Rival lawsuits based on illicit gaming

REBECCA STEVENSON

Last updated 05:00 12/05/2013

Rules of the game: The High Court decision was based on the principle that no one should benefit from his or her own wrong.

A struggling Auckland golf club which sold its course to property developers ran an illegal pokies operation which pulled in almost $1 million in revenue from gamblers and paid out under $10,000 in grants.

A recent High Court judgment revealed one of Auckland's oldest golf clubs, the Manukau Golf Club, ran an illicit gaming operation in a Takinini bar - the Trophy Bar - between late 2007 and 2009.

The golf club and the Trophy Bar's owner, Maurice Joyce, subsequently unsuccessfully sued each other to cover losses each side claimed they suffered as a result of the closure of the 18-machine gaming operation.

Manukau's venue licence for the Trophy Bar operation was suspended by the Department of Internal Affairs for 30 days in December 2009 after an audit uncovered venue overpayments, late banking and poor paperwork. Manukau surrendered its venue licence at around the same time, and the bar closed.
Manukau then claimed more than $1.18 m from Joyce's company, Shoye Venture, for failing to adhere to the terms of the venue agreement, which detailed how the bar's pokie operation was to run, in accordance with gambling regulations.

However, the parties operated a contradictory side agreement involving the illegal gambling operation, where the distance between Manukau as the gaming licence holder, and Shoye as the venue manager, was not maintained.

The golf club alleged in its civil suit that the bar closure cost the club $638,000 in lost gaming revenue, that more than $65,000 in gaming profits was unpaid and that Shoye was overpaid for venue payments.

Internal Affairs' audit into Manukau's gaming operation in early 2009 found overpayments of $101,368 were made to Shoye. Shoye was paid more than $2300 per week for its interest in the business - in breach of gambling regulations - and it received more than $260,000 in venue payments over the two years.

Manukau Golf Club's 2009 annual report showed income from off-site gaming at the Trophy Bar was $987,611 over its two years of operation, 2008 and 2009. Of this the golf club paid out $9800 in grants.

It recorded $134,571 as "misappropriations" from the off-site gaming operation. In addition, almost $60,000 was spent on advertising - Manukau paid the Trophy Bar about $4000 per month for advertising club memberships when a club membership for a year was only $1500. Legal fees were $50,000. Shoye denied Manukau's claim and counterclaimed for more than $1.15m from the failed gaming deal and the loss of the Trophy Bar business. It said Manukau ran the gaming operation and bar outright through golf club employee Tania Mara - not Joyce and Shoye - and had no responsibility for the venue, the gaming operation, or any liabilities or losses. Joyce sought compensation for the loss of the Trophy Bar business, its income, and other losses resulting from the closure of the gaming operation, including $30,000 to settle a lease on the bar's premises.
Shoye said the venue overpayments were made by Manukau to another company, Trophy Bar Ltd, which was controlled by the golf club, not Shoye. Trophy Bar Ltd was owned by Mara.

In a ruling out last month Justice Ailsa Duffy dismissed both claims and found neither the Manukau Golf Club, or Joyce through his company Shoye Venture, could sue each other as "it would allow them to sue to recover losses that are a consequence of their illegal gambling operation". To allow

Manukau to sue would offend the principle that no one should benefit from his or her own wrong, Justice Duffy said.

"The loss of the Trophy Bar business and any income Shoye might have received from leasing the bar to a third party was the direct result of the failed and illegal gambling operation. Shoye was a willing participant in that operation."

The club sold its historic Manukau course to Fletcher Residential last year for $40m to ease financial pressures blamed on dwindling memberships and unfunded course improvements, and will move to a new site in 2016. It has about 750 members left.

Club general manager Stewart Halligan refused comment on record about the civil suits and Joyce did not respond to calls.

Several members responsible for running the club at the time of the illegal gaming are no longer doing so, including former club manager Ross Keown, golf club chairman Edward Malloch, and men's team captain Anthony Barrow.

http://www.stuff.co.nz/business/8661677/Rival-lawsuits-based-on-illicit-gaming