Jabetin Pty Ltd v Liquor Administration Board

[2005] HCATrans 659

[2005] HCATrans 659

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S188 of 2005

B e t w e e n -

JABETIN PTY LIMITED

Applicant

and

LIQUOR ADMINISTRATION BOARD

First Respondent

BENWINE PTY LIMITED

Second Respondent

ALLAN JACKSON

Third Respondent

FANTED PTY LIMITED

Fourth Respondent

Office of the Registry
  Sydney  No S189 of 2005

B e t w e e n -

BENWINE PTY LTD

Applicant

and

JABETIN PTY LTD

Respondent

Applications for special leave to appeal

McHUGH ACJ
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 SEPTEMBER 2005, AT 10.15 AM

Copyright in the High Court of Australia

__________________

MR J.M. IRELAND, QC:   Your Honour, in those matters, I appear with my learned friend, MR N.R. MURRAY, on behalf of the applicant in S188 of 2005, that is Jabetin, which is also the respondent in S189 of 2005.  (instructed by Tranter Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR A. HATZIS, for Benwine Pty Limited, which is the second respondent in S188 of 2005 and the applicant in S189 of 2005.  (instructed by Deutsch Partners Lawyers)

McHUGH ACJ:   Yes.

KIRBY J:   I could not wait to get to this case, but I had papers in this case before me when the earlier case was called and I therefore thought it was before us at that stage, but I am still asking the question, what is this agreement and why is it necessary?

McHUGH ACJ:   It is just about the facts, is it not, the way you are dealing with them?

MR JACKSON:   Yes, your Honour.  What happened was that the cases had been settled in part and we thought it appropriate ‑ ‑ ‑

KIRBY J:   Is that since the Court of Appeal or ‑ ‑ ‑

MR JACKSON:   Yes.  These cases relate in toto to 15 poker machine entitlements.

KIRBY J:   Yes.

MR JACKSON:   There are some temporal considerations.  The parties reached an agreement in relation to some of them.  We thought it appropriate to tell the Court the facts had changed slightly.  We thought it appropriate also to say that the facts have not changed in a way which would affect the way in which the Court might deal with the matters.

McHUGH ACJ:   Yes, Mr Ireland.

MR IRELAND:   Your Honour, the application by Jabetin in S188 of 2005 is an application in what where proceedings for judicial review.  It arises out of the statutory schema which was introduced by the New South Wales Government to place a freeze or cap on poker machines in licensed premises.  That arose under the Gaming Machines Act 2001 (NSW). Your Honours might remember that in New South Wales poker machines were not allowed in hotel premises until 1997 and when they were allowed into hotel premises it was a question of application to the controlling body, which was the Liquor Administration Board or “LAB”, and each case was dealt with on its merits having regard to the requirements of the licence.

Everything changed, as it were, out of the blue on 19 April 2001 when the government announced a freeze on poker machine entitlements, no doubt because the enormous gambling revenue had given rise to associated social problems and it was thought that there ought to be introduced a finite number of these things in the State, much as the wisdom of the 19^th century gave rise to the Licences Reduction Board in respect of hotels.  But the introduction of this cap or freeze, coupled with a mechanism in the statute which was consequentially enacted, led to an instant market being created in respect of these poker machine entitlements which became transferable from one licensed premises to another. 

Now, for many years it has been a habit in the hotel industry to grant long leases of hotel premises.  That was the case in respect of many premises at the time this sudden freeze was announced and typically the leases which were on foot at that time said nothing at all about poker machines or poker machine entitlements, and this is such a case.  Typically also, the liquor licence associated with the premises would be transferred to the tenant of the premises for the currency of the lease.  So the tenant or, in the case of a corporate tenant, the tenant’s nominee would become the licensee pursuant to the Liquor Act 1982 (NSW). Also typically, there were a series of covenants in such leases which were protective of that licence for the benefit of the landlord.

If your Honours look in the present case, we have set out in our written argument in the application book at 95 the covenants which were included in this lease and which I say are not atypical.  So Benwine, which is the tenant, was required to apply to renew the hotelier’s licence.  The tenant was obliged to inform the landlord, Jabetin, of any legal process.  The tenant appointed the landlord as its attorney to defend or otherwise deal with proceedings which might arise in relation to the licence.  There was the usual restriction on using the premises otherwise than for a hotel.  The tenant was required to carry on business as a hotelier.  There was nothing to be done by the tenant to jeopardise or lead to the forfeiture of the licence. 

So, in these cases reflective of the commercial position, a landlord with such a lease has a keen interest in the maintenance of the licence because in all of these cases at the end of the tenancy when the tenant departs, there will be a covenant, as in this case, to restore the licence to the landlord. 

Now, the problem that arose in these cases was that the mechanism which the Gaming Machines Act produced to deal with these transferable poker machine entitlements which related to the liquor licence involved a decision by the Board about who were the people with a financial interest in the licence. That was enshrined, your Honours, in section 19 of the Gaming Machines Act which is reproduced, I think, conveniently at ‑ ‑ ‑

KIRBY J:   Page 97.

MR IRELAND:   ‑ ‑ ‑ 63.  I am looking at our book which is S188 of 2005.  It is at 63.  It should also be at – I do not know which books your Honours are working off at the moment.

KIRBY J:   Well, it will be everywhere so ‑ ‑ ‑

MR IRELAND:   Yes, so it is at page 63 of the application book in S188 of 2005 and it is also at page ‑ ‑ ‑

KIRBY J:   That will do, 63.  Let us get on with it.

MR IRELAND:   So your Honours see that the poker machine entitlements are allocated in respect of a particular licence. Their transfer must be approved by the Board – this is section 19(2):

The transfer of a poker machine entitlement does not have any effect –

inter partes –

unless the transfer:

(a)      is approved by the Board –

and then (3) at the foot of – this is paragraph 25 in the judgment of Justice Mason in the Court of Appeal, the learned President:

An application for the Board’s approval of the transfer of the poker machine entitlement must:

(a)      be accompanied by the fee . . . 

(b)      be accompanied by such particulars –

and then critically in section 19(3)(c):

in the case of an application for the transfer of an entitlement allocated in respect of a hotelier’s licence – [the applicant must] demonstrate, to the satisfaction of the Board, that the proposed transfer is supported by each person who, in the opinion of the Board, has a financial interest in the hotelier’s licence –

Now, what that does is to introduce, in effect, a statutory veto so that if the relevant parties cannot reach a state of co-operation as to a proposed transfer, then the Board cannot become satisfied of that and the transfer cannot go ahead.  So the critical question then becomes, who are the persons who in the opinion of the Board have a financial interest in the hotelier’s licence who must join in such an application?  It is subsection (5) of ‑ ‑ ‑

KIRBY J:   Just explain what was the rationale behind that requirement.

MR IRELAND:   The rationale behind that requirement seems to be this, your Honour, that perhaps the Parliament foresaw that the capping of these things coupled with the transferability would lead to a market and, hence, a premium and the question was this statutory windfall which was brought in by a side wind to the otherwise well‑intentioned piece of social control, how one would deal with that.  You have on the one hand a landlord of a hotel who wants to keep these entitlements once they exist, because if they are disposed of during the currency of a lease and the lessee then goes away at the end of the term of the lease, then the landlord may wish to go out into the market and buy new ones to replace them if the business requires it. 

So we submit that the statutory schema is to say that all the persons having an interest in the licence must co-operate, otherwise there is a stalemate situation and the entitlement should stay with the licence and, hence, with the premises. 

Now, the opposite result was reached both before the trial judge, Justice Gzell, and also in the Court of Appeal because the court took the view that subsection (5) which follows was a code and stated exhaustively when a person would be treated as having a financial interest in the licence and subsection (5) related that interest to the business that was carried on.  If I can read the words, it says:

For the purposes of subsection (3)(c), a person –

and this is the odd phrase –

is taken to have a financial interest in a hotelier’s licence if the person is entitled to receive any income derived from the business carried on under the authority of the licence or any other financial benefit or financial advantage from the carrying on of the business –

So it links some benefit or advantage from the business ‑ ‑ ‑

KIRBY J:   You latch onto the words “is taken” as ‑ ‑ ‑

MR IRELAND:   Yes, we say that is not exhaustive but rather it is a deeming provision which adds to the natural meaning of the words.

KIRBY J:   So that at least for those persons there will be no argument but you say it leaves it open for other persons.

MR IRELAND:   That is so and, typically, in the standard case, of which this is one of many cases that have been litigated, this is the one that has percolated its way up to this level.

KIRBY J:   And I think the submissions say there are a number of cases that turn on this.

MR IRELAND:   There are a number of cases, your Honour.  In fact, I do not think it is a secret that because of this problem in the industry generally, there was a group of tenants that got together to try and test these questions which were widespread and that ‑ ‑ ‑

KIRBY J:   I can see the arguments on both sides but you have had your run in the courts below and you really have to show error to get the matter to us.

MR IRELAND:   We do, your Honour.

KIRBY J:   In the old days we would have said this is just New South Wales legislation but Justice Callinan will not let us say that now.

MR IRELAND:   No, you are not allowed to say that anymore, your Honour.  But this is a matter of general importance because this legislation has a wide impact ‑ ‑ ‑

KIRBY J:   It is not of general importance to Australia.  It is of general importance to this branch of industry in this State.

MR IRELAND:   That is right.  That is enough, in my respectful submission, and it arises neatly in a sense because it is a point of statutory construction ‑ ‑ ‑

KIRBY J:   But you have unanimous conclusions against your construction by four learned judges.

MR IRELAND:   We do.  However, on the other hand, Justice Hodgson in the Court of Appeal perhaps best for my purposes articulates the doubts.  If your Honours would go ‑ ‑ ‑

KIRBY J:   There are always doubts.  Justice McHugh said this in News Limited and one of the recent cases.  There are always doubts about statutory construction.

MR IRELAND:   Yes, otherwise cases would not run.

KIRBY J:   Otherwise you lot would be out a lot of business.

MR IRELAND:   Out of business again, your Honour.  Could I just point to it though?  It is useful and, if I may say, neatly captured at page 83 of the application book, if your Honours would pass over to the judgment of Justice Hodgson.  His Honour points out that within the same Act there are other provisions which are truly exhaustive, so that when “close associate” is defined within the Act, the expression – this is at 83, line 14:

(3)      In this section:

relevant financial interest in a business means –

so the word “means” is used by this statute when it wants to be exhaustive and his Honour says that is the strongest example.  Then passing down to section 118 at line 40 on the same page, perhaps a more neutral formulation, this is 118(2):

For the purposes of subsection (1), a person is interested in the business . . . if the person is entitled to receive –

His Honour said that was not so clearly exhaustive but nevertheless so and his Honour says ultimately ‑ ‑ ‑

KIRBY J:   Did he wobble into the opposite camp then?

MR IRELAND:   He wobbled and said that, with some hesitation, he was joining in what the President had to say.  So the matter still remains respectably debateable.

KIRBY J:   But if it came up to us, we would have the same sorts of considerations.  You would get the same hesitations ‑ ‑ ‑

MR IRELAND:   Different judges wobbling in different directions, your Honour.

KIRBY J:   That is it.

MR IRELAND:   We have been having to cope with that for a long time in this Court, your Honour.

KIRBY J:   But what is the reason of principle that we would take such a case on?

MR IRELAND:   Only because, your Honour, it really does impact on an awful lot of situations.  There are a lot of these leases around.  They are long leases where the disposition by tenants independently of the landlord’s consent of these very significant assets.  They run into hundreds of thousands of dollars for a set of three, and in this case there were 15.  There is a lot of money involved and the adjustment of this position between the

tenants and the landlords in a typical case, which this is, the typical case, in a situation where the expression “is taken to be” has been treated, we would say rather surprisingly, as a codifying principle excluding other obvious examples where someone does not have an interest in the business yet has an interest in the licence generates a proper basis to bring this matter before this Court.

KIRBY J:   You have put your point now and, if I can say so, very well because I was against you when I came in but now I am not sure.

MR IRELAND:   Thank you, your Honour.

McHUGH ACJ:   Yes, Mr Jackson.

MR JACKSON:   Thank you, your Honours. 

KIRBY J:   With those encouraging words, what do you have to say? Why are not those words – I mean there has been a lot of authority on the “is deemed to be” or “shall be taken to be”.  It is not exclusive of the category. 

MR JACKSON:   No, but, your Honour, could I just say that one is looking at provisions of the enactment which, in our submission, make it really pretty clear in the end, we would submit, that the conclusions arrived at by the Board, Justice Gzell and all members of the Court of Appeal were correct and could I just say this, your Honours. Your Honours will see, if I could go to section 19 and the way in which it works. You will see in section 19(2) that the transfer does not have effect unless it is done in accordance with the regulations, et cetera, and the Act. Then you come to 19(3), the relevant part of which is that you have to have the application:

supported by each person who, in the opinion of the Board, has a financial interest in the hotelier’s licence –

You then have, your Honours, two further provisions, (5) and (6), subsection (6) having been added afterwards to make things clearer.  Now, what subsection (5) does ‑ ‑ ‑

KIRBY J:   Can I just ask you what your theory of (3)(c) is?

MR JACKSON:   Quite, your Honour.  The theory of (3)(c) simply is that if one has a financial interest in the sense referred to in subsection (5) of getting something dependent on or out of the operation of the business, in the sense of having – one then has a financial interest in the licence.

KIRBY J:   But I have to say Mr Ireland has made the point that then one would expect that to be “means” not “is taken to have”.

MR JACKSON:   Your Honour, I am just going to go onto that. One sees my learned friend saying that. If I could just go to page 107 of the Jabetin application book, your Honours will see in paragraph 19 – perhaps I could preface it by saying in a sense what we have said in paragraph 18, that section 19(6) makes it perfectly clear when the owner of the hotel premises does not have an interest in the hotel licence. So it is not quite just a question of what 19(5) does; it is 19(6) as well. The point we would seek to make in paragraph 19 is that, as Justice Mason said, whilst our learned friend advanced the theory of construction, they were actually “hard pressed to suggest any type of interest” which would lie outside subsection (5). Your Honours, that is a strong pointer, we would submit, towards the exhaustive operation of 19(5). Justice Gzell was to the same effect in his reasons. We would also say, your Honours, that ‑ ‑ ‑

KIRBY J:   The possible flaw in that is:

by reason only of the person being the owner of the hotel. 

MR JACKSON:   I am sorry, your Honour?

KIRBY J:   It says “by reason only of . . . being”, in other words, that that alone is not enough.

MR JACKSON:   Your Honour, that was all this case was and what your Honours will see is ‑ ‑ ‑

KIRBY J:   You say here the only interest of the owner of the hotel was being the owner of the hotel.

MR JACKSON:   This, your Honours, was the typical case of a lease entered into before these things came into existence and it simply dealt with – it was the typical case and your Honours will see references in the judgments to the fact that it contained the ordinary covenants as between owner and lessee.

McHUGH ACJ:   The owner did not own the poker machines.

MR JACKSON:   No, not at all.

McHUGH ACJ:   They belonged to Benwine.

MR JACKSON:   They belong to us, yes. So, your Honours, it was the typical case that one would exactly expect to be covered by section 19(6). So, your Honours, the simple point we would seek to make is that this is a case where one has had three levels already dealing with the case. There

has not been anyone who has taken the view that section 19(5) together with section 19(6) did not, at least so far as cases of this kind are concerned, operate exhaustively and exhaustively in the sense that, unless you had something more, 19(6) applied.

It is not just a case of getting 19(3)(c) and 19(5) and saying maybe there is something more which we are having a bit of difficulty identifying.  There is also the provision of 19(6).  So, your Honours, we accept, of course, it is an issue of interest to people in the trade, our people, their people ‑ ‑ ‑

KIRBY J:   And a lot of money is bound up in the decision apparently.

MR JACKSON:   Yes, of course, but having said that, that makes the case one of importance.  It does not make the case, in our submission, one where the applicant’s argument is one that has sufficiently worthwhile prospects of success to merit this Court’s interest.  Your Honours, those are our submissions on this question.

McHUGH ACJ:   Yes, Mr Ireland.

KIRBY J:   You had better address subsection (6).

MR IRELAND:   Yes, I am.  Subsection (6), your Honour – we have sent up some materials yesterday which include the introduction of subsection (6) which was a later amendment to the Act.  Do your Honours have our “APPLICANT’S LEGISLATION AND MATERIAL FOR HEARING”?  It is in a bound book.

McHUGH ACJ:     Under tab 4 are the parliamentary debates.  Your Honours will see under tab 4 there are a series of pages.  The page I want to refer to are the remarks in the committee stages of the Legislative Assembly where this amendment was introduced. 

KIRBY J:   Yes, where do you take us?  What page of the record?

MR IRELAND:   It is at page 1557 at the top – I am not sure if it came through on the photocopying, that is all – 7 May 2002 Legislative Council. 

KIRBY J:   Yes, we have that.

MR IRELAND:   It says in the middle of the page, “The Government is pleased to introduce the” ‑ I am sorry, I have that wrong.

KIRBY J:   Repeat Offenders Bill.

MR IRELAND:   Yes, that is wrong, I am sorry.

KIRBY J:   I am sure there would be some people who would think the gambling machines are repeat offenders.

MR IRELAND:   I am sorry, I think we have managed to reproduce everything except the critical page.  I am sorry, could I go to 2036, which is the second‑last page in that bundle, and your Honours will see there that  ‑ ‑ ‑

KIRBY J:   Well, that is just where it was introduced.

MR IRELAND:   ‑ ‑ ‑ the Legislative Council had returned the matter to the Legislative Assembly after the amendment was introduced.  I am sorry, I am hampered by the fact that the right page does not seem to be in our materials.  What they said, in essence, if I can be permitted to summarise it, was there had never been any intention that the mere ownership of a building, that is the mere ownership of a building, that is the word that is repeatedly used, should be enough to bar the transfer of these poker machine entitlements. 

Now, we say that subsection (6) is designed – it was called, I think, in the trade the Westfield amendment where one had large shopping centres where the freehold was owned.  But where you go further than that and you have a series of intricate covenants that protect the licence in favour of the landlord, it is not the mere ownership of the building, it is a whole series of contractual relations which impose, we would say, a financial interest and then provide the financial interest to the – I now have the piece of paper, I can read it out.  It simply says this:

The amendment will make it clear that a person whose only interest in a hotel is to own the building is not a person with a financial interest –

So that was the purpose that subsection (6) was introduced.  It was not introduced to say that whatever rights a freeholder has, no matter how intricate within the lease to control and insist on the return of the licence should be disregarded. 

KIRBY J:   It does put a bit of poison in the well because it leaves it very doubtful that there is much other interest that the hotel owner typically has or that your client had other than that which is referred to in (6) in this case.

MR IRELAND:   Your Honour, we did give examples in the Court of Appeal.  They did not seem to ‑ ‑ ‑

KIRBY J:   They did not impress their Honours.

MR IRELAND:   ‑ ‑ ‑ raise loud cheers from the President.  He said – our best example, I think, was you have a case where there is no business being operated.  The hotel has been burnt out.  The business has gone away.  Nevertheless, the licence is dormant.

KIRBY J:   That is a very hypothetical and remote – we are talking about a very active industry and very valuable property here and therefore you have to ask why did the Council add (6) and when you add (6) to the ingredients of (5) and take into account (3)(c) ‑ ‑ ‑

MR IRELAND:   That was the argument prevailed against us below, your Honour, that the concatenation of those three provisions ‑ ‑ ‑

KIRBY J:   As Justice McHugh has said many times, these things are problematic ‑ ‑ ‑

MR IRELAND:   They are finely balanced.

KIRBY J:   ‑ ‑ ‑ and you have to ask essentially what is the policy or theory of the Act.  I just, myself, feel that there is not enough now to bring it up because one can understand the decision that has been reached.

McHUGH ACJ:   What do you say about the statement of Justice Hodgson at page 84, line 45 where he says:

Furthermore, s 19(5) tends to suggest that it is some present entitlement to a benefit or advantage from the carrying on of the business which is the kind of financial interest ‑ ‑ ‑

MR IRELAND:   What his Honour is saying is that at the time the transfer application is lodged, there must be some state of affairs then which generates the financial interest in the licence.  I think his Honour is saying the fact that you can get the licence back in the future, it does not count, relevantly.  But we would say, your Honour, that this remains debatable.  The significance of the matter ‑ ‑ ‑

KIRBY J:   Debatable is not enough.  You have to show error and could we do any better than Justice Hodgson saying there are pointers in your direction but ‑ ‑ ‑

MR IRELAND:   It comes down to a construction of two words.  What does “taken to be” mean in this statutory context?  Does it mean additionally ‑ ‑ ‑

KIRBY J:   Yes, but we have gone beyond the age of textual construction.  We are in the age of contextual construction.  So you read those words in the context of (6).

MR IRELAND:   I accept that completely, but when you look in the context of the other provisions, the Act makes it clear when it is being exhaustive and his Honour Justice Hodgson obviously had plain doubts about that.  In the end he fell in with the President’s view ‑ ‑ ‑

KIRBY J:   It is not unusual.  I am plagued by doubt every time we look at a statute.

MR IRELAND:   But, as I say, your Honour, the matter has a wide significance for those participants in the industry.  I would maintain my submission that this matter is well debatable and it is not doomed to fail, this argument.  That is the best I can say.

McHUGH ACJ:   Yes, we will hear your argument on the second matter, Mr Jackson.

MR JACKSON:   Your Honours, so far as the Benwine application is concerned, the issue in the application is set out at page 80 of the application book, paragraph 1.  That is whether we will have or retain a beneficial interest in the poker machine entitlements on the expiration or sooner determination of the lease.  Your Honour, it is an issue on which there was a difference in view between, on the one hand, the primary judge who decided in our favour and the Court of Appeal which decided the other way. 

Your Honours, there was some similarity in view.  Both the primary judge and the Court of Appeal held that the poker machine entitlements were capable of being the subject of a trust.  Your Honours will see that at pages 14 and 80 respectively.  Your Honours, there seems no reason, in our submission, why as a general proposition an express, to take the first example, or a resulting or constructive trust might not exist in respect of poker machine entitlements.

KIRBY J:   Except that this is social legislation which is designed to deal with the whole problem and Parliament has dealt with it.

MR JACKSON:   Your Honour, we accept that Parliament has dealt with the issue and the thing I was about to say was that, of course, for the ability to exist in respect of those entitlements, for a trust to exist, they would have to be consistent with the enactment which governed their creation.  Your Honours, we accept that.  In the Court of Appeal the reasons underlying its decision appear to have turned essentially upon a view that there was an incompatibility between the provisions of the Gaming Machines Act and the suggested trust.  Could I take your Honours to that passage.

McHUGH ACJ:   But is there not an anterior question?  We have to show that it would be unconscientious or ‑ ‑ ‑

MR JACKSON:   I was dealing with the capacity on the one hand.  I was going to come to that next, your Honours, if I may.  May I take just a moment to deal with the first point.  At page 68, paragraph 85, your Honours will see the view expressed by Justice Mason that the declarations which were made did not conform to the statutory scheme because the lease would have come to an end and the hotelier’s licence will have been transferred to the nominee of the owner.  It is said that it does not contemplate an entitlement being detached, et cetera. 

Now, your Honours, could we say in relation to that there is, in our submission, no incompatibility.  We refer to that issue in our written submissions and your Honours will see that set out in paragraph 17 at the top of page 83.  Your Honours, could I say in relation to that just one thing.  Your Honours will see we refer to an entitlement to any profits made from the exercise of the entitlements.  There is a provision in the Act, section 73(1), which deals with non-sharing of receipts but it is subject to some qualifications, one of which refers to the filing of an affidavit under section 38 of the Liquor Act which would cover the situation.

Your Honours, assuming that there is no difficulty on the incompatibility question, the next question is whether the circumstances could give rise to a trust.  Your Honours, that turns on really some very basic facts.  We obtained the poker machine entitlements (a) because of the statute, of course.  Our learned friend calls it a windfall, a great sudden thing, your Honours, who knows about all these matters.  But we obtained them because of steps we had taken to acquire gaming machines and authorisations for them before there was a freeze on obtaining any more.  The respondents played no part and to obtain the poker machine entitlements one had to have two things.  One was statute; two what we had done. 

The poker machine entitlements were issued, of course, in respect of the licence – that is section 15(2)(a) – but it does not follow that they necessarily belong absolutely to the licensee from time to time and if you have a situation where at the end of the term of the lease our poker machine entitlements, which we have done whatever was necessary to obtain them, go over to the new licensee absolutely.  That, in our submission, gives rise to a trust of the nature to which we have referred in our written submissions.

McHUGH ACJ:   I meant to have a look at a case –are you familiar with it – I think the name of it is Keith Henry v Stuart Walker & Co 100 CLR 342. It concerned quotas and Keith Henry had the licence for the quotas but they were transferable and they lent their quotas to the other firm, then further quotas were issued based on the use of quotas and the second firm applied and got the new quota and Keith Henry, whose quota had been the basis, missed out on it. Now, this Court held there was nothing unconscientious about that and no trust arose. It is Keith Henry v Stuart Walker 100 CLR 342, Mr Jackson.

MR JACKSON:   Well, your Honour, all these cases depend on the circumstances,

McHUGH ACJ:   I appreciate that but ‑ ‑ ‑

MR JACKSON:   Can I just say the views taken about trusts may have moved on a little from then, with respect, but if that be ‑ ‑ ‑

McHUGH ACJ:   It was a joint judgment of Chief Justice Dixon and Justices McTiernan and Fullagar and they said there was “no recognisable equity” in the case:

The whole substance of the situation can be stated in a few words.  The Minister for Customs has in his disposition certain rights, which are of value, and which he is entitled to grant at his discretion.  He announces that he will grant them on a certain basis.  A contends that on this basis the rights should be granted to him.  B contends that on this basis they should be granted to him, B.  The Minister, in the exercise of his discretion, makes the grant to B.  There is really no more in this case than that.

MR JACKSON:   It has a flavour of administrative law and ultra vires really rather than anything else, with respect, your Honour.  Of course, one is in a situation now where for doing nothing really one sees, in accordance with the Court of Appeal’s judgment, the respondent in the present application obtaining the benefit of them.  We, who did whatever we had to ‑ ‑ ‑

McHUGH ACJ:   You seem to be arguing it is a sort of Keech v Sandford type situation in which the profits or the use of these entitlements are held in trust.

MR JACKSON:   Yes, what we would say, your Honour, is that we have the benefit of the entitlements.  Of course the entitlements relate to a particular licence, but leaving aside circumstances where the beneficial interest in them could be defeated by particular transactions, leaving that

aside, there is no particular reason why, whilst they adhere to the licence, the benefit of them is not a benefit that belongs to us.  Your Honours, that is our submission.

McHUGH ACJ:   Yes.  Yes, Mr Ireland.

MR IRELAND:   The trust argument which was upheld at first instance and rejected in the Court of Appeal really has no hope, we would say, and for this reason, that once it is accepted that during the currency of holding the liquor licence one can exercise the poker machine entitlements, that that is the statutory scheme.  When the liquor licence is transferred, the benefit of those entitlements, whether by sale or exercise, goes away and that is what the Court of Appeal says and there is nothing unconscientious about that.  Whilst one has these things as part of the arrangements under the lease with the associated liquor licence, one can exercise them.  It was mere coincidence that the tenant was in the hotel when the 15 came to be crystallised, as awarded, as it were, in respect of the licence of this hotel.  They travel with the licence.

The Court of Appeal last Friday reaffirmed this position in the appeal of Masters v Garcia which is under tab 5 in our bundle.

KIRBY J:   They would just follow their own authority, would they not?

MR IRELAND:   They made it very clear that Jabetin, this case which you are dealing with, was clear authority that once you ceased to be the licensee you could not be the destination of an equitable interest, so that there is a second and overriding reason why – a more emphatic reason why the constructive trust contended for here could not arise.  Could I just say this:  your Honours have not ruled on the first application.  There may be an interplay between these.

McHUGH ACJ:   Yes.

MR IRELAND:   We had experience last year where there were two associated matters in Elders and Harkins ‑ ‑ ‑

KIRBY J:   Yes, you had to come along, did you not?

MR IRELAND:   ‑ ‑ ‑‑ where special leave was refused in one and not the other and the respondent raised by way of contention all the matters that the other applicant – and I was allowed to sit in in Canberra.  Your Honours might remember that.

KIRBY J:   Yes, we can never forget it.

McHUGH ACJ:   Justice Kirby and I, we dissented.

MR IRELAND:   Yes, that is right.  So that, your Honours, in my respectful ‑ ‑ ‑

KIRBY J:   We often do.

MR IRELAND:   The mistake I made on that day was to not ask your Honours to think about the two cases on the grant of special leave and see whether – one without the other would be a real disaster, we think, in this case.

McHUGH ACJ:   Yes.  Mr Jackson.

MR JACKSON:   Just two things, your Honours.  The Garcia decision follows this case but both of them turn on an assumption which, in our submission, is really not made out of which one really finds little actual reasoning in the judgment in either case and that is the assumption that any interest in the poker machine entitlement has to be held by someone who also has an interest in the licence.

KIRBY J:   Yes, but in a matter of big business and obvious big interests you are trying to gloss the statute with equity to provide benefits that the Parliament has not given you.

MR JACKSON:   Your Honour, could I say Garcia accepts the existence of equity.  It is just a question of – it reduces the persons who may have an interest in it.  There is no reason at all, your Honour, why one could not have an express trust of this ‑ ‑ ‑

KIRBY J:   Except that one normally expects Parliament in comprehensive and social legislation to make its own provisions, not to rely on courts to try and work out equitable provisions which will vary from case to case.

MR JACKSON:   Your Honour, it is by no means uncommon and this is an example of circumstances where new rights are created and it is a question of the general law dealing with them thereafter and this is one where Parliament ‑ ‑ ‑

KIRBY J:   This is big business though.

MR JACKSON:   Well, your Honour, Parliament expressly said, “We are not expressing a view on who owns these”.

KIRBY J:   I really have doubt about the use of equity to arm business with rights that Parliament has not provided them.

MR JACKSON:   Your Honour, I do not want to enter into a larger discussion about it than necessary ‑ ‑ ‑

KIRBY J:   That is behind this sort of use of equity.  My tender conscience for the vulnerable is not so easily enlivened in a case like this.

MR JACKSON:   Your Honour, one does have a situation where the choice, in a sense, lies between two people:  the owner on the one hand and the persons who did something to get them on the other hand.  If one does have a situation where new rights are created and there is nothing to indicate that in relevant respects the general law would not apply, then in the ordinary course of events one would expect that to apply.

McHUGH ACJ:   In the application of Jabetin Pty Limited v Liquor Administration Board, we are of the opinion that there are insufficient prospects of success to warrant the grant of special leave to appeal to this Court. 

In issue is the meaning and effect of section 19 of the Gaming Machines Act 2001 (NSW). As is so often the case in questions of statutory construction, the applicant has some plausible arguments to support its interpretation, as indicated in the reasons of Justice Hodgson in the Court of Appeal of New South Wales. However, like his Honour, we would conclude, along with all the learned judges who have looked at this issue in the courts below, that the preferable, and therefore the correct, construction of the Act is that which the courts below have given. Accordingly, special leave to appeal must be refused with costs.

In the application of Benwine Pty Ltd v Jabetin Pty Ltd we see no error in the reasoning of the Court of Appeal.  Accordingly, special leave to appeal is refused with costs.

The Court will now adjourn to reconstitute.

AT 10.56 AM THE MATTERS WERE CONCLUDED