Chapter 17

The structure of Crown Melbourne

Introduction

1. In 1993, the then casino regulator, the VCCA, agreed to grant Crown Melbourne (then known as Crown Casino) a casino licence to operate the Melbourne Casino.
2. On 21 September 1993, pursuant to section 142 of the Casino Control Act, the VCCA and Crown Melbourne entered into an agreement for the establishment and operation of the casino—the Casino Agreement.
3. The Casino Agreement deals with the development of the Melbourne Casino Complex; the grant of the casino licence (including the payments to be made for the grant); the security to be provided by Crown Melbourne for the performance of its obligations; and the manner in which the casino operations are to be conducted.
4. The Casino Agreement also deals with the structure of Crown Melbourne. There are three aspects of the structure that will be considered in this chapter:
   • ownership of the casino operator
   • management of the casino operator
   • the single purpose restriction.
5. Finally, the Casino Agreement deals with the extent to which Crown Melbourne’s holding company, Crown Resorts, is entitled to compete with Crown Melbourne’s casino operations. While incidental to the structure of Crown Melbourne, this aspect will also be explored.

Ownership structure

Original shareholding

6. The Casino Agreement has been varied on 12 occasions. It is convenient to consider the ownership structure first by reference to the Casino Agreement in its original form.
7. The Casino Agreement originally provided that:
   • until the completion of the Melbourne Casino Complex, the total number of shares to be held by the original developers, HCL and Federal Hotels (together known as the Sponsors) and by CUB was to be not less than 40 per cent of the issued capital in Crown Melbourne¹
   • during the 12 months following the completion of the complex, each Sponsor was not to reduce its shareholding to less than 10 per cent of the issued capital²
   • apart from the initial shareholders, Crown Melbourne would not permit a person to become entitled to, or continue to hold, shares exceeding 5 per cent of the issued capital without the approval of the regulator.³
8. Consistent with the contractual 5 per cent limit on shareholding, the Articles of Association of Crown Melbourne contained the following clauses:
   • The number of shares to which a person (other than a Sponsor) was entitled could not exceed 5 per cent of the total number of shares in the company without the prior consent of the VCCA.⁴
   • The VCCA could require the company to dispose of any shares held by a member.⁵
9. These provisions were entrenched because the Articles of Association could not be amended without the VCCA’s approval.⁶
10. The reference to a person becoming ‘entitled to shares’ in both the Casino Agreement and the Articles of Association adopted the meaning of that expression in the Corporations Act 1989 (Cth) (Corporations Act 1989), which was then in force.⁷ It also adopted any change to that meaning that would result from an amendment to the Corporations Act 1989 or any replacement legislation.⁸
11. The shares to which a person was ‘entitled’ under the Corporations Act 1989 included shares in which that person had a ‘relevant interest’.⁹ A person had a ‘relevant interest’ in shares principally if they had the power to vote or dispose of the shares.¹⁰ In addition, if a person had the prescribed shareholding in a body corporate (20 per cent of the shares), that person was deemed to have the same power to vote or dispose of the shares as had the body corporate.¹¹ The person was, therefore, deemed to have a ‘relevant interest’ in the shares held by the body corporate.
12. The Corporations Act 1989 was repealed and, ultimately, replaced by the Corporations Act 2001. The concept of an ‘entitlement’ to shares is not found in the Corporations Act. Instead, it has been replaced by a ‘relevant interest’ in shares.¹² The principles are, however, substantially the same.¹³
13. The reference in the Casino Agreement to an ‘entitlement’ to shares must now be taken to refer to a ‘relevant interest’ in shares as defined by the Corporations Act. Applying the applicable principles of the construction of instruments would lead to the same conclusion regarding the meaning of an ‘entitlement’ to shares in the Articles of Association.
14. HCL was not a party to the Casino Agreement. But it had entered into the Supplemental Sponsors’ Agreement by which it undertook to comply, and to use its best endeavours to ensure that the other Sponsors comply, with clause 22 of the Casino Agreement (the clause where the shareholding restriction is found).¹⁴
15. The requirement that the Sponsors and CUB should hold not less than 40 per cent of the shares had two objectives. One was to secure the capital base of Crown Melbourne. The other was to ensure that the Sponsors remained committed to the development of the casino project.¹⁵
16. This purpose was reinforced by clause 22.1(b), which permitted the Sponsors to only sell their shareholding down to less than 10 per cent of the issued capital during the 12 months following the completion of the Casino Complex.¹⁶

Change to original shareholding

17. In January 1996, Crown Melbourne (then named Crown Limited) advised the then regulator, the VCGA, that the Sponsors’ shareholding had fallen below 40 per cent. This occurred because Crown Resorts had made several private placements of shares to finance property acquisitions and building works.¹⁷
18. HCL and Crown Melbourne requested the VCGA to agree to reduce the minimum shareholding requirement from 40 per cent to 37 per cent.¹⁸
19. Later, HCL sought a variation of the Casino Agreement to permit it to sell down its shareholding to 33.5 per cent of the shares on issue.
20. Ultimately, the VCGA agreed to alter the shareholding requirements. One reason was that because Crown Melbourne had become a listed company, it now had a secure capital base. Another reason was that a sell-down by HCL or a dilution of HCL’s interest was seen as a positive factor, because it would reduce its influence over Crown Melbourne and create a greater diversity of ownership.¹⁹
21. On 8 May 1997, the agreement to allow the reduction in the shareholding requirement was put into effect by the Sixth Variation to the Casino Agreement.²⁰ By that variation, the changes to the shareholding requirements included the following:
    • The original shareholding requirements were revoked by the deletion of paragraphs (a) and (b) of clauses 22.1.
    • A new paragraph 22(a) was inserted that provided, among other things, that HCL must not dispose of any of its shares. That restriction did not, however, prevent HCL from disposing of its shares, provided it still held 33.5 per cent of the total number of shares on issue.
    • A new paragraph 22(b) was inserted that provided that 12 months after the date of completion of the Melbourne Casino Complex (with a specified exclusion), HCL could reduce its shareholding to less than 10 per cent of the shares on issue or the number of shares held on that date (whichever was lower).²¹

Merger with PBL

22. In December 1998, PBL proposed a ‘merger’ with Crown Melbourne.²² The proposed merger involved PBL acquiring Crown Melbourne for around $2 billion.²³ Shareholders in Crown Melbourne (then a listed company) were to be offered ‘one PBL share for each 11 Crown Limited shares’.²⁴
23. To understand what happened next, it is necessary to mention other provisions in the Casino Agreement in its original form: those that establish the so-called single purpose restriction.²⁵ They are:
    • Crown Melbourne must not carry on or conduct any business other than the casino business, or any business incidental to or complementary with the casino business, without the regulator’s approval.²⁶
    • Crown Melbourne must not establish or acquire a subsidiary, unless it relates to an incidental or complementary business, without the regulator’s approval.²⁷ (A business was incidental or complementary to the casino business if a dominant purpose of the business was to operate in support of and in conjunction with the casino business to increase or preserve the revenue of that business.)²⁸
    • Crown Melbourne must strive to obtain the maximum GGR by conducting its operations as a discrete business operated in Melbourne in a proper and efficient manner having regard to the best operating practices in international casinos of a similar size and nature.²⁹
24. The VCGA thought that, should the proposed merger go ahead, these restrictions might no longer be effective. For example, its view was that:
    • PBL could ‘cannibalise’ Crown Melbourne and establish a competing casino elsewhere in Australia
    • PBL could acquire another casino, market it and move the high roller business to the new casino or between the two casinos
    • PBL could set up a casino tax bidding war between Victoria and other states.³⁰
25. A mechanism had to be found to prevent PBL, or any related company, from carrying out casino operations elsewhere in Australia.
26. In addition, to evaluate the merger proposal, the VCGA obtained a report from the National Institute of Economic and Industry Research. The report made the following observations:
    • The merger was expected to result in a net loss of $150 million for the Victorian economy.
    • Loss of control over Crown Melbourne would largely contribute to that loss.
    • The refinancing arrangements that would occur as a result of the merger would remove the difficulties Crown Melbourne then had with its financial covenants.³¹
27. The National Institute of Economic and Industry Research also noted that, as Crown Melbourne was a single purpose company without subsidiaries, Victoria’s economic interest and the shareholders’ interests were being given equal value. This would be lost, according to the National Institute, if the ownership of Crown Melbourne changed as a result of the merger.
28. Ultimately, the merger proposal was agreed. That agreement led to the Eighth Variation to the Casino Agreement, made on 27 May 1999.³²
29. The Eighth Variation Agreement brought about the following relevant amendments. First, definitions were added, including:
    • ‘Holding Company’, which was defined to mean, in effect, Crown Melbourne’s holding company that was not itself a subsidiary of a company incorporated in Australia. The Holding Company was PBL.³³
    • ‘Holding Company Group’, which was defined to mean:
      1. the Holding Company;
      2. the Holding Company’s Subsidiaries (including without limitation, [Crown Melbourne] and its Subsidiaries); and
      3. any other entity which the directors of the Holding Company are required to consolidate in the consolidated profit and loss accounts and balance sheets of the Holding Company under the Corporations Act.³⁴
30. Second, the provisions relating to the founding shareholders (including clauses 22.1(a) and (b)) would become redundant if PBL was the sole shareholder in Crown Melbourne. Hence, they were removed.
31. Third, clause 22.1(f), which dealt with the 5 per cent shareholding limit, was deleted and replaced by the following clause:

    [Crown Melbourne] will not knowingly permit a person or, upon becoming aware of a person being entitled, allow a person to continue to be entitled to a number of Shares which exceeds 5% of the total number of Shares on issue at any time, without the prior written approval of the [VCGA].³⁵

32. This was designed to prevent PBL from listing Crown Melbourne on the ASX or from selling Crown Melbourne to another party without the VCGA’s consent.³⁶
33. Fourth, a new clause 22.1(r) was added. This provides:

    The Holding Company Group, if it pursues anywhere in Australia a business similar to that of [Crown Melbourne], will use its best endeavours to ensure that such business is conducted in a manner:

    1. which is beneficial both to that business and to [Crown Melbourne] and which promotes tourism, employment and economic development generally in the State of Victoria; and
    2. which is not detrimental to [Crown Melbourne’s] interests.³⁷

34. The obvious purpose of this clause was to ensure that PBL conducted all its businesses to promote, rather than undermine, the Casino Control Act’s objective of promoting tourism, employment and economic development generally in Victoria.³⁸
35. That being said, under the new arrangements PBL was not prevented from acquiring an interstate casino operation. If it did, however, it would not be able to operate the interstate casino ‘to the detriment of the Melbourne Casino’.³⁹
36. Contemporaneously with the making of the Eighth Variation Agreement, the VCGA, Crown Melbourne and PBL entered into a Supplemental Casino Agreement. This agreement was made so that PBL could acquire the shares in Crown Melbourne with the VCGA’s approval.⁴⁰
37. By the Supplemental Casino Agreement, PBL undertook, among other things:
    • to comply with and ensure that each member of the Holding Company Group complied with clause 22 of the Casino Agreement
    • to ensure that Crown Melbourne would require the transfer, or the compulsory transfer, of shares in accordance with the company’s constitution if the transfer would remedy a breach of the Casino Agreement or if the VCGA requested the transfer
    • to procure the affairs of Crown Melbourne to be conducted in accordance with the conditions set out in clause 22 of the Casino Agreement.⁴¹
38. It was also agreed that, for the purposes of the Casino Agreement, PBL would be regarded as the Holding Company of Crown Melbourne.⁴²
39. For its part, the VCGA agreed that it would not treat Crown Melbourne as being in breach of clause 22(1)(f) of the Casino Agreement or article 2.7 of its constitution (the 5 per cent shareholding restriction), or regard PBL as being in breach of clause 4 of the Supplemental Casino Agreement (the obligation to enforce the 5 per cent share limit), if a person became entitled to more than 5 per cent of the issued capital of Crown Melbourne solely through their shareholding in PBL.⁴³
40. It is not clear whether the effect of this last provision (clause 7 of the Supplemental Casino Agreement) was properly understood. PBL had obtained approval to acquire all the shares in Crown Melbourne despite the 5 per cent share limit. After that, however, a person who acquired more than 20 per cent of the shares in PBL would become ‘entitled’ to, or have a ‘relevant interest’ in, the shares in Crown Melbourne held by PBL.
41. The consequence was that any person could acquire between 20 per cent and 100 per cent of the capital of PBL, and thereby acquire an ‘entitlement’ or ‘relevant interest’ in all the issued shares of Crown Melbourne without being in breach of the 5 per cent share limit.
42. For some reason, the VCGA took a limited (and potentially incorrect) view of the effect of clause 7. It regarded the clause as:

    a technical provision intended to remove a possible, unintended consequence of clause 22.1(f) of the Casino Agreement which, operating in conjunction with the share entitlement provisions of the Corporations Law in the circumstance where a person acquired 6% of PBL, would require PBL to dispose of shares in Crown.⁴⁴

Restructure

43. The position was to become even more complicated as a result of the following events.
44. First, on 12 December 2007, the shares in Crown Melbourne were acquired by Crown Resorts (then known as Crown Limited) as part of a corporate restructure. The restructure involved PBL separating its gaming operations from its other ventures. It also involved Crown Resorts undertaking to assume the obligations of PBL under the Supplemental Casino Agreement, including the obligation to ensure that each member of the Holding Company Group complies with clause 22 of the Casino Agreement.⁴⁵
45. Then, in 2019, there were discussions between Crown Resorts and the VCGLR (which had by then become the regulator) concerning a possible alteration of the securities provided by the Crown group to the State to secure the performance of Crown Melbourne’s obligations under the Management Agreement.
46. Agreement in-principle was reached. That agreement was to be recorded in a further variation (the Twelfth Variation) to the Casino Agreement. In the course of discussions about the terms of the Twelfth Variation, Ms Mary Manos, the solicitor at Crown Resorts who had carriage of the negotiations, emailed Mr Scott May, General Counsel at the VCGLR, on 13 September 2019. She had the following proposal:

    Clause 7.1 of the Supplemental Casino Agreement provides that the [regulator] agrees that it will not regard Crown Melbourne as breaching clause 22.1(f) of the Consolidated Casino Agreement or article 2.7 of the Crown Melbourne’s constitution if a person becomes entitled to more than 5% of the total number of Shares in Crown Melbourne solely through that person’s shareholding in PBL.

    When Crown Resorts acquired Crown Melbourne at the end of 2007, an exercise was undertaken to update references to PBL in the Consolidated Casino Agreement to Crown Resorts. It appears that when that exercise was done, the separate Supplemental Casino Agreement was not incorporated into the one document so continues to exist alongside the Consolidated Casino Agreement. The currently proposed amendments to the Casino Agreement reflect an agreed position in relation to the security package. As part of that [process] we have also undertaken the administrative exercise of consolidating the provisions of the Supplemental Casino Agreement so that going forward, the parties need only refer to the one document.

    Clause 7.1 of the Supplemental Casino Agreement now appears as clause 22B.1 of the Consolidated Casino Agreement. But for updating the reference to PBL to Crown Resorts, the clause is in the exact same terms.

    The effect of the clause is to acknowledge that Crown Melbourne as a subsidiary company of Crown Resorts has no power to direct or control the register of Crown Resorts. Similarly, as a listed public company whose shares are [freely] traded, Crown Resorts also has limited power to control its register.

    In the above circumstances, it is appropriate that [it] be clarified that Crown Melbourne should not be taken to have contravened clause 22.1(f) of the Consolidated Casino Agreement if a person becomes entitled to more than 5% of the total number of Shares in Crown Melbourne solely through that person’s shareholding in Crown Resorts. Even if Crown Melbourne became aware of a deemed interest in its shares there would be little it could do to ‘not allow’ that interest.⁴⁶

47. The proposed change (the addition of clause 22B to the Casino Agreement) was referred to a solicitor at the VCGLR for comment.⁴⁷ The solicitor recognised that the change would mean that an acquisition of 20 per cent or more of the shares in Crown Resorts would not breach the 5 per cent share restriction. That would confine the VCGLR’s oversight to the question of whether an acquisition of a significant shareholding in Crown Resorts would trigger the ‘major change’ provision in the Casino Control Act.⁴⁸
48. The solicitor emailed Mr May advising that ‘[i]f the Commission wishes to retain its power to consider the suitability of a person with significant interests in the holding company of the casino operator, then the [Casino Control Act] may need to be revised to allow this’.⁴⁹
49. The issue identified by the solicitor was then the subject of correspondence between Mr May and Ms Manos. During that exchange, Mr May wrote that ‘the proposed [clause] 22B.1 simply imports from the Supplemental Agreement into the Casino Agreement what is currently the case, and there is no “update” (the update having already occurred in 2007)’.⁵⁰
50. The Twelfth Variation Agreement was made on 26 September 2019.⁵¹ It was intended to give effect to the restructure of the securities and to consolidate the provisions of the Supplemental Casino Agreement and the Casino Agreement. The consolidation involved adding the following clause 22B.1:

    The [VCGLR] agrees that it will not regard [Crown Melbourne] as breaching clause 22.1(f) of this document or article 2.7 of [Crown Melbourne’s] constitution if a person becomes entitled to more than 5% of the total number of Shares in [Crown Melbourne] solely through that person’s shareholding in Crown Resorts.⁵²

51. Plainly, the new clause was more than a consolidation of the two existing agreements. It substituted permitted acquisitions of shares in PBL for permitted acquisitions of shares in Crown Resorts, a public listed company. In a practical sense, it made the 5 per cent share limit almost irrelevant. The only time it would come into operation was if Crown Resorts wished to dispose of its subsidiary, Crown Melbourne.

The 5 per cent limit

52. The reason for the 5 per cent limit on shareholding in Crown Melbourne can be traced back to Mr Connor, QC’s 1983 Report. He said that it was:

    essential that the licensing body be given ample power to investigate proposed changes in the corporate structure of the company which holds a licence or in a group of companies of which it is part. The essential object of all such investigations is to expose the seat of effective control, which may often be hidden; and then to regulate it.⁵³

53. Mr Connor, QC explained that a person who wished to acquire a 5 per cent shareholding in a licensee should be subject to investigation. He expressed the view that a shareholding of that size may be sufficient, in combination with other shareholders, to effect vital changes in the personnel and policies of a casino licensee.⁵⁴
54. These observations are as true today as they were when made in 1983. There is now a substantial body of academic literature that considers the position of a dominant shareholder— a shareholder who has the power to remove a corporation’s board or management or who can significantly influence a corporation’s affairs—and the dangers such a shareholder poses for a corporation.
55. To be sure, a dominant shareholder can be beneficial. A dominant shareholder has the capacity, and sometimes the incentive, to monitor management and enhance a corporation’s value.⁵⁵ This minimises the risk of management acting opportunistically or in their own interests.⁵⁶ Research indicates that a dominant shareholder can prevent:
    • suboptimal investment and wastage of resources
    • excessive executive compensation
    • practices that confer management with non-pecuniary benefits that reduce share value.⁵⁷
56. On the other hand, a dominant shareholder can use its power to harm a corporation.⁵⁸ It is not uncommon, for example, for a dominant shareholder to take action to expropriate minority shareholders’ rights. One method is by a non prorata distribution of dividends.
57. Another problem is where the dominant shareholder has arrangements with persons who contract with the corporation so that they can receive favourable contractual treatment in return for kickbacks.
58. Yet another problem is where the dominant shareholder diverts the corporation’s assets or value to itself.
59. More relevantly, a dominant shareholder has the capacity, and often the incentive, to exercise active control over, and monitor the actions of, senior management of the corporation, if not its board.
60. Experience shows that a dominant shareholder usually has no difficulty making the board take into account its views on any important issue. At the very least, it is unlikely that the board would disregard the dominant shareholder’s preferences.⁵⁹
61. Directors who are linked to the dominant shareholder will often make decisions on transactions that benefit the dominant shareholder, even when those decisions may be detrimental to the corporation as a whole. This occurs even when the dominant shareholder does not have power, or does not exercise power, to nominate its appointees to the board.
62. CPH is an instructive example of the power of a dominant shareholder. Currently, CPH holds 37 per cent of the shares in Crown Resorts. For some time, Mr James Packer (the effective owner of CPH) was on the Crown Resorts board. He then resigned for personal reasons.
63. Both before and after his resignation, Mr Packer exercised a powerful influence over Crown Resorts—an influence much more powerful than any single director could exercise. According to the Bergin Report:
    • It was second nature for Mr Packer to require information from Crown Resorts so that he, Mr Packer, could make judgements about Crown Melbourne’s financial position on a daily basis and to make demands on those who were managing that financial position.⁶⁰
    • Mr Packer was involved in many very important decisions affecting the operations of Crown Resorts and its employees and officers, even when he was no longer a director of Crown Resorts.⁶¹ This was more than a major shareholder proffering advice or views about Crown Resorts’ operations. It involved him ‘managing and manoeuvring’ all significant decisions of Crown Resorts.⁶²
    • Mr Packer took a prominent and active role in shaping the course of major business decisions, including alterations to the entire capital structure and strategic direction of the Crown group.⁶³
64. In other words, CPH, through Mr Packer, acted in a manner that a dominant shareholder often can—to further its own commercial interest.
65. To ensure this situation does not arise again is itself a compelling reason why there should be an effective limit on the number of shares that can be held in a casino operator, or in the casino operator’s holding company, that ought only be exceeded with the regulator’s approval. There is, however, a significant obstacle to imposing an effective limit on the shareholding in Crown Melbourne, even on a ‘look through’ basis.
66. The 5 per cent limit is not found in the Casino Control Act. It was implemented in a private contract, the Casino Agreement. At the time the agreement was made, the shareholders in Crown Melbourne were known. Although the 5 per cent limit was exceeded, and indeed the initial shareholders were required to hold more than 5 per cent of the capital, that was acceptable to the regulator.⁶⁴
67. The Casino Agreement was subsequently amended so that PBL could acquire all the shares in Crown Melbourne and so that CPH (as a substantial shareholder of PBL) could thereby indirectly acquire an entitlement to more than 5 per cent of the shares in Crown Melbourne. This was also acceptable to the regulator.⁶⁵
68. Then the Casino Agreement was again amended, substituting Crown Resorts for PBL.⁶⁶ This now allows shareholders in Crown Resorts to indirectly acquire an entitlement to more than 5 per cent of the shares in Crown Melbourne without the regulator’s approval.
69. With Crown Resorts’ shares listed on the ASX and the contractual 5 per cent limit of little effect, an acquisition of a substantial interest in Crown Melbourne can only be policed by the ‘major change’ provision in the Casino Control Act.⁶⁷
70. It is, however, often difficult to identify who are the ‘real’ shareholders in a public company. It is common for shares to be held on trust by a nominee company, such as a subsidiary of a trading bank. It is true that there is an obligation on a person who acquires 5 per cent or more of the shares in a listed corporation to notify the corporation of that fact.⁶⁸ Moreover, there is statutory power to enable the beneficial owner of shares in a listed corporation to be discovered.⁶⁹ But these provisions are often ignored and, in any event, difficult for the regulator to supervise.
71. Greater problems would arise if Crown Resorts ceased to be a listed company, as then none of these provisions would apply. In that circumstance, the true owner of shares in Crown Resorts may never be known.
72. While Crown Resorts remains a listed entity, it would be impossible to have existing shareholders agree not sell their shares to a person if the share sale would result in the purchaser having more than 5 per cent of the issued capital.
73. It is equally impossible to suppose that the shareholders in Crown Resorts would agree to amend that company’s constitution to incorporate a limit on shareholding in the company.
74. In these circumstances, the only effective means of imposing a limit on shares directly or indirectly held in a casino operator is by an amendment to the Casino Control Act.
75. There is good reason for there to be a limit. Without one, it is possible that an undesirable person could take control of the casino operations or, at a minimum, be in a position to influence the operations of a casino.
76. It is not to the point, as the CPH parties would have it, that CPH does not now, and is no longer in a position to, control Crown Resorts or its subsidiaries because of undertakings it has given to ILGA in New South Wales and which it is also prepared to give to the VCGLR.⁷⁰
77. The undertakings are, in substance, that CPH will not obtain from Crown Resorts any information about its affairs that is not otherwise available to all shareholders, and it will not exercise its ability to appoint directors to the Crown Resorts board.⁷¹
78. First, the issue is one of principle. A person should not, without the approval of the regulator, have the capacity to exercise control over, or be able to influence the affairs of, a casino operator. For, at some point, that potential may become the reality.
79. Second, CPH is in a special position. For the reasons exposed in the Bergin Report, CPH should never be in the position to exert control over Crown Resorts and Crown Melbourne. While it maintains its shareholding, it could resume control once its undertakings to ILGA not to do so have expired.
80. Nor is it appropriate, if there is to be a cap on shareholding, that the cap be 20 per cent as contended for by CPH,⁷² or even 10 per cent as suggested by Crown Resorts.⁷³ A person who holds more than 5 per cent of the shares in a listed company will often have power to influence its affairs. The more widely the other shares are held, the greater the potential for influence.
81. For these reasons, it is appropriate that the 5 per cent limit on the shareholding in the casino operator be retained or, at least, reinstated. The same limit should apply to any corporation that is the ultimate or intermediate holding company of the casino operator.
82. The Bergin Report suggested that there should be a 10 per cent limit on the ownership of shares in the holding company of a casino operator.⁷⁴ It would be good policy if there could be uniform legislation governing this issue. Nevertheless, not only is the 10 per cent limit inconsistent with the position that has been in place in Victoria since the casino licence was first granted, but the risk of undue influence by a person holding such a large stake in the holding company is unacceptable.

83. The reason for the carve-out—not restricting any existing shareholding in Crown Resorts other than for CPH—should be explained. Currently, Crown Resorts owns all the shares in Crown Melbourne and three shareholders hold more than 5 per cent of the issued capital of Crown Resorts: CPH, the Blackstone Group (9.99 per cent) and Perpetual Investments (8.19 per cent). Apart from the CPH interest, the other substantial shareholders were entitled to acquire their shares without approval. It would not be appropriate for the Parliament to now impose restrictions on their holdings without good cause being shown.
84. The CPH stake is different. CPH abused its position as a dominant shareholder. It has temporarily given up its power to control, or exercise control over, the Crown Resorts board. On the other hand, once its undertakings to ILGA lapse, its position of control would be restored. That could be detrimental to Crown Melbourne.
85. At the same time, it would not be reasonable to force CPH to immediately sell its interest in Crown Resorts. Among other things, that would have a negative effect on the share price. There is no reason for that to occur. Hence, the recommendation is limited in two respects. First, it allows CPH to retain a 5 per cent holding. Second, it gives CPH until September 2024 to dispose of the remainder of its holding. That will enable it to realise a fair price.

Control of management

86. The regulator has some control over the structure of the Crown Melbourne board and management team. Conversely, it has little oversight of decision making, whether at board or management level.
87. The regulator has power:
    • to approve the appointment of directors or alternative directors
    • to direct the removal of any director or alternative director.⁷⁵
88. There is also an obligation that Crown Melbourne must, at all times, have a minimum of five directors.⁷⁶
89. The failings of Crown Melbourne that have been exposed by the Bergin Inquiry, as well as those that have been discovered by this Commission, make plain that greater control of a casino operator is required.
90. A casino operator is not simply an organisation whose success or failure is a matter in which the Victorian Government has no real interest and no role to play.
91. The rationale for regulatory oversight of casinos in Australia and elsewhere include:
    • concerns about the potential for links with organised crime
    • concerns about the adverse social impacts of gambling
    • reducing the scope for money laundering
    • reducing the scope for other illegal conduct
    • ensuring that the casino operator complies with the conditions of its licence, the Casino Control Act and any agreements with the State or the regulator
    • ensuring that the casino operator remains financially stable.⁷⁷
92. The focus of regulating a casino begins with ensuring the suitability of the casino operator. This invites extensive scrutiny during the application process. The focus must continue throughout the period of the casino’s operations.
93. Close regulation of a casino is clearly justified. In their report on Responsible Gambling and Casinos, researchers from the South Australian Centre for Economic Studies explain:

    The justification for regulation with respect to casinos is indisputable for the simple fact that it is government legislation which established casinos in each jurisdiction, government controls the rate of entry of competing business (e.g. conveys a monopoly licence for a specified time period), and government confers special privileges on casinos and then may apply different tax rates with respect to the privileges thus granted. Regulations are imposed on the industry to assist government with respect to a broad range of obligations such as disclosure regulation (e.g. monitor money laundering, large financial transactions) and ensure venues are free from criminal elements (e.g. review of probity, integrity and performance standards). Tax arrangements are designed (they are often negotiated) to facilitate international competitiveness (e.g. to attract VIP gamblers) as well as to address the negative externalities arising from the industry, such as the development of problem gambling, the cost of government provided gambling help services and traditional services such as policing, correctional services, health services and impact on third parties (families, businesses, etc).⁷⁸

94. The investigation carried out by this Commission shows that the existing oversight framework has been ineffective in preventing corporate misconduct (including significant breaches of the law) or in preventing the harms caused to Melbourne Casino’s patrons and others.
95. One obvious area for regulatory improvement is the board of the casino operator. If change is made here, as well as in other aspects of the casino’s operations, the misconduct that has occurred and the harms that are still occurring may not be repeated.
96. There are several steps that could be taken to improve board functions. One is to specify the type of director that should be appointed to the board of a casino operator. At present, Crown Melbourne’s Articles of Association provide that at least one-third of the board must be ‘independent of the Sponsors and their respective [a]ssociates’.⁷⁹ This restriction no longer has any effect as the Sponsors (HCL and Federal Hotels) no longer hold shares in Crown Melbourne.
97. It is appropriate here to say something about independent directors. An independent director is one who, broadly speaking, is not a member of the management team and has no commercial relationship with the company that would interfere with the independent exercise of the director’s judgement.⁸⁰
98. The ASX Corporate Governance Principles and Recommendations recommend that a majority of a listed company’s board be independent directors.⁸¹ The commentary to the recommendation states:

    Having a majority of independent directors … maximises the likelihood that the decisions of the board will reflect the best interests of the entity as a whole and will not be biased toward the interests of management or any other person or group with whom a non-independent director might be associated.⁸²

99. Bodies around the world publish corporate governance guidelines. Most recommend that the board of a public corporation should have independent directors. The guidelines usually recommend that the independent directors make up a certain proportion of the board, ranging from one independent director to a majority of independent directors. Some guidelines suggest that there simply be a sufficient number of independent directors to influence the conduct of the board as a whole.⁸³
100. Interestingly, academics Jeffrey Lawrence and Geof Stapledon have conducted an analysis of the effectiveness of independent directors. The analysis suggested that, on average, the performance of listed Australian companies did not improve even though they had independent directors. In other words, their existence did not add shareholder value.⁸⁴ The authors suggest that possible reasons for this include:
     • Independent directors may not have been performing their monitoring roles effectively at the time the study was undertaken.
     • Different types of boards may be appropriate for different companies.
     • Board behaviour rather than board composition is the critical factor.
     • Only some independent directors add value.
     • Non-executive independent directors may simply be ineffective.⁸⁵
101. Crown Melbourne is a striking example of the ineffectiveness of independent directors, at least when the directors are not independent of the holding company. Independent directors have always been on the board. They were on the boards of both Crown Resorts and Crown Melbourne when CPH was the controlling shareholder. Some are still on the boards.
102. It is nothing short of an understatement to say that the independent directors failed to benefit the management of Crown Melbourne as it is thought independent directors will do.
103. This is not to say, however, that the concept of independent directors should be put aside. To the contrary, it is likely that independent directors can have an important role to play on the Crown Melbourne board.
104. Mr Nigel Morrison is one of the recently appointed directors to the boards of both Crown Resorts and Crown Melbourne. Mr Morrison has an impressive background. He is a chartered accountant. He has worked extensively in the commercial world. He has had professional associations with casinos in Australia and overseas. For eight years, he was the Managing Director of SkyCity, a company that operates five casinos in New Zealand and Australia.⁸⁶
105. Mr Morrison was asked for his views on having independent directors on the board of a company. He said, ‘I think it is absolutely appropriate and fundamental to proper governance of any company.’⁸⁷
106. Mr Morrison went on to explain:

     [B]ecause—I think the independent directors need to make sure they are free to exercise their judgment, and their best judgment, and not be constrained with any loyalties or any other matters that might influence their judgment which aren’t appropriate to thinking about the matter as a whole, objectively, and in the interests of all stakeholders and all shareholders.⁸⁸

107. Mr Morrison was then asked whether it would be appropriate for a majority or some other number of the board members to be independent. He replied:

     I will speak about SkyCity a little bit. When I was a managing director for eight years, there was no dominant shareholder, no major shareholder, all institutional shareholders, and the board was made up of non-executive directors. 100 per cent non-executive directors. And I thought that gave a really good demarcation between management and the board such that management was in charge of strategy, it was great for the management team to exercise its view about things, it could come up with its own strategy, formulate its own strategy, present it to the board, have the board critique it, get some good independent advice in relation to that strategy, and we’d come out with a stronger plan at the end of the day. I thought that worked really, really well, without having any executive directors on the board other than I guess myself being the managing director.⁸⁹

108. Mr Morrison’s views are compelling. They conform to the views of many knowledgeable commentators who contend that good corporate governance requires there to be independent decision makers on the board.
109. However, where the casino operator is a subsidiary company, it is important that the directors of the subsidiary are also independent of the holding company.
110. For some time, this has been the view of the regulator. In the Second Review that was undertaken in 2000, the regulator (then the VCGA) looked into the corporate governance of Crown Melbourne after the merger with PBL. The report noted:
     • After Crown Melbourne ceased to be a listed company, there was a reduction in the disclosure of information relevant to the regulator’s functions.⁹⁰
     • The regulator did not consider a Victorian-based director nominated by the holding company to be the same thing as an independent director.⁹¹
     • The regulator expressed concern that:

     the proper level of decision making for the Crown [Melbourne] board requires a degree of independence from the parent company. Crown [Melbourne] is the licensed entity responsible for detailed technical compliance with the regulatory regime and it is the board of Crown [Melbourne] which is primarily responsible for Crown [Melbourne]’s actions.⁹²

111. At the time, the VCGA was advised that Crown Melbourne’s constitution was being reviewed and changes might be made to the director provisions.⁹³
112. In its Third Review, undertaken in 2003, the VCGA revisited the issue of independent directors for the casino operator. Its report noted:
     • The VCGA had been informed that Crown Melbourne’s review of its constitution had been completed and that Crown Melbourne had decided not to amend it.
     • The VCGA was of the view that Crown Melbourne should appoint two additional independent directors so that at least one-third of the board were independent; that is, independent of the holding company.⁹⁴
113. The regulator’s observations were wholly justified.

114. This recommendation is made despite the fact that the regulator has power to approve the appointment of a director as well as power to require the removal of a director. The imposition of a statutory obligation that a majority of the directors of a casino operator be independent of any holding company emphasises the importance of the casino operator making decisions that are solely in its interests, and not those of other companies.
115. Each of Crown Resorts and Crown Melbourne accept that a casino operator should have an independent board and, if there is a holding company, that the board should be independent of the holding company.⁹⁵

The single purpose restriction

116. One of the principal objectives of the Casino Control Act is for a casino in Victoria to maximise the financial benefits to the State.
117. With this objective in mind, the Casino Agreement required the Melbourne Casino to be a single purpose company. The three clauses of the Casino Agreement that imposed this requirement have been outlined earlier in this chapter.⁹⁶
118. There were several reasons for the imposition of the single purpose restriction:
     • To ensure that the employment benefits of operating a large casino remain in Victoria. The restriction prevents Crown Melbourne from shifting its operations interstate where it might own and operate another casino.
     • To prevent the casino operator from shifting, or threatening to shift, significant sources of casino revenue, such as the high roller business, to an interstate or overseas casino.
     • To ensure the casino operator avoids any conflict of interest in operating a competing casino and is not distracted from focusing on ensuring the Melbourne Casino Complex remains a world-class tourist attraction, generating maximum revenue for the State.
     • So that disciplinary action requiring the suspension or cancellation of the casino licence and the appointment of a manager would not be hampered by the possibility of such action having an adverse impact on some other ‘entwined casino business’ owned by Crown Melbourne.⁹⁷
119. Coupled with the single purpose restriction was the best operating practices obligation (clause 28). By this obligation, the Melbourne Casino and the Casino Complex were to be conducted in accordance with the best international operating practices.

Removal of the restriction

120. On 25 August 2003, Crown Resorts wrote to the Minister and to the regulator requesting a variation of the Casino Agreement by removing the single purpose restriction.⁹⁸ The letters made the following points:
     • Crown Resorts was unaware of the original reason for the restriction.
     • No other casino or gambling operator in Australia has such a restriction imposed on it.
     • Given the Victorian Government’s stated commitment to promote the export-oriented development of Victorian companies and industries, it was ‘incongruous’ that a successful Victorian company should be restrained from competing nationally and internationally.
     • The gambling industry is competitive and there are significant advantages to be gained by broadening the activities of a casino operator beyond a single property.
     • There is an appreciable risk that the size and scale of merged operations, both in Australia and worldwide, would make it difficult for Crown to continue to compete effectively in key areas.⁹⁹
121. Ultimately, the State and the regulator agreed to remove the single purpose restriction and permit Crown Melbourne to operate businesses in addition to the Melbourne Casino.
122. The price for the removal of the single purpose restriction was Crown’s agreement that:
     • any business owned or operated by Crown Resorts outside Victoria was to be managed from Melbourne
     • PBL was to locate the headquarters of its gaming business at the Melbourne Casino
     • the Melbourne Casino would remain the flagship of PBL’s gaming business in Australia
     • Crown Melbourne would endeavour to maintain the Melbourne Casino as the dominant Commission Based Player casino in Australia.¹⁰⁰
123. The removal of the single purpose restriction and the implementation of the terms agreed to give effect to this removal were achieved by the Ninth Variation Agreement to the Casino Agreement.¹⁰¹
124. By that variation:
     • Crown Melbourne must ensure that at least 75 per cent of the meetings of the company’s board of directors are held in Melbourne.¹⁰²
     • Crown Melbourne must ensure that at least 75 per cent of the meetings of the company’s senior executive managers are held in Melbourne.¹⁰³
     • Crown Melbourne must ensure that its senior executive managers reside in Victoria.¹⁰⁴ The senior executives are the CEO, CFO, COO, a director who is an executive officer, and the heads of Gaming, Surveillance, International and Domestic VIP Business and Compliance.¹⁰⁵
     • One company secretary must reside in Victoria.¹⁰⁶
     • Crown Melbourne must ensure that the Holding Company Group locates the headquarters of its gaming business in Melbourne.¹⁰⁷
     • Crown Melbourne must endeavour to maintain the Melbourne Casino as the dominant Commission Based Player casino in Australia.¹⁰⁸
     • Crown Melbourne must ensure that the Holding Company Group maintains the Melbourne Casino as the flagship casino of the Holding Company Group’s gaming business in Australia.¹⁰⁹
     • Crown Melbourne must conduct its operations at the Melbourne Casino in a manner that has regard to the best operating practices in international casinos of a similar size and nature.¹¹⁰

The centralisation controversy

125. It is clear what these provisions were designed to achieve. Their objective was to make sure that the Melbourne Casino remained the dominant Commission Based Player casino in Australia and that the actual decision makers; the board and senior executives of Crown Melbourne, had personal knowledge of, and exercised control over, all critical aspects of the Melbourne Casino’s operations.
126. Has this objective been achieved? There are two aspects of the obligations that the new provisions imposed. One is geographic; the other is substantive.
127. The geographic aspect is simple enough. It requires certain meetings and certain officers to reside in Melbourne or Victoria. There is no dispute about this aspect. Crown has conceded, however, that while Mr Barry Felstead was the CEO of Crown Melbourne, it was possible that there was a breach of clause 22.1(bb), for he was a resident of, and spent much time in, Western Australia.¹¹¹ That breach was rectified when Mr Xavier Walsh was appointed CEO.¹¹²
128. The second aspect, the one of substance, does give rise to a controversy. The controversy arises in this way. By centralising all the administrative functions, Crown Resorts is in effective control of Crown Melbourne’s management team. At the same time, Crown Melbourne has its own executives.
129. The CPH group contends that, so long as Crown Melbourne employs officers who have the designation CEO, CFO and so on, the substantive aspects of the provisions are satisfied.¹¹³ That cannot be correct. This approach is inconsistent with the objective that lies behind the new provisions.
130. On the proper construction of the new provisions, a designated office holder must carry out the duties that pertain to that office. A CEO, for example, is the head of the executive team of an organisation. The CEO takes instructions from, and is answerable to, the directors. The provisions do not permit a CEO to take instructions from, and be answerable to, the CEO of the holding company. Put more simply, Crown Melbourne must employ ‘the CEO’ for its organisation (the actual head of the management team) not ‘a CEO’ (who takes instructions from the actual head). The same is true for the other designated positions.
131. The same construction applies for the directors of Crown Melbourne. The directors must be the actual decision makers. They cannot act as mere surrogates of the Crown Resorts board.
132. The substantive obligations imposed by the new provisions seems to have been overlooked. For some time, the power to make important decisions affecting Crown Melbourne’s operations, including the operation of the Melbourne Casino, has been delegated to the executives of the holding company, Crown Resorts. This was noted by the VCGLR in its Sixth Review:

     [M]ost of the resolutions [of Crown Melbourne] were related to capital initiatives already determined by the Crown Resorts board or were formal resolutions complying with Corporations Law requirements (such as the approval of financial statements and the declaration of dividends) …¹¹⁴

     The VCGLR noted also:

     Not only does Crown Resorts control Crown Melbourne, but many critical functions are performed on behalf of the casino operator at the group level or by people whose accountability is to the board of Crown Resorts rather than Crown Melbourne.¹¹⁵

133. The Sixth Review identifies the functions that have been delegated to Crown Resorts:
     • strategic direction and financial strategy
     • information technology
     • regulation and compliance
     • responsible gaming
     • international business operations
     • learning and development
     • public relations
     • product, strategy and innovation
     • procurement and supply
     • risk and audit
     • finance
     • AML
     • enterprise reporting
     • legal
     • VIP International
     • customer analytics
     • strategy and finance
     • hotels
     • retail
     • food and beverage.¹¹⁶
134. As a result, the Crown Melbourne board has little to do. According to the Sixth Review, board meetings took only 35 minutes and the chair of the Crown Melbourne board participated in only two of the 16 meetings held between January 2013 and May 2016.¹¹⁷ The Crown Melbourne board’s functions were, and remain, mainly formal. That is less true of the executive level. But it is the case that most, if not all, major decisions are made by those responsible to the Crown Resorts board, not the Crown Melbourne board.
135. Crown Melbourne justifies a centralisation of board and management decision making on the basis that it produces greater consistency in approach across the Crown group and helps executives develop greater expertise because they have a broader experience. It explained to the VCGLR that there are local staff at each Crown operating subsidiary who report to group managers at Crown Resorts. It asserted that this arrangement was needed for good management.¹¹⁸
136. Here there is some uncertainty about some of the information Crown Melbourne provided to the VCGLR regarding its current management structure. Those details are different from the evidence presented to the Commission. Mr Nick Weeks is the newly appointed Executive General Manager, Transformation and Regulatory Response at Crown Resorts. Mr Weeks said that, at present, the Crown group has ‘a decentralised corporate governance model … that results in duplication of decision-making regarding core compliance, risk and governance issues’.¹¹⁹ He said that the Crown group’s plan for the future is to transition to a centralised model, so that corporate governance and risk functions for the group are centralised. Mr Weeks said that the Crown Resorts board has given in-principle support to this plan.¹²⁰
137. Crown Resorts has taken advice from Herbert Smith Freehills (HSF) about the appropriateness of centralising all management functions. In that advice, given on 8 September 2020, it is recorded (no doubt based on instructions) that Crown Resorts is operating a ‘decentralised governance framework’ and wishes to centralise its governance structure to facilitate best-practice governance for a corporate group.¹²¹
138. Putting to one side the divergence on the facts, HSF noted the potential problems that might arise from a centralised corporate governance model:
     • Directors of the holding company must be able to demonstrate that they exercise due care and diligence in relation to the entire corporate group.
     • Oversight and monitoring of the entire group is a more complex task and increases the workload of the directors of the holding company, which may increase the risk that they fail to oversee and monitor the entire corporate group.¹²²
139. HSF advised that the majority of large ASX-listed companies use a centralised management structure and consolidate the core governance, risk and compliance functions at the level of the holding company. This approach, according to HSF, is ‘best practice for large ASX-listed companies but subject to any regulatory requirements … and conflicting fiduciary duties’.¹²³
140. HSF also explained that if the principal governance functions are performed on a group basis by central management (including functions such as setting strategy and business plans, monitoring risk and audit functions, monitoring compliance with group policies, procedures and the like), ‘subsidiary boards are not expected to, and generally should not, duplicate functions performed for the [g]roup’.¹²⁴ HSF advised:

     Under the centralised governance structure, the directors of each subsidiary will place reliance on the [g]roup management processes and, in general, will only separately consider such issues at the subsidiary level where exceptional circumstances exist.¹²⁵

Centralisation inappropriate

141. In the case of a Victorian casino operator, centralising management functions is not an acceptable position. There are several reasons. They should be understood against the background of Mr Connor, QC’s observations in his 1983 Report:

     To those unfamiliar with casinos, the degree of control [over a casino operator] which has been found necessary may seem at first to be somewhat far fetched. Once the dangerous and volatile nature of casino gambling is understood, however, the absolute necessity for competent ongoing strict, even draconian, control becomes clear.¹²⁶

142. Recognising this, the Casino Agreement requires management decisions to be taken at the Crown Melbourne level. What Mr Weeks put forward as a proposal, and what Crown Melbourne has informed the regulator it wishes to do, is inconsistent with that requirement. Put more simply, as explained earlier, on the proper construction of the Casino Agreement, decisions typically made by a board and by senior managers must be made by the Crown Melbourne board and its senior managers, and not by the Crown Resorts board and senior management.
143. There are good reasons for important decisions to be made by the casino operator and not delegated to a third party.
144. First, there must be strict oversight of the casino operator by the regulator to ensure that it is properly run. That will not be possible if major decisions are not made by the casino operator.
145. Second, as an aspect of the first reason, there is a need for the regulator to be able to deal directly with the senior executives of the casino operator. Sometimes the regulator will need to deal with senior executives urgently and sometimes it will be exercising its statutory power to obtain information. If major decision making takes place at the holding company level, that will unnecessarily and unduly restrict the regulator in performing its functions.
146. Third, decision making at senior management level should be done by the casino operator’s senior management to ensure those making the decisions have a thorough understanding of the casino operations.
147. Fourth, policies or decisions that may be in the interest of a corporate group may not be in the interests of the casino operator. A simple example will make the point.
148. Part 2M.3 of the Corporations Act requires every company to lodge an annual financial report and an audit report. ASIC has issued an instrument that sets out the conditions upon which wholly owned corporations may be relieved of their reporting obligations under part 2M.3. Compliance with the instrument will allow the group to publish consolidated accounts.¹²⁷
149. One condition that must be satisfied to obtain the benefit of the instrument is that each subsidiary must enter into a deed of guarantee by which it guarantees the debts of the holding company and all other companies in the group.¹²⁸
150. Crown Resorts and its subsidiaries have taken advantage of the instrument. The result is that Crown Melbourne is relieved of its obligation to lodge annual returns. The price it pays is that it has now guaranteed the obligations of Crown Resorts and all other Crown Resorts subsidiary companies. This occurred in circumstances where Crown Melbourne is the most valuable company in the group.
151. Providing the guarantee might not involve any financial risk for Crown Melbourne. It will not involve any risk if Crown Resorts and all the other subsidiaries are solvent and there is no chance of them becoming insolvent. Indeed, in some circumstances, Crown Melbourne may be advantaged by cross-guarantees because its debts will be secured by the assets of Crown Resorts and its other subsidiaries.
152. However, the opposite may be the case. For example, Crown Melbourne is under an obligation to ensure its total liabilities do not exceed 60 per cent of its total assets without the regulator’s approval.¹²⁹ This obligation could be put in jeopardy if there is a deterioration in the financial position of Crown Resorts or one of its subsidiaries.
153. It is not only the potential of a future breach of the financial covenant (the 60 per cent requirement) that is problematic. The mere existence of the cross-guarantees makes it difficult for the regulator to determine whether the casino operator continues to be commercially viable when so much might depend on the financial position of all the companies in the Crown group. As a consequence, the regulator must become familiar with the assets and liabilities of every company in the corporate group. That puts the regulator in an unenviable position.
154. Perhaps there could be a suitable arrangement between Crown Melbourne and the regulator that allows some decision making to be centralised. It would not, however, be appropriate for board decisions, and decisions by the senior managers holding the positions identified in the Casino Agreement, to be made by the board and senior managers of the holding company.

Competing with the Melbourne Casino

155. Crown Resorts is permitted to operate casinos outside Victoria. If it does so, the Casino Agreement imposes obligations on Crown Resorts to protect the position of the Melbourne Casino.
156. In the event that Crown Resorts does operate another casino, then, as has been explained, the Holding Company Group (which includes Crown Resorts) must ‘use its best endeavours’ to ensure that the other casino is conducted in a manner:
     • which is beneficial … to [Crown Melbourne] and which promotes tourism, employment and economic development generally in Victoria; and
     • which is not detrimental to [Crown Melbourne’s] interests.¹³⁰
157. In addition, Crown Melbourne is under an obligation:
     • to endeavour to maintain the Melbourne Casino as the dominant ‘Commission Based Player’ casino in Australia;
     • to ensure the Crown group maintains the Melbourne Casino as the flagship casino of Crown Resorts gaming business in Australia.¹³¹
158. Crown Melbourne may terminate some of its obligations on giving the regulator notice.¹³² Presumably, it was assumed that Crown Resorts could require Crown Melbourne to give the notice, regardless of whether it was in the best interests of Crown Melbourne to do so. If Crown Melbourne is under independent control, it would not act against its own best interests.
159. On 4 July 2013, the then Premier of New South Wales announced that Crown Resorts had been invited to move ahead with a proposal to establish a six-star resort, including VIP gaming facilities, at Barangaroo in Sydney. This casino would have no EGMs, no low bet tables and only VIP members.¹³³
160. In an ASX media release, Crown Resorts said the proposal would ‘give Sydney a landmark hotel it can be proud of … [it would] attract international tourists, create jobs and put Sydney on the map’.¹³⁴
161. Crown Resorts proposed that:
     • it pay an upfront licence fee of $100 million
     • it pay a casino tax of 29 per cent of gaming revenue
     • it make total payments of $1 billion to the New South Wales Government over the first 15 years of full operation
     • the licence fee and tax be reviewed only after 20 years.¹³⁵
162. According to the then New South Wales Premier, the new resort’s contribution to Gross State Product and State taxes would be greater than that contributed by Star Casino, another casino operating in Sydney. The Premier also estimated that the proposed development would create 1,250 additional jobs after the casino was constructed and increase international tourism.¹³⁶
163. In its annual reports, Crown Resorts said that the proposed Barangaroo development would:
     • be ‘a world-class’ development that would attract ‘a larger share of the booming Asian outbound tourism market. Incorporating world-class VIP gaming [that would] provide a further attraction to high net worth tourists from China and other Asian countries’¹³⁷
     • ‘deliver significant and unique benefits for the people of [New South Wales], boosting employment, business investment, export income and state revenue’. It would ‘also assist Sydney attract a larger share of the booming outbound Asian tourism market’¹³⁸
     • ‘become an international tourism icon and [would] help Sydney attract high net worth travellers from all parts of the world’¹³⁹
     • represent a ‘$2.2 billion investment’ that [would] bring ‘long term benefits’ to ‘Crown and the New South Wales economy more broadly’.¹⁴⁰

Material breach

164. There is a possibility that by proceeding with the Barangaroo development, including the new casino, Crown Melbourne will breach its obligations under the Casino Agreement. There are several reasons for this view.
165. The Commission requested Crown Resorts to produce its business plan for the development. It is unlikely that development of this magnitude would get underway without the preparation of a business plan that analysed the viability of the project.
166. No business plan was produced. Instead, the Commission was provided with a submission by Crown Resorts that had been provided to the New South Wales Government in June 2013. The submission sought government approval for the Barangaroo development.¹⁴¹
167. The submission contains a financial analysis of the project. Part of that analysis assumes a significant growth in the VIP International business for Australia. It also records that growth would accrue to both Melbourne and Sydney. It is suggested that the Melbourne Casino would experience a 6 per cent growth in this market, which would be driven by the opening of Crown Sydney.¹⁴²
168. The submission also indicates that Crown Sydney would not be taking business away from Melbourne.
169. There is a not insignificant risk, however, that the Melbourne Casino would suffer a loss of custom.
170. First, it is apparent from the published material that the patrons of the proposed Barangaroo casino (Chinese and Asian VIP players) are to be drawn from the same pool that Melbourne Casino targets.
171. Second, no detailed financial analysis appears to have been undertaken by Crown Resorts on the effect of the proposed Barangaroo casino on Melbourne Casino’s operations or on the effect on tourism, employment and economic development in Victoria.
172. Third, the submission to the New South Wales Government does not address whether the projected 6 per cent growth of the Melbourne Casino business was less than the likely growth if the Barangaroo casino did not commence operations.
173. Fourth, more recent information that is contained in a Crown Resorts Business Plan and Budget for Crown Melbourne’s VIP International business indicates a downturn in revenue at the Melbourne Casino. The budget was prepared for the financial years 2019 to 2023. The budget anticipates a decline in profits in each of the years 2022 and 2023. The budget does not attribute this potential decline to the opening of the new casino at Barangaroo, but the new casino may be a contributing factor.¹⁴³
174. On the other side, the Commission did hear evidence suggesting that the Barangaroo development would benefit at least Crown Melbourne and its operations. Ms Jane Halton, a director of Crown Resorts, said that as a result of the Sydney development, ‘everyone gets a better financial outcome … nothing I’ve seen, or ever been told, … suggests otherwise’.¹⁴⁴
175. Mr Stephen McCann, recently appointed CEO Crown Resorts and CEO Crown Melbourne, went further. He said, ‘… one of the big drivers for Victoria is tourism revenue, and part of the vision around having Crown Sydney is to become more appealing to international tourism spend, which would go to both Sydney and Melbourne’.¹⁴⁵
176. In the end, it is not possible to determine whether there is likely to be a breach of the Casino Agreement. That will depend on what happens if and when the Barangaroo casino gets underway. Even then, it will take some time to determine whether the operation of the Barangaroo casino will be detrimental to the Melbourne operation or will benefit Victoria in any way.
177. That is a matter that will no doubt be properly investigated at some future time. If a problem develops, the parties can resort to their existing statutory/contractual rights.
178. On the other hand, it seems tolerably clear that Crown Resorts did not undertake a detailed analysis to determine whether Crown Sydney would be beneficial to Crown Melbourne or would promote tourism, employment and economic development in Victoria. This is a matter of real concern. The potential breach of a promise by Crown Melbourne to the State should be taken seriously.
179. It may turn out that the failure to undertake a detailed analysis is of no consequence. If so, that may be little more than good luck. It does, however, provide another example of the risks Crown is prepared to run.

Endnotes

_{1 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(a).}

_{2 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(b).}

_{3 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(f).}

_{4 Exhibit RC1467 Crown Melbourne Memorandum and Articles of Association, 25 May 1998, art 2.7.}

_{5 Exhibit RC1467 Crown Melbourne Memorandum and Articles of Association, 25 May 1998, art 9.11.}

_{6 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(k).}

_{7 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.3; Exhibit RC1467 Crown Melbourne Memorandum and Articles of Association, 25 May 1998, art 1.2(i).}

_{8 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 47.1(c); Exhibit RC1467 Crown Melbourne Memorandum and Articles of Association, 25 May 1998, art 1.2(a).}

_{9 Corporations Act 1989 (Cth) ss 603 (definition of ‘entitled’), 609(1)(a).}

_{10 Corporations Act 1989 (Cth) ss 9 (definition of ‘relevant interest’), 31.}

_{11 Corporations Act 1989 (Cth) ss 33, 30(7)(b).}

_{12 Corporations Act 2001 (Cth) s 9 (definition of ‘relevant interest’).}

_{13 Corporations Act 2001 (Cth) ss 608(1), 608(3)(a).}

_{14 Exhibit RC0481 Bundle of contracts and correspondence between the VCGA and Crown, various dates, 210 (Facsimile from MinterEllison to VCGA, 12 July 1996).}

_{15 Exhibit RC0481 Bundle of contracts and correspondence between the VCGA and Crown, various dates, 17 (File Note regarding comments on submissions made in response to the draft amendment proposed to clause 22.1(a), 20 November 1996).}

_{16 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(b).}

_{17 Exhibit RC0481 Bundle of contracts and correspondence between the VCGA and Crown, various dates, 227 (Letter from Peter Ronec to Alan Rowe, 23 January 1996).}

_{18 Exhibit RC0481 Bundle of contracts and correspondence between the VCGA and Crown, various dates, 157 [7] (VCGA General Report on All ‘In-Progress’ Amendments to the Agreements for the Casino, n.d.).}

_{19 Exhibit RC0481 Bundle of contracts and correspondence between the VCGA and Crown, various dates, 17 (File Note regarding comments on submissions made in response to the draft amendment proposed to clause 22.1(a), 20 November 1996).}

_{20 Exhibit RC0494 VCGA Melbourne Casino Project Sixth Variation Agreement to the Casino Agreement, 8 May 1997.}

_{21 Exhibit RC0494 VCGA Melbourne Casino Project Sixth Variation Agreement to the Casino Agreement, 8 May 1997, cl 2.1(e).}

_{22 For further discussion of the merger, see Appendix E.}

_{23 Exhibit RC1620 Article: Packer Deals Again for Crown, 15 December 1998.}

_{24 VCGA, Third Triennial Review of the Casino Operator and Licence (Report, June 2003) 32.}

_{25 See the discussion of single purpose later in this chapter and in Chapter 2.}

_{26 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(p).}

_{27 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(q).}

_{28 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.4.}

_{29 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 28.}

_{30 Exhibit RC0486 VCGA meeting minutes, 21 May 1999, 126–7 (Proposed Crown/PBL Merger Supporting Paper No. 1).}

_{31 Exhibit RC0486 VCGA meeting minutes, 21 May 1999, 26 (National Institute of Economic and Industry Research, ‘The economic impact of the proposed Crown/PBL merger’ report).}

_{32 Exhibit RC0496 VCGA Melbourne Casino Project Eighth Variation Agreement to the Casino Agreement, 27 May 1999.}

_{33 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 2 (definition of ‘Holding Company’).}

_{34 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 2 (definition of ‘Holding Company Group’).}

_{35 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(f).}

_{36 Exhibit RC0486 VCGA meeting minutes, 21 May 1999, 109–10 (Detailed explanation of the proposed transaction documents: Eighth Variation).}

_{37 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(r).}

_{38 Exhibit RC0486 VCGA meeting minutes, 21 May 1999, 110 (Detailed explanation of the proposed transaction documents: Eighth Variation); Casino Control Act 1991 (Vic) s 1(a)(iii).}

_{39 Exhibit RC0485 Bundle of contracts and file notes, various dates, 266 (Office of Gambling Regulation, Review of the Casino Agreement, 23 September 2003).}

_{40 Exhibit RC1568 Melbourne Casino Project Supplemental Casino Agreement, 27 May 1999.}

_{41 Exhibit RC1568 Melbourne Casino Project Supplemental Casino Agreement, 27 May 1999, cl 4.}

_{42 Exhibit RC1568 Melbourne Casino Project Supplemental Casino Agreement, 27 May 1999, cl 6.}

_{43 Exhibit RC1568 Melbourne Casino Project Supplemental Casino Agreement, 27 May 1999, cl 7.}

_{44 Exhibit RC0486 VCGA meeting minutes, 21 May 1999, 111 (Detailed explanation of the Proposed Transaction Documents: Eighth Variation).}

_{45 Exhibit RC1569 Deed of Amendment, Accession and Release, 22 October 2007, cl 5; Exhibit RC1568 Melbourne Casino Project Supplemental Casino Agreement, 27 May 1999, cl 4(a).}

_{46 Exhibit RC1570 Email from Mary Manos to Scott May, 13 September 2019.}

_{47 Exhibit RC1571 Email chain between VCGLR Solicitor and Scott May, 10 September 2019, 5.}

_{48 Exhibit RC1571 Email chain between VCGLR Solicitor and Scott May, 10 September 2019, 3–4; Casino Control Act 1991 (Vic) s 28.}

_{49 Exhibit RC1571 Email chain between VCGLR Solicitor and Scott May, 10 September 2019, 4.}

_{50 Exhibit RC1572 Email from Scott May to Mary Manos, 16 September 2019.}

_{51 Exhibit RC0500 VCGLR Melbourne Casino Agreement Project Twelfth Variation Agreement to the Casino Agreement, 26 September 2019.}

_{52 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22B.1. As discussed further in Appendix E, at different times, both Crown Resorts and Crown Melbourne were named ‘Crown Ltd’; consequently we have substituted the current name for the entity in square brackets.}

_{53 Xavier Connor, Report of Board of Inquiry into Casinos in the State of Victoria (Report, April 1983) [16.24].}

_{54 Xavier Connor, Report of Board of Inquiry into Casinos in the State of Victoria (Report, April 1983) [16.24].}

_{55 Exhibit RC1603 Article: The Role and Effect of Controlling Shareholders in Corporate Governance, 2 November 2016, 563.}

_{56 Exhibit RC1598 Article: The Elusive Quest for Global Governance Standards, 2009, 1281; Exhibit RC1603 Article: The Role and Effect of Controlling Shareholders in Corporate Governance, 2017, 562; Exhibit RC1601 Article: Deconstructing Independent Directors, 2013, 71.}

_{57 See, eg, Exhibit RC1601 Article: Deconstructing Independent Directors, 2013, 70–1; Exhibit RC1598 Article: The Elusive Quest for Global Governance Standards, 2009, 1284–6, 1305.}

_{58 Exhibit RC1603 Article: The Role and Effect of Controlling Shareholders in Corporate Governance, 2017, 563; Exhibit RC1598 Article: The Elusive Quest for Global Governance Standards, 2009, 1295; Exhibit RC1611 Article: Tunnelling, 2000, 23; Exhibit RC1612 Article: Unbundling and Measuring Tunnelling, 2014, 1700–1; Exhibit RC1607 Related Party Transactions: Policy Options and Real-World Challenges, October 2014, 3.}

_{59 Exhibit RC1598 Article: The Elusive Quest for Global Governance Standards, 2009, 1295.}

_{60 Exhibit RC0445 Bergin Report Volume 1, 1 February 2021, 168 [120].}

_{61 Exhibit RC0445 Bergin Report Volume 1, 1 February 2021, 169–70 [121]–[123].}

_{62 Exhibit RC0445 Bergin Report Volume 1, 1 February 2021, 171 [127].}

_{63 Exhibit RC0445 Bergin Report Volume 1, 1 February 2021, 175 [148].}

_{64 Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cl 22.1(f).}

_{65 VCGA, Third Triennial Review of the Casino Operator and Licence (Report, June 2003) 27, 32; Exhibit RC0496 VCGA Melbourne Casino Project Eighth Variation Agreement to the Casino Agreement, 27 May 1999.}

_{66 Exhibit RC0500 VCGLR Melbourne Casino Project Twelfth Variation Agreement to the Casino Agreement, 26 September 2019.}

_{67 Casino Control Act 1991 (Vic) s 28.}

_{68 Corporations Act 2001 (Cth) ss 9 (definition of ‘substantial holding’), 671B(1)(a).}

_{69 Corporations Act 2001 (Cth) ss 672A, 672B.}

_{70 Responsive submission CPH Parties, 2 August 2021, 10–13 [19]–[31].}

_{71 Exhibit RC0437 Statement of Helen Coonan, 28 April 2021 (marked up corrections applied 5 July 2021), Annexure i.}

_{72 Responsive submission CPH Parties, 2 August 2021, 26–8 [80]–[86].}

_{73 Responsive submission Crown Melbourne Limited and Crown Resorts Limited, 2 August 2021, 83–4 [C.152(a)].}

_{74 Exhibit RC0970 Bergin Report Volume 2, 1 February 2021, 636 [110].}

_{75 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cls 22.1(c)–(d).}

_{76 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(e).}

_{77 Submission 08 South Australian Centre for Economic Studies, 30–5.}

_{78 Submission 08 South Australian Centre for Economic Studies, 35.}

_{79 Exhibit RC1467 Crown Melbourne Memorandum and Articles of Association, 15 June 2007, art 14.2.}

_{80 See commentary at ASX Corporate Governance Council, Corporate Governance Principles and Recommendations (4th ed, February 2019) 13–14.}

_{81 ASX Corporate Governance Council, Corporate Governance Principles and Recommendations (4th ed, February 2019) 15.}

_{82 ASX Corporate Governance Council, Corporate Governance Principles and Recommendations (4th ed, February 2019) 15.}

_{83 Jeffrey Lawrence and Geof Stapledon, Do Independent Directors Add Value? (Report, 1999) 2.}

_{84 Jeffrey Lawrence and Geof Stapledon, Do Independent Directors Add Value? (Report, 1999) 53.}

_{85 Jeffrey Lawrence and Geof Stapledon, Do Independent Directors Add Value? (Report, 1999) 53–5.}

_{86 Exhibit RC0223 Statement of Nigel Morrison, 15 June 2021, 1–2, 4; Exhibit RC0223 Statement of Nigel Morrison, 15 June 2021, Annexure b.}

_{87 Transcript of Nigel Morrison, 22 June 2021, 2268.}

_{88 Transcript of Nigel Morrison, 22 June 2021, 2268.}

_{89 Transcript of Nigel Morrison, 22 June 2021, 2270.}

_{90 VCGA, Second Triennial Review of the Casino Operator and Licence (Report, June 2000) 24.}

_{91 VCGA, Second Triennial Review of the Casino Operator and Licence (Report, June 2000) 26.}

_{92 VCGA, Second Triennial Review of the Casino Operator and Licence (Report, June 2000) 26.}

_{93 VCGA, Second Triennial Review of the Casino Operator and Licence (Report, June 2000) 25–6.}

_{94 VCGA, Third Triennial Review of the Casino Operator and Licence (Report, June 2003) 12.}

_{95 Responsive submission Crown Melbourne Limited and Crown Resorts Limited, 2 August 2021, 85 [C.152(d)].}

_{96 For further information on the single purpose restriction, see the discussion in Chapter 2.}

_{97 Exhibit RC0485 Bundle of contracts and file notes, various dates, 266 [16] (Office of Gambling Regulation, Review of the Casino Agreement, n.d.).}

_{98 Exhibit RC0483 Brian Forrest Casino Agreement Review, n.d., 31–5 (see Letter from Rowen Craigie to Brian Forrest, 25 August 2003 and letter from Rowen Craigie to the Minister for Gaming, 25 August 2003); Exhibit RC0488 VCCA Melbourne Casino Project Casino Agreement, 21 September 1993, cls 22.1(p), 22.1(q), 22.4, 48.2(e).}

_{99 Exhibit RC0483 Brian Forrest Casino Agreement Review, n.d., 31−2 (Letter from Rowen Craigie to Brian Forrest, 25 August 2003).}

_{100 Exhibit RC0483 Brian Forrest Casino Agreement Review, n.d., 249–50 (Ministerial Brief regarding outcome of negotiations with Crown on removal of single purpose company provision and changes required by government in exchange, n.d., Attachment 4).}

_{101 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.6 (deleting cls 22.1(p)−(r), 22.4 of the Casino Agreement).}

_{102 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.3 (inserting cl 22.1(b) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(b).}

_{103 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.3 (inserting cl 22.1(c) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(ba).}

_{104 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.4 (inserting cl 22.1(bb) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(bb).}

_{105 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.2 (amending cl 2 of the Casino Agreement, inserting definition of ‘Senior Executive Manager’); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 2 (definition of ‘Senior Executive Manager’).}

_{106 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.4 (inserting cl 22.1(bc) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(bc).}

_{107 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.7 (inserting cl 22.1(ra) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(ra)(i).}

_{108 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.7 (inserting cl 22.1(ra) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(ra)(ii).}

_{109 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.7 (inserting cl 22.1(ra) of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(ra)(iii).}

_{110 Exhibit RC0497 VCGR Melbourne Casino Project Ninth Variation Agreement to the Casino Agreement, 8 July 2005, cl 2.11 (substituting cl 28 of the Casino Agreement); Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 28.}

_{111 Responsive submission Crown Melbourne Limited and Crown Resorts Limited, 2 August 2021, 71–2 [C.109].}

_{112 Responsive submission Crown Melbourne Limited and Crown Resorts Limited, 2 August 2021, 71–2 [C.111].}

_{113 Responsive submission CPH Parties, 2 August 2021, 45 [150].}

_{114 Exhibit RC0002 VCGLR Sixth Review of the Casino Operator and Licence, June 2018, 56.}

_{115 Exhibit RC0002 VCGLR Sixth Review of the Casino Operator and Licence, June 2018, 39.}

_{116 Exhibit RC0002 VCGLR Sixth Review of the Casino Operator and Licence, June 2018, 51.}

_{117 Exhibit RC0002 VCGLR Sixth Review of the Casino Operator and Licence, June 2018, 56.}

_{118 Exhibit RC0002 VCGLR Sixth Review of the Casino Operator and Licence, June 2018, 52.}

_{119 Exhibit RC0416 Statement of Nick Weeks, 7 June 2021, 10.}

_{120 Exhibit RC0416 Statement of Nick Weeks, 7 June 2021, 10.}

_{121 Exhibit RC1557 Memorandum of advice regarding Crown Resorts Governance Structure, 8 September 2020, 1.}

_{122 Exhibit RC1557 Memorandum of advice regarding Crown Resorts Governance Structure, 8 September 2020, 3.}

_{123 Exhibit RC1557 Memorandum of advice regarding Crown Resorts Governance Structure, 8 September 2020, 4.}

_{124 Exhibit RC1557 Memorandum of advice regarding Crown Resorts Governance Structure, 8 September 2020, 5.}

_{125 Exhibit RC1557 Memorandum of advice regarding Crown Resorts Governance Structure, 8 September 2020, 5.}

_{126 Xavier Connor, Report of Board of Inquiry into Casinos in the State of Victoria (Report, 1983) [16.02].}

_{127 ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.}

_{128 ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, s 5.}

_{129 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(m).}

_{130 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cls 22.1(r)(i)–(ii).}

_{131 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cls 22.1(ra)(ii)–(iii).}

_{132 Exhibit RC0435 Consolidated Casino Agreement, 21 September 1993, cl 22.1(ra).}

_{133 Crown Resorts, ‘Crown Sydney Hotel Resort Unsolicited Proposal Update’ (ASX Media Release, 4 July 2013); New South Wales Government, ‘Crown Proposal Moves to Stage 3’ (Media Release, 4 July 2013).}

_{134 Crown Resorts, ‘Crown Sydney Hotel Resort Unsolicited Proposal Update’ (ASX Media Release, 4 July 2013).}

_{135 New South Wales Government, ‘Crown Proposal Moves to Stage 3’ (Media Release, 4 July 2013).}

_{136 New South Wales Government, ‘Crown Proposal Moves to Stage 3’ (Media Release, 4 July 2013).}

_{137 Crown Resorts, Annual Report 2014 (Report, 2014) 20.}

_{138 Crown Resorts, Annual Report 2015 (Report, 2015) 26.}

_{139 Crown Resorts, Annual Report 2018 (Report, 2018) 3.}

_{140 Crown Resorts, Annual Report 2020 (Report, 2020) 5.}

_{141 Exhibit RC1466 Crown Sydney Hotel Resort Financial Submission, June 2013.}

_{142 Exhibit RC1466 Crown Sydney Hotel Resort Financial Submission, June 2013, 8, 12.}

_{143 Exhibit RC0353 Second Statement of Xavier Walsh, 23 April 2021, Annexure x, 17.}

_{144 Transcript of Jane Halton, 7 July 2021, 3621.}

_{145 Transcript of Stephen McCann, 6 July 2021, 3495.}