Australian Capital Territory Gaming and Liquor Authority v Dimitrie Andonaros Also Known As Jim Andonaros and Sophia Andonaros Also Known As Sophie Andonaros Trading As Molonglo Tavern and Daryl Stanley Arnold [1991] ACTSC 53 (31 July 1991)

SUPREME COURT OF THE ACT

AUSTRALIAN CAPITAL TERRITORY GAMING AND LIQUOR AUTHORITY v. DIMITRIE ANDONAROS
also known as JIM ANDONAROS and SOPHIA ANDONAROS also known as SOPHIE
ANDONAROS trading as MOLONGLO TAVERN and DARYL STANLEY ARNOLD
S.C. No. 282 of 1989
Gaming and Wagering - Contracts - Damages
(1991) 103 FLR 450

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Gaming and Wagering - Actions to enforce wagering contracts - what are wagering contracts - whether totalizator betting involves a wagering contract unenforceable under the Games Wagers and Betting-houses Act 1901 - "totalizator".

Gaming and Wagering - Racing, racecourses and totalizators - totalizators - whether totalizator betting involves a wagering contract.

Gaming and Wagering - Racing, racecourses and totalizators - totalizators - whether bet accepted at agency not approved by Minister is prohibited by Betting (Totalizator Agency) Act 1964.

Gaming and Wagering - Racing, racecourses and totalizators - totalizators - whether bet accepted on credit by agent was in breach of s.37(2) of Betting (Totalizator Agency) Act 1964 and agreement with betting authority.

Contracts - general contractual principles - illegal and void contracts - contracts illegal by statute - general principles - statutory construction - whether legislature intends that prohibited contract be unenforceable.

Contracts - particular parties - principal and agent - duties and liabilities of agent to principal - duty to account - whether requirement to account weekly for all investments or other moneys received and dividends or refunds paid or unpaid or other moneys paid gave rise to a liquidated debt or simply a duty to render a reckoning of debits, credits.

Damages - Measure and remoteness of damages in actions for breach of contract - remoteness - whether reasonable person in defendant's position would have realised that loss likely to result to plaintiff - no issue of principle.

Elderton and Anor v United Kingdom Totalisator Co. Ltd. (1946) Ch 57 at 63

Tote Investers Ltd. v Smoker (1968) 1 QB 509

Carlill v Carbolic Smoke Ball Co. (1892) 2 QB 484

Attorney-General v Luncheon and Sports Club Ltd. (1929) AC 400

Petranker v Brown and Others (1984) 2 NSWLR 177

Yango Pastoral Company Pty. Limited and Others v First Chicago Australia Limited and Others [1978] HCA 42; (1978) 139 CLR 410

Victorian Daylesford Syndicate Limited v Dott (1905) 2 Ch 624

Cornelius v Phillips (1918) AC 199

Koufos v Czarnikow Ltd. [1967] UKHL 4; (1969) 1 AC 350

Wenham and Another v Ella [1972] HCA 43; (1972) 127 CLR 454

Burns v M.A.N. Automotive (Aust) Proprietary Limited [1986] HCA 81; (1986) 161 CLR 653

Graham, Victorian Pleading Precedents (1982)

Britts, Pleading Precedents (4th ed., 1990)

Australian Encyclopaedia 5th ed.

Macquarie Dictionary 1982 ed.

HEARING

CANBERRA
31:7:1991

Counsel for the Plaintiff: Mr E.W. Gillard, QC and Mr B. Meagher

Solicitors for the Plaintiff: Snedden Hall and Gallop

Counsel for the First Defendants: Mr K. Crispen, QC and Ms P. Burton

Solicitors for the First Defendants: John Faulks and Co.

Counsel for the Second Defendant: Mr C. Kilduff

Solicitors for the Second Defendant: Morris Ahern and Vincent

ORDER

There be judgment for the plaintiff against the first defendants in the sum of $338,757.89.

There be judgment for the second defendant in the action.

The first defendants pay the plaintiff's costs of proceeding against them in the action.

The second defendant pay his own costs of the action.

The claim for contribution and indemnity brought by the first defendants against the second defendant be dismissed.

The first defendants and the second defendant pay their own costs of and incidental to the said claim for contribution and indemnity.

DECISION

This is an action for breach of contract. It arises out of an unfortunate series of events which occurred on the afternoon of Saturday, 8 April 1989 at Fyshwick and in Melbourne. What happened at Fyshwick was that the second defendant (Mr Arnold) made a number of bets (mostly in amounts of $4,500) at the totalizator sub-agency conducted by the first defendants (Mr and Mrs Andonaros) at the Molonglo Tavern. What happened in Melbourne was that the horses backed by Mr Arnold lost. By the end of the afternoon the total amount of the bets made was about $250,000. The plaintiff (the Authority) claims a sum approximate thereto after certain adjustments from Mr and Mrs Andonaros or Mr Arnold or both.
Facts

2. There is not much dispute over the essential facts, although on some matters the evidence is not very clear.

3. The Authority is a body corporate established by the Australian Capital Territory Gaming and Liquor Authority Act 1987 (the Authority Act). On 16 June 1988 the Authority appointed Mr and Mrs Andonaros as its agents to carry on a totalizator betting sub-agency at the Molonglo Tavern premises. (The term "sub-agency" is a misnomer but it is a term used by the Authority as a matter of convenience to distinguish betting establishments conducted on premises of which the agent is the owner, lessee or licensee from other betting establishments, known as agencies, where the premises are vested in the Authority.)

4. The agency agreement was contained in a deed executed on 16 June 1988. It contained the following provisions:
"6. CONDUCT AND CONTROL AGENCY

The Agent shall be responsible for the
conduct of his Agency in a proper orderly and
efficient manner in accordance with general policy
laid down by the Authority and without limiting
the generality of the foregoing shall:
(a) observe all the requirements
of the Betting (Totalizator Agency) Ordinance (sic) 1964
and the Rules and Regulations pursuant thereto.
(b) Observe the provisions of the Games, Wagers
and Betting Houses Act 1901 and the Gaming
and Betting Act 1906 of New
South Wales in their application to the
Australian Capital Territory.
(c) Observe the necessary operating
procedures relating to the conduct of the Agency as
the Authority from time to time may determine.
.....
8. RECEIPT OF MONEYS
All moneys received by the Agent in the
operation of the Agency shall be received on behalf
of the Authority and after
deducting such payments as should be made
for expenses properly incurred on behalf of
the Authority in the operation of the
Agency shall remain the property of the
Authority at all times.
9. ACCOUNTING AND AUDIT
The Agent shall:
.....
(b) Account weekly or as required
to the Authority for all investments or other moneys
received and dividends or refunds paid or unpaid or other moneys
paid.
.....
10. LOSSES AND ERRORS
(a) The Agent shall be liable to the
Authority for all losses and expenses sustained by
the Authority resulting from any malfeasance or misfeasance on his
part or on the part of any of his
employees in relation to the conduct
of the totalizator agency business.
.....
(c) Errors resulting from mistakes made by
the Agent shall be carried by the Agent.
(d) Errors resulting from mistakes made by the Authority
shall be carried by the Authority."

5. On or about 13 July 1988 the Authority sent to its sub-agents, including Mr and Mrs Andonaros, a memorandum bearing that date and in the following terms:

"SUBJECT: CREDIT BETTING
All Sub-Agency staff should be made aware
of the implications involved if they allow punters
to bet on credit.
At times punters will approach staff to try
to gain credit. This can be done in various ways,
from straight out asking "Can I have a bet on
credit", to the more devious method of:
a) Placing a bet or bets and asking the operator to
hold the ticket until after the race; or
b) Placing a bet or bets and advising the operator
they have left their money in the car outside.
In either of the above cases if the bet or
bets placed are not successful the operator will
most likely never see this punter again. Of
course if they are winning bets the punter will
return and claim his winnings, allowing the
operator to deduct the original investment from
the amount claimed. The procedures for averting
the above examples are as follows:
a) Refuse to hold the tickets until after the race,
and if the customer is unable to pay
for these tickets immediately cancel his bets.
b) If bets are placed and the customer
leaves the Sub-Agency to find money for payment,
immediately cancel these tickets.
For the Sub-Agent and their operator's
protection no form of betting without payment
should be allowed."

6. The first defendants conducted the business of the sub-agency from 13 July 1988 and were continuing to do so on 8 April 1989. On that day Mr Arnold made a number of bets at the sub-agency through Mrs Andonaros, who was on duty there, apparently alone. At the time of making each of those bets he paid no money and in fact has never paid any money in respect of those bets. Mr Arnold commenced the betting at about 1.50 p.m. Some time thereafter the Director of Administration of the Authority, Mr Noel Luff, on duty at the Authority's control centre at Dickson, became aware that the computer there was recording a series of "really large bets" from the Molonglo Tavern Sub-Agency. Mr Luff telephoned Mrs Andonaros and asked her "whether she had the money in" to which she replied, "Yes". The reply to Mr Luff's question was of course completely untrue. Mrs Andonaros, apparently in a state of panic, continued to allow Mr Arnold to make bets without paying for them. She said in her evidence that once the total amount of the bets made passed $60,000 or $70,000, she lost control of herself. On the evidence (Exhibit M) that would have occurred shortly after 3 p.m.

7. At about 4 p.m. Mr Luff telephoned Mr Malcolm Bayliss, the Director of Operations. Mr Bayliss then telephoned Mrs Andonaros and enquired what was happening. Mrs Andonaros broke down and told him that Mr Arnold owed her money, had promised to give her a cheque and had failed to do so. Mr Bayliss instructed Mrs Andonaros not to carry out any more transactions through her computer terminal. Mr Luff and Mr Bayliss then proceeded to the sub-agency arriving there at about 4.35 p.m. Mrs Andonaros and Mr Arnold were present. Mr Bayliss asked Mrs Andonaros "How much is owing?" and she replied, "Approximately $247,000". At the request of Mrs Andonaros, Mr Bayliss spoke to Mr Arnold and asked him whether he had a problem paying for bets at the sub-agency that afternoon, but Mr Arnold "failed to acknowledge" the question. At about 4.55 p.m. Mr Bayliss locked and disconnected the computer terminal. According to the evidence of Mr Bayliss, no betting took place via the sub-agency from about 4.45 p.m. onwards on that day. Mr Arnold had prior to then made a number of bets on the race at Melbourne which did not run until about 5.03 p.m. The bets had been made between 4.08 p.m. and 4.10 p.m. and totalled $67,500.

8. In her evidence Mrs Andonaros said that Mr Arnold made his first bet in these circumstances:

"Mr Arnold came in and placed the first bet and it was almost time
for the horses to start and he said, "Quick, I am going to miss the
race, put the bet on". I put that first amount which is $9,000 and
I asked him for the money and he said, "It is okay, don't worry, I
have got the money, I'll get it in a minute". And then it came to
the second one, the same thing happened and - I do not know, I do
not know what happened."

9. Mrs Andonaros went on to say that she was in an emotional state that afternoon and did not know what she was doing. She said that Mr Arnold continued to ask her to accept bets and she continued to accept them. When asked why, she said this:

"Because he seemed to become more forceful.
He came around the side of the bar there, we had
the terminal here and there was gap in the counter
and he came behind and he was saying, "Come on,
hurry up, put it on, I'm going to miss the race"
and I was just - I just lost control. I do not
know what happened to me but I lost control and I
did put those bets on. I am not denying that."

10. Mrs Andonaros also said that by the end of the day Mr Arnold had written down "the total amount" on the back of a betting slip. The betting slip was produced in evidence. It became exhibit 1. It shows amongst other figures a total figure of $247,500.

11. On some subsequent occasion, the date of which Mrs Andonaros did not specify, Mr Arnold signed a handwritten document in these terms:

"ARNOLD'S AUTO'S
I DARYL ARNOLD OWE A.C.T. TAB SUB-AGENT
"MOLONGLO TAVERN"
AMOUNT $247,000.00
PLAYED ON SATURDAY 8th APRIL 1989."

12. On 11 April 1989, in accordance with the established procedures relating to transactions between the Authority and its sub-agents, the Chief Executive of the Authority wrote to Mrs Andonaros with a statement of figures relating to the business transacted by the sub-agency for the week ended 8 April 1989. The figures showed a balance due to the Authority of $246,909.76 and the letter concluded with the following:

"You are required to account for the
balance due to the Authority by forwarding by
return mail or by hand a cheque for the balance
due to the Authority".

13. On 17 April 1989 Mrs Andonaros wrote to the Authority as follows:

"We refer to your letter dated 11th April
1989 concerning payment of monies due.
We enclose our cheque in the sum of
$5,274.54 being the amount held on your behalf
calculated in accordance with the attached statement."

14. In fact no statement was attached to the letter, but on 5 May 1989 the Authority received a document which was apparently the statement intended to be attached to the letter of 17 April 1989. The only significance of the letter and the attachment is that counsel for the plaintiff concedes that the cheque enclosed reduced the liability of Mr and Mrs Andonaros for transactions in the week 8 April 1989.
Totalizator Betting in the ACT

15. It is necessary to say something about the powers and functions of the Authority and of totalizator betting in the Australian Capital Territory.

16. By s.5(1)(a) of the Authority Act, the functions of the Authority are:

"(a) to conduct or provide, in accordance
with the Betting Act, totalizator betting facilities
in respect of races held within or outside the Territory:
(i) by operating its own totalizator, or
(ii) by means of agreements entered into
under section 20 of the Betting Act."

17. The conduct of totalizator betting is more particularly controlled by the Betting (Totalizator Agency) Act 1964 (the Betting Act). Both Acts define "totalizator betting" as "betting, on a racecourse or elsewhere than on a racecourse, by placing bets on a race on a totalizator". However, the term "totalizator" is not defined.

18. The relevant sections of the Betting Act are as follows:

"Conduct of betting facilities
18A. The Authority has, in the Territory,
the exclusive right to conduct or provide
totalizator betting facilities on races held
whether within or outside the Territory."

19. Section 20 makes provision for arrangements to be entered into between the Authority and other totalizator authorities in the States and other Territories with regard to interstate betting.

"Establishment of offices etc. elsewhere
than on racecourses
21(1) Subject to this section, the
Authority may, from time to time establish offices
and agencies for the carrying out of its functions
referred to in paragraphs 5(1)(a), (b), (c), (d)
and (e) of the Authority Act, its functions or
duties under this Act, its powers arising out of
those functions or duties or its powers under this
Act and may discontinue any office or agency so established.
(2) The Authority shall not carry on its
business arising out of or relating to any of its
functions, duties or powers referred to in
subsection (1) except at an office or agency at a
place approved, and in accordance with any
conditions determined by the Minister.
(4) Sub-section (2) does not apply to or
in relation to the carrying on by the Authority of
its business on a racecourse in the Territory.
Operation of offices etc.
22. Subject to this Act, the operation of
offices and agencies of the Authority, including
the hours of business of its offices and agencies
shall be as the Authority determines.
.....
Lawful betting elsewhere than on racecourses
36(1) A bet on a race that could lawfully
be made in the Territory at a racecourse during a
race meeting may be made through the Authority at
an office or agency of the Authority as provided
by this Act, whether or not a race metting is
being conducted at a racecourse in the Territory
on the day the bet is made.
.....
Acceptance of bets
37(1) The Authority shall not accept a bet
except at an office or agency of the Authority and
in accordance with this Act.
(2) The Authority shall not accept a bet
from a person unless -
(a) the amount of the bet is deposited in
cash at an office or agency of the Authority
at the time of making the bet;
(b) the amount of the bet is received
at an office or agency of the Authority with a letter
from that person setting out the bet;
(c) the bet is made by telegram from
that person received at an office or agency of the
Authority and payment of the amount of the bet is arranged by that
telegram; or
(d) the bet is made by letter, telegram or
telephone message to, or personally at, an
office or agency of the Authority by that person and payment of the
amount of the bet is authorized to be
made from a credit account that -
(i) was established by that person under section 39 before the
commencement of the race meeting
at which the race on which the
bet is made is run; and
(ii) shows sufficient credit at the time
of making the bet to pay the amount of the bet.
(3) The Authority shall not accept a bet
except in an amount of 50 cents or a multiple of 50 cents.
(4) A person shall not, in respect of a
bet, issue a ticket or other acknowledgement
purporting to be in respect of a bet and to be
issued by the Authority unless he is a person
lawfully managing or controlling, or is employed
in, an office or agency of the Authority.
Placing of bets
37A. The Authority shall place a bet
accepted by it under this Act -
(a) in respect of a race on which the
Authority operates its own totalizator - on that
totalizator; and
(b) in respect of a race on which the
Authority does not operate its own totalizator -
on the totalizator in a State or another Territory of the

Commonwealth,

being the totalizator in respect of
which a body conducting totalizator
betting in that State or Territory on
that race is, in pursuance of an
agreement with that body under
section 20 the agent of the Authority."

20. In the light of the statutory provisions and the evidence, it appears that the betting procedure adopted at a sub-agency is as follows.

21. The person making the bet fills out a betting slip and hands the betting slip and the amount of the bet in cash to the operator. The operator puts the betting slip into the sub-agency computer terminal. The computer "reads" the betting slip and relays the contents to the computer system at the control centre of the Authority at Dickson. The bet is then placed on the Authority's totalizator and the particulars of the bet are relayed from the control centre back to the sub-agency where the terminal prints a ticket in accordance with the request contained in the betting slip. This process takes a few seconds. The person making the bet receives the betting ticket in exchange for the cash and the betting slip already handed over.

22. As I understand it, if the bet is on a race being run interstate, the computer at Dickson relays the information to the appropriate interstate totalizator agency, where the bet is placed by that agency on its totalizator. As in the case of a bet placed on the Authority's totalizator, the Dickson computer relays the information back to the sub-agency and a ticket on the interstate race is issued to the person making the bet.

23. If the person making the bet does not pay cash to the agency at the time of making the bet, the bet may nevertheless be accepted by the Authority by one of the other methods stipulated in s.37(2), that is to say where the amount of the bet is received with a letter setting out the bet, where the bet is made by telegram and payment of the amount is arranged by that telegram, or where there is a credit account previously established and which shows sufficient credit at the time of making the bet to pay the amount of the bet.

24. Section 37 distinguishes between making, accepting and placing a bet. A bet may be made by a person who wishes to bet on a race. A bet may be accepted by the Authority and once accepted must be placed on the Authority's own totalizator or upon a totalizator interstate.

25. According to the evidence, a procedure was adopted in accordance with the requirements of the Act and the deed whereby once a week the Authority sent to the sub-agency a settlement sheet derived from the figures produced by the computer. The settlement sheet showed the amount owed by the Authority to the sub-agency or owed by the sub-agency to the Authority as a result of the week's totalizator betting transactions conducted through the sub-agency.
The Contract Between the Authority and Mr Arnold

26. The claim against Mr Arnold is pleaded in paragraphs 11 and 12 of the statement of claim in the following terms:

"11. The second defendant placed with the
first defendants as agents for the plaintiff
a number of bets during the week commencing
the 2nd of April 1989 and ending
the 8th of April 1989 and namely on the 8th
April 1989 in the following sums:
Sydney Race 3 Horse 4 $ 9,500.00
Adelaide Race 4 Horse 6 500.00
Melbourne Race 5 Horse 2 5,500.00
Melbourne Race 6 Horse 8 500.00
Brisbane Race 5 Horse 1 9,250.00
Sydney Race 5 Horse 6 50,500.00
Adelaide Race 6 Horse 1 500.00
Brisbane Race 6 Horse 2 49,750.00
Sydney Race 6 Horse 1 54,250.00
Melbourne Race 8 Horse 2 67,500.00
Brisbane Race 7 Horse 2 1,500.00
Sydney Race 7 Horse 1 1,750.00
$251,000.00
12. The second defendant therefore
became liable to pay in respect of the bets
the amount of the bets subject to any
credit for any dividends payable thereon.
13. The plaintiff says that the fact
is the amount of the said bets placed by
the second defendant less any dividends is
as follows:
$242,150.00.

14(a) ..... 14(b) The plaintiff claims against the

second defendant the amount of $242,150.00
being the amount of the bets laid by the
second defendant with the first defendant
as agent for the plaintiff less any
dividends payable plus interest pursuant to
Section 53A of the Australian Capital
Territory Supreme Court Act 1933 and costs."

27. As a matter of pleading, the statement of claim makes no express reliance on contract. I find it difficult to see that the claim against Mr Arnold as pleaded discloses any cause of action at all, although Graham, Victorian Pleading Precedents (1982) and Britts, Pleading Precedents (4th ed., 1990) both provide precedents similar to the statement of claim in the present case. Be that as it may, the case proceeded and submissions were put upon the basis that the claim was in contract.

28. There was no dispute that insofar as a totalizator betting transaction conducted through a sub-agency constituted a contract, then the contract was between the Authority and the person making the bet. The role of the sub-agency was to act as an agent on behalf of the Authority and the betting transaction itself did not involve any contract between the agent and the person making the bet. On the other hand, as was acknowledged in evidence, there was nothing to prevent a collateral contract relating to the bet between the agent and the person making the bet. For instance, there was nothing to prevent an agent lending money to enable the bet to be made. In my view, the nature of the contract is as I have outlined above. In ordinary circumstances, the tendering of the cash and betting slip by the person making the bet constitutes an offer which may be accepted by the Authority. Whether the overt act of acceptance is the placing of the betting slip into the terminal, the "reading" of the slip by the computer, the placing of the bet by the computer on the Authority's totalizator or an interstate totalizator, the printing of the betting ticket or the handing of the betting ticket to the person making the bet does not seem to me to matter for present purposes.

29. In the present case, however, no cash passed and the contract, in my view, involved on the one hand an acceptance and placing by the Authority of each bet made by Mr Arnold together with a promise by the Authority to pay the appropriate dividend in the event of a win and on the other hand, a promise by Mr Arnold to pay the amount of each such bet in the event of a loss. The contract was therefore partly executed and partly executory on the part of the Authority and wholly executory on the part of Mr Arnold.

30. The substantial matters raised in the defence of Mr Arnold as filed are as follows.

31. Under paragraph iii Mr Arnold "denies that the plaintiff was empowered to establish offices and agencies for the carrying out of its powers or functions".

32. Under paragraph iv Mr Arnold denies "that the debts alleged in paragraph 11 of the plaintiff's statement of claim were lawfully authorised under and by the said agreement and under and by the provisions of the ACT Gaming and Liquor Authority Ordinance 1987, the Betting (Totalizator Agency) Ordinance 1964, or at all".

33. Under paragraph viii Mr Arnold says that the "said bets, if placed (which is denied), were not lawfully authorised under any law or regulation of the Australian Capital Territory whereby the second defendant could lawfully place a bet as alleged in the said paragraph".

34. According to the way in which the argument proceeded, the defences of Mr Arnold were in substance:

1. The bets made by Mr Arnold, unless
authorised under the Betting Act, were
unenforceable as wagering contracts according to
the terms of the Games Wagers and Betting-houses
Act 1901 (NSW).
2. The Authority was not authorised to accept
or place the bets made by Mr Arnold because at
the date in question the Minister had not approved
the Molonglo Tavern as an agency in accordance
with s.21(2) of the Betting Act.
3. The Authority had no power to accept the
bets of Mr Arnold because the bet was not made in
one or other of the various ways prescribed by
s.37(2) of the Betting Act and in particular no
cash was deposited at the time of making the bets
as requried by s.37(2)(a).
I shall deal with each of these grounds.

Defences: A Contract of Gaming or Wagering?

35. Mr Kilduff for Mr Arnold submitted that the contract between his client and the Authority was a contract of gaming and wagering and therefore unenforceable under s.13 of the Games Wagers and Betting-houses Act 1901 (NSW) (preserved in the Australian Capital Territory as a continuous State Act by s.3 and Schedule 2 Part 17 of the New South Wales Acts Application Act 1984.) The section provides as follows:

"Gaming contracts not enforceable
13. Subject to section 13A, all contracts
or agreements whether by parol or in writing by
way of gaming or wagering shall be null and void
and no suit shall be brought or maintained in any
court for recovering any sum of money or valuable
thing alleged to be won upon any wager or which
has been deposited in the hands of any person to
abide the event on which any wager has been made."
Section 13A is not relevant in the present case.

36. Mr Kilduff's well-researched argument drew on a long line of authorities to seek to support the submission that the law construes strictly contracts which contain an element of betting, so as to ensure that they do not escape the prohibition on enforceability of contracts which are truly wagering contracts. However, in my view, whilst it is true that there are many cases which adopt that attitude, none of them expresses the general principle and there is no justification for the general principle which counsel sought to distil from those authorities.

37. The term "totalizator" is not defined in the Betting Act nor the Authority Act. It is not a term of law although it is not unknown in the law. In Elderton and Anor v United Kingdom Totalisator Co. Ltd. (1946) Ch 57 at 63, Lord Greene M.R. said:

"the ordinary totalisator, the operation of
which, of course, is perfectly well known ..... is
a method of procuring or enabling betting to be
carried out, in such a way that the mathematically
correct odds are always given."

38. According to the Australian Encyclopaedia 5th ed., the totalizator now in operation all over the world was brought to its present highly efficient state in Australia by George Alfred (later Sir George) Julius (1873-1946), the first Chairman of C.S.I.R.O.

39. One of the dictionary meanings is "a form of betting, as on horse races, in which those who bet on the winners divide the bets or stakes, less a percentage for the management, taxes, etc." (Macquarie Dictionary 1982 ed.). Whilst the reference to betting and winners suggests a form of wager, nevertheless in at least three decided cases totalizator betting has been held not to involve a wager. In Tote Investers Ltd. v Smoker (1968) 1 QB 509, Lord Denning, M.R. cited the classic definition of a wagering contract given in Carlill v Carbolic Smoke Ball Co. (1892) 2 QB 484 by Hawkins J. at 490 who said:

"According to my view, a wagering contract
is one by which two persons, professing to hold
opposite views touching the issue of a future
uncertain event, mutually agree that, depending
upon the determination of that event, one shall
win from the other, and that other shall pay or
hand over to him, a sum of money or other stake;
neither of the contracting parties having any
other interest in that contract than the sum or
stake he will so win or lose, there being no other
real consideration for the making of such contract
by either of the parties. It is essential to a
wagering contract that each party may under it
either win or lose, whether he will win or lose
being dependent on the
issue of the event, and, therefore, remaining
uncertain until that issue is known. If either of
the parties may win but cannot lose, or may lose
but cannot win, it is not a wagering contract."

40. In Smoker's case, Lord Denning M.R. said that the Totalizator Board there could neither win nor lose because all it did was receive the moneys and pay out the total to those who succeeded less expenses. On the authorities Lord Denning felt compelled to hold that a contract by a backer who puts money on the totalizator is not a contract by way of gaming or wagering. Lord Wilberforce agreed and said at p 519:

"the contracts in this case are not
contracts of wagering because the totalizator does
not run any risk either of winning or losing."

41. Their Lordships cited with approval an earlier case of Attorney-General v Luncheon and Sports Club Ltd. (1929) AC 400 in which a club organized its own form of private totalizator betting. Lord Dunedin said at p 406:

"Inasmuch as on the determination of the
event in question - to wit, whether a certain
horse is first or placed in a race, as the case
may be, the Club can neither win nor lose, it
follows that there is no bet with the only
bookmaker alleged."

42. These two English decisions were referred to with approval by Samuels J.A. and Priestley J.A. in Petranker v Brown and Others (1984) 2 NSW LR 177. The case was concerned with the game of lotto. At p 182 Samuels J.A. said as follows:

"In the present case the licensees can
neither win nor lose. Their function, pruned to
its essentials, is to collect the subscriptions
and to pay out to the successful subscribers that
percentage which the Act requires to be allocated
to that purpose. It is, of course,
indistinguishable in this respect from the
function of a totalizator."

43. The New South Wales Court of Appeal accordingly held that a contract between a subscriber and a person holding a licence to conduct lotto did not involve gaming or wagering under the gaming and betting legislation.

44. I therefore conclude that the contract between the Authority and Mr Arnold is not to be regarded as unenforceable as a contract of gaming or wagering.
Defences: Is the Contract Prohibited by the Betting Act?

45. The submission put on behalf of Mr Arnold was that in accepting the bet in return for Mr Arnold's promise to pay, the Authority acted contrary to the provisions of s.37(2) of the Betting Act and that the Court would not assist the Authority to give effect to the transaction.

46. In what is probably the leading case in Australia on the question of the enforceability of contracts alleged to be in breach of statutory provisions, Yango Pastoral Company Pty. Limited and Others v First Chicago Australia Limited and Others [1978] HCA 42; (1978) 139 CLR 410, Gibbs A.C.J. said at p 413:

"There are four main ways in which the
enforceability of a contract may be affected by a
statutory provision which renders particular
conduct unlawful: (1) The contract may be to do
something which the statute forbids; (2) The
contract may be one which the statute expressly or
impliedly prohibits; (3) The contract, although
lawful on its face, may be made in order to effect
a purpose which the statute renders unlawful; or
(4) The contract, although lawful according to its
own terms, may be performed in a manner which the
statute prohibits."
Later his Honour continued at p 413:
"It is often said that a contract expressly
or impliedly prohibited by statute is void and
unenforceable. That statement is true as a
general rule, but for complete accuracy it needs
qualification, because it is possible for a
statute in terms to prohibit a contract and yet to
provide, expressly or impliedly, that the contract
will be valid and enforceable. However, cases are
likely to be rare in which a statute prohibits a
contract but nevertheless reveals an intention
that it shall be valid and enforceable, and in
most cases it is sufficient to say, as has been
said in many cases of authority, that the test is
whether the contract is prohibited by the statute.
Where a statute imposes a penalty upon the making
or performance of a contract, it is a question of
construction whether the statute intends to
prohibit the contract in this sense, that is, to
render it void and unenforceable, or whether it
intends only that the penalty for which it
provides shall be inflicted if the contract is
made or performed.
The question whether a statute, on its
proper construction, intends to vitiate a contract
made in breach of its provisions, is one which
must be determined in accordance with the ordinary
principles that govern the construction of
statutes. "The determining factor is the true
effect and meaning of the statute" (St. John
Shipping Corporation v Joseph Rank Ltd. (1957) 1
QB 267, at p 286.) "One must have regard to the
language used and to the scope and purpose of the
statute" (Archbolds (Freightage) Ltd. v S.
Spanglett Ltd. (1961) 1 QB 374, at p 390.) One
consideration that has been regarded as important
in a great many cases, of which Cope v Rowlands
(1836) 2 M and W 149 (150 ER 707) is a notable
example, is whether the object of the statute - or
one of its objects - is the protection of the
public. An antithesis is commonly suggested
between an intention to protect the public and an
intention simply to secure the revenue, and it is
said that when the former intention appears the
contract must be taken to be prohibited, whereas
if the intention is only to protect the revenue
the statute will not be construed as imposing a
prohibition on contracts."

47. Mason J., as he then was, and with whom Aickin J. agreed, said at p 423:

"The principle that a contract the making
of which is expressly or impliedly prohibited by
statute is illegal and void is one of long
standing but it has always been recognized that
the principle is necessarily subject to any
contrary intention manifested by the statute. It
is perhaps more accurate to say that the question
whether a contract prohibited by statute is void
is, like the associated question whether the
statute prohibits the contract, a question of
statutory construction and that the principle to
which I have referred does no more than enunciate
the ordinary rule which will be applied when the
statute itself is silent upon the question.
Primarily, then, it is a matter of construing the
statute and in construing the statute the court
will have regard not only to its language, which
may or may not touch upon the quesion, but also to
the scope and purpose of the statute from which
inferences may be drawn as to the legislative
intention regarding the extent and the effect of
the prohibition which the statute contains."

48. Whether the problem is approached by looking at the four possible situations postulated by Gibbs A.C.J. or by looking at the matter more generally as Mason J. did, does not appear to me to affect the result. At the outset, of course, it is necessary to refer back to the terms of the contract. In my view, the contract involved the acceptance by the Authority of the bet made by Mr Arnold in consideration of Mr Arnold's promise to pay the amount of the bet. The contract in those precise terms may not fall within the first of the four possible situations envisaged by Gibbs A.C.J. If the "doing something" is merely the acceptance of the bet simpliciter, then it is not something which the statute prohibits. Indeed one of the aims of the statute must be to facilitate totalizator betting through the Authority by its acceptance of bets. On the other hand, if the "doing something" is the acceptance of a bet without payment, then the acceptance is something which the statute expressly prohibits. Turning to the second category, although I would consider that the contract is not one which the statute expressly prohibits, it is so clearly prohibited by implication that views could differ about whether the prohibition is express or not. If a contract is constituted by the acceptance of a bet without the deposit of cash at the time of making the bet, it is partly executed by the Authority and that acceptance is in breach of s.37(2) of the Betting Act. The third of the categories does not cover the present case. The fourth does if the first and second do not, for the reasons I have already given

49. Nevertheless, it is still necessary to go further to determine the question whether the statute intends that the prohibited contract should be unenforceable. That question is as both Gibbs A.C.J. and Mason J. emphasise one to be decided in accordance with the rules of statutory construction.

50. The Betting Act carries a sub-title "An Act to provide for betting on horse or dog races conducted through an agency for totalizators and for other purposes". Amongst the other purposes is the establishment of a racecourse development fund and the payment to race clubs from commissions retained out of the amount of bets received and placed on the totalizator. Another object of the legislation is to regularise off-course betting and to maximise returns to persons making bets. Those purposes of the statute would appear to involve both revenue raising and the protection of the public. Furthermore, although s.43 provides for penalties for certain breaches of the Act and individual offences are created under other sections such as s.38(2) and sub-s.40(1), breach of s.37 does not appear to constitute an offence. The situation therefore is different from that which occurred, for instance, in Victorian Daylesford Syndicate Limited v Dott (1905) 2 Ch 624 in which it was said that the purpose of the statute was sufficiently served by the penalties prescribed and that avoidance of the contract would cause grave inconvenience and injury to innocent members of the public without furthering the object of the statute. In the present case it could of course be said that the public interest is not served by allowing a person who places a bet without paying for it to be freed from the obligation to pay if the bet is not successful. On the other hand, if the contract is unenforceable, it is unenforceable at the suit of either party and it would seem to me in accordance with the general purposes of the statute that a person who makes a bet in contravention of s.37(2) should not be entitled to collect the winnings should the bet happen to be on a winner.

51. However, it is desirable for a judge particularly at first instance to avoid having to decide a question of statutory construction on matters of public policy. I consider such matters only for the purpose of ascertaining whether the contract, which upon its terms appears to be prohibited by the statute, should by reason of public policy, be regarded as enforceable. I do not think that any consideration of public policy detracts from what I consider to be the intention of the legislative provisions.
Defences: Premises Not Approved by Minister

52. So far the discussion has been concerned with the prohibition against the acceptance of bets in certain circumstances as provided for in sub-s.37(2). Sub-s.37(1) provides that the Authority shall not accept a bet except at an office or agency of the Authority. The further submission was made on behalf of Mr Arnold that at the time of the contract the Molonglo Tavern was not a place approved by the Minister. The evidence is clear that it was in fact not so approved. Sub-s.21(2) prohibits the Authority from carrying out its business except at an office or agency at a place approved by the Minister. The submission is made that as the contract was entered into at a place not approved by the Minister, then the contract is not enforceable.

53. However, in my view, the effect of these provisions is not to impliedly prohibit contracts being entered into at premises not approved. An office or agency of the Authority at a place not approved by the Minister is nevertheless capable of possessing the character of an office or an agency. The fact that the Molonglo Tavern was at a place not approved by the Minister does not mean that it was not an office or agency of the Authority. Neither sub-s.37(1) nor sub-s.21(2) prohibits contracts made at an unapproved place. Those aspects of the Betting Act to which I have referred in relation to sub-s.37(2) do not apply to sub-s.37(1) or to sub-s.21(2). The place where the Authority accepts bets does not affect the character of the contract, or its terms. Like the statutory provisions under consideration in the Yango Pastoral case, the language of both sub-sections indicates that they are directed not at the making or performance of particular contracts but at the location of totalizator betting facilities and carrying on of the business of the Authority. Although on the face of it the facts of the present case are similar to those in Cornelius v Phillips (1918) AC 199, I think that there is a difference in principle. In that case legislation made it an offence for a money lender to carry on business other than at a registered address and it was held that that provision avoided a contract of loan made by the money lender at some place other than the registered address. Commenting on that decision, Jacobs J. in the Yango Pastoral case said at p 432:

"In other cases the prohibition against
carrying on a business may not be able to be
construed as either an express or implied
prohibition against making of a particular
contract. Nevertheless in such a case the courts
may not enforce such a contract but, if they do
not, it is not because the contract itself is
directly contrary to the provisions of the statute
by reason of an express or implied prohibition in
the statute itself but because it is a contract
associated with or in the furtherance of illegal
purposes, for instance, the purposes of a business
being carried on illegally."

54. If, as Jacobs J. said, one then enters the field of contracts not themselves unlawful but made for an illegal purpose, the fact that the contract in the present case was made at a place not then approved by the Minister has little significance. The Authority was not carrying on business illegally and the contract was not made for the furtherance of illegal purposes. What is of significance is that on the occasion in question the premises were used for the acceptance of bets contrary to s.37(2) and I have already expressed my opinion that it is the contravention of sub-s.37(2) which renders the contract unenforceable.
Liability of First Defendants: Failure to Account

55. Paragraph 8 of the statement of claim is in these terms:

"PARTICULARS OF DEBTS
8. Pursuant to the agreement between the
plaintiff and the first defendants the first
defendants were liable to pay to the plaintiff
the sum of $246,909.76 in
respect of the week ending Saturday the 8th
of April, 1989. Such sum being made up as follows:
Amount of bets accepted $273,472.50
Less commission receivable $ 5,285.74
Less dividends payable thereon $ 21,282.00
Plus hire of T.V. $ 5.00
Nett amount payable $246,909.76
The first defendants are liable to pay to
the plaintiff the said sum of $246,909.76 pursuant
to their obligation to account to the plaintiff on
a weekly basis but the first defendants have
failed and/or refused to pay the said sum to the
plaintiff in breach of the said obligation."

56. It was submitted on behalf of the plaintiff that the cause of action pleaded in paragraph 8 of the statement of claim gives rise to a liquidated debt. I do not accept this submission. The claim is not simply for moneys had and received or on accounts stated or any other common money count. Sub-clause 9(b) of the deed provided that Mr and Mrs Andonaros would account weekly or as required to the Authority for all investments or other moneys received and dividends or refunds paid or unpaid or other moneys paid. Part of the present claim is for moneys not received.

57. It was submitted on behalf of Mr and Mrs Andonaros that sub-clause 9(b) simply required them to pass accounts, that is to say, to give an itemised reckoning or explanation of all amounts to be credited to the Authority on the one hand or to be debited on the other. On the other hand it was contended on behalf of the plaintiff that there was an obligation on Mr and Mrs Andonaros to account for any balance shown to be to the credit of the Authority by making that credit balance available to the Authority, that is to say that a failure to pay the balance would be a failure to account. I reject that latter submission. Whilst there may be circumstances in which an unexplained failure to pay a balance calculated to be due might be regarded as a failure to account, that arises not by the failure to pay but by the failure to explain. Furthermore, the meaning suggested on behalf of the plaintiff does not accord with the system of cash betting at an agency required by s.37 of the Betting Act. Sub-clause 9(b) of the deed distinguishes between investments and other moneys received on the one hand and dividends or refunds paid or unpaid on the other. Dividends and refunds may be uncollected by the investor and remain with the agency. Investments on the other hand are required to be paid in cash or by one of the other methods of payment authorised by s.37(2). The system established by the section does not contemplate that a bet may be accepted without prepayment. An unpaid bet is, according to the Betting Act, a contradiction in terms. Lastly, the reference in sub-clause 9(d) to the information and explanation required in relation to the "accountancy" of an agency reinforces the concept of the accounting to the Authority in the form of a reckoning of credits and debits.

58. It has not been suggested on behalf of the plaintiff or shown that Mr and Mrs Andonaros failed to render a proper account of the credits and debits relating to the accountancy of the agency within clause 9 of the deed. Nor has it been shown that if there were such a failure to account then that failure resulted in damage to the plaintiff. The plaintiff fails on this cause of action.
Liability of First Defendants: Malfeasance or Misfeasance

59. Clause 6 of the Deed casts upon Mr and Mrs Andonaros a duty to conduct the agency "in accordance with the general policy laid down by the Authority" and to observe the requirements of the Betting Act and to observe the necessary operating procedures relating to the conduct of the agency.

60. In permitting Mr Arnold to make bets without depositing cash, and in causing the Authority to accept those bets, Mrs Andonaros clearly brought about a breach of s.37(2) of the Betting Act and a breach of sub-clause 6(a) of the deed. In my view, she also committed a breach of the general requirements of clause 6 that the agency be conducted in accordance with general policy laid down by the Authority and further a breach of sub-clause 6(c) by failing to observe the necessary operating procedures. The memorandum of 13 July 1988 from the Authority drew attention to the "implications" of allowing persons to bet "on credit" and concluded with a warning that for the protection of the sub-agent "no form of betting without payment should be allowed". In simple terms, Mr and Mrs Andonaros were obliged to get the cash or cancel the betting ticket before the race was run and they did not do either. Whether this is malfeasance or misfeasance does not matter. It was certainly one or the other. The plaintiff is entitled to damages for breach of sub-clause 10(a) of the deed.
Liability in Negligence

61. A claim in negligence against Mr and Mrs Andonaros was not pursued.
Damages

62. The function of an award of damages for breach of contract is to put the plaintiff as far as possible in the position the plaintiff would have been in if there had been no breach on the part of the defendant.

63. An initial question of causation arises in relation to part of the damages claimed. The evidence shows that the Authority was aware of problems at the Molonglo Tavern sub-agency prior to 4 p.m. or thereabouts on the day in question. By 4 p.m. or shortly afterwards Mr Bayliss had been informed by Mrs Andonaros that Mr Arnold "owed her money". Accordingly, so it was submitted on behalf of Mr and Mrs Andonaros, the Authority should have immediately cancelled any betting tickets issued on races still to be run. It appears that there was one race to be run in Melbourne at 5.03 p.m. What happened was that Mr Bayliss and Mr Luff proceeded to the sub-agency, arriving there at about 4.35 p.m. and the computer terminal there was closed down about twenty minutes later. Mr Arnold had made his bets on that race soon after 4 p.m. Although the evidence does not show at what time the bets were placed by the Authority on the Victorian Totalizator, I think it likely that it was already done when Mr Luff telephoned Mr Bayliss. In the subsequent settlement procedures between the two totalizator agencies, the Authority was debited by the Victorian agency with the amount of the bet. It is conceivable that something might have been done between 4.45 p.m. and the commencement of race No. 8 to cancel the bets placed by the Authority on the Victorian totalizator, but neither Mr Bayliss nor Mr Luff was cross-examined to suggest that that course of action was practicable and I am not convinced that it was.

64. It was also submitted on behalf of Mr and Mrs Andonaros that it could not have been in the contemplation of the parties at the time of making the agency agreement that the Authority might suffer damage by placing unpaid bets on an interstate totalizator. Mrs Andonaros said in evidence that she did not know that the Authority made payments to interstate agencies for bets placed on races interstate. Mr Andonaros, the other first defendant, gave no evidence. In any event, the test whether the sort of damage suffered was in the contemplation of the parties at the time of the making of the contract is not the subjective state of mind of one or other of those parties. In Koufos v Czarnikow Ltd. [1967] UKHL 4; (1969) 1 AC 350, Lord Reid said at p 385:

"The crucial question is whether, on the
information available to the defendant when the
contract was made, he should, or the reasonable
man in his position would, have realised that such
loss was sufficiently likely to result from the
breach of contract to make it proper to hold that
the loss flowed naturally from the breach or that
loss of that kind should have been within his contemplation."

65. This passage has been approved by the High Court of Australia in Wenham and Another v Ella [1972] HCA 43; (1972) 127 CLR 454 at 471-172 and in Burns v M.A.N. Automotive (Aust) Proprietary Limited [1986] HCA 81; (1986) 161 CLR 653 at 667.

66. Having regard to the general nature of the totalizator betting system and of the provisions of sub-s.37(2) and s. 37A of the Betting Act, I have little difficulty in finding that a reasonable person entering upon the business of conducting a totalizator betting sub-agency in the Territory, would have realised that a failure to insist on cash payment at the time of accepting a bet was likely to result in loss to the Authority of the amount of the debt by reason of the distribution of the proceeds of bets, including, notionally, any unpaid bet, by way of dividend.

67. Accordingly, I find that Mr and Mrs Andonaros are liable to pay to the Authority what it lost by reason of its obligation to pay the Victorian agency. That amount is arrived at by taking the Victorian figures, shown in Exhibit N, but removing from them bets of $500 and $250 which, according to the evidence of Mrs Andonaros, could not be shown to have been made by Mr Arnold. I understand that this amount excludes turnover tax of 6 percent, race club payments of 3.5 percent and racecourse development fund payments of 0.75 percent. I assume that the Authority has already paid these latter sums and if that is so then I think it is entitled to recovery of a total of $233,630. If I am wrong in this assumption the parties have a further opportunity to address me on this aspect of the case.

68. I am not convinced that the cheque for $5,274.54 received by the Authority from Mr and Mrs Andonaros on 5 May 1989 related to the liability of Mr and Mrs Andonaros that arose from the bets made by Mr Arnold.

69. Interest is claimed and will be awarded in accordance with s.53A of the ACT Supreme Court Act 1933. I was told that interest at the appropriate rates from 15 April 1989 to 9 October 1990 on $233,630 is $64,533.05 and that the current daily rate of interest is $134.42. On that basis, total interest to 31 July 1991 is $104,186.95 and that should be added to the award of damages.
Claim for Indemnity

70. Mr and Mrs Andonaros make a claim for indemnity and contribution. The notice making the claim and filed in the proceedings is simple in the extreme and does not disclose any ground upon which the claim is based. Written submissions were received to support the claim. They rely in the main upon the assumption that Mr Arnold is liable to the Authority. However, I have found that he is not so liable and what appears to be the basis of the submissions claiming contribution falls to the ground.

71. Similarly, arguments based upon the right to reimbursement after discharging the primary liability of another person, or arising from common interests in land to which a burden is attached but enforced against one party only, are not to the point.

72. On the face of it, the fact that both Mrs Andonaros and Mr Arnold each participated in the formation of the contract which I have found to be unlawful provides strong ground for her and her husband co-defendant to be precluded from obtaining contribution from Mr Arnold. There is a suggestion in the case that in some way Mr Arnold coerced Mrs Andonaros into accepting his bets in breach of her duties under the agency agreements, but that was not a matter which was pleaded or properly investigated by way of evidence or the subject of argument. I take into account the curious document, Exhibit 1, which appears to be an admission by Mr Arnold that he owes Mr and Mrs Andonaros the sum of $247,000. However, there was no claim on an account stated, and the admission by Mr Arnold of an amount owing to Mr and Mrs Andonaros, if that is what it was, was not the subject of any live issue in the case. According to the way in which the case proceeded, I can see no way in which Mr and Mrs Andonaros are entitled to contribution or indemnity from Mr Arnold.
Change in Legislation

73. It would be inappropriate to conclude these reasons for my decision without acknowledging that the legislation in question has been extensively amended since the hearing. The Betting (Totalizator Administration) (Amendment) Act, No. 55 of 1990, inter alia, repeals s.37 of the Betting Act and replaces it with the simple words, "The TAB shall not accept a bet from a person on credit". The Authority Act is repealed by the Australian Capital Territory Gaming and Liquor Authority (Repeal) Act 1990 and the function of the Authority is taken over by a body known as the TAB. By s.5 the TAB is substituted for the Authority as a party to any contract, agreement or arrangement entered into by the Authority and in force immediately before the commencement of the repealing Act. By s.6, assets, rights and liabilities of the Authority existing immediately before the commencement date vest in the Territory except to the extent that the Minister, before 1 July 1991 specifies under sub-s.(2) assets, rights and liabilities of the Authority that vest in the TAB.

74. It would appear that these provisions do not affect the orders that are appropriate in the present case and that if I make orders affecting the Authority, those orders will by operation of the legislation itself have effect in favour of or against the Territory or the TAB as the case may be. However, counsel have liberty to make submissions on this aspect if they wish.
Orders

75. Subject to allowing the parties to say something about the arithmetic and the amending legislation just referred to, I propose to direct entry of judgment in the action in favour of the plaintiff against the first defendants for $337,816.95 made up of damages of $233,630.00 together with interest of $104,186.95. There will be judgment for the second defendant in the action. As to costs in the action, I propose to order that the first defendants bear the plaintiff's costs of proceeding against them in the action. The facts are sufficiently clear for the purposes of costs for me to find that the second defendant brought all proceedings on himself and I propose to order him to pay his own costs in the action. I propose to dismiss the claim for contribution or indemnity, the parties to pay their own costs of that claim. I will defer making final orders until short minutes of order are brought in. I appoint Wednesday, 7 August 1991 at 9.30 a.m. for that purpose. If counsel wish to address further on the matters referred to, they may do so then.