Venue Managers Criminally Liable but Faultless?

Harkness Henry solicitor Jarrod True specialises in advising Trusts and Clubs who are involved in the gaming industry.  Jarrod’s article discusses what element of fault is required to criminally prosecute Venue Managers for late bankings and suggests a process Venue Managers should undertake to avoid the possibility of criminal liability.

Section 104 of the Gambling Act provides that it is a criminal offence punishable by a fine not exceeding $5,000.00 if the Venue Manager fails to bank gaming machine proceeds into the Trust’s bank account each week.  The section appears to impose an absolute obligation.  If the gaming machine proceeds are stolen during a burglary does the Venue Manager commit a criminal offence by failing to bank the full proceeds at the end of the week?  If the bar is suffering financially and does not have sufficient funds at the end of the week to make full payment, will the Venue Manager commit a criminal offence by banking late?

Section 104 is silent as to whether any mens rea (i.e. any intentional or deliberate fault) is required.  The section would appear to provide that a Venue Manager is criminally liable when, due to no fault of their own, the gaming machine proceeds are not available for banking at the end of the week.

The Courts however are very reluctant to impose criminal sanctions when an offence has occurred unintentionally.  The Courts will imply a mens rea ingredient if the offence is classified as “serious” or “truly criminal”.  Offences which are considered to be “public welfare” offences or “regulatory” offences are less likely to have any requirement to prove fault incorporated and as such are classified as strict liability offences.  When the section clearly provides that fault is not required, the offence will be classified as an absolute liability offence (lack of mens rea or absence of fault would not be a defence).

Section 104 does not expressly provide that lack of intention or fault is irrelevant.  It is therefore highly unlikely that section 104 would be considered to be an absolute liability offence.

It is yet to be decided by the Courts whether section 104 is a “truly criminal” offence requiring proof of a deliberate act for fault, or whether the section is a “regulatory” type offence.

If the Courts held section 104 to be a “regulatory” type offence, to obtain a conviction the Police or DIA would not need to prove a deliberate act or fault, but a conviction could be avoided if the Venue Manager proved total absence of fault on their part.  To prove total absence of fault the Venue Manager must show that they acted with a high standard of care, with due diligence and without negligence.

In the case of a burglary (assuming adequate security measures were in place) the Venue Manager would have a defence on both classifications.  If the Court classified the section as a “truly criminal” offence requiring mens rea, the Venue Manager would have a defence as there was no intention to fail to bank the full proceeds.  If the offence was classified as one of strict liability, the Venue Manager would be able to prove total absence of fault and thus will still have a defence to the charge.

The situation would be different when a Venue Manager is unable to bank the gaming proceeds to the Trust at the end of the week due to the business having financial difficulties. Let us look at the example of a Venue Manager who knows the business is having financial difficulties and banks gaming proceeds into the business’ trading account and then due to insufficient funds being available at the end of the week fails to bank the gaming proceeds.  If the offence was a classified as a “truly criminal” offence requiring intention, the Venue Manager may be able to defend a charge on the grounds that he or she fully intended to account to the Trust but due to a decline in business there was insufficient funds available.

If the offence is classified as a strict liability regulatory type offence the lack of intent will not be a defence.  The only defence available is total absence of fault.  A Venue Manager who banks gaming funds into the general trading account of a business when he or she knows that those funds may be used for other expenses and that there may be insufficient funds available to account to the Trust, is unlikely to be able to satisfy the Court of the defence of total absence of fault.  A conviction would be imposed.

On balance, the Courts are likely to hold that the offence is a “regulatory” offence not a “truly criminal” offence.  If funds are not banked, the only way to avoid a criminal conviction would therefore be to show total absence of fault on the part of the Venue Manager.  Venue Managers should therefore avoid the practice of banking gaming machine proceeds into a business’ trading account.  Venue Managers should bank gaming funds daily into the Trust’s nominated account or alternatively into a separate account of the business which is clearly recorded as being a trust account.

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