Martin v Kelly

[2008] NSWSC 577

CITATION:	Martin and Anor v Kelly and Ors [2008] NSWSC 577
HEARING DATE(S):	29 February 2008
JUDGMENT DATE :	12 June 2008
JUDGMENT OF:	Johnson J at 1
DECISION:	1. Summons dismissed. 2. Plaintiffs to pay the costs of the First, Second, Fourth and Fifth Defendants. 3. No order as to costs of the Third Defendant.
CATCHWORDS:	GAMING - claim for prerogative relief - decision of Liquor Administration Board approving transfer of poker machine entitlements - decision that Plaintiffs had not demonstrated "financial interest in the hotelier's licence" for purpose of s.19 Gaming Machines Act 2001 - claim that decision affected by error of law, jurisdictional error or manifestly unreasonable - no error demonstrated - relief refused
LEGISLATION CITED:	Gaming Machines Act 2001 Supreme Court Act 1970
CATEGORY:	Principal judgment
CASES CITED:	Jabetin Pty Limited v Liquor Administration Board (2005) 63 NSWLR 602 Masters v Garcia (2005) 65 NSWLR 92 Boreland v Docker [2007] NSWCA 94 Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Abebe v Commonwealth of Australia (1999) 197 CLR 510 Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 Cross v McHugh [1974] 1 NSWLR 500 Craig v South Australia (1994-1995) 184 CLR 163 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 Weal v Bathurst City Council (2000) 111 LGERA 181; [2000] NSWCA 88 Wyong Shire Council v MCC Energy Pty Ltd (2005) 139 LGERA 296; [2005] NSWCA 86 Buck v Bavone (1976) 135 CLR 110 Bruce v Cole (1998) 45 NSWLR 163 Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd (1959) 59 SR(NSW) 122 Hope v Bathurst City Council (1980) 144 CLR 1 Chan v Cresdon Pty Limited (1989) 168 CLR 242 Penrith White Water Stadium Limited v Lesvos Pty Limited [2007] NSWCA 176 Wonnall Pty Limited v Clarence Property Corporation Limited (2003) 58 NSWLR 23
TEXTS CITED:	Bradbrook and Croft, “Commercial Tenancy Law in Australia”, Butterworths, 2nd edn, 1997
PARTIES:	George Owen Martin and Alison Martin (Plaintiffs) Robert James Kelly (First Defendant) Kenneth John Kelly (Second Defendant) Liquor Administration Board (Third Defendant) Reserve Hotels Pty Limited (Fourth Defendant) Scott Patrick Lane (Fifth Defendant)
FILE NUMBER(S):	SC 30070/2007
COUNSEL:	Mr PT Russell (Plaintiffs) Mr MJ Leeming SC; Ms JK Taylor (First and Second Defendants) Mr WG Muddle SC (Fourth and Fifth Defendants)
SOLICITORS:	Alister Somerville (Plaintiff) Maxwell & Co (First and Second Defendants) IV Knight, Crown Solicitor (Third Defendant) Bruce Stewart Dimarco (Fourth and Fifth Defendant)
LOWER COURT DATE OF DECISION:	---
LOWER COURT MEDIUM NEUTRAL CITATION:	---

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADMINISTRATIVE LAW LIST

Johnson J

12 June 2008

30070/07 George Owen Martin and Anor v Robert James Kelly and Ors

JUDGMENT

1 JOHNSON J: This is a claim for prerogative relief arising from a decision approving the transfer of poker machine entitlements under the Gaming Machines Act 2001 (“GM Act”).

The Parties and the Claims

2 The Plaintiffs, George Owen Martin and Alison Martin, are the freehold owners of the Tabulam Hotel, Tabulam. The First Defendant, Robert James Kelly, is the hotelier licensee (licence owner) of the Tabulam Hotel. The Second Defendant, Kenneth John Kelly, is the lessee (business owner) of the Tabulam Hotel. The Third Defendant is the Liquor Administration Board (“LAB”). The Fourth Defendant, Reserve Hotels Pty Limited, is the freehold owner of the Black Market Hotel, Chippendale. The Fifth Defendant, Scott Patrick Lane, is the hotelier licensee of the Black Market Hotel.

3 On 20 December 2006, the LAB approved the transfer of three poker machine entitlements from the Tabulam Hotel to the Black Market Hotel. By their Summons, the Plaintiffs, who are represented by Mr PT Russell of counsel, seek relief in the nature of certiorari under s.69 Supreme Court Act 1970 contending that the LAB decision of 20 December 2006 should be quashed. The First and Second Defendants, who are represented by Mr MJ Leeming SC and Ms JK Taylor of counsel, resist the Plaintiffs’ claim for relief. Mr WG Muddle SC, for the Fourth and Fifth Defendants, likewise resists the Plaintiffs’ claim for relief. In accordance with usual practice, the Third Defendant has filed a submitting appearance save as to costs.

4 The Fourth and Fifth Defendants have filed a Cross Claim against the First and Second Defendants. As the Cross Claim would only arise in the event that the Plaintiffs succeeded in their claim for relief, I determined that the appropriate course was to hear and determine the Plaintiffs’ claim, with the Cross Claim being put to one side pending that decision (T2, 29 February 2008).

Relevant Provisions of GM Act

5 Poker machine entitlements are allocated under Part 3 (ss.14-31C) GM Act. Sections 19, 20 and 21 GM Act relate to transfer of poker machine entitlements. It is appropriate to set out those provisions in the form in which they stood in December 2006:

“19 Transfer of poker machine entitlements


(1) A poker machine entitlement allocated in respect of a hotelier’s licence or the premises of a registered club is transferable.

(2) The transfer of a poker machine entitlement does not have any effect unless the transfer:

(a) is approved by the Board, and

(b) complies with the requirements of this Division and any requirements specified in the regulations.
(3) An application for the Board’s approval of the transfer of a poker machine entitlement must:

(a) be accompanied by the fee (if any) prescribed by the regulations, and

(b) be accompanied by such particulars or other matter as may be required by the Board in relation to the proposed transfer, and

(c) in the case of an application for the transfer of an entitlement allocated in respect of a hotelier’s licence - 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, and

(d) be in the form and manner determined by the Board from time to time.

(4) If a poker machine entitlement is transferred to another hotelier’s licence or premises of a registered club in accordance with this Division, the transferred entitlement is, for the purposes of this Division, taken to have been allocated by the Board in respect of the other hotelier’s licence or club premises.

(5) For the purposes of subsection (3)(c), a person 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 (whether the entitlement arises at law or in equity or otherwise).

(6) However, a person is not, for the purposes of subsection (3) (c), to be considered as having a financial interest in a hotelier’s licence by reason only of the person being the owner of the hotel.
20 General requirements relating to transfer of poker machine entitlements


(1) Poker machine entitlements allocated in respect of a hotelier’s licence may be transferred only to another hotelier’s licence.

(1A) If a hotelier’s licence is removed under the Liquor Act 1982 to other premises, the removed licence is, for the purposes of this Act, taken to be another hotelier’s licence to which poker machine entitlements allocated in respect of the hotelier’s licence may be transferred.

(2) Poker machine entitlements allocated in respect of the premises of a registered club may be transferred only:

(a) to another set of the club’s premises, or

(b) to the premises of another registered club.
(3) Subject to this Act, the following requirements apply to the transfer of poker machine entitlements:

(a) a transfer must comprise one or more blocks of 2 or 3 poker machine entitlements nominated by the transferor (referred to in this Division as a transfer block),

(b) from each such transfer block, one of the entitlements must be forfeited to the Board.

(4) A transfer block may comprise poker machine entitlements that have been allocated in respect of more than one hotelier’s licence or more than one set of club premises.

(5) Despite subsection (3), one poker machine entitlement allocated in respect of a hotelier’s licence that is held in relation to a country hotel (the transferring hotel) may be transferred in any period of 12 months without the requirements of that subsection applying to the transfer if:

(a) the transfer is to another hotelier’s licence that is held in relation to a country hotel, and

(b) the SIA threshold for the transferring hotel is not more than 8.

(6) Subsection (3) continues to apply in respect of any subsequent transfer, in any period of 12 months, of poker machine entitlements allocated in respect of a hotelier’s licence of a transferring hotel as referred to in subsection (5).

(7) If the Board approves the transfer of poker machine entitlements, the Board is to vary the authorisation under Part 5 of both the transferor and transferee to keep approved poker machines.
21 Other provisions relating to transfer of poker machine entitlements


(1) In the case of a hotelier’s licence that is held in relation to a country hotel, no more than one block of poker machine entitlements allocated in respect of the licence may be transferred in any period of 12 months to a hotelier’s licence held in relation to a hotel that is situated in a metropolitan area.

(2) If, in the case of a registered club that has more than one set of premises or that establishes new or additional premises, poker machine entitlements allocated in respect of one of those sets of premises (the transferring premises) are transferred to another set of the club’s premises, the forfeiture to the Board of one entitlement per transfer block is required unless the other set of premises is:

(a) situated within 1 kilometre of the transferring premises (in the case where either one of the premises is situated within a metropolitan area), or

(b) situated within 50 kilometres of the transferring premises (in the case where both the other set of premises and the transferring premises are not situated in a metropolitan area).

(3) Subsection (2) does not apply to or in respect of a large-scale club to which section 21A applies.

(4) If for the time being the number of poker machine entitlements allocated in respect of the premises of a registered club is 10 or less (the remaining entitlements), the club cannot transfer any of those remaining entitlements unless the transfer has been approved in principle at an extraordinary general meeting of the ordinary members of the club (being an approval supported by a majority of the votes cast at the meeting).

(5) If a liquidator has been appointed for a registered club and any poker machine entitlements allocated in respect of any of the premises of the club are proposed to be transferred, the forfeiture to the Board of one entitlement per transfer block is required.

(6) If a registered club (the former club) amalgamates with another registered club under the Registered Clubs Act 1976, any poker machine entitlements allocated in respect of any of the premises of the former club are taken to be transferred to those same premises without the forfeiture of any entitlement to the Board.”

6 Provisions allowing for transfer of poker machine entitlements under the GM Act have received judicial attention: Jabetin Pty Limited v Liquor Administration Board (2005) 63 NSWLR 602; Masters v Garcia (2005) 65 NSWLR 92; Boreland v Docker [2007] NSWCA 94.

7 Section 19(3)(c) GM Act makes the LAB the arbiter of the question whether the proposed transfer is supported “by each person who, in the opinion of the Board, has a financial interest in the hotelier’s licence”: Jabetin at 617 [37]. Subject to s.19(6), s.19(5) spells out exhaustively the criteria to be taken into account by the LAB when forming its opinion whether or not a person has a financial interest in a particular hotelier’s licence: Jabetin at 618 [41], 626 [96].

8 Notwithstanding their statutory base, poker machine entitlements are a species of property with the normal incidents of property, such as ownership, disposal and the capacity to be made subject of a trust. However, the incidents of property have to operate within the legislative framework of the GM Act: Jabetin at 624-625 [87]; Boreland v Docker at [101].

The Plaintiffs’ Asserted “Financial Interest”

9 The Plaintiffs contend that they had, at the relevant time in October-December 2006, a “financial interest in the hotelier’s licence” for the Tabulam Hotel so that their support was required under s.19(3)(c) GM Act for the proposed transfer of the poker machine entitlements to the Black Market Hotel. The Plaintiffs acknowledge that their ownership of the hotel was not enough to give them the relevant financial interest (s.19(6)), but contend that they satisfied the requirements of s.19(3)(c) and (5).

10 The LAB determined that the Plaintiffs did not have a financial interest under s.19(3)(c) and (5) and thus the support of the Plaintiffs was not a prerequisite to approval being given to the proposed transfer. The Plaintiffs submit that the LAB’s decision in this respect involved error so as to attract relief in the nature of certiorari.

Relief under s.69 Supreme Court Act 1970

11 The Plaintiffs claim in substance, that there was error of law on the face of the record and/or jurisdictional error on the part of the LAB.

12 The Plaintiffs bear the onus of proving the facts grounding an entitlement to such relief: Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 at 259.

The Confines of Judicial Review

13 The present hearing involves judicial review of administrative action by way of a claim for prerogative relief. In Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 at 35-36, Brennan J described the duty and jurisdiction of the Court on such an application in the following way:

“The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.”

14 This statement has been applied in subsequent decisions of the High Court of Australia where the confines of judicial review have been emphasised: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 579-580 [195]; Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 at 152-154 [43]-[44].

15 The limited role of a court reviewing the exercise of an administrative decision must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrative tribunal exercising power which the legislature has vested in that body: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 at 40-41.

16 The reasons for an administrative decision are not to be minutely and finely construed with an eye keenly attuned to the perception of error. The reasons of an administrative decision maker are meant to inform, and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-2; SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 at [25]. The reasons under challenge must be read as a whole and must be fairly read: Cross v McHugh [1974] 1 NSWLR 500 at 503; Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 291.

Relief in the Nature of Certiorari

17 Relief in the nature of certiorari is not an appellate procedure enabling either a general review of the order or decision, or substitution of the order or decision which the Supreme Court thinks should have been made. Relief enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds - jurisdictional error, denial of procedural fairness, fraud and error of law on the face of the record: Craig v South Australia (1994-1995) 184 CLR 163 at 175-176.

18 The face of the record includes the reasons expressed by the LAB for its ultimate determination: s.69(4) Supreme Court Act 1970.

19 In Craig v South Australia, Brennan, Deane, Toohey, Gaudron and McHugh JJ at 179 identified the scope for intervention by way of relief in the nature of certiorari with regard to administrative tribunals:

“If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.”

20 In Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, McHugh, Gummow and Hayne JJ referred to the non-exhaustive list of kinds of error in Craig v South Australia, and continued at 351 [82]:

“Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it.”

21 Where a decision is challenged upon the basis that it was manifestly unreasonable (in the Wednesbury sense), the test to be applied is stringent. The decision must amount to an abuse of power or be so devoid of plausible justification that no reasonable person could have taken that course: Attorney-General for NSW v Quin at 36-37; Weal v Bathurst City Council (2000) 111 LGERA 181 at 188; [2000] NSWCA 88 at [27]; Wyong Shire Council v MCC Energy Pty Ltd (2005) 139 LGERA 296 at 312; [2005] NSWCA 86 at [79].

22 In the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power: Minister for Aboriginal Affairs v Peko-Wallsend Limited at 41.

23 Where a challenge is one that relates to the formation of an opinion by an administrative tribunal, then the ground of legal error is somewhat confined by reference to the principles in Buck v Bavone (1976) 135 CLR 110 at 118-119; Bruce v Cole (1998) 45 NSWLR 163 at 183-184. The language used in s.19(3)(c) GM Act is a commonly used drafting device to ensure that judicial review is restricted although the LAB’s opinion is nevertheless examinable according to the principles in Buck v Bavone at 118-119: Jabetin at 617 [37].

24 Any error of law on the face of the record which is established needs to be dispositive before a decision such as that of the LAB could be set aside in proceedings for judicial review: Jabetin at 615 [28].

Submissions and Materials Provided to the LAB

25 Submissions were sought with respect to the transfer application and were considered by the LAB. It is appropriate to refer to the material which was before the LAB including submissions made concerning the application.

26 On 16 August 2006, the First Defendant lodged a Poker Machine Entitlement Transfer Form seeking approval for transfer to the Black Market Hotel for poker machine entitlements for a total consideration of $341,000.00 including GST. The First and Second Defendants consented to the transfer.

27 On 24 October 2006, the Secretary of the LAB wrote to the First Defendant noting that as a “dispute flag” was lodged on the hotelier’s licence, the LAB had directed that a copy of the transfer be served on the Plaintiffs to permit them to make submissions concerning the application.

28 On 14 November 2006, the solicitor for the Plaintiffs made written submissions to the LAB. In that submission, the Plaintiffs claimed a financial interest in the hotelier’s licence and stated that they did not consent to the transfer. The submissions annexed a lease dated 22 March 1999 for the Tabulam Hotel and recited communications between the parties since 2004 concerning the lease and an option to renew the lease. Reference was made to clause 21 of the lease concerning option to renew which provided a formula for calculation of rent by reference to a percentage of turnover on poker machines. However, the submission did not assert that rent being paid in, and prior to, October 2006 was calculated in this way.

29 It was the case that the solicitor for the Second Defendant, on 28 July 2004, had confirmed that the Second Defendant wished to exercise the option in respect to the property pursuant to clause 21 of the lease and requested that an option lease be provided as soon as possible. However, no such lease was proffered by the Plaintiffs prior to the LAB decision of 20 December 2006. Instead, the Plaintiffs’ solicitor, on 27 January 2005, proposed that rent for the first year be $1,800.00 per week (exclusive of GST) with subsequent years to increase at the rate of 5% per annum as compounded, with weekly rents in the sixth year to be in the sum of $2,297.31. Negotiations continued with respect to the terms of the lease. It is common ground, however, that in 2005 and 2006, rent was being paid for the Tabulam Hotel in the sum of $1,800.00 per week.

30 I pause to place these matters in context in the present proceedings. It was common ground that this rental figure was not calculated by reference to turnover from the licence. As will be seen, this is a critical issue in these proceedings. For the Plaintiffs to succeed in their claim for relief, it is necessary for them to establish, on the balance of probabilities, that the LAB erred relevantly in its decision that the Plaintiffs did not have a financial interest for the purpose of s.19(3)(c) and (5) GM Act. It is necessary for the Plaintiffs to establish that, despite the fact that they had been receiving $1,800.00 per week rent not calculated by reference to turnover, they nevertheless had a legal or equitable interest, so as to give them the relevant financial interest, because of an ability to enforce a rental agreement which was based on turnover.

31 I return to the submissions made to the LAB in 2006. On 20 November 2006, the solicitor for the First and Second Defendants responded to the written submissions advanced for the Plaintiffs. It was said that rent had been paid by weekly instalments of $1,800.00 since the end of the term of the previous lease on 21 March 2005. It was said that there was no doubt that the rent for the new lease was agreed at $1,800.00 per week, subject to increase in accordance with the greater of three per cent or the CPI. It was said that, in any event, as no new lease had been entered into between the parties, the tenants remained in occupation of the premises pursuant to the holding-over clause (clause 10) of the 1999 lease. In those circumstances, it was said that the lessors had no financial interest in the hotelier’s licence based upon the decision of the Court of Appeal in Jabetin. Annexed to the written submissions for the First and Second Defendants was correspondence passing between the solicitors for the parties between 11 May 2005 and 2 June 2005. This correspondence appeared to make clear an agreement between the parties that rental be paid at $1,800.00 per week, with a ratchet clause for an increase of the greater between three per cent and the CPI.

32 The submissions to the LAB to this point seemed to demonstrate that rental had been paid since March 2005 by reference to a formula entirely unrelated to turnover at the Tabulam Hotel. The Plaintiffs had not furnished to the First and Second Defendants a new lease since March 2005.

33 On 14 December 2006, the solicitor for the Plaintiffs provided a written submission to the LAB in reply to the submission of 20 November 2006. The submission referred to the history of negotiations in 2005 and 2006. The submission stated (page 2):

“It is conceded that rent of $1,800.00 per week plus GST was being paid and accepted. However so far as the Lessors were and are concerned, this was only an interim measure and its finality was dependant upon full and final agreement being reached on all other terms. This didn’t happen.”

34 Copies of further correspondence were provided with the submission. The Plaintiffs’ solicitor concluded (page 4):

“I submit that the only conclusion that could be drawn from all of the correspondence and the facts and circumstances is that there was no binding and final replacement lease agreement reached between the parties. Therefore, the Lessee having property [sic] exercise the option under the expired Lease, the terms of that Lease with the new rent as dictated by the option clause must apply. This is so even though the parties had conditionally reached agreement on certain matters, including the rent. However, it is in my unequivocal view that the parties had to reach agreement on all matters before the said conditionally agreed terms became unconditional.
It is also my view that at no time did the Lessors waive any rights that they had in respect of the Poker Machine Entitlements.
It is also my view that there is no principle at law or at equity (including estoppel) that would prevent the Lessors from asserting their rights in respect of the exercise of the option. This would include seeking an Order from the Supreme Court for specific performance.
In the circumstances, it is my submission that the Board must find that the Lessors have a financial interest in the Hotelier’s Licence and in view of the fact that they do not consent to the Application to the transfer of the Poker Machine Entitlements, the Board must refuse that Application.”

LAB Decision of 20 December 2006

35 Given the nature of relief being sought and the submissions of the parties, it is appropriate to set out in its entirety the LAB decision of 20 December 2006:

“On 16 October 2006 the Board received a Poker Machine Entitlement Transfer Form in relation to the Tabulam Hotel, Tabulam from Robert James Kelly as seller, licensee, and signed by him as licence owner and by Kenneth John Kelly as business owner. No particulars were given for any other person or corporation having a financial interest.
The Board directed that the application be served upon the freehold owner. On 14 November 2006 the Board received submissions from Alister Somerville, solicitor for George Owen Martin and Allison Martin as freehold owners. On 20 November 2006 Maxwell and Co, solicitors for the licensee made written submissions in response. On 14 December 2006 the Board received a further response from Alister Somerville.
The Board has considered the submissions.
The Board’s function is to determine whether the lessors, freehold owners, have a financial interest in the hotelier’s licence. Section 19 of the Gaming Machines Act 2001 is the relevant provision.
In 1999 a 6 year lease was granted for the hotel. In January 2002 the hotel business was sold to Kenneth John Kelly who became the licensee. The licence was transferred to Robert James Kelly in October 2004. The Board does not have documents to confirm this but it appears that the lease was transferred from the previous lessee to one of the Kelly’s.
Clause 21 of the lease contained an option to renew for a further term of 6 years. That clause provided for rent to be ‘equivalent to 10% of the combined total of all liquor purchases made by the lessee together with 10% of the gross turnover of all forms of gambling …’. On 28 July 2004 the lessee exercised the option.
As a result of the exercise of the option substantial correspondence was exchanged between lessor and lessee as to the terms of the new lease. No agreement was reached and the negotiations have terminated.
The Board finds that accordingly the lessee continues to occupy the premises under the holding over provisions contained in the 1999 lease. The Board does not find that the terms of the option to renew the lease which would provide new provisions are in force.
Accordingly the determination of whether the lessor has a financial interest is based upon the 1999 lease. That lease contains no provisions which give the lessors a financial interest within the meaning of s19 or the recent case law upon s19.
The lessors do not argue to the contrary but submit that the lessee is bound by the terms of the lease which were required to be entered into as a result of the exercise of the option. As set out the Board does not accept that these provisions are in force.
No other financial interest in the lessors within the meaning of s19 is identified.
The Board is satisfied, that for the purposes of s19 the only person with a financial interest in the hoteliers licence is the lessee.
The Board is satisfied that the Poker Machine Entitlement Transfer Form is accompanied by all necessary signatures and consents required by the legislation and the transfer is approved.”

Further Correspondence After LAB Decision

36 Following receipt of the LAB decision, the solicitor for the Plaintiffs wrote to the LAB on 21 December 2006 stating:

“My advice to my client which is supported by Counsel is that the Board has made an error at law and that my instructions are to appeal the Board’s decision to the Supreme Court and as soon as possible.”

37 A copy of the letter of 21 December 2006 to the LAB was provided to the solicitor for the First and Second Defendants with a request that the settlement of the contract for sale of the poker machine entitlements be deferred. On 22 December 2006, the solicitor for the First and Second Defendants replied in the following terms:

“Our client is not prepared to negotiate further in the current situation. If you intend to take proceedings in the Supreme Court to overturn the decision of the Board please do so as soon as possible and any negotiations can await the outcome.
Our purchaser is not in a position to settle until after 8 January so you have until at least then to institute the proceedings otherwise we intend to settle as soon as our purchaser is able.”

38 It was not until 6 July 2007 that the present proceedings were commenced by filing of a summons in this Court.

Holding Over and Option to Renew Clauses in 1999 Lease

39 The decision of the LAB, and the submissions of counsel, touched directly upon the provisions of the 1999 lease concerning holding over and option to renew. It is appropriate to set out these clauses from the lease.

40 Clause 10 was in the following terms:

“10. HOLDING-OVER

Should the Lessee with the consent of the Lessor continue to occupy the Premises beyond the expiration of the term of this Lease (otherwise than pursuant to the grant of a further lease) he shall do so as a weekly tenant only at a rental payable weekly in advance, the first such payment to be made on the day following the termination date equal to one-twentyfifth of the sum of the following amounts:

(a) the annual amount of the rent payable under this Lease immediately prior to the expiration of the term of this Lease; and

(b) the annual amount of the Lessee's payment or contribution to the outgoings referred to in clause 4 of this Lease.
Such tenancy shall be subject to the terms and conditions of this Lease as far as they can be applied to a weekly tenancy and the tenancy so created shall be determinable at any time by either party by giving one month's notice in writing to that effect to the other party.”

41 Clause 21 provided as follows:

“21. OPTION TO RENEW

21.1 Should the Lessee wish to take a further lease of the Premises for a further term of six (6) years from the expiration of the term of this Lease and prior to the expiration of the term give to the Lessor not less than four (4) months notice in writing of intention to exercise this option and shall in the meantime duly and punctually pay the rent reserved by this Lease at the times appointed for payment and shall duly perform and observe the covenants and agreements by and on the part of the Lessee contained in this Lease up to the expiration of the term granted the Lessor will at the expense of the Lessee demise to the Lessee the Premises for a further term of six (6) years at a rental as determined as follows:


(a) the annual rental shall be equivalent to 10% of the combined total of all liquor purchases made by the Lessee together with 10% of the gross turnover of all forms of gambling carried on in the premises including gross turnover on poker machines together with an amount equivalent to any goods and services tax (GST) levied by any State or Federal Government Authority at such rate as may be determined from time to time.

(b) the rental in each year shall be calculated on the basis of the total gross liquor purchases and gambling turnover in the proceeding year and for the first year of any option period commencing 6th March 2005, the rental shall be calculated on the basis of the period from 6th March 2004 to 5th March 2005. Notwithstanding any other provision herein, the rental for the first year of the option period and any subsequent years shall not be less than the rental payable in any proceeding year.”

Submissions of the Parties

42 Counsel furnished detailed written submissions which were supplemented by oral submissions at the hearing of the Summons.

The Plaintiffs’ Submissions

43 In essence, Mr Russell submitted that the LAB fell into error of law in findings made as part of its opinion under s.19(3)(c) GM Act, namely:

(a) the lessee (Second Defendant) continued to occupy the premises under the holding-over provisions (clause 10) in the 1999 lease;

(b) the terms of the option to renew the lease, which would provide new provisions, were not in force; and

(c) accordingly, the determination of whether the lessor (the Plaintiffs) had a financial interest was based upon the 1999 lease, and that lease contained no provisions which gave the lessor a financial interest within the meaning of s.19 GM Act.

44 Mr Russell submitted that the errors suggested in the preceding paragraph were jurisdictional errors, manifest errors of law and/or constituted a constructive failure to make a statutory decision for a number of reasons.

45 Firstly, he submitted that as a matter of law, upon the exercise of the option on 28 July 2004, a valid and binding agreement for a further lease arose between the Plaintiffs and the Second Defendant pursuant to clause 21 of the 1999 lease. He submitted that the agreement for lease was specifically enforceable and that, in equity, the lessee (the Second Defendant) was regarded as having a lease for a further term and the parties had rights in relation to that agreement for lease, including the right to call for the execution of a formal lease in accordance with that agreement. Reliance was placed upon Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd (1959) 59 SR(NSW) 122 at 123-124; Bradbrook and Croft, “Commercial Tenancy Law in Australia”, Butterworths, 2nd edn, 1997 at [4.8], [14.1], [14.5], [14.8]. Mr Russell noted that, subsequent to the LAB decision, the parties had entered into a new lease in accordance with clause 21 of the 1999 lease.

46 Secondly, Mr Russell submitted that the LAB found (correctly) that the parties had not reached agreement on the terms of a new lease to replace the lease otherwise required under the exercise of the option. He submitted that this finding precluded any possible finding or suggestion that the agreement for lease which arose on the exercise of the option was discharged or otherwise not operative.

47 Thirdly, Mr Russell submitted that the exercise of the option under clause 21 of the 1999 lease was inconsistent with any holding over pursuant to clause 10 of the 1999 lease. He submitted that one cannot exercise an option to renew a lease and, at the same time, hold over under the terms of an existing lease at the end of its term. He submitted that the agreement, demise and obligations of the parties under these separate approaches were mutually exclusive.

48 Fourthly, Mr Russell submitted that there was no evidence or material before the LAB that would allow it to find, or be satisfied, that the lessee was in fact holding over under the 1999 lease. He submitted that there was nothing to suggest that either the Plaintiffs or the Second Defendant were conducting themselves as if the Second Defendant was holding over under the 1999 lease and, in particular, there was nothing to suggest that the Second Defendant was paying the rent provided for in clause 10 of the 1999 lease which, in its terms, required a rent of at least twice the sum paid in the last year of the 1999 lease.

49 Mr Russell submitted that it was apparent that in purporting to reach an opinion as to whether the Plaintiffs had a financial interest in the hotelier’s licence, the LAB was seeking to determine the legal relationship between the Plaintiffs as lessors and the Second Defendant as lessee. Mr Russell submitted that:

(a) having found that the option had been exercised, the LAB erred in law by failing to find that the option provisions were in force because a valid and binding agreement for lease arose upon the exercise of the option; no further facts needed to be found and the LAB clearly misconstrued, or did not understand, the legal effect of the exercise of an option to renew: Hope v Bathurst City Council (1980) 144 CLR 1 at 7;

(b) upon finding that no agreement had been reached on the terms of the new lease, the LAB erred in law by misconstruing or not understanding the law that this did not discharge or otherwise render inoperative the option provisions;

(c) on the basis of the findings of the exercise of the option and that no agreement has been reached on the new lease, the LAB erred in law by failing to take into account the option lease provisions required by clause 21.1 of the 1999 lease, especially those relating to rent;

(d) the LAB erred in law in finding that the Second Defendant was holding over under clause 10 of the 1999 lease, because there was no evidence or material to support that finding; and

(e) finally, in light of the above matters, the decision and opinion of the LAB was so unreasonable that no reasonable decision maker could properly have arrived at it.

50 Mr Russell submitted that each of the suggested errors referred to in the preceding paragraph vitiated the opinion reached by the LAB.

51 Further, Mr Russell submitted that no basis had been demonstrated by the Defendants for withholding relief from the Plaintiffs upon discretionary grounds.

Submissions of the First and Second Defendants

52 Mr Leeming SC submitted that the LAB had made no error at all, and certainly no judicially reviewable error, in deciding that the Plaintiffs had no “financial interest in the hotelier’s licence”.

53 Mr Leeming SC submitted that the issue for determination by the LAB was whether the Plaintiffs had a financial interest in the hotelier’s licence in either October or December 2006 (it does not matter which). Competing submissions were put to the LAB by the parties. It was for the LAB to resolve those competing claims so as to answer the question posed by s.19(3)(c) GM Act. The First and Second Defendants claimed that the Second Defendant remained in occupation of the premises pursuant to the holding-over clause. The Plaintiffs conceded that rent of $1,800.00 per week plus GST was being paid, but asserted that this was “only an interim measure and its finality was dependant upon full and final agreement being reached on all other terms” which did not happen (Plaintiffs’ submissions to LAB, 14 December 2006, pages 2-3). The Plaintiffs had submitted that no binding and final replacement lease agreement had been reached between the parties and that, therefore, as the lessee had properly exercised the option under the expired lease, the terms of that lease with the new rent as dictated by the option clause must apply.

54 Mr Leeming SC submitted that the question for the LAB concerned the nature of the tenancy of the Second Defendant at the end of 2006. That depended, in the first place, upon the facts.

55 Mr Leeming SC submitted that it was open to the LAB to make findings consistent with what was common ground between the parties. That common ground included:

(a) that the lessee was not paying rent based on a percentage of liquor purchases plus gaming turnover (as per clause 21 of the 1999 lease), but instead was paying a fixed rent, and

(b) that the landlords had agreed, at least conditionally, to accept rent on that basis, and had done so since March 2005.

56 Mr Leeming SC noted that the LAB had found that the terms of the new lease were not in force. He submitted that it was difficult to see how any other finding could reasonably have been made. He submitted that the finding made was plainly open to the LAB upon the material before it, and that it was clear that the Plaintiffs had no financial interest in the hotelier’s licence.

57 Mr Leeming SC responded to Mr Russell’s submissions.

58 With respect to the Plaintiffs’ first submission (at [45] above) that there was a valid and binding agreement for a new lease following the exercise of the option, Mr Leeming SC submitted that this was debatable as the lessee had expressed an intention to exercise the option, but the Plaintiffs certainly had not supplied a lease for execution before 20 December 2006. Even if it be assumed that the letter of 28 July 2004 gave rise to a binding agreement for a new lease, Mr Leeming SC submitted that, unless the agreement was specifically enforceable, there was no equitable interest: Chan v Cresdon Pty Limited (1989) 168 CLR 242 at 249-255; Penrith White Water Stadium Limited v Lesvos Pty Limited [2007] NSWCA 176 at [43]-[44].

59 Mr Leeming SC submitted that it would be imprudent to assume that specific performance would be awarded as a matter of course: Chan v Cresdon Pty Limited at 255. He contended that it would be speculative in the extreme to assert that, in December 2006, the Plaintiffs would have been entitled to specific performance of an agreement executed in July 2004, when both parties had been acting inconsistently with that agreement for more than a year. In particular, the lessee had been paying, and the lessors accepting, rent at $1,800.00 per week for almost two years. It was the lessors who had been telling their tenant that a turnover rent would be too harsh. Mr Leeming SC submitted that a court would not readily order specific performance of an agreement which would have the lessee paying rent on a basis which the landlord had said was onerous, if not impossible.

60 Further, Mr Leeming SC submitted that it was apparent from the lengthy history of communications between the parties that, in the event of a claim for specific performance, there would be defences of estoppel by representation, estoppel by convention as well as a defence or cross claim for misleading and deceptive conduct. Mr Leeming SC submitted that, at the end of 2006, the Plaintiffs had not sought to enforce any rights they might have pursuant to the exercise of the option in July 2004 (some two-and-a-half years earlier) and thus laches and delay would have been good reason to refuse specific performance had it been sought at the end of 2006.

61 Mr Leeming SC submitted that all those matters entitled the LAB to form the view that the option in the lease was not in force.

62 He submitted further that events which may have occurred months after the LAB decision were irrelevant to the question whether the LAB had made judicially reviewable error in December 2006.

63 With respect to Mr Russell’s second submission (at [46] above), Mr Leeming SC contended that the threshold question was whether specific performance was available and, if not, there could be no equitable lease. Further, Mr Leeming SC submitted that the inconsistent conduct of the parties was apt to give rise to defences.

64 With respect to Mr Russell’s third submission that the exercise of the option was inconsistent with any holding over (at [47] above), Mr Leeming SC submitted that this does not advance the matter because what happened in the years after the exercise of the option in July 2004 was likewise inconsistent with the equitable tenancy the Plaintiffs asserted to the LAB and in these proceedings.

65 In answer to Mr Russell’s fourth submission (at [48] above), Mr Leeming SC contended that the LAB correctly appreciated that it was necessary to have regard to matters occurring after the exercise of an option in order to determine whether the lease the subject of the option was in force. Mr Leeming SC submitted that there was evidence to support the LAB’s finding, not least being the fact that the lessee was paying weekly rent in a fixed amount reflective of the incremental fixed rentals under the 1999 lease.

66 Alternatively, Mr Leeming SC submitted that it may be that the lessee continued in possession pursuant to a separate common law tenancy. If that was the preferable analysis, he submitted that this did not vitiate the LAB decision: Jabetin at 619 [50]. Mr Leeming SC submitted that the only relevant question was whether there was an equitable lease with turnover rent. That was the only submission which the Plaintiffs had advanced, and it constituted the only basis upon which the Plaintiffs could seek to demonstrate that they had the relevant “financial interest”.

67 In the event that the Plaintiffs did demonstrate relevant error on the part of the LAB, Mr Leeming SC submitted that relief ought be withheld on discretionary grounds. These included delay in commencement of proceedings between December 2006 and July 2007, and suggested prejudice to the First and Second Defendants.

Submissions of Fourth and Fifth Defendants

68 Mr Muddle SC submitted that it was fundamental to note that Parliament has specified that it was the LAB which had to be satisfied of matters under s.19 GM Act and not the Court: Wonnall Pty Limited v Clarence Property Corporation Limited (2003) 58 NSWLR 23 at 48-49 [54], [57]. He submitted that the financial interest must be a present, and not a prospective, interest. The person claiming the interest must have a present right to receive income from the business: Jabetin at 619 [46].

69 Mr Muddle SC noted that the Plaintiffs did not assert an interest at law but contended that they had an equitable lease which gave them a present interest. He submitted that there were four reasons why the Plaintiffs’ argument was wrong or, at least, it was open to the LAB to conclude that it was wrong:

(a) the giving of the notice under the option clause did not give rise to a binding agreement to lease;

(b) the course of conduct was plainly consistent with the parties having abandoned, by late 2006, any such agreement which arose in mid-2004;

(c) the putative equitable estate was dependent upon the ability to obtain specific performance, when such relief would not have been granted;

(d) any equitable right which the Plaintiffs did have was not a present entitlement to receive income from the business as required to satisfy s.19 GM Act.

70 Mr Muddle SC developed submissions in support of these four propositions. With respect to [69](a) above, he submitted that the Second Defendant gave notice of intention to exercise the option, but did not, in fact, exercise the option. He submitted that clause 21.1 of the 1999 lease required the lessor to proffer a new lease. He submitted that clause 21 did not give rise to an immediate further legal or equitable estate in the Second Defendant, or oblige him to execute the option lease if so proffered. In fact, it was not proffered. He submitted that the approach of the Plaintiffs required the Court to redraft the lease. Further, he submitted that the conduct of the lessors and lessee, viewed as a whole, showed that they did not intend to enter a legally binding lease on the specific option terms in July 2004. The lessee merely said he was desirous of exercising the option, to which the lessors responded that they should negotiate a new and different lease (without a turnover rent). Mr Muddle SC sought to distinguish Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Pty Ltd.

71 With respect to [69](b) above, Mr Muddle SC submitted that from the outset, the parties had abandoned the terms of the option lease. The Plaintiffs’ letter of 13 October 2004 made plain that they did not want the turnover rent provided for in the option lease. Instead, the Plaintiffs proposed that the parties negotiate the term, rent and a further option and that is what then happened for two-and-a-half years. The only term clearly agreed in those years was that the rent would be a fixed (and not turnover) rent, with the sum of $1,800.00 being agreed upon and thereafter paid. Mr Muddle SC pointed to the correspondence and submitted that the option lease had been abandoned in favour of a new and different lease and that ultimately, the new lease was also abandoned. However, the lessee remained in occupation and paid rent and was therefore, by definition, holding over. He submitted that this conclusion was correct whether or not the lessee complied with, or breached, provisions of the original lease as to what should occur during the holding-over period.

72 Mr Muddle SC submitted that, on any view, the conclusion reached by the LAB was one within its jurisdiction and open to it. The fact that the Court might prefer a different finding (if that be the case) was immaterial. He submitted that the entering of a new lease in September 2007 had no significance as it occurred after the LAB decision of 2006 and cannot assist in determining rights which existed at an earlier time. He submitted that the Plaintiffs’ argument that the LAB ought to have limited its consideration to events which occurred in July 2004, in determining the position as at late 2006, was self-evidently wrong.

73 With respect to [69](c) above, Mr Muddle SC submitted that the equitable lease, for which the Plaintiffs contend, is dependent upon their ability to secure an order for specific performance at the time. No such order was sought or made and the Court could not be satisfied that such an order would have been made. He submitted that a delay of two-and-a-half years in enforcing a six-year lease, coupled with payment and acceptance of rent on an entirely inconsistent basis during that period, clearly gave rise to available defences of laches, estoppel and change of position. During this delay of two-and-a-half years, Mr Muddle SC noted that the lessors did not submit for execution a lease conforming to the option terms. In those circumstances, he submitted that any action by the lessors to compel execution of a lease would have been hopeless.

74 With respect to [69](d) above, Mr Muddle SC submitted that, even if it be assumed that the Plaintiffs had a binding agreement to lease which included a turnover rent as at late 2006 (which he denied), that was not a present (as distinct from prospective) right to receive income from the business within the meaning of s.19(5) GM Act. He submitted that, at best, on their own case, the Plaintiffs had the ability to move the Court for a discretionary order for execution of the option lease by way of specific performance. But that had not occurred, nor had the Plaintiffs served an instrument conforming to the option terms.

75 Mr Muddle SC submitted that if the Plaintiffs had established grounds for relief, it ought be refused in any event on discretionary grounds. He pointed to delay in commencement of proceedings which he submitted had not been satisfactorily explained. He submitted that the Fourth and Fifth Defendants would suffer financial prejudice, which would not be sufficiently protected by their Cross Claim against the First and Second Defendants, whose ability to meet any such claim might be regarded as questionable. Mr Muddle SC did not press the claim for suggested prejudice based upon the gaming social impact statement (T10.41, 29 February 2008).

Resolution of Competing Submissions

76 Elaborate and detailed arguments have been advanced on behalf of the parties. The resolution of the Summons involves determination of a short point. Is relevant error demonstrated in the decision of the LAB which vitiates the decision to approve the transfer of poker machine entitlements under s.19?

77 I bear in mind the nature and limits of the relief being sought by the Plaintiffs (see [11]-[24] above). In accordance with the principles recited at [16] above, it is necessary to fairly read the decision of the LAB.

78 The critical question for the LAB was whether the Plaintiffs had a “financial interest in the hotelier’s licence” so that their consent was required to the transfer of poker machine entitlements. The Plaintiffs and the First and Second Defendants made submissions to the LAB bearing upon this question. It was for the LAB, as the statutory decision maker, to determine whether it was so satisfied for the purpose of exercising its function under s.19 GM Act.

79 The LAB had regard to submissions made to it. The rent clause in the 1999 lease did not involve turnover rent, but specified a weekly figure with an escalation clause unconnected to turnover. The option to renew clause (clause 21) in the 1999 lease did provide for a type of turnover rent clause. However, the material before the LAB demonstrated that the rent payable by the First and Second Defendants between March 2005 and December 2006 was a fixed figure of $1,800.00 per week plus GST. This figure was not calculated by reference to turnover.

80 It is true that the holding-over clause (clause 10) in the 1999 lease would have involved a rental of some $2,800.00 per week. It is clear that this rental was not paid by the lessee to the lessors following the expiration of the 1999 lease in 2005.

81 I accept the submission of the Defendants that it was open to the LAB to conclude that the lessee held over under the 1999 lease, but with an agreed rental ($1,800.00 per week plus GST) that differed from that provided in clause 10. The fact that the rent paid was not that provided for expressly in clause 10 did not mean that there was not a holding over under the 1999 lease. The fact that the lessee had indicated an intention to exercise the option to renew under clause 21 went nowhere, in reality, as the lessors had not furnished a new lease to the lessee by the time of the LAB decision in December 2006. This was a requirement of clause 21 which had not occurred.

82 Mr Russell submitted that the LAB did not make a finding that the rental being paid as at October-December 2006 was $1,800.00 per week plus GST, a sum not connected with licence turnover. However, it was common ground in submissions to the LAB that rent had been calculated and paid on this basis for some time. It was only in the Plaintiffs’ submission in reply to the LAB on 14 December 2006 that reference was made (for the first time and in passing) to the prospect of specific performance with respect to a suggested equitable lease.

83 I express the following conclusions concerning the decision of the LAB:

(a) the LAB was correct in observing that the lessee exercised the option on 28 July 2004, in the sense of indicating an intention to exercise the option;

(b) the LAB was correct in observing that substantial correspondence was exchanged thereafter between the lessors and the lessee as to the terms of the new lease, but no agreement was reached and the negotiations were terminated;

(c) it was open to the LAB to find that, accordingly, “the lessee continues to occupy the premises under the holding over provisions contained in the 1999 lease” in the sense of holding over with an agreed rent of $1,800.00 per week plus GST;

(d) it was open to the LAB to “not find that the terms of the option to renew the lease which would provide new provisions are in force” - the provisions of clause 21 were not in force, and the parties had acted in a manner inconsistent with clause 21 by agreeing to payment of rent of $1,800.00 per week plus GST which was not calculated by reference to turnover;

(e) it was open to the LAB to conclude that “accordingly the determination of whether the lessor has a financial interest is based upon the 1999 lease … that lease contains no provisions which gives the lessors a financial interest within the meaning of section 19 or the recent case law upon section 19” ;

(f) it was open to the LAB to conclude that the option to renew provisions in the 1999 lease were not in force.

84 The LAB did not accept that the Plaintiffs had demonstrated that they had a relevant financial interest. In my view, this conclusion was open to the LAB as the statutory decision maker. Although a contrary argument was advanced by the Plaintiffs to the LAB, it has not been demonstrated that the decision of the LAB was infected by error of law or jurisdictional error. The conduct of the parties between July 2004 and December 2006, in offering and accepting rent calculated upon a basis unrelated to turnover, was a most significant fact in this respect.

85 The Plaintiffs have not established that the decision of the LAB was so unreasonable that no reasonable decision maker could properly have arrived at it. Indeed, given the fact that rent had been paid for some time at $1,800.00 per week plus GST, being a formula not based upon turnover, it is difficult to see how the LAB could have properly concluded that the Plaintiffs had a “financial interest in the hotelier’s licence” for the purpose of s.19(3)(c) GM Act.

86 I accept the submissions of Mr Leeming SC and Mr Muddle SC concerning the equitable lease issue. In particular, I accept Mr Leeming SC’s submissions with respect to Chan v Cresdon Pty Ltd. The conduct of the parties, over an extended period of time, would constitute an impenetrable barrier to any claim for specific performance by the Plaintiffs.

87 I accept the submissions of Mr Muddle SC concerning the construction of clause 21 of the 1999 lease. The Plaintiffs did not proffer a new lease for execution before December 2006. This was an essential requirement under clause 21. This conclusion compounds the difficulties surrounding the Plaintiffs and operates as a further impediment to any action which they may have brought for specific performance of a claimed equitable lease.

88 I accept the submission of Mr Muddle SC that, even if the Plaintiffs had demonstrated an equitable lease, this would not have been a present interest in the income of the business so as to constitute a “financial interest” in the hotelier’s licence for the purpose of s.19 GM Act.

89 The Plaintiffs have not demonstrated, on the balance of probabilities, relevant error which vitiates the decision of the LAB in its conclusion that the Plaintiffs did not have a “financial interest in the hotelier’s licence” for the purpose of s.19.

90 Accordingly, I am not satisfied that the Plaintiffs have demonstrated a basis for relief in the nature of certiorari.

Discretionary Factors

91 My conclusion on the Plaintiffs’ claim for relief does not require any detailed consideration of submissions made concerning discretionary refusal of relief. However, as the matter was fully argued, I will refer shortly to this topic.

92 If a basis for relief had been demonstrated, the Defendants advanced submissions in support of discretionary refusal of such relief. These considerations included alleged unwarrantable delay in commencing proceedings between 20 December 2006 and 6 July 2007. In particular, reliance was placed upon the Plaintiffs’ assertion on 21 December 2006 that it intended to commence Supreme Court proceedings as soon as possible and the response of the solicitor for the First and Second Defendants on 22 December 2006 indicating that settlement of the transfer of the poker machine entitlements to the Fourth and Fifth Defendants would not take place until after 8 January 2007, and that the Plaintiffs should commence proceedings by then if they intended to do so.

93 The Plaintiffs’ explanation for delay in bringing proceedings was based upon the continuation of negotiations, between January and May 2007, with the First and Second Defendants with respect to issues in controversy.

94 I am not satisfied that delay in itself would have provided a basis for discretionary refusal of relief in this case.

95 Other bases relied upon include suggested prejudice to the Fourth and Fifth Defendants (the price of poker machine entitlements had gone up) and suggested prejudice to the First and Second Defendants in that the transfer of three poker machine entitlements results in one poker machine entitlement being forfeited under s.20(3) of the Act. The latter argument is not sound given that the setting aside of the s.19 transfer (as part of any order of the Court) would remove the statutory basis for forfeiture under s.20 of the Act. Any prejudice to the Fourth and Fifth Defendants may have been met sufficiently by a claim for damages which they assert, by way of Cross Claim, against the First and Second Defendants.

96 If the Plaintiffs had demonstrated an entitlement to relief, I would not have declined to grant relief on discretionary grounds.

Conclusion

97 The Plaintiffs have not demonstrated an entitlement to relief as sought in the Summons. I am not satisfied that error of law on the face of the record or jurisdictional error has been demonstrated, let alone error which vitiated the LAB decision under s.19 GM Act. The Plaintiffs have not demonstrated that the LAB decision was manifestly unreasonable. It was open to the LAB to conclude that the Plaintiffs had not demonstrated the existence of a “financial interest in the hotelier’s licence” for the purpose of s.19 GM Act.

98 As the Plaintiffs have failed in their claim for relief, no occasion arises for consideration of the Cross Claim brought by the Fourth and Fifth Defendants.

99 I make the following orders:

(a) the Summons is dismissed;

(b) the Plaintiffs are to pay the costs of the First, Second, Fourth and Fifth Defendants;

(c) no order as to costs of the Third Defendant.

**********