THE DEPARTMENT OF INTERNAL AFFAIRS v THE WHITEHOUSE TAVERN TRUST BOARD [2015] NZCA 398

THE DEPARTMENT OF INTERNAL AFFAIRS v THE WHITEHOUSE TAVERN TRUST BOARD [2015] NZCA 398 [28 August 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA233/2014[2015] NZCA 398BETWEEN THE DEPARTMENT OF INTERNALAFFAIRSAppellantAND THE WHITEHOUSE TAVERN TRUSTBOARDRespondentHearing: 18 June 2015 (further submissions: 8 July 2015)Court: Wild, White and French JJCounsel: K M Muller and T M Badland for AppellantD M O'Neill for RespondentJudgment: 28 August 2015 at 10.00 amJUDGMENT OF THE COURTA The appeal is allowed in part.B The declaration made in the High Court under s 4(1) of the Judicature Amendment Act 1972 is set aside.C In all other respects the appeal is dismissed.D There is a declaration that the Gazette notice issued by the Secretary of Internal Affairs on 17 July 2008 under s 116(1) of the Gambling Act 2003 is invalid to the extent that it excludes storage and mileage costs incurred by class 4 operators such as the respondent.E The Secretary of Internal Affairs is directed under s 4(5) of the Judicature Amendment Act 1972 to reconsider the Gazette notice and determine whether storage and mileage costs incurred by class 4 operators such as the respondent should have been limited or excluded.F The appellant must pay the respondent's costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by White J)Table of ContentsPara NoIntroduction [1]Legislative framework [12]The Gazette notice [32]Factual background [38]High Court decision [45]Are the storage costs "costs associated with the class 4 venue"within the scope of the Gazette notice or are they prohibitedby s 118?The "costs associated with the class 4 venue" [58]The scope of the Gazette notice [66]The s 118 prohibitions [69]Should the High Court declaration be set aside? [80]Was the Secretary required to consider whether the storage andmileage costs should have been limited or excluded beforeissuing the Gazette notice? [87]If so, should the Secretary be directed to reconsider the Gazettenotice and determine whether the storage and mileage costsshould have been limited or excluded? [96]Result [104]Introduction[1] The respondent, the Whitehouse Tavern Trust Board (Whitehouse), is licensed to operate class 4 gambling under the Gambling Act 2003 (the Act). It does so by operating gaming machines at the Whitehouse Tavern in Papakura, which is owned by Salutation Hotels Ltd (Salutation). Salutation, through its sole director and principal shareholder, Mr Hayes, manages the gaming venture at the Tavern for Whitehouse.[2] Whitehouse pays Salutation costs associated with the Tavern gambling operation. The costs are listed in a venue agreement approved by the Secretary of Internal Affairs (the Secretary) who is responsible under the Act for the licensing of gambling operators. The costs approved by the Secretary are subject to a Gazettenotice issued under s 116 of the Act on 18 July 2008. Section 116 empowers theSecretary to set limits on, or exclude, the costs that may be incurred by a "corporate society", such as Whitehouse, that conducts class 4 gambling.[3] Whitehouse and Salutation have agreed that Whitehouse should pay Salutation the following amounts:(a) $125 per month for storing Whitehouse's records; and(b) $42 per week as mileage for banking the proceeds from the gaming machines in the Tavern and collecting money used in operating the machines.[4] The Secretary initially approved these costs, but subsequently decided he had done so in error and declined to approve these amounts as costs in the venueagreement between Whitehouse and Salutation because they were in the Secretary'sview precluded by the Gazette notice.[5] Whitehouse then brought proceedings in the High Court under the Declaratory Judgments Act 1908 and the Judicature Amendment Act 1972challenging the Secretary's interpretation of the Gazette notice and its validity. Collins J issued a declaration under s 4(1) of the Judicature Amendment Act that theGazette notice did not fully comply with the Act and that it would need to be amended to authorise the Secretary to allow the deduction of costs that were:1(1) actual, reasonable, and necessary; and(2) which have the effect of increasing the profits from gaming machines that are available for distribution to authorised purposes even when those costs are paid to a venue operator.[6] The appellant, the Department of Internal Affairs, has appealed against the High Court decision on the grounds the declaration should not have been issued because:1 Whitehouse Tavern Trust Board v Department of Internal Affairs [2014] NZHC 662, [2014] NZAR 605 [High Court decision] at [73].(a) the storage costs are not "costs associated with the class 4 venue" andare therefore outside the scope of the Gazette notice and are prohibited by s 118(2) and (3) of the Act; and(b) the declaration, which appears to apply to any costs paid to a venue operator, is in any event contrary to the statutory scheme in respect of non-venue related costs and would not work in practice.[7] The Department's argument that the storage costs are not "costs associatedwith the class 4 venue" and therefore prohibited under s 118 was not raised in theHigh Court.[8] Following the hearing of argument in this Court, it occurred to us there might also be another way of approaching the question of the validity of the Gazette notice, which was not specifically addressed in the High Court judgment or in the submissions of counsel, namely that the Secretary in issuing the Gazette notice had failed to take into account relevant considerations which were expressly or impliedly identified under the Act.2 In giving the parties an opportunity to provide further submissions, we suggested this question arose because:(a) regulation 5(1) and (2) of the Gambling (Class 4 Net Proceeds) Regulations 2004 requires Whitehouse to store its documents; and(b) section 104(1) of the Act requires the profits of Whitehouse to be banked by Salutation within a specified time frame.3[9] We received further helpful submissions from the parties on this question.[10] In light of the new ground of appeal for the Department based on s 118 of the Act and the question raised by the Court after the hearing, there are now four principal issues for determination:2 Petrocorp Exploration Ltd v Minister of Energy [1991] 1 NZLR 1 (CA) at 33; overturned on different grounds in Petrocorp Exploration Ltd v Minister of Energy [1991] 1 NZLR 641 (PC).3 Regulation 4 of the Gambling (Class 4 Banking) Regulations 2006 requires Salutation to bank gaming machine profits within five working days beginning on the day that the profits are, or ought to be, calculated.(a) Are the storage costs "costs associated with the class 4 venue" withinthe scope of the Gazette notice or are they prohibited by s 118?(b) Should the High Court declaration be set aside?(c) Was the Secretary required to consider whether the storage and mileage costs should have been limited or excluded before issuing theGazette notice?(d) If so, should the Secretary be directed under s 4(5) of the Judicature Amendment Act to reconsider the Gazette notice and determine whether those costs should have been limited or excluded?[11] Before summarising the High Court decision and addressing the submissions for the parties in the context of the principal issues, it is convenient to refer to the legislative framework, the Gazette notice and the background facts in more detail.Legislative framework[12] In New Zealand gambling is prohibited and illegal unless it is authorised by and under the Act or the Racing Act 2003 or is "private gambling".4 It is a criminal offence to participate in illegal gambling.5 A contract for, or relating to, illegal gambling is an illegal contract.6[13] Gambling authorised by or under the Act must comply with the Act and any relevant licence, game rules, and minimum standards.7 In addition to having responsibility for the licensing of gambling operators, the approval of venue agreements and the issuing of s 116 Gazette notices,8 the Secretary is empowered to appoint gambling inspectors to ensure that gambling operators comply with the Act.94 Gambling Act 2003, s 9(1); and definitions of "gambling" and "private gambling" in s 4(1). Seealso Laws of New Zealand Betting, Gaming and Lotteries (Reissue 1) (online ed) at [1]–[23].5 Section 19(1)(a).6 Section 14(1).7 Section 9(1)(a).8 Sections 65–70.9 Sections 330–332.Gambling inspectors are given wide powers of information gathering, entry and search and seizure.10[14] The policy behind this approach to gambling in New Zealand is reflected in the purpose of the Act as set out in s 3:The purpose of this Act is to—(a) control the growth of gambling; and(b) prevent and minimise harm from 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 the conduct of gambling; and(g) ensure that money from gambling benefits the community; and(h) facilitate community involvement in decisions about the provision of gambling.[15] The Act divides authorised gambling into six legal classes: two classes which do not require a licence, three which do, and lotteries operated by the New Zealand Lotteries Commission.11 There are separate comprehensive regulatory regimes for the classes which require licences.12[16] This appeal is concerned with class 4 gambling and the statutory provisionsrelating to the licensing of "corporate societies", such as Whitehouse, which arerequired to hold a class 4 operator's licence for the gambling and a class 4 venuelicence for the place where the gambling is conducted.13 Licensed corporatesocieties are known as holders of class 4 operator's licences (class 4 operators).1410 Sections 333–338 and 340.11 Sections 20–34; pt 2, sub-pt 5; and pt 3, sub-pt 2.12 Part 2, sub-pt 3 (class 3 gambling); sub-pt 4 (class 4 gambling); and sub-pt 5 (casinos).13 Section 31.14 See s 4(1), definitions of "class 4 venue agreement" and "key person".[17] In order to obtain the requisite licences, a class 4 operator must enter into a"venue agreement" with a "venue operator", such as Salutation (the venue operator),who will own the primary business at the premises where the class 4 operator provides the gambling.15 The form and content of a class 4 venue agreement must beapproved by the Secretary and must include an "itemised list of costs associated with the operation of class 4 gambling at the venue".16[18] Class 4 gambling is defined as:17In this Act, class 4 gambling is gambling that satisfies the following criteria:(a) the net proceeds from the gambling are applied to, or distributed for, authorised purposes; and(b) no commission is paid to, or received by, a person for conducting the gambling; and(c) there are game rules for the gambling; and(d) the gambling, and the conduct of the gambling, satisfies relevant game rules; and(e) either—(i) the Secretary has categorised the gambling as class 4 gambling and not as another class of gambling; or(ii) the gambling utilises or involves a gaming machine.[19] The expression "net proceeds" is defined in s 4(1) as:net proceeds, in relation to gambling, means the turnover of the gambling (less prizes) plus interest or other investment return on that turnover plus any gain above the book value from the sale of gambling assets less—(a) the actual, reasonable, and necessary costs, levies, and taxes incurred in conducting the gambling; and(b) the actual, reasonable, and necessary costs incurred in complying with whichever of the following apply to the gambling:(i) this Act or any other relevant Act:(ii) an operator's licence:15 Sections 65(3) and 4(1), definitions of "class 4 venue agreement" and "venue operator".16 Sections 67(1)(j) and 69(1)(b).17 Section 30.(iii) a venue licence; and(c) the amount by which any gambling asset is depreciated in each year in accordance with generally accepted accounting practice (as defined insection 108) and, where applicable, the depreciation rates set undersection 116; and(d) any loss from selling or disposing of a gambling asset at a price orvalue below the gambling asset's book value at the time of the sale ordisposal[20] The expression "authorised purpose" is defined in s 4(1) as:authorised purpose means,—(a) for class 1 gambling, class 2 gambling, and class 3 gambling, any of the following purposes:(i) a charitable purpose:(ii) a non-commercial purpose that is beneficial to the whole or a section of the community:(iii) promoting, controlling, and conducting race meetings under theRacing Act 2003, including the payment of stakes:(iv) an electioneering purpose:(b) for class 4 gambling, any of the purposes specified in paragraph (a)(i) to (iii)[21] The importance of applying or distributing a corporate society's "net proceeds" from class 4 gambling only to or for an authorised purpose is reinforcedby s 106 which makes it a criminal offence not to do so and results, on conviction, incancellation of the corporate society's licences.18[22] As already noted, class 4 gambling may be conducted only by a "corporate society" that holds:19(a) a class 4 operator's licence for the gambling; and(b) a class 4 venue licence for the place where the gambling is conducted.18 This is reinforced further by ss 30(a), 52(1)(e) and 53A(d).19 Section 31.[23] A "corporate society" is defined as meaning one society that is:20(a) incorporated under the Incorporated Societies Act 1908; or(b) incorporated as a board under the Charitable Trusts Act 1957; or(c) a company incorporated under the Companies Act 1993 that—(i) does not have the capacity or power to make a profit; and(ii) is incorporated and conducted solely for authorised purposes; or(d) a working men's club registered under the Friendly Societies and Credit Unions Act 1982[24] There are then detailed provisions relating to both class 4 operator's licencesand venue licences.21 The purpose of these provisions is to provide the Secretary with control over the manner in which the corporate society operates. For example, the Secretary is provided with continuous electronic monitoring of gambling equipment and may investigate and audit licensees.22 He may suspend or cancel aclass 4 operator's licence or a class 4 venue licence or disable gambling equipment.23The holder of a class 4 operator's licence must provide an annual report to theSecretary stating what distributions to authorised purposes have been made.24[25] The Secretary is empowered by notice in the Gazette to set limits on, or exclude, the costs that may be incurred by a corporate society that conducts class 4 gambling. Section 116 provides:116 Secretary may limit or exclude costs of corporate society(1) The Secretary may, by notice in the Gazette,—(a) set limits on, or exclude, the costs that may be incurred by a corporate society that conducts class 4 gambling:(b) set the rates of depreciation for gambling assets acquired by a corporate society in respect of class 4 gambling.(2) The costs that may be limited or excluded by the Secretary include the following:20 Section 4(1).21 Part 2, sub-pt 4.22 Sections 86–87 and 117.23 Sections 58, 74 and 85.24 Sections 107–108.(a) costs associated with the class 4 venue, including salary or wages paid to a key person or another person for work associated with class 4 gambling at the venue, whether or not they are costs identified in the class 4 venue agreement:(b) costs associated with repairing and maintaining gambling equipment:(c) costs of operating the corporate society, including fees, salary, expenses, or other payments to a key person or another person involved in operating the corporate society.(3) A notice under subsection (1) may apply—(a) to specified licence holders or classes of licence holder; or(b) in respect of specified venues or classes of venue; or(c) in respect of specified gambling equipment or classes of gambling equipment; or(d) in respect of specified games or classes of games.(4) A limit may be expressed in any way that the Secretary considers appropriate, including the following:(a) as a specific amount:(b) as a percentage:(c) as an amount for each gaming machine.(5) A contract or other arrangement or obligation entered into by a corporate society, whether before or after the passage of this Act, that does not comply with limits set under subsection (1) is an illegal contract for the purposes of the Illegal Contracts Act 1970.(6) A notice given under subsection (1) is a disallowable instrument, but not a legislative instrument, for the purposes of the Legislation Act 2012 and must be presented to the House of Representatives undersection 41 of that Act.[26] The definition of "key person" in s 4(1) encompasses amongst others a venue manager such as Mr Hayes and a venue operator such as Salutation.[27] Then s 118, which is now relied on by the Department in relation to the storage costs, provides:118 Certain persons must not seek, receive, or offer benefits with conditions attached(1) A holder of, or key person in relation to, a class 4 operator's licenceor a class 4 venue licence must not knowingly receive or seek money, a benefit, an advantage, a privilege, or a gift from the following persons if the receipt has a condition attached to it and whether the receipt or condition is direct, indirect, formal, informal, or otherwise:(a) a grant recipient or potential grant recipient:(b) a person that sells, repairs, services, or maintains gambling equipment.(2) A key person in relation to a class 4 venue licence must not knowingly receive or seek money, a benefit, an advantage, privilege, or gift from the following persons, if the receipt has a condition attached to it and whether the receipt or condition is direct, indirect, formal, informal, or otherwise:(a) a holder of a class 4 operator's licence if the holder operatesat that venue:(b) a key person in relation to a class 4 operator's licence if theholder operates at that venue.(3) A holder of, or key person in relation to, a class 4 operator's licence,or person that sells, repairs, services or maintains gambling equipment must not knowingly offer money, a benefit, an advantage, a privilege, or a gift to the following persons if the receipt has a condition attached to it and whether the receipt or condition is direct, indirect, formal, informal, or otherwise:(a) a grant recipient or potential grant recipient:(b) a key person in relation to a class 4 venue licence.(3A) Any other person involved in making decisions on grant applicationsmade to the holder of a class 4 operator's licence must notknowingly receive or seek money, a benefit, an advantage, a privilege, or a gift from a grant recipient (or potential grant recipient) if the receipt has a condition attached to it, and whether the receipt or condition is direct, indirect, formal, informal, or otherwise.(4) Subsections (2) and (3) do not prevent the holder of a class 4operator's licence paying a key person in relation to a class 4 venuecosts associated with the class 4 venue if the costs—(a) do not exceed the amounts specified in any venue agreement; and(b) do not exceed the limits in section 116; and(c) are otherwise lawful.(5) A person who contravenes this section commits an offence and is liable on conviction to a fine not exceeding $10,000.(6) To avoid doubt, this section applies whether—(a) the condition is attached either before or after the money, benefit, advantage, privilege, or gift is received by the person concerned; or(b) any money, benefit, advantage, privilege, or gift is actually received by the person concerned.[28] The possibility of storage costs being incurred by the gambling operator arises because reg 5(1) and (2) of the Gambling (Class 4 Net Proceeds) Regulations 2004 provides:5 Duty to keep documents and data(1) A licence holder must keep documents and data relating to the conduct of its class 4 gambling that are up to date and accurate and enable the verification of all transactions relating to the conduct of its class 4 gambling.(2) Without limiting subclause (1), a licence holder must ensure that documents relating to—(a) the application of funding to authorised purposes or distribution of funding for authorised purposes, as the case may be, are up to date and accurate on a day-to-day basis; and(b) the payment of costs are up to date and accurate on a day-to-day basis.(3) Without limiting subclause (1), a licence holder must keep the following documents and data relating to the conduct of its class 4 gambling—(a) a record of its assets and liabilities; and(b) a day-to-day record of its income and expenditure and the matters in respect of which income and expenditure occurs; and(c) documents associated with gambling equipment; and(d) documents recording the application of funding to authorised purposes and grant distributions for authorised purposes, as the case may be, on a day-to day basis; and(e) the licence holder's financial statements and documentsrelating to the annual report required under section 107 of the Act; and(f) vouchers, bank statements, invoices, receipts, and other similar documents to verify the matters referred to in paragraphs (a) to (e).(4) (5) A licence holder must retain the documents and data required under subclauses (1) to (4) for a period of not less than 7 years after the date on which they were completed or compiled.(6) A licence holder must retain at the class 4 venue copies of records, required by any relevant game rules, that have been completed or compiled at the venue.(7) The copies of records referred to in subclause (6) must be retained at the venue for at least 1 month after they are completed or compiled.[29] The possibility of mileage costs being incurred by the gambling operator arises because s 104(1) provides:A venue manager must bank all gaming machine profits from class 4 gambling directly into a dedicated account for gaming machine profitsspecified by, and in the name of, the holder of the class 4 operator's licenceat a registered bank in New Zealand.[30] This obligation is reinforced by reg 4 of the Gambling (Class 4 Banking) Regulations 2006 which provides:For the purposes of section 104 of the Act, a venue manager must bank all gaming machine profits within 5 working days beginning on the day that the profits are, or ought to be, calculated.[31] For present purposes the following features of the legislative framework are significant:(a) The purpose in s 3(g) of ensuring that money from gambling benefits the community is implemented by the requirement of s 106(1) that a corporate society licensed to conduct class 4 gambling must apply ordistribute its "net proceeds" only to or for an authorised purpose.(b) In order to ensure that the "net proceeds" are maximised, the definition of that expression limits the permitted deductions to: "theactual, reasonable, and necessary costs, levies, and taxes incurred inconducting the gambling"; and "the actual, reasonable, and necessarycosts incurred in complying with" the Act, the operator's licence and the venue licence. To be deductible, the costs must be "actual, reasonable, and necessary" and they must be incurred "in conducting the gambling" or in "complying with" the legislation or licences.(c) Amongst the costs that will be deductible will be the "costs associated with the operation of class 4 gambling at the venue" listed in thevenue agreement approved by the Secretary and paid by the gambling operator to the venue operator.(d) The Secretary has power under s 116 by way of Gazette notice to setlimits on, or exclude, all or any of "the costs that may be incurred by a corporate society that conducts class 4 gambling". As s 116(2) makesclear, the costs that may be limited or excluded cover all "the actual, reasonable, and necessary costs" referred to in the definition of "net proceeds", including any costs "associated with the class 4 venue". Inother words, the Secretary is empowered by Gazette notice to limit or even exclude costs that would otherwise be deductible in calculatingthe "net proceeds" of the gambling operator.(e) The s 118 prohibitions on persons seeking, receiving or offering benefits with conditions attached does not prevent the holder of aclass 4 operator's licence paying a venue operator "costs associated with the class 4 venue" if the costs do not exceed the amountsspecified in the venue agreement, the limits in a Gazette notice under s 116, and are otherwise lawful.The Gazette notice[32] The Gazette notice issued by the Secretary under s 116 of the Act on 17 July 2008 replaced an earlier notice which had followed a process of sector consultation, independent advice from McCullum Peterson, a firm of financial consultants, ondeveloping a costing model, and internal Departmental analysis.25 The McCullumPeterson Report included a recommendation for a 25 per cent "profit margin" to cover a venue operator's management fee and incidental expenses. There was noreference to storage or mileage costs in the Report.[33] Dissatisfaction in the class 4 gambling sector led to an unsuccessful challenge to the validity of the earlier Gazette notice before Parliament's Regulations ReviewCommittee and the establishment of a venue costs working party whose report made recommendations that led to the 2008 Gazette notice.26 Again there was no reference to storage or mileage costs in that report.[34] It is acknowledged by the Department that prior to issuing the 2008 Gazettenotice the Secretary did not consider whether storage and mileage costs incurred directly or indirectly by a corporate society in complying with the relevant statutory and regulatory requirements relating to the keeping of records and the banking of gambling proceeds should or should not be addressed in the Gazette notice. The question was not raised by the sector or in either of the reports.27[35] The 2008 Gazette notice provides:Limits and Exclusions on Class 4 Venue Costs Notice 17 July 2008Pursuant to section 116 of the Gambling Act 2003, I, Michael Francis Hill, Director, Gambling Compliance Group, Department of Internal Affairs, acting under authority delegated to me by the Secretary for Internal Affairs, give notice that the following limits and exclusions on the costs that may be incurred by a corporate society that conducts class 4 gambling have been set.1. This notice applies only to costs (excluding GST) associated with class 4 venues in respect of which a venue agreement is required under the Gambling Act 2003.2. A corporate society, when incurring costs (excluding GST) associated with class 4 venues, must not incur costs (excluding GST) of:(a) more than $0.60 per gaming machine per hour of gaming machine operation in Hourly Operating Costs (Limit A);(b) more than $75.00 per gaming machine per week for Weekly Operating Costs (Limit B);25 High Court decision, above n 1, at [19]–[20].26 At [21]–[25].27 At [58].(c) more than $800.00 per venue per week for Venue Operating Costs (Limit C); and(d) more than 16% of gaming machine profits (as defined in section 104 of the Gambling Act 2003, but excluding GST), in any 12 month period (Limit D).3. A corporate society, when incurring costs associated with a class 4 venue, must not:(a) incur costs that are not Hourly Operating Costs, Weekly Operating Costs or Venue Operating Costs;(b) incur costs that are Hourly Operating Costs, Weekly Operating Costs or Venue Operating Costs for services performed at class 4 venues in the operation of class 4 gambling except for those made within the limits set out in (2)(a)–(d);(c) reimburse costs of a venue operator that the venue operator is not liable for under the venue agreement or that are not actually incurred by the venue operator; or(d) incur the same cost simultaneously in more than one of the categories specified in (2)(a)–(c).4. For the purposes of this notice:"Hourly Operating Costs" are:(i) labour costs for the performance of tasks required for the hourly operation of machines;(ii) electricity costs of operating gaming machines; and(iii) fees, for managing the provision of the services specified in (4)(i) and (4)(ii), not exceeding 25% of the sum of (4)(i) and (4)(ii)."Weekly Operating Costs" are:(iv) labour costs for the performance of tasks required for the weekly management of machines;(iv) rent or lease payments for hosting gaming machines;(v) insurance costs;(vi) interest costs; and(vii) fees, for managing the provision of the services specified in (4)(iv)–(vii), not exceeding 25% of the sum of (4)(iv), (4)(v), (4)(vi) and (4)(vii)."Venue Operating Costs" are:(ix) labour costs for the performance of tasks required for the weekly provision of a venue;(x) security costs;(xi) developments and/or enhancements and/or maintenance of the venue; and(xii) fees, for managing the provision of the services specified in (4)(ix)–(xi), not exceeding 25% of the sum of (4)(ix), (4)(x) and (4)(xi).5. The limits and exclusions in this notice take effect on 18 July 2008.6. The Limits and Exclusions on Class 4 Venue Costs Notice 2 September 2004 (No. 5857)* is revoked.[36] The Secretary also issued a Schedule, which is a standardised form for applicants for class 4 venue licences to fill in and submit to the Secretary itemising the costs agreed to be paid to the venue operator under the venue agreement. The costs detailed in the Schedule replicate the permitted costs in the Gazette notice.[37] As counsel for the Department has now pointed out, the Gazette noticeapplies "only to costs (excluding GST) associated with class 4 venues in respect of which a venue agreement is required". The Department originally took the view thatboth the storage and the mileage costs were excluded by the terms of the notice, but,on appeal, now takes the view that the storage costs are not "costs associated with class 4 venues" and are therefore not excluded by the Gazette notice but are prohibited by s 118(2) and (3).Factual background[38] Whitehouse is a "corporate society" under the Act because it is incorporatedunder the Charitable Trusts Act 1957. It has 18 gaming machines in the Tavern which is a high performing venue generating approximately $30,000 per week in profits.28[39] Whitehouse and Salutation signed a venue agreement on 14 March 2005 which, with qualifications, was subsequently approved by the Secretary.2928 At [27]–[28].29 At [30].[40] On 1 August 2010 Whitehouse and Salutation agreed on a new venue agreement which included the provisions that have led to this case:(a) Provision for Salutation to charge Whitehouse $125 per month for the storage of the records which Whitehouse is required to keep.(b) Provision for Salutation to charge Whitehouse a mileage cost of $42 per week when conducting banking activities five days per week on behalf of Whitehouse.[41] The Secretary declined to approve these provisions because neither the storage nor mileage costs were specific cost items in the Gazette notice.30 The Secretary was also of the view that the storage costs might otherwise be lawfully incurred as actual, reasonable and necessary costs depending on the volume and standard of storage required, but that the claimed costs for mileage were not reasonable or necessary.[42] In correspondence between Whitehouse and the Secretary, the Secretary accepted it would be reasonable for Whitehouse to pay $178 (plus GST) a month to have its documents stored by a third party storage company but not by Salutation.31[43] As far as the mileage costs are concerned, Whitehouse said:32(a) The mileage fee Salutation wished to charge the Trust was $42 per week.(b) The mileage fee related to Salutation conducting banking for the Trust five days a week.(c) The mileage fee was calculated on the basis of $1.05 per kilometre.[44] The Department's current position is that:30 High Court decision, above n 1, at [33] and [36].31 At [32].32 At [35].(a) the storage costs are prohibited by s 118(2) and (3); and(b) the mileage costs of $42 per week are not reasonable.High Court decision[45] Collins J began by summarising what he regarded as the key relevant legislative provisions, the issuing of the Gazette notices and the factual background. He did not refer to s 118. He then gave his reasons for declining to make the declarations sought by Whitehouse under the Declaratory Judgments Act. As Whitehouse has not cross-appealed against that part of the Judge's decision, it isunnecessary for us to consider it further.[46] Collins J then gave his reasons for deciding that the Secretary had made a reviewable error of law in issuing the Gazette notice and the Schedule.33 As theJudge explained, the Secretary's error was not as alleged by Whitehouse which was that the Gazette notice ought to have included the storage and mileage costs because they were actual, reasonable and necessary costs under the Act.[47] Instead the Judge considered that the Secretary had erred by limiting his attention to only one side of the equation, namely controlling the ability of venue operators (such as Salutation) to maximise their returns thereby minimising the net proceeds from gambling that could be distributed to authorised purposes.34 In doing so, the Secretary had inadvertently issued a Gazette notice that failed to give effect toParliament's intention.[48] The Judge had identified Parliament's intention from the following factors:35(a) An object of the Act is to ensure money from gambling benefits the community.(b) The Trust is required to maximise the net proceeds from class 4 gambling and minimise the operating costs from that gambling.33 At [52].34 At [59]–[61].35 At [53].(c) The requirement to maximise net proceeds is designed to ensure the maximum distribution of the net proceeds of gambling to authorised purposes.(d) To ensure entities like the Trust maximise the distribution of net proceeds to authorised purposes, net proceeds are defined to include"the actual, reasonable, and necessary costs".(footnotes omitted).[49] The Judge then said:36However, Parliament also decided not all "actual, reasonable, and necessary costs" would necessarily be able to be lawfully deducted by a corporatesociety when calculating net proceeds. Parliament authorised the Secretaryto exclude or set limits on certain "actual, reasonable, and necessary costs"that a corporate society might agree to with a venue operator and which canbe deducted when calculating the corporate society's net profit fromgambling. It is axiomatic that Parliament did not provide the Secretary withan unfettered discretion when determining what "actual, reasonable, and necessary costs" can be deducted by a corporate society when calculating netproceeds from gambling. What Parliament intended was that the Secretary would be able to exclude or limit costs that were "actual, reasonable, and necessary" and which undermined the legislative intention that net proceedsfrom gambling are maximised to ensure a greater distribution of the proceeds of gambling to authorised purposes. Conversely, Parliament did not intendthe Secretary would exclude or limit "actual, reasonable, and necessary costs" which maximise the net proceeds from gambling even when thosecosts were payments to a venue operator.[50] After noting the Secretary would have no concerns if Whitehouse paid reasonable storage costs and necessary and reasonable mileage costs to a third party rather than to Salutation,37 the Judge said:38The obvious question is why should it matter if cheaper storage and mileage fees are incurred pursuant to a venue agreement as opposed to more expensive charges being incurred through a contract with a third party? When questioned on this point, Ms Muller, senior counsel for the Secretary, made the following points:(1) Storage fees and mileage fees could reasonably be subsumed within the 25 per cent management fee which the Secretary has specifically allowed in the Gazette Notice and Schedule.(2) The Gazette Notice was prepared after extensive consultation with interested persons. No one raised storage or mileage fees as being an issue which required consideration.36 At [54].37 At [55]–[56].38 At [57].(3) It is unrealistic to expect the Secretary to turn his mind to every conceivable cost when considering what costs might be excluded pursuant to a Gazette Notice issued pursuant to s 116 of the Act.[51] The Judge also rejected the argument for the Secretary that the storage and mileage costs were covered by the 25 per cent management fee. He said:[58] I do not believe the 25 per cent management fee provides the answer which the Secretary is advocating. It is clear from the McCullum Peterson Report that minor and incidental costs might be covered by the 25 per cent management fee. It is also clear that until the Trust raised the issue of storage and mileage fees no one had contemplated claims of the kind the Trust wishes to make.[59] In particular, all attention was on controlling the ability of venue operators to maximise their returns thereby minimising the net proceeds from gambling that could be distributed to authorised purposes. The fact that no one thought of the possibility that actual, reasonable, and necessary storage and mileage fees could be incurred with a venue operator at better rates than might ordinarily [be] charged illustrates that the 25 per cent management fee was not intended to cover the type of costs with which this proceeding is concerned.[60] While the management fee might absorb minor and incidental costs, the costs associated with storage do not appear to be any less significant than some of the specific costs provided for in the Gazette Notice. For example, in the present case, it appears the sums the Trust pays the venue operator for insurance, interest on the float and electricity are similar to the amount it wishes to pay the venue operator for storage costs.[52] The Judge concluded on this issue:39I have sympathy for the position the Secretary has found himself in. It is clear that when determining what costs to exclude or limit by way of a s 116Gazette Notice the Secretary did not contemplate the possibility the Trust might incur "actual, reasonable, and necessary costs" with the venueoperator that would enhance the profits that could be available for distribution to authorised purposes. The Secretary understandably focused on excluding and limiting costs that reduced the profits that would be available for distribution to authorised purposes by controlling the payments a corporate society can make to a venue operator. However, by limiting his attention to only one side of the equation, the Secretary has inadvertently issued a Gazette Notice that fails to give effect to Parliament's intention setout in the provisions which I have cited in paragraph [52] of this judgment. In doing so, the Secretary has made a reviewable error of law.39 At [61].[53] The Judge then rejected Whitehouse's claim based on legitimate expectation.40 As Whitehouse has not pursued this claim on appeal, it is unnecessary for us to consider it further.[54] Next the Judge accepted Whitehouse's claim that the Secretary when settlingthe terms of the Gazette notice had failed to take into account relevantconsiderations, but because the Secretary's error was inadvertent and the issuesraised by Whitehouse had not been considered at any stage during the very long process of consultation and analysis it fell short of being unreasonable.41 While the Judge referred to the decision of this Court in Petrocorp Exploration Ltd v Minister of Energy,42 he did not address the specific question whether the Secretary was required to take into account the storage and mileage costs because they were expressly or impliedly identified under the Act as relevant considerations. As already noted,43 this is the specific question on which we sought and obtained further submissions.[55] Finally, the Judge addressed the question of relief. He noted advice from counsel for the Department that legislative reform of the payment of costs for a venue operator was contemplated so that a direction requiring the issue of a newGazette notice would be of little utility because it would result in a Gazette notice with a short life span.44 The Judge decided, however, to make the declaration to which we have already referred because he considered there would be no assurance the proposed reforms would be achieved within the foreseeable future.45[56] The Judge considered the declaration he made provided Whitehouse with the most effective relief to which it was entitled and no other relief was necessary.46 In particular, the Judge did not make any of the declaratory orders sought by Whitehouse relating specifically to its storage and mileage costs or setting aside the40 At [62]–[65].41 At [66]–[69].42 Petrocorp Exploration Ltd v Minister of Energy, above n 2.43 Above at [8].44 High Court decision, above n 1, at [70].45 At [71]–[73].46 At [74].Gazette notice. The Judge left it to the Secretary to amend the Gazette notice toallow the deduction of a corporate society's costs that are:47(a) actual, reasonable, and necessary; and(b) which have the effect of increasing the profits from gaming machines that are available for distribution to authorised purposes even when those costs are paid to a venue operator.[57] Before addressing the issue whether this declaration should be set aside, we deal with the new questions raised on appeal by the Department.Are the storage costs "costs associated with the class 4 venue" within the scopeof the Gazette notice or are they prohibited by s 118?The "costs associated with the class 4 venue"[58] We note at the outset there is no dispute that:(a) if the storage costs are "actual, reasonable, and necessary costs" inconducting the gambling or in complying with the Act they will bepermitted deductions within the "net proceeds" definition;(b) only if the storage costs are "associated with the operation of class 4gambling at the venue" will they be capable of being listed in thevenue agreement; and(c) if the storage costs are "costs that may be incurred by a corporate society that conducts class 4 gambling", they may be limited orexcluded by a s 116 Gazette notice.[59] The Department argues, however, that the storage costs are not "costs associated with the class 4 venue" and are therefore not within the Gazette noticeexclusion and are prohibited by s 118(2) and (3). The Department's argument is thatthe phrase is limited to "costs associated with performing the statutory role of venue operators or venue managers". Relying on the decision in Kia Australia Pty Ltd v47 At [73].Chief Executive Officer of Customs48 and Oxford English Dictionary definitions of"associated",49 Ms Muller submits that the cost and the venue (of the venue operator that is to be paid) must be joined in function: that is the nature of the association that is required. The cost must be a cost associated with the venue operator (or venue manager) performing the function of hosting the gambling operation. She submits that this interpretation gives effect to the legislative intent of limiting the involvement a venue operator may have in the gambling operation and is consistent with the wider purposes in s 3(g) and (f) of the Act and the distinction drawn in s 116(1) and (2) between costs incurred by gambling operators generally, costs associated with class 4 venues, and costs of operating the corporate society.[60] Ms Muller then submits that storage costs are not "costs associated with the class 4 venue" because:(a) the records of a gambling operator relate to the corporate society'sown financial operations and grant-making processes and do not relate to the particular venue;(b) the storage costs do not relate to any role played by the venue operator or venue manager under the statutory scheme: they relate to the corporate society rather than to the venue.[61] We do not agree with the Department's interpretation of the expression "costsassociated with the class 4 venue" or its application in this case. As Mr O'Neill for Whitehouse points out, the Department's interpretation is a narrow one involving thereading of words into the expression which are unrealistic and not justified by the scheme of the Act.[62] First, the storage costs are incurred because corporate societies are obliged to keep their financial records and documents relating to funding and grants for various periods of time.50 These obligations are imposed to enable the Secretary and his48 Kia Australia Pty Ltd v Chief Executive Officer of Customs (1998) FCR 473 at 479–481.49 Lesley Brown (ed) The New Shorter Oxford English Dictionary (Clarendon Press, Oxford,1993), vol 1 at 132, definition of "associate".50 See above at [28].gambling inspectors to ensure compliance by societies with the requirements of theAct, the terms of their operator's and venue licences and their venue agreements.51As such, they are record-keeping obligations that relate to all aspects of the society'sgambling operations at their class 4 venue. The obligation to store records relating to funding applications and grant distributions arises only because the corporate society is a licensed gambling operator at the venue. The record-keeping obligation is supplemented by electronic monitoring of gambling equipment and the duty to provide annual reports to the Secretary.52 The cost of storing these records willtherefore be costs "associated" with the venue in the sense that they will be costsincurred by the society in conducting its gambling operation at the venue and in complying with its record-keeping obligations.[63] Second, requiring the costs to be limited to costs "associated with the venueoperator (or venue manager) performing the function of hosting the gamblingoperation" would be to impose an artificial limitation on "costs associated with the class 4 venue". There is no reason to limit the costs to those of the venue operatorand to exclude costs necessarily incurred by the gambling operator, especially when, as here, the costs are in fact incurred in respect of the storage of records and documents at and relating to the venue.[64] Third, this approach is not inconsistent with the decision in Kia Australia, dictionary definitions or the purpose and scheme of the Act:(a) As the decision in Kia Australia recognises, the meaning of"associated" will depend on the particular legislative context.53(b) The dictionary definitions of "associated" include "allied; in the same group or category" which is apposite here.54(c) There is no need to limit the involvement of a venue operator by preventing on-site storage of the records and documents. It is hard to51 See above at [24].52 See above at [24].53 Kia Australia Pty Ltd v Chief Executive Officer of Customs, above n 48, at 480.54 Tony Deverson and Graeme Kennedy (eds) The New Zealand Oxford Dictionary (OxfordUniversity Press, Melbourne, 2005) at 60, definition of "associate".see how such storage is inconsistent with the legislation, especially in view of the extensive powers of enforcement available to the Secretary and his gambling inspectors.55(d) The distinction drawn in s 116(2) between different categories of costs is not determinative when it is borne in mind that the purpose of theprovision is to make it clear that the Secretary's power to limit or control costs incurred by the society extends to the three categories and that the categories themselves will inevitably overlap with one another. The section identifies general categories but does not prescribe or define them. In any event, the definition of "costs of operating the corporate society" in that section seems directed moretowards the internal costs of the society, such as expenses and salaries of its officers, rather than the storage of documents which relate to its gambling operations.(e) The reference to "the class 4 venue" may, by virtue of s 33 of the Interpretation Act 1999, include all the "venues" of the particulargambling operator unless the context requires otherwise. We see no contextual reason here for a requirement otherwise.[65] For these reasons we therefore consider that the storage costs are "costs associated with the class 4 venue".The scope of the Gazette notice[66] Our conclusion that the storage costs are "costs associated with the class 4 venue" means they are within the scope of the Gazette notice which, as we havealready noted, applies "only" to such costs.[67] But this also means that storage costs are currently excluded by the Gazettenotice because:(a) paragraph 3(a) of the Gazette notice provides that a corporate society55 See above at [13]."must not (a) incur costs that are not Hourly Operating Costs, Weekly Operating Costs or Venue Operating Costs"; and(b) storage costs (like mileage costs) are not included in the definitions of Hourly Operating Costs, Weekly Operating Costs or Venue Operating Costs.[68] Consequently, storage costs (and mileage costs) are not costs that a corporatesociety like Whitehouse may deduct for the purpose of calculating its "net proceeds".The s 118 prohibitions[69] Our conclusion that the storage costs are "costs associated with the class 4venue" means that the prohibitions in s 118(2) and (3) will be inapplicable if, interms of s 118(4), the costs:(a) do not exceed the amounts specified in any venue agreement; and(b) do not exceed the limits in section 116; and(c) are otherwise lawful.[70] As the requirements of paras (a) and (b) are not currently met because storage costs are not approved in the venue agreement or permitted by the Gazette notice, it is necessary to consider whether the prohibitions under s 118(2) and (3) are applicable.[71] The Department's argument is that the storage costs which would be paid byWhitehouse (the class 4 operator) to Salutation (the venue operator) are prohibited by s 118 rather than the Gazette notice because:(a) section 118(2) prohibits a venue operator from seeking or receiving any money or benefit with a condition attached from a class 4 operator; and(b) section 118(3) prohibits a class 4 operator from offering any money or benefit with a condition attached to a venue operator.[72] The Department's argument is dependent on the references to a "condition"in s 118(2) and (3) meaning any kind of contractual term or condition. In the courseof argument, Ms Muller explained that the contractual "conditions" here were theprovision of storage services and the receipt of payment for those services.[73] In response Mr O'Neill submitted that the purpose of s 118 was to preventkick-backs or inducements being offered by class 4 operators to venue operators. He referred to the New Zealand Gambling Law Guide 2013:56Section 118 is designed to ensure that the relationships, direct and indirect, financial and otherwise between societies, venue operators, grant recipients and gambling equipment associated entities do not stray from the strictlyregulated permissible limits contained in the Gambling Act 2003 the onlyrelationship between venue operators and societies should be that governed by the venue agreement [74] Mr O'Neill also submitted that the key to interpreting s 118 is the proposedamendment to the provision currently before Parliament which would insert the term"improper" before each reference to "condition attached".57[75] We do not agree with Mr O'Neill that it is appropriate to refer to the proposedamending legislation for the purpose of interpreting s 118. We agree with Ms Muller that we should disregard the amending legislation. First, as a matter of principle, courts will be cautious before interpreting legislation even in light of enacted amendments.58 Second, the Gambling Amendment Bill (No 3) proposes to alter significantly the nature of the relationship between venue operators and class 4 gambling operators by allowing the Secretary to issue regulations prescribing the matters for which venue operators may or may not be paid, including but not limited to costs.59 The Government Administration Committee recommends the amendments to s 118 in conjunction with other amendments.60 The Bill is thereforeunhelpful in discerning Parliament's intention at the time s 118 of the Gambling Act 2003 was enacted.56 Jarrod True New Zealand Gambling Law Guide (Harkness Henry, 2013) at [6.01].57 Gambling Amendment Bill (No 3) 2015 (216-2) (explanatory note) at 3.58 Databank Systems Ltd v Commissioner of Inland Revenue [1990] 3 NZLR 385 (PC) at 393–394;and Ross Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at 683–685.59 Gambling Amendment Bill (No 3) 2015 (216-2), cl 13 and 18.60 Gambling Amendment Bill (No 3) 2015 (216-2) (explanatory note) at 3.[76] But we do not accept the Department's submissions as to the interpretation ofs 118. They are not supported by the text and purpose of the provision:(a) The first three subsections of s 118 prohibit specific actions which by virtue of subsection (5) are criminal offences.(b) The language of "knowingly" receiving or seeking and "knowingly" offering "money, a benefit, an advantage, privilege, or gift" with "a condition attached" is the language required for criminal offending. Itis not the language indicating an ordinary contractual relationship.(c) The requirement for the person to do the proscribed act "knowingly"is the mental element for the criminal offences.(d) The requirement for the "condition" to be "attached" to the receipt indicates that the "condition" involves the addition of an extrarequirement, such as a kick-back or inducement, not an ordinary contractual term.(e) These requirements reflect the purpose of the offence provisions which is to prohibit arrangements beyond the ordinary contractual terms of the venue agreement between the gambling operator and the venue operator which will include the itemised list of costs approved by the Secretary.61(f) If Parliament had intended the prohibitions to relate to the ordinary contractual terms of the venue agreement, it would have said so.[77] This approach to the interpretation of s 118(2) and (3) is supported by the legislative history of the provision. The enactment of the Act in 2003 was preceded by a Departmental review, including a discussion document released on 28 February 2001 which called for submissions.62 In the context of considering fundamental61 See above at [17].62 Department of Internal Affairs Gaming Reform in New Zealand: Towards a New Legislative Framework (Wellington, 2001).principles relating to all types of gaming, the review noted concerns that the system for distribution of the profits of gaming allowed site operators to influence the grants decision-making process and potentially abuse the system. An example was given of a site operator imposing a condition on potential grant recipients that they would not be recommended to receive a grant unless the recipient group patronised the hotel.63Section 118(1) appears to respond to these concerns of misuse of the system. And there is nothing in the Select Committee report or in Hansard which indicates Parliament intended to prohibit contractual conditions more broadly in situations where there is no flavour of impropriety or misuse.[78] For these reasons we therefore do not accept Ms Muller's argument that theagreement between Whitehouse and Salutation for the provision of storage services and the receipt of payment for those services constitutes offences prohibited by s 118(2) and (3). It does not involve the requisite mental element for the offendingor a "condition attached" to a receipt. The agreement is one that could be approved by the Secretary for the inclusion in the venue agreement.[79] This means it is necessary to consider next whether Collins J was right to make the declaration he did requiring the Secretary to amend the Gazette notice.Should the High Court declaration be set aside?[80] It is well-established that a court will generally not make a declaration under the Judicature Amendment Act unless there is a dispute between the parties, the dispute arises from specific facts which are already in existence, the dispute is alive and its determination will be of some practical consequence to the parties or the public.64 The requirement that the declaration have utility means that it should be fact-specific, efficacious and capable of practical application.63 At 71.64 Fowler & Roderique Ltd v Attorney-General [1987] 2 NZLR 56 (CA) at 78; Wool Board Disestablishment Co Ltd v Saxmere Co Ltd [2010] NZCA 513, [2011] 2 NZLR 442 at [141]; Lord Woolf and Jeremy Woolf Zamir and Woolf: The Declaratory Judgment (4th ed, Sweet & Maxwell, London, 2011) at [4.57]–[4.109]; Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thompson Reuters, Wellington, 2014) at [27.3.3] and Andrew Beck and others McGechan on Procedure (online looseleaf, Brookers) at [JAA4.03(12)]. The position under s 3 of the Declaratory Judgments Act 1908 is different:Mandic v The Cornwall Park Trust Board (Inc) [2011] NZSC 135, [2012] 2 NZLR 194 at [5]–[9].[81] In this case there are a number of difficulties with the High Court declaration. First, the requirement for the Secretary to amend the Gazette notice to allow thededuction of a corporate society's costs that are "actual, reasonable, and necessary" simply reflects the language of the first part of paragraph (a) in the definition of "net proceeds" in the Act. In other words, costs that meet these requirements are bystatutory definition to be deducted from the gambling turnover in order to constitute"the net proceeds" from the gambling that are to be applied to, or distributed for,authorised purposes in accordance with the definition of class 4 gambling.65[82] Costs that are "actual, reasonable, and necessary" must therefore be takeninto account in calculating a corporate society's "net proceeds" unless the Secretarylimits or excludes them by Gazette notice issued under s 116 of the Act. In the event that a Gazette notice limits or excludes costs that may be incurred by a corporate society, the corporate society will not be entitled to take those costs or their fullamount into account in calculating its "net proceeds". In other words, a Gazettenotice will have the effect of modifying the reference to the "actual, reasonable, andnecessary" costs in the definition of "net proceeds".[83] The requirement in the High Court declaration for the Secretary to allow thededuction of a corporate society's costs that are "actual, reasonable, and necessary"is therefore contrary to the power of the Secretary under s 116 to issue a Gazettenotice to the opposite effect. As Simon France J said in refusing to issue a declaration in similar terms in Pub Charity v Department of Internal Affairs:66Section 116 is a power given to the Secretary to additionally limit certain expenses. In other words, to go beyond the general limit in the Act of reasonable and necessary, and further circumscribe expenditure. Theplaintiff's interpretation would restrict the Secretary, under s 116, to merelydeclaring what are reasonable and necessary costs. Such an interpretation is not warranted by the wording of the section and would render s 116 of no practical utility. Further, it is a proposition specifically rejected by the Select Committee considering the Bill. The Committee considered a submission that the general test was sufficient constraint but expressly recommended the retention of what was to become s 116.65 See above at [19].66 Pub Charity v Department of Internal Affairs [2014] NZHC 1096 at [38].[84] Second, the requirement for the Secretary to amend the Gazette notice to allow the deduction of a corporate society's costs that "have the effect of increasingthe profits from gaming machines that are available for distribution to authorisedpurposes even when those costs are paid to a venue operator" is also problematic.The first part of the requirement is obviously consistent with the purpose of the Act,but it does not add anything to the Secretary's existing obligations and the secondpart is difficult to understand and apply.[85] Costs that are in fact paid by a corporate society to a venue operator willeither meet the requirements of the Act or not. If they are costs that are "actual, reasonable, and necessary", they will be able to be taken into account in calculating the corporate society's "net proceeds" unless they are limited or excluded by a s 116Gazette notice in which case they will not be. This part of the declaration is therefore either unnecessary or contrary to the power of the Secretary to issue aGazette notice which limits or excludes such costs.[86] For these reasons, we are satisfied the High Court declaration is in such general and non-specific terms that it does not meet the utility requirement for a declaration and should therefore be set aside.Was the Secretary required to consider whether the storage and mileage costs should have been limited or excluded before issuing the Gazette notice?[87] There is no doubt that by s 116 of the Act Parliament has conferred a wide discretionary power on the Secretary to limit or exclude by Gazette notice the costs that may be incurred by a corporate society conducting class 4 gambling. There is no limitation on the nature or scope of the power of limitation or exclusion in s 116 itself. It appears that any costs incurred by the corporate society may be limited or excluded completely. Indeed s 116(2) makes it clear the costs that may be limited orexcluded "include" the various categories of costs referred to in paras (a), (b) and (c)of that subsection. Plainly it is contemplated that any other costs incurred by a corporate society may also be limited or excluded.[88] But, like all such wide discretionary powers, the power conferred on the Secretary by s 116 is not unfettered.67 It must be exercised lawfully in accordance with the relevant legislative purposes and provisions and taking into account all mandatory and relevant considerations.68[89] As far as relevant considerations are concerned, it is well-established and not in dispute that an exercise of a statutory discretion of this nature may only be set aside for failure to have regard to relevant considerations when a statute expressly or impliedly identifies considerations required to be taken into account. As Cooke P said in Petrocorp Exploration Ltd v Minister of Energy:69In previous cases I have had occasion to underline the fairly obvious point that it is only when a statute expressly or impliedly identifies considerations required to be taken into account that an exercise of statutory discretion may be set aside for failure to have regard to relevant considerations. It is not enough that the consideration is one that could properly be taken into account or that many people, including the Court, would have taken into account; see for instance CREEDNZ Inc v Governor-General [1981] 1 NZLR, 172, 183 and the authorities there cited; Ashby v Minister of Immigration [1981] 1 NZLR 222, 225.[90] In our view it is a straightforward application of this principle to conclude that when the Secretary is proposing to issue a Gazette notice limiting or excluding costs the Secretary is required to identify the costs involved, including in particular costs that the legislation itself recognises, expressly or impliedly, will be incurred by the corporate society, and consider whether it is appropriate to limit or exclude them. The power of limitation or complete exclusion of costs is an important power in the Act. Its exercise is likely to have a significant impact on the calculation of acorporate society's "net proceeds". In these circumstances it is therefore reasonableto conclude that Parliament would have intended the Secretary to give careful consideration to the impact of the exercise of the power on all the relevant costs affected by the proposed Gazette notice.67 Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42 at [53].68 New Zealand Drivers' Association v New Zealand Road Carriers [1982] 1 NZLR 374 (CA) at 388; Harness Racing New Zealand v Kotzikas [2005] NZAR 268 (CA) at [57]; and Ross Carter, Jason McHerron and Ryan Malone Subordinate Legislation in New Zealand (LexisNexis, Wellington, 2013) at [12.1.4]–[12.1.5] and [12.2.1]–[12.2.2].69 Petrocorp Exploration Ltd v Minister of Energy, above n 2, at 33. See also Joseph, above n 64, at [23.2.3].[91] In this case the Secretary issued a Gazette notice which had the effect of excluding the storage and mileage costs incurred by Whitehouse, a corporate society conducting class 4 gambling. As mentioned, the Department accepts that before issuing the Gazette notice with this effect no consideration was given to the question whether the storage and mileage costs should have been excluded. The Secretary failed to consider the propriety of the exclusion of these costs notwithstanding the statutory and regulatory provisions that meant that they would be, or would be likely to be, incurred by a corporate society conducting class 4 gambling.[92] In the case of the storage costs, reg 5(1) and (2) of the Gambling (Class 4 Net Proceeds) Regulations made under s 371 of the Act require a gambling operator to keep and store records and documents for seven year periods. It is reasonable to assume that the corporate society gambling operator will incur storage costs in complying with these obligations either by storing documents on-site, in which case the venue operator (Salutation) will charge for the service, or off-site, in which case a third party will charge. The fact the Secretary would agree to a gambling operator paying storage costs to a third party confirms that such costs ought to have been considered before the Gazette notice was issued excluding them.[93] In the case of the mileage costs, s 104(1) of the Act requires the profits of the gambling operator (Whitehouse) to be banked by the venue operator (Salutation) within the timeframe specified in the Regulations.70 Again it is reasonable to assume that the corporate society gambling operator will incur mileage costs in complyingwith these obligations either itself or by paying the venue operator. As Mr O'Neillpointed out, the evidence established that it was necessary for Mr Hayes of Salutation to bank a hopper bin full of coins from the Tavern's gambling machineson a daily basis.[94] The fact that no-one raised the storage and mileage costs at any time before the Gazette notice was issued does not mean they were not relevant considerations which the Secretary was required to consider. The requirement to consider these costs arises by virtue of the Act and Regulations and is not abrogated by inaction on the part of anyone else.70 See above at [30].[95] Similarly, the Department's argument that the mileage costs claimed here are unreasonable because the Trust claims five trips per week and at a rate above theInland Revenue Department's approved rate does not nullify the requirement for theSecretary to consider the costs before issuing the Gazette notice. The question whether the costs are reasonable is a separate question for the Secretary to consider when deciding whether to approve them in the venue agreement.If so, should the Secretary be directed to reconsider the Gazette notice and determine whether the storage and mileage costs should have been limited or excluded?[96] Once an error of law is identified, the Court has a discretion as to what remedy should be granted. Generally, some form of relief will be granted where there is substantial prejudice, unless there are extremely strong reasons otherwise.71Relief might be refused where it would be futile, legislation is likely to be changed or administrative chaos would otherwise result.72 One remedy is for the Court to direct the decision maker to reconsider his or her decision with directions as to how the matter should be reconsidered.73 This remedy may be appropriate and efficacious where the decision-maker is in the best position to do so in light of legal findings that he or she has erred in approach and the decision may have far-reaching consequences.[97] Applying these principles to the exercise of the discretion here, we are satisfied that relief should be granted, but it would not be appropriate to set aside the whole of the Gazette notice. Rather there should be a declaration that it is invalid to the extent that it excludes storage and mileage costs and the Secretary should be directed to reconsider the notice and determine whether storage and mileage costs incurred by class 4 operators such as Whitehouse should have been limited or excluded.[98] Relief should be granted because of the Secretary's error of law in failing toconsider whether the storage and mileage costs should have been limited or excluded71 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [60]–[61]; Rees v Firth [2011] NZCA 668, [2012] 1 NZLR 408 at [48]; and Tauber v Commissioner of Inland Revenue [2012] NZCA 411, [2012] 3 NZLR 549 at [90]–[91].72 Joseph, above n 64, at [27.4.2(6)–(7)]; Carter, McHerron and Malone, above n 68, at [12.10].73 Judicature Amendment Act 1972, s 4(5).before issuing the Gazette notice. Whitehouse has been prejudiced by theSecretary's decision to exclude these costs and there is no suggestion administrativechaos would result from the declaration or if the Secretary were required to reconsider the question.[99] The Department submitted that, if the Court were minded to intervene, reliefshould be refused in the Court's discretion given "the proposed and imminent amendments to the scheme for paying venue costs". As a condition of this, theDepartment said it would submit to the Court making an order that the Department allow Whitehouse to pay Salutation any mileage and/or storage costs that are found to have been barred unlawfully by the 2008 Gazette notice, from August 2010 when Whitehouse submitted the 2010 agreement for approval.[100] We do not consider the prospect of amending legislation means that relief should be refused. The relief will have an impact on the period from August 2010 until the amending legislation is enacted and comes into force.[101] We also do not consider it would be appropriate for the Court to impose a condition of the nature suggested by the Department. If, on reconsideration, the Secretary decides that storage and mileage costs should not have been excluded by the Gazette notice, then it will be for the Secretary to decide whether to approve those costs and to permit Whitehouse to pay them to Salutation.[102] We do not consider it would be appropriate to set aside the whole of theGazette notice because:(a) it is unnecessary to do so when only the exclusion of storage and mileage costs is at issue;(b) an order of that nature might have an adverse practical effect on all gambling and venue operators; and(c) a declaration limited to invalidating the Gazette notice to the extent that it excludes storage and mileage costs will suffice.[103] We consider it appropriate to direct the Secretary to reconsider the Gazettenotice and determine whether storage and mileage costs incurred by class 4 operators such as Whitehouse should have been limited or excluded. This direction will require the Secretary to consider whether the storage and mileage costs are "actual, reasonable, and necessary" and, if so, whether they ought to have been limited orexcluded in the Gazette notice and then, if necessary, approved, in whole or in part, in the venue agreement.Result[104] Accordingly:(a) The appeal is allowed in part.(b) The declaration made in the High Court under s 4(1) of the Judicature Amendment Act 1972 is set aside.(c) In all other respects the appeal is dismissed.(d) There is a declaration that the Gazette notice issued by the Secretary of Internal Affairs on 17 July 2008 under s 116(1) of the Gambling Act 2003 is invalid to the extent that it excludes storage and mileage costs incurred by class 4 operators such as Whitehouse.(e) The Secretary of Internal Affairs is directed under s 4(5) of the Judicature Amendment Act 1972 to reconsider the Gazette notice and determine whether storage and mileage costs incurred by class 4 operators such as Whitehouse should have been limited or excluded.[105] As costs should follow the event and Whitehouse has been largely successful, the Department must pay Whitehouse's costs for a standard appeal on a band A basis and usual disbursements.Solicitors:Crown Law Office, Wellington for AppellantNielsen Law, Hamilton for Respondent