence sought, I said this:

[60] Firstly, this judgment has been given on the assumption that the six month period referred to in s 92(1)(b) of the Act continues to run even where there is an application as here for a new licence. I heard no argument on that point in any depth. Given the result of this application I have advised counsel that I would be prepared to hear argument on that point and give a ruling. If time is suspended under s 92(1)(b) when an appeal from a decision of the defendant or an application for a new licence is made then the plaintiff is still within time to protect its interest in an 18 gaming machine venue licence by an appeal to the Commission.

[4] This judgment is concerned with the interpretation of s 92(1)(b) of the Gambling Act 2003 and whether the plaintiff is still within time to have its appeal heard and determined by the Gambling Commission while retaining its entitlement to 18 gaming machines. It should be read together with my judgment of

8 October 2010.

[5] Two evidential matters arose which require mention. Firstly, the defendant filed an affidavit from Mr Francis Markland, a policy analyst with the Department of Internal Affairs. He was intimately involved in the development of the 2003 Act. No objection was made to his exposition of general background material or to his identification of publicly available information regarding the 2003 Gambling Act.

[6] However, there are parts of Mr Markland’s affidavit which the plaintiff objected to and which the defendant accepted should not be read by me. They primarily related to Mr Markland’s expressions of opinion as to Parliamentary intent and purpose. I agree with the defendant’s concession. For the purpose of this

judgment, therefore, I will not read those portions of Mr Markland’s affidavit set out

in para 32 of the plaintiff’s submissions before me.

[7] Secondly, together with its reply submissions the plaintiff filed an affidavit from a solicitor relating to other applications for venue licences and the time limitation within s 92. No authority for the late filing of the affidavit had been given. In the end the plaintiff did not ask that this affidavit be read. The parties accepted as a fact, and invited me to accept, that applications for new venue licences to which s 92(1)(b) applies, and any subsequent appeals, may well not be able to be dealt with within six months from application.

The Issues

[8] Section 92(1)(a) and (b) provide as follows:

92 Limit on number of gaming machines for which class 4 venue licence held on 17 October 2001

(1) This section applies to a class 4 venue for which—

(a) a class 4 venue licence was held on 17 October 2001; and

(b) there has not been a period of 6 months or more since 17

October 2001 when no class 4 venue licence was held.

[9] If sub (1)(a) and (b) apply then the holder of the licence can retain the ―right‖

to have up to 18 gaming machines at the venue.

[10] Here, the class 4 venue licence was cancelled on 30 March 2010. A new licence was applied for but on 23 September 2010 was refused by the Secretary of Internal Affairs. An appeal was then filed with the Gambling Commission. However, six months from the cancellation of the venue licence was 30 September. There was, therefore, no prospect of an appeal being heard and decided before the six month period had expired. The plaintiff ’s case is, however, that for the purpose of s 92(1)(b) time is suspended if an applicant, within the six month period, applies for (or appeals from a refusal to grant) a new licence. Until the application and appeal rights are exhausted the six month time ―limit‖ in s 92(1)(b) is, the plaintiff’s claim, suspended.

[11] The plaintiff’s case is that Parliament made a drafting mistake when enacting s 92(1)(b). They say it is clear that Parliament intended to protect existing entitlements until any application (and appeal) for a new venue licence was made and resolved. However, by mistake the protection of these existing rights (on the face of s 92) appear to exist only for six months irrespective of any application or appeal filed within the six month limit. A literal interpretation of the section would therefore require not only an application to be made but also resolved within this period if the existing rights are to be protected.

[12] The plaintiff says, therefore, that either I should interpret the word ―held‖ in s 92(1)(b) as including not only the time when a licence was in existence (the literal meaning of ―held‖) but also to include the time from the date of the application (or appeal) until resolution, even if at that time a licence was not literally ―held‖. In the alternative the plaintiff ’s case is that I should read into s 92(1)(b) the words ―at the date a licence is applied for‖ so that s 92(1)(b) reads:

At the date a licence is applied for there has not been a period of six months or more since 17 October 2001 when no class 4 venue licence was held.

[13] These additional words would in the plaintiff’s submission correct the

Parliamentary ―error‖ in the section.

[14] The defendant says there is no reason to extend the meaning of ―held‖ or to add words to s 92(1)(b). If the new licence is not granted within the six month period then subject to any Court orders arising from review proceedings, the applicants would lose what they view as their ―right‖ to 18 gaming machines. This, the defendant says, is the meaning of the plain words of the section. He submits there is no reason to extend meanings or add words to Parliament’s intention clearly expressed in the words of the provision. There is the backstop of judicial review to

―cure‖ any injustice that may arise.

[15] The issue for me to resolve, therefore, is one of statutory interpretation. If the defendant’s position is correct then at best a venue licence at The Crossing will be limited to nine machines. (This conclusion may be subject to any power and decision by the Commission to backdate any licence grant. I was not asked and do not express any view as to whether the Commission has the power to backdate such a licence – see [68]–[69].) If the plaintiff’s position is correct then any class 4 licence granted to the applicant on appeal would be with 18 gaming machines.

Relevant Law

[16] As I have identified ([11]) behind the plaintiff’s submission is the proposition that Parliament has made a mistake in drafting s 92(1)(b). To cure that mistake the plaintiff says either, as I have noted, ―held‖ should be given the extended meaning contended for or the additional words identified at [12] should be read into the section to cure this ―error‖.

[17] The Courts have been prepared to ―correct‖ obvious Parliamentary error where the words of a statute do not express what Parliament intended. In Inco Europe Limited v First Choice the House of Lords accepted that where there were

―obvious drafting errors‖ it could add, omit or substitute words.[1] The conditions

imposed on such an approach by the Court were expressed in this way:[2]

Before interpreting a statute in this way the Court must be abundantly sure of three matters (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the drafts when in Parliament failed to give effect to that purpose and the provision in question; (3) the substance of a provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation.

[18] Ordinarily the words proposed to be added to the provision must not be too extensive or too much at variance with the language used by the legislature.[3]

Ordinarily it is for Parliament to fix errors or deficiencies in statutes other than those which are obvious or minor. There is a presumption against Parliamentary drafting error.

[19] Ordinarily the Courts will not add words to a statute.[4] However, the Courts have been prepared, in limited circumstances, to stretch the meaning of the words used to accommodate clear Parliamentary intention.

[20] In Statute Law in New Zealand the authors identified seven possible circumstances in which words may be added by the Courts to a statute.[5]

[21] The plaintiff’s invitations fall most probably into the third category where the words need to be added to a provision to make the particular provision workable in a way consistent with the Act’s scheme and purpose.[6]

[22] The other possibility is the first ground identified by the authors. This is based on a sensible reading of the provision and the Act as a whole, where it is clear the express words imply the additional words which are proposed.

[23] Whatever approach is taken it is necessary to identify whether the words used in s 92(1)(b) failed to give effect to Parliament’s clear intention such that either a stretched definition of the word ―held‖ or the additional words identified should be added to ensure that s 92(1)(b) works as Parliament intended.

[24] My conclusion is that although there are unsatisfactory aspects to s 92(1)(b) this is not a clear case of a failure by Parliament to put into words what it intended. I am, therefore, not prepared to either stretch the meaning of ―held‖ or to add words to

_{the section to give the meaning contended for by the plaintiffs.}

Discussion

[25] A number of factors in the end have influenced me in my conclusion. I do not consider the current form of s 92(1)(b) fails to reflect Parliamentary purpose or that the section has been mistakenly drafted. Firstly, the literal words of s 92(1)(b). The literal meaning of s 92(1)(b) is clear. ―Held‖ in the context of the section must mean a current class 4 venue licence is in existence. Thus, the literal meaning of the section is that if an existing class 4 venue licence was operative as at

17 October 2001 and since that time there has not been a period of six months or more when there has not been a current class 4 venue licence with respect to the premises then the existing gaming machine entitlement applies. If, however, there has been a period of six months or more during which there has not been a current class 4 venue licence ―held‖ with respect to the premises, then the ―grandfather‖ entitlement given in s 92 is lost and the venue is limited to the maximum of nine gaming machines as provided for in s 94.

[26] The plaintiff’s response is that a purposive interpretation of s 92 does not support this literal interpretation. It says that a purposive interpretation gives a practical, sensible and workable result. This points toward ensuring that as long as an application for a new licence (or an appeal from a refusal) is lodged within the six month period identified in s 92(1)(b) then time effectively stands still until the application has been resolved. This is the only way to ensure that rights are not lost or arbitrarily infringed and the legislation is able to work as Parliament intended.

[27] This purposive interpretation is, the plaintiff says, supported by the extrinsic evidence, the context of the Act itself, other cases under s 92 and Parliamentary intention.

[28] Parliamentary purpose or intent can change the meaning of a section based on a literal interpretation where it is clear that Parliament’s intent demands something other than a literal reading of the words. The Courts function is to ensure as far as possible that Parliamentary words are read in a way which gives effect to Parliament’s intention. The Court, however, must be wary of any proposal for it to redraft what Parliament has said.

[29] In 2000/2001 a review of the 1977 Gaming and Lotteries Act was undertaken. The ultimate result was the 2003 Gambling Act. The review recognised concerns regarding; a significant increase in the numbers of gaming machines; problem gambling; and lack of local input into decisions about gambling venues. While the background material of the review and Parliamentary discussion of the Gambling Bill give useful background there is no specific material nor any particular discussion relating to s 92 which points to a failure to reflect Parliamentary intent in the plain words of the section.

[30] The 2003 Act covers new, old and transition licences. New venue licences under the 2003 Act have a nine machine limit halving the previous maximum. Local authorities were given a veto right on new premises for the first time.

[31] The legislation had to address how existing licence holders were to be dealt with and provide for transition to the new scheme. Broadly, existing venues retained the 18 gaming machine maximum entitlement. There was recognition by Parliament that existing site owners and operators had likely invested in sites and machines based on existing statutory provisions and a broad acceptance that these interests should be considered. Thus, 17 October 2001 became the date for identifying existing entitlements (the date identified in s 92). As to new venues s 94 provided that a class 4 venue could not operate more than nine gaming machines unless s 92 applied.

[32] Section 92 is concerned with existing licences as at October 2001. As the defendant observed it provides a form of grandfathering of existing entitlements for

―old‖ venues. Subsection (3) authorises a maximum of 18 gaming machines for a class 4 venue where the licence was held as at 17 October 2001. Further, not only must the licence have been held as at that date but sub (1)(b) provides there must not have been a period of more than six months since that date where a venue licence with respect to the premises has not been ―held‖.

[33] As the defendant identified a class 4 licence can be ―lost‖ and therefore on

the literal interpretation not ―held‖ in a number of ways, including: (a) Surrender (s 79(1)(b));

(b) ―Forced‖ surrender (s 71(1)(g) and 71(1)(a));

(c) The operator’s licence with respect to the venue ends in some way and

so must the venue licence (s 70(5));

(d) The licensing period expires and a renewal is not sought before licence expiry (s 72);

(e) Licence cancellation (as here) (s 75).

[34] As to (d) the significant point is that if renewal of the licence is sought before the expiry date the Act permits the licence to continue until a decision on the renewal is made. This rewards timely application. An application for renewal cannot be made after the expiry of the licence. A new licence must then be applied for. The existing entitlements to gaming machine numbers would then have been lost.

[35] The transition period is covered by s 93 for applications granted after

17 October 2001 but before 19 September 2003 when the Act came into force. These venues were limited to nine machines from the assent date of the statute.

[36] Finally, s 3 of the new Act provided:

3 Purpose

The purpose of this Act is to—

(a) control the growth of gambling; and

(b) prevent and minimise the harm caused by gambling, including problem gambling; and

(c) authorise some gambling and prohibit the rest; and

(d) facilitate responsible gambling; and

(e) ensure the integrity and fairness of games; and

(f) limit opportunities for crime or dishonesty associated with gambling;

and

(g) ensure that money from gambling benefits the community; and

(h) facilitate community involvement in decisions about the provision of gambling.

[37] The background to the legislation establishes that Parliament was concerned to protect existing licence holders. Thus, if a class 4 venue licence was held as at

17 October 2001 then generally up to a maximum of 18 gaming machines were protected and could be used at that venue in the future. This is the basis of the grandfathering approach in the Act.

[38] However, the interests of existing licence holders as at 17 October 2001 were protected even further. Section 92(1)(b) allows even those venue licensees who had, since October 2001, lost their licence, to retain the existing 18 machine maximum entitlement as long as the loss of licence was not for more than six months (of one continuous period).

[39] Thus, s 92(1)(b) is an extension of the basic protection of existing license holders under the Act. Even if a licence is lost, as long as it can be applied for and obtained within six months then (on the literal meaning of s 92(1)) the grandfathering rights will not be lost. Given the gaming machine entitlements of those who have continuously held a licence is protected there is, in my view, nothing in the history or background to the Act which compellingly suggests that those who are in the s 92(1)(b) situation (having lost their licence) should also have the same absolute protection as those who have continuously held the licence.

[40] I consider, therefore, the grandfathering of existing rights and the protection of existing licence holders does not require s 92(1)(b) to be read as the plaintiff suggests. The background of the Act relating to the protection of existing licence holders is more than adequately met by a literal interpretation of s 92(1)(b).

[41] Nor do I consider there is anything in the purpose, intent or structure of the Act which points toward the need for the proposed extended meaning of ―held‖ or the additional words proposed by the plaintiff.

[42] As to the extended meaning of ―held‖ the meaning suggested by the plaintiff is rather more than just an extension. ―Held‖ must, in s 92(1)(b), incorporate the existence of a current licence. The plaintiff’s case is that ―held‖ should also cover the situation where a licence is not in existence but simply applied for. Thus, the licence is not ―held‖ at all but simply applied for. This, as I have said, is rather more than stretching the definition of ―held‖. This case illustrates the awkwardness of such an approach. Here, the licence was cancelled. If the plaintiff’s interpretation is correct then as soon as the plaintiff appeals the cancellation then from that date the licence is considered ―held‖, although no decision has been made to grant the licence.

[43] Further, the wording of s 90(2) suggests what was intended by s 92(1)(b). Section 90 requires the Secretary to keep a register of venues which held a relevant licence on 17 October 2001. Then sub (2), for the purpose of assessing the situation described in s 92(1)(b), provides as follows:

90 Register of class 4 venue licences must be maintained

...

(2) The Secretary must make an entry in the register if, at any time after

17 October 2001, there is a period of 6 months or more during which there is no class 4 venue licence for a class 4 venue to which

subsection (1) applies.

[44] Thus, the record required to be kept in s 90(2) is of any period when there is no class 4 licence at such a venue. If, as the plaintiff claims, what was intended by s 92(1)(b) was that time for the six month calculation would not run if a venue licence had simply been applied for but not held, then the information required to be obtained under s 90(2) could easily have said so. If the plaintiff’s suggested meaning of s 92(1)(b) is correct then the record keeping required in s 90(2) will be inadequate whenever an application for a new venue licence is made or a refusal appealed within the six month period.

[45] In my view s 90(2) supports a literal reading of s 92(1)(b).

[46] As to parliamentary purpose and intention the plaintiff points to a range of provisions which protect existing licensees from cancellation while awaiting consideration of an application or an appeal. It submits the purpose of these statutory provisions seen together, illustrate that Parliament’s failure to explicitly protect existing licensees in s 92 was a Parliamentary oversight which this Court should remedy. The plaintiff says that there is no reason to distinguish between s 92(1) and these other statutory provisions.

[47] Sections 56, 62, 72 and 78. These sections, therefore, show, the plaintiff says, that Parliament was concerned to prevent rights being lost as a result of delay.

[48] Section 72 allows a corporate society to apply for a renewal of its venue licence. As long as the application to renew is made before the expiry of the licence s 72(6) provides that the licence continues in force after its expiry date until the application is considered. Section 56 is a similar provision regarding the renewal of a class 4 operator’s licence.

[49] Sections 62 and 78 provide that where an appeal is brought in relation to an amendment or revocation of a condition of a licence the licence remains in force pending the outcome of the appeal.

[50] The plaintiff says that the same policy considerations underpin s 92 but as a result of Parliamentary error they neglected to protect the interests of similar applicants or appellants.

[51] As to Parliamentary purpose and context what must be kept in mind is that what is being protected here is the grandfathering of an existing entitlement. This is not a case of complete loss of entitlement. There is, therefore, a logical reason for a different approach to s 92 from the other statutory provisions relied upon by the plaintiff as analogous. None of the analogous provisions relate to any form of grandfathering of existing rights. They are concerned with the continuation of existing licences in some form or another. They are each designed to ensure that an

existing licence continues even beyond its expiry date as long as an application for extension or amendment etc has been made within the time limit provided.

[52] It is worthy of note that if the application for renewal is not made before the expiry of the licence then no consideration is given and the applicant will be required to make application for a new licence, the old licence having expired.

[53] In s 92 there is a reasonable expectation, given the right being protected, that applicants will urgently apply to protect the six month time limit and existing rights. Given Parliament’s desire to limit the growth of gambling machines it can reasonably be said that Parliament decided to take a firm line with existing licence holders. As I have observed the Act essentially tells them that if they act promptly to ensure a licence is held then their existing rights are likely to be protected. If they do not act promptly, then they may well lose those existing rights.

[54] Further, this is not a situation where applicants are losing all rights to gaming venue licences. The consequence is not the loss of a licence but the loss of a licence with exceptional entitlements to 18 rather than nine gaming machines. This can be contrasted with the situation in ss 56, 62, 72 and 78.

[55] Thus, Parliament has protected existing owners and sites, given financial investments had been made on the basis of the existing law. However, to protect those rights existing owners have to act promptly.

[56] It is clear from the Act that Parliament was well aware that it had the power to suspend time while applications and appeals were being considered as identified in ss 56, 62, 72 and 78. These sections expressly contain such a power.

[57] There is no reason to think that the absence of any such provision in s 92 is anything other than deliberate. After all Parliament was clearly aware of its power to do so.

[58] The plaintiff’s submission focused on the fact that even if they acted expeditiously they could still lose their existing rights if the Department or the Commission failed to act on their application or appeal promptly thereby dragging the application process out beyond the six month period.

[59] In those circumstances the Court’s may act to protect the applicant’s situation. See First Sovereign v Secretary of Internal Affairs[7]. There is, however, some strength to the plaintiff’s submission that even if an applicant does everything in its power to comply with the six month time limit it could be frustrated by bureaucratic inaction.

[60] There is something unsatisfactory about the proposition that in those circumstances the applicant will be faced with seeking a discretionary remedy from the Courts as in First Sovereign. However, in a practical sense in the last six years apparently only three such review proceedings have been instituted with First Sovereign being the only successful such application. While the section is less than ideal in a practical sense there is no real problem manifest.

Section 92 and 98

[61] The 2003 Act provided for the first time what is effectively a local body veto right with respect to gambling premises. Section 98(b) provides, however, that territorial authority consent to a licence is not required when an existing class 4 licence was held as at 17 October 2001. This coincides with a fundamental point that those with licences as at that date have their existing entitlements protected.

[62] Thus, s 98 was designed to protect the position of those who held licences prior to the cut off date of 17 October 2001. The retrospective protection from the requirement of local authority consent is also extended by s 98(c) to a situation where an application is made for a new venue licence within the previous six month

_period.

[63] And so, consent is not required as long as an application is made for a class 4 venue licence during that six month period. Thus, provided an application is made during that time the six month period will not expire and no territorial consent will therefore be required.

[64] The plaintiff ’s point is that s 98 gives protection to those who have applied for a licence within the six month period. They say s 98 illustrates the protection Parliament intended also to give to those in the s 92(1)(b) situation was for those who were applicants for a new venue licence, rather than only those who had obtained the licence within the six months.

[65] Thus, the plaintiff says, s 98(c) supports their submission that Parliament’s intention as to grandfathering effect was to protect those not only who had existing licences but those who had lost existing licence rights for no more than six months and had applied for a new licence. Section 98, therefore, the plaintiff says, supports their submission that the meaning of ―held‖ should be extended or the additional words suggested read into s 92(1)(b).

[66] I agree with the defendant that the two situations in s 98 and 92(1)(b) are distinguishable. Section 98 gives, in particular circumstances, a local body veto of venue licences. If consent is required of the local authority but refused then the venue cannot be licensed at all and there is a complete loss of licence. However, s 92(1)(b) is different. Failure to obtain a new licence within the six month period does not mean absolute loss of venue licence rights but simply a reduction in entitlements of the number of gaming machines from 18 to nine. There is, therefore, a reason to distinguish between the two situations.

Summary

[67] The plaintiff has not convinced me, therefore, that Parliament’s intention in s 92(1)(b) was to protect those who held and those who had applied for licences. On balance I consider that there is nothing in the history, purpose or context of the Act which convinces me to stretch the definition of ―held‖ or add the words identified (see [12]) to s 92(1)(b). While this section is a somewhat unusual provision that

conclusion is well short of what is required before it would be proper for me to stretch the definition of words or add to what Parliament has itself written.

Backdating

[68] The defendant asked that I also give my view as to whether the Commission was correct when in other appeals relating to s 92(1)(b) situations, it concluded that it could backdate a venue licence.[8] If the backdating order by the Commission were sufficiently lengthy then this could mean the six month period in s 92(1)(b) was not infringed and, therefore, the 18 gaming machine entitlement protected even though the new licence had not been both applied for and obtained within the six month period.

[69] However, the backdating issue does not arise in this case. It is not appropriate, therefore, for me to give my view on whether the Commission has

_{power to backdate such a licence in these circumstances.}

Ronald Young J

Solicitors:

M A J Elliott, Barrister, PO Box 825, Christchurch, email: [e-mail]

K Muller, Crown Law, PO Box 2858, Wellington, email: [e-mail]

---

[1] _{Inco Europe Limited v First Choice Distribution [2000] All ER 109 (HL).}

[2] At 115.

[3] _{See Western Bank Limited v Shindler [1976] 2 All ER 393 at 404.}
[4] _{See R v Joyce [1968] NZLR 1070 (CA).}
[5] J F Burrows and I R Carter, Statute Law in New Zealand, (4th ed, Lexis Nexis, Wellington, 2009).

[6] See Northern Milk Ltd v Northland Milk Vendors Association Inc [1988] 1 NZLR 537 (CA).

[7] First Sovereign Trust v Secretary of Internal Affairs HC Wellington CIV 2005-485-512, 22 March 2005.

[8] Gambling Commission decision GC26/10, 5 October 2010.