Garcia v Masters

In the case of Garcia v Masters, the matter before the court involved disputes concerning the equitable interests in poker machine entitlements regulated under the Gaming Machines Act 2001. The dispute arose between the former lessee, business operator, and holder of a hotelier's licence, who had surrendered their lease and contracted to sell the hotel business to a new lessee who had also obtained the hotelier's licence. The former lessee sought to preserve their alleged title to property rights in respect of poker machine entitlements, while the lessors sought to protect their interests through various contractual provisions with the new lessee. The former lessee further sought relief against both the lessors and the new lessee, claiming that the new lessee was a constructive trustee of the poker machine entitlements for their benefit and sought relief in contract. Additionally, the former lessee attempted to sell the poker machine entitlements to an outside third-party holder of hotelier's licences.

The legal issues before the court included determining whether the outgoing lessee/licensee could bind the incoming lessee/licensee in relation to poker machine entitlements and whether the new lessee was a constructive trustee of the poker machine entitlements for the benefit of the former lessee. The court also needed to consider whether the former lessee's claims in contract and equity were valid and if the new lessee was obliged to deal with the poker machine entitlements under the direction of the former lessee.

The court found in favour of the former lessee, holding that the new lessee was a constructive trustee of the poker machine entitlements for the benefit of the former lessee. The court determined that the former lessee's claims in contract and equity were valid and that the new lessee was obliged to deal with the poker machine entitlements under the direction of the former lessee by making an application to the Liquor Administration Board for the transfer of entitlements to the purchaser of the entitlements from the former lessee. The court's decision was made in very urgent circumstances, and the former lessee was granted the relief they sought.