N6930

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 289 OF 2015

JOHN OPOTIO
Plaintiff

V

COURTABELLE INVESTMENTS LIMITED 
TRADING AS HOTEL HODAVA 
Defendant

Madang: Cannings J
2016: 25 June, 10 August, 
2017: 6 October

CONTRACTS – gaming machines – alleged breach of contract by site owner who operated a poker machine parlour – refusal to pay winning bet – whether the fact that a poker machine is faulty provided the site owner with a defence. 

The plaintiff played a game of chance on a licenced gaming machine at a poker machine parlour operated by the defendant in accordance with a permit granted under the Gaming Machine Act 2007. The machine on which the plaintiff played showed a winning bet of K40,800.00. The defendant refused to pay out the bet, claiming that the machine had malfunctioned and that it was the responsibility of the National Gaming Control Board (the owner of the machine) to remedy the problem. The plaintiff commenced proceedings against the defendant, claiming damages for breach of contract. The defendant argued that, for three reasons, there was no breach of contract: (a) the machine malfunctioned and therefore the winning bet was void; (b) it was not the owner of the machine and therefore could not be liable; (c) the winning bet was void per force of Section 31 of the Gaming Machine Regulation 2015 (as the winning credits on the machine exceeded the winning bets on the price table, which rendered the win void). A trial was conducted on the issue of liability.    

Held:

(1)	An enforceable contract existed between the plaintiff and the defendant, the terms of which included that upon the poker machine displaying a winning bet, the defendant was obliged to forthwith pay the amount of the bet to the plaintiff unless for some good and lawful reason the bet was void.

(2)	The burden of proving that a bet was void rested on the party making that claim, the defendant.

(3)	As to the three arguments raised by the defendant: (a) proof that a machine was faulty does not by itself render a winning bet void, and in any event the defendant failed to prove that the machine was faulty; (b) the fact that a poker machine is owned by a person or authority other than the person operating the machine (in accordance with a permit) is not a defence; (c) reliance could not be placed on Section 31 of the Gaming Machine Regulation as it was not pleaded in the defence, that provision was not the law at the relevant time, and in any event the preconditions to its operation were not proven by the defendant. 

(4)	The defendant failed to prove that the winning bet was void and under the terms of the contract with the plaintiff, it was obliged to pay the winning bet. Its refusal to pay was a breach of contract and it is liable in damages. 

Cases cited

No cases are cited in the judgment. 

STATEMENT OF CLAIM

This was a trial on liability for breach of contract.

Counsel

G Pipike, for the Plaintiff
P N Rumints, for the Defendant

6th October, 2017 

1.      CANNINGS J: The plaintiff John Opotio played on a poker machine at the gaming lounge at Hotel Hodava, Port Moresby, on 19 October 2013.  He had been playing on the same machine, called “Jaguar”, for several hours when the machine displayed a winning bit of 4,080,000 (4.08 million) credits. Each credit had a value of one toea. The winning bet amounted to K40,800.00. The plaintiff claimed that sum from the cashier but upon checking with her supervisor, she refused to pay out the winning bet. 

2.     The plaintiff was aggrieved and complained to the hotel proprietor, Courtabelle Investments Ltd, the defendant, which lawfully operates the poker machine and 36 others at its premises in accordance with a permit issued to it under the Gaming Machine Act 2007. The defendant refused to pay out the bet on the grounds that the machine had malfunctioned and it was the responsibility of the National Gaming Control Board (the owner of the machine) to remedy the problem.

3.     The plaintiff subsequently commenced proceedings against the defendant, claiming damages for breach of contract. A trial has been conducted on the issue of liability.

ISSUES 

4.     +The defendant does not dispute the essential facts alleged by the plaintiff. The defendant does not dispute that the poker machine showed a winning bet of K40,800.00 and does not suggest that the plaintiff tampered with the machine or cheated. The defendant does not dispute the existence of a contract between it and the plaintiff and that in normal circumstances it would be obliged to pay the winning bet displayed on the machine. However, it denies the claim of breach of contract, on three grounds:

(a)	the machine malfunctioned and therefore the winning bet was void; 
(b)	it was not the owner of the machine and therefore could not be liable;
(c)	the winning bet was void perforce of Section 31 of the Gaming Machine Regulation 2015. 

5.     I am satisfied that there was an enforceable contract between the plaintiff and the defendant, the implied terms of which included that upon the poker machine displaying a winning bet, the defendant was obliged to forthwith pay the amount of that bet to the plaintiff unless for some good and lawful reason the bet was void. The burden of proving that a bet is void rests on the party making that claim, in this case, the defendant. I now address the defendant’s three arguments.

(a)	THE MACHINE MALFUNCTIONED AND THEREFORE THE WINNING BET WAS VOID

6.     The defendant’s assertion that the machine malfunctioned is based on the affidavit evidence of its managing director, Vincent Mirupasi. He deposed that the 4,080,000 credits displayed on the machine did not register on the pay-out computer, which shows that the machine had malfunctioned. He states that he is aware that a technical team from the National Gaming Control Board attended the site on 20 October 2013 and verified that the machine had malfunctioned. He states that the Jaguar machine is similar to a State of Origin machine in that a pay-out can be no more than K10,000.00. He stated that the National Gaming Control Board technicians did not issue a report on the faulty machine, which they should have done. He stated that the Board is the owner of the machines and responsible for service, repair and maintenance and keeping accurate maintenance records and that its failure to do so in this case amounted to negligence on its part.

7.     I find that Mr Mirupasi’s evidence is of little probative value as it is hearsay, not independent, opinionated and uncorroborated. I am not satisfied that the machine malfunctioned. Even if I were so satisfied, I am not satisfied as a matter of law that that by itself renders a winning bet void. Argument (a) is rejected. 
 
(b)	THE DEFENDANT WAS NOT THE OWNER OF THE MACHINE AND THEREFORE COULD NOT BE LIABLE

8.     This is a vague and empty argument. It is uncontentious that the defendant was not the owner of the machine. That does not relieve it of liability. The fact that a poker machine is owned by a person or authority other than the person operating the machine is not a defence. Argument (b) is rejected. 

(c)	THE WINNING BET WAS VOID PERFORCE OF SECTION 31 OF THE GAMING MACHINE REGULATION 2015 

9.     Ms Rumints, for the defendant, relied on this provision, which states:

(1)	A site owner or holder of a gaming machine permit shall only be liable to pay a wining bet won on any authorised gaming machine by a patron or player in accordance with the price table displayed on the gaming machine.

(2)	When a win by a patron or player on an authorised gaming machine and the credits won exceed the corresponding winning credits displayed on the price table due to an error or faulty machine, the win is void and cannot be claimed by a patron or player.

(3)	Notwithstanding Subsection (2), the site owner or holder of a gaming machine permit shall be liable to pay the equivalent of the winning credits displayed on the price table that ought to have appeared on the concerned gaming machine.

(4)	When a dispute arises between a patron or player and the holder of a gaming machine permit, the dispute must be referred to the Board for determination as soon as practicable and the decision of the Board shall be final and binding.

10.      Ms Rumints submitted that Section 31(2) applied in this case as the plaintiff’s ostensibly winning bet of K40,800.00 exceeded the corresponding winning credits displayed on the “price table” due to the machine being faulty, making the win void. She submitted that the plaintiff should have referred the dispute to the National Gaming Control Board, rather than bringing it to Court.  

11.     I reject this argument for four reasons. First, Section 31 of the Gaming Machine Regulation 2015 was not pleaded in the defence, and leave was not sought to amend the defence. It is a new argument of which the plaintiff has been given no notice. It cannot be relied on. 

12.     Secondly, the Regulation was made in 2015. It is not expressed to have retrospective effect. It cannot apply to the events in this case, which occurred in 2013. 

13.    Thirdly, the preconditions to operation of Section 31(2) have not been proven by the defendant. It has not been proven: (i) that the credits won exceeded the corresponding winning credits displayed on the price table or (ii) that the excess was due to an error or faulty machine. 

14.     Fourthly, the requirement in Section 31(4) to refer disputes to the Board is directory only. It should not be interpreted as a bar to an aggrieved player commencing legal proceedings against the holder of a gaming machine permit. Argument (c) is rejected. 

CONCLUSION 

15.     The defendant has been unable to discharge the burden of proving that the plaintiff’s winning bet was void.  Under the terms of the contract with the plaintiff, it was obliged to pay the winning bet. Its refusal to pay was a breach of contract and it is liable in damages. The plaintiff is entitled at least to the liquidated sum of K40,080.00. There will need to be a trial on assessment of the other relief sought in the statement of claim – general damages and interest – unless the parties agree on appropriate awards. Costs will follow the event.   

ORDER

1.	The defendant is liable in breach of contract to the plaintiff as pleaded in the statement of claim.

2.	The defendant is liable for the liquidated sum of K40,800.00 plus general damages, which if necessary will be subject to assessment at a separate trial. 

3.	Subject to any specific costs orders made in the course of the proceedings the defendant shall pay the plaintiff’s costs of the entire proceedings to date, on a party-party basis, which shall if not agreed be taxed.

Judgment accordingly.
_____________________________________________________________
GP Lawyers:  Lawyers for the Plaintiff	
Mirupasi Lawyers:  Lawyers for the Defendant