Pub
Charity has been accused of gaming the legal system, using a legal subterfuge
when trying to wriggle out of a one day suspension of its operations imposed as
a penalty way back in 2011 for breaching its gaming licence. The High Court has ordered Pub Charity serve
its one day penalty on 30 March 2015.
Pub Charity was set up in
1987. By 2008 it was operating over 1700
gaming machines at nearly 180 pubs and clubs.
The High Court was told Pub Charity had gross revenue of over $69
million for the year ending September 2008, making donations of more than $25
million to community groups.
Under its gaming licence, Pub
Charity is required to limit venue costs to 16 per cent of its profits. Gaming legislation seeks to maximise net
proceeds for distribution to community groups, minimising operating costs. Internal
Affairs took an interest when Pub Charity overshot this limit by $286,200 for
the twelve month period ending July 2009.
This overspend breached the limit by 0.46 per cent. Pub Charity said in its defence that it was
difficult to monitor expenditure centrally when it operated from so many
venues. Evidence before the court
indicated that Pub Charity’s business approach is to maximise venue costs up to
the allowed limit, not to reduce expenditure as much as possible.
Internal Affairs imposed a one
day suspension of Pub Charity gaming machines as penalty. Penalties of up to six months suspension can
be ordered. Pub Charity’s one day suspension was to have occurred in July
2011. No suspension took place while Pub
Charity fought a series of appeals through the Gambling Commission, the High
Court and the Court of Appeal. Internal
Affairs won the final round. The Court
of Appeal sent the case back to the Gambling Commission to set the penalty. Pub Charity promptly withdrew from the field
of battle, declaring it had withdrawn from the case. There were no longer any legal proceedings on
foot, and Pub Charity challenged Internal Affair’s ability to reset a
suspension date.
Back in the High Court, Pub
Charity was arguing it was off the hook: first because the earlier litigation
had collapsed and secondly because Internal Affairs had issued a written
warning which Pub Charity said served as a substitute for the ordered
suspension. In June 2013, Internal
Affairs had placed on record with Pub Charity a formal warning in respect of
three breaches: the overspend of $286,200; a grant of $220,000 for the running
of the Queenstown National Sevens Tournament as not being a grant for a charitable
purpose; and costs of some $52,500 for what was considered unnecessary building
alterations at four gambling venues.
Justice Mallon ruled that
Internal Affairs could set a new date for the suspension, regardless of Pub
Charity deciding to abandon its appeal.
She said the date for suspension would be Monday 30 March 2015, unless
Pub Charity and Internal Affairs agree to a different date. Evidence was given that Mondays are the
quietest days for gambling. Justice
Mallon suggested Internal Affairs remove from its files the Pub Charity warning
letter. This avoids any suggestion that
Pub Charity is receiving both a suspension and a warning in respect of the same
breach.
Pub
Charity v. Internal Affairs – High Court (17.02.15)
15.006