Masters v Garcia

[2005] NSWCA 287

Reported Decision: 65 NSWLR 92

Court of Appeal

CITATION:	Masters v Garcia [2005] NSWCA 287
HEARING DATE(S):	19 July 2005
JUDGMENT DATE:	26 August 2005
JUDGMENT OF:	Tobias JA at 1; Basten JA at 18; Campbell AJA at 107
DECISION:	1. Order that the orders and declarations numbered 1, 2 and 4-9 in the Court below entered on 28 May 2005 be set aside; 2. Direct that the parties indicate in writing what further orders should be made or further steps taken to dispose of the appeal, within 7 days; 3. Grant liberty to the parties to apply to Basten JA if further time is required to comply with the foregoing direction.

CATCHWORDS:	Poker machine entitlements under Gaming Machines Act 2001 - whether entitlements capable of being held on trust - whether former holder of hotelier's licence could retain the benefit of the transferability of poker machine entitlements - whether entitlements capable of being severed from hotelier's licence - whether lessor of hotel premises had a financial interest in the hotelier's licence for the purposes of s19 of the Gaming Machines Act
LEGISLATION CITED:	Gaming Machines Act 2001 (NSW) Liquor Act 1982 Lotteries and Art Unions Act 1901 Gaming and Betting Act 1912 Unlawful Gambling Act 1998 Liquor (Amendment) Act 1993 Liquor and Registered Clubs Legislation Further Amendment Act 1996 Registered Clubs Act 1976 Evidence Act 1995 (NSW)
CASES CITED:	Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92 University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 Hypec Electronics Pty Ltd (In liq) v Mead (2004) NSWCA 221 Whitehouse v BHP Steel Ltd (2004) NSWCA 428 Jack v Smail (1905) 2 CLR 684 Slatter v Railway Commissioners (NSW) (1931) 45 CLR 68 Wonall Pty Ltd v Clarence Property Corporation Ltd (2002) 58 NSWLR 23 Yanner v Eaton (1999) 201 CLR 351 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100
PARTIES:	Raymond Henry Masters (First Appellant) Gweneth Hazel Masters (Second Appellant) Paul Joseph Garcia (First Respondent) Darren McAsey (Second Respondent)
FILE NUMBER(S):	CA 40425/05
COUNSEL:	M L D Einfeld QC/R Lancaster (Appellants) J Garnsey QC/A Hatzis (Respondents)
SOLICITORS:	Verekers (Appellants) Deutsch Partners Lawyers Pty Ltd (First Respondent) Angela M Frost (Second Respondent)

LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	6442/04
LOWER COURT JUDICIAL OFFICER:	Einstein J

CA 40425/05
ED 6442/04

TOBIAS JA
BASTEN JA
CAMPBELL AJA

26 August 2005

MASTERS & ANOR v GARCIA & McASEY

The Appellants own hotel premises, which in 1994, they leased to Goldsands Pty Ltd, which in turn, nominated Mr Garcia as the licensee of the hotel. In 1996 Goldsands transferred the lease to Mr Garcia.

In 1997 the Liquor Act 1982 (NSW) was amended to permit an hotelier’s licence to provide that a specified number of poker machines “may be kept, used and operated” on the premises to which the hotelier’s licence relates.

Between 1997 and April 2001, Mr Garcia obtained permission from the Liquor Administration Board (the Board) to keep, use and operate nine poker machines on the premises.

Mr Garcia and the Appellants signed a new lease in December 2001 but it was surrendered in October 2002 and the Appellants entered into a new lease with Mr McAsey, who simultaneously purchased the hotel business from Mr Garcia under a sale agreement. However, Mr Garcia sought to exclude from the sale agreement the poker machine entitlements, so that he had the right to deal with the entitlements separately from the sale of the hotel business.

Clause 11 of the sale agreement contemplated that the poker machine entitlements were held by Mr McAsey and not Mr Garcia and provided, in effect, that Mr McAsey was to act at the direction of Mr Garcia in relation to the poker machine entitlements.

However, the contract required Mr Garcia to take proceedings on or before 30 November 2004, if he sought to enforce his rights with respect to those entitlements in such a way as to deprive Mr McAsey of “the right to own, use and operate the poker machine entitlements.” Proceedings were commenced in the Equity Division of the Court on 29 November 2004.

The primary judge, at the request of Mr Garcia, granted a number of declarations and orders, including declarations that the Appellants had no financial interest in the hotelier’s licence for the purposes of s19 of the Gaming Machines Act 2001 (the Act); that Mr McAsey held the benefit of the nine poker machine entitlements on trust for Mr Garcia; and that McAsey was to do all acts, execute all such documents and do all such things necessary on his part to enable the transfer of the poker machine entitlements to such holder of an hotelier’s licence as the plaintiff may nominate.

The issues for determination by the Court of Appeal were:

(i) whether Mr Garcia could retain the benefit of the transferability of poker machine entitlements pursuant to s19(1) of the Gaming Machines Act and whether the poker machine entitlements were property that was capable of being the subject of a trust, the benefit of which was held by a person other than the holder of the hotelier’s licence;

(ii) whether the primary judge erred in granting the declaration that the Appellants had no financial interest in the hotelier’s licence for the purposes of s19 of the Gaming Machines Act; and

(iii) the appropriate course to be taken if the orders and declarations made by the primary judge were made in error.

1. A poker machine entitlement is in the nature of property; as such it may be the subject matter of a trust under which the equitable interest therein may vest in a person other than the holder of the hotelier’s licence in respect of which the entitlement has been allocated; the entitlement and the right to transfer that entitlement pursuant to s19(1) of the Act may be the subject of a separate contract or dealing which may give rise to a trust, provided that the contract or trust (including any equitable interest arising under that trust) is consonant with the Act.

2. Accordingly, consonance with the Act in terms of the creation of a trust requires that the holder of the equitable or beneficial interest under the trust must at all times retain an interest in the hotelier’s licence in respect of which the poker machine entitlements have been allocated. The fact that there may be more than one person who has a financial interest in a hotelier’s licence is recognised in ss18 (3)(c) and 19(5) of the Act.

3. Because, at the relevant time, Mr Garcia had no interest, financial or otherwise, in an hotelier’s licence, Mr McAsey could not and did not hold the subject entitlements on trust for him as a consequence whereof Mr Garcia was not entitled to the declarations made by the primary judge.

Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92 explained and applied

1. The beneficial ownership of a poker machine entitlement cannot vest in any person, whether by way of trust or otherwise, who is not at the relevant time the holder of an hotelier’s licence.

2. Once Mr Garcia ceased to hold any hotelier’s licence, he was not entitled to the declarations that Mr McAsey held the entitlements on trust for him or that Mr McAsey was required to take such steps as might be necessary to give effect to his equitable interest in the entitlements, as he had no such interest which was consonant with the Gaming Machine Act.

1. Section 19(3)(c) confers on the Board the obligation to form the relevant opinion. If the Board were to formulate such an opinion on a wrong legal basis, its opinion could be reviewed. However, if the Board were to apply itself properly to the correct legal question, it would be entitled to reach a different view on the facts from that determined by his Honour. A declaration sought in terms that involved mixed findings of fact and law should not have been made.

Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 referred to.

2. Where there is no absence of jurisdiction in the Board, nor any clear indication that it will not exercise its powers properly according to law, the proper exercise of the primary judge’s discretion should have been to refuse to make a declaration in the terms of the first declaration made below.

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 distinguished.
Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558 followed.

Because the primary judge was correct in holding that clause 11 of the agreement for sale is not void for uncertainty, but was incorrect in making orders based on the existence of an equitable interest, Mr Garcia may be entitled to an order for specific performance. This is an issue on which the Court needed to hear further from the parties.

CA 40425/05
ED 6442/04

TOBIAS JA
BASTEN JA
CAMPBELL AJA

26 August 2005

MASTERS & ANOR v GARCIA & McASEY

Judgment

1 TOBIAS JA: In this matter I have had the benefit of reading in draft the judgment of Basten JA. Subject to what appears hereunder, I agree with his Honour that, at present, it is inappropriate for the Court to make any orders for the disposal of the appeal and that the Court should give the directions to which Basten JA refers in [106] of his judgment.

2 His Honour has set out the history of the matter, the relevant facts and an analysis of the Gaming Machines Act 2001 (the Act) with which I generally agree. I also agree with his Honour's conclusion that the declarations made by the primary judge should be set aside. In my opinion, the foundation adopted by the primary judge for the making of those declarations was contrary to this Court's reasoning in Jabetin Pty Ltd v Liquor Administration Board [2005] NSWCA 92. Those declarations proceed upon the basis that the beneficial interest in the relevant poker machine entitlements was vested in Mr Garcia at a time when he was neither the holder of the hotelier's licence in respect of which they had been allocated nor the lessee of the Hotel in respect of which that licence had been granted. In other words, Mr Garcia had at the relevant time ceased to have any legal, equitable or financial interest in the licence.

3 Thus, as Basten JA points out in [62] of his judgment, the effect of the second declaration in particular made by the primary judge that Mr McAsey held the benefit of the subject poker machine entitlements on trust for Mr Garcia until such time as the former ceased to be the licensee of the Hotel, is at odds with this Court's reasoning in Jabetin which establishes that under the Act a person cannot hold either a legal or equitable interest in a poker machine entitlement allocated in respect of a hotelier's licence in which that person no longer holds an interest.

4 However, I would observe, lest there be any misunderstanding, that in my opinion the reasoning in Jabetin does not mandate that only the holder of the hotelier's licence has a sufficient interest therein to support under the Act a right to or in the poker machine entitlements allocated in respect of that licence. Paragraphs 53, 57 and 78 of the judgment of Mason P establish that firstly, a poker machine entitlement is in the nature of property; secondly, that as such it may be the subject matter of a trust under which the equitable interest therein may vest in a person other than the holder of the hotelier's licence in respect of which the entitlement has been allocated; thirdly, the entitlement and the right to transfer that entitlement pursuant to s 19(1) of the Act may be the subject of a separate contract or dealing which may give rise to a trust; provided, fourthly, that contract or trust (including any equitable interest arising under that trust) is consonant with the Act.

5 Accordingly, consonance with the Act in terms of the creation of a trust requires that the holder of the equitable or beneficial interest under the trust must at all times retain an interest in the hotelier's licence in respect of which the poker machine entitlements have been allocated. The fact that there may be more than one person who has a financial interest in a hotelier's licence is recognised in ss 19(3)(c) and 195(5) of the Act.

6 However, in the present case Mr Garcia had no interest, financial or otherwise, in the hotelier's licence for the Hotel so that Mr McAsey could and did not hold the subject entitlements on trust for him. But this does not mean that he had no contractual rights with respect to those entitlements authorising him to direct Mr McAsey, as the holder of the hotelier's licence, to transfer them to the holder of some other hotelier's licence in accordance with the Act. Whether he had any such rights depended on the construction of cl 11 of the sale agreement to which I refer hereunder.

7 Accordingly, as Basten JA correctly observes in [63] of his judgment, it does not follow that Orders 4, 6 and 8 made by the primary judge must necessarily fail because the declarations must be set aside for the reasons referred to. As his Honour observes, to uphold those orders or any variation of them it is necessary for Mr Garcia to rely solely upon the contractual arrangements set forth in cl 11 of the sale agreement and to seek relief in the nature of specific performance in relation thereto. It is to be noted that this was one approach adopted by Mr Garcia before the primary judge as recorded in [66] of his Honour's judgment.

8 As Basten JA then observes in [65] and [75] of his judgment, whilst the primary judge accepted that Mr McAsey was bound under cl 11 of the sale agreement to deal with the subject entitlements for the benefit of and as directed by Mr Garcia (by which I take his Honour to mean that Mr McAsey was bound to transfer the entitlements at the direction of Mr Garcia to the holder of another hotelier's licence in accordance with ss 19 and 20(1) of the Act), nevertheless he did not make an order in the nature of specific performance but, apparently, considered that a more appropriate form of relief was the imposition of a trust. For the reasons given by Basten JA in [74] of his judgment, it was not open for the primary judge to take that course.

9 Both before the primary judge and this Court the appellants contended that cl 11 of the sale agreement was void for uncertainty. The primary judge rejected this argument (at [80]) finding, correctly in my opinion, that subject to the provisions of ss 19 and 20(1) of the Act, Mr McAsey whilst he remained the holder of the hotelier's licence was contractually bound to deal with the subject entitlements for the benefit of and as directed by Mr Garcia (see at [79]).

10 Basten JA has analysed cl 11 in [90]-[92] of his judgment with which, subject to the matter to which I refer in [11] below, I generally agree. Thus in the last sentence of [92] his Honour says:

"Subject to temporal constraints, that right of ownership must include the right to transfer the entitlements pursuant to s 19(1)."

If this be so (deleting the reference to temporal constraints), which I consider it is, then Mr Garcia's "right" under cl 11 at least included the contractual right to direct Mr McAsey to transfer the subject entitlements pursuant to and in accordance with ss 19 and 20(1) of the Act . This was the construction of cl 11 adopted by the primary judge (at [79]-[80]) and I agree with it.

11 However, I am not presently prepared to consider whether that contractual right of Mr Garcia is possibly subject to the temporal constraints referred to by Basten JA particularly in [94] of his judgment. No submission was made to the primary judge or to this Court to suggest any such constraint or limitation. It seems to me that the references by Basten JA to which I have referred constitute at least an implied invitation to the appellants now to take a point upon the construction of cl 11 which was neither raised before the primary judge nor on the appeal.

12 The primary argument of the appellants with respect to cl 11 was that it was void for uncertainty. That argument was rejected by the primary judge and, in my opinion, correctly so. I do not understand Basten JA to be of a different view.

13 It is trite law that a party is bound by the conduct of his case and that except in the most exceptional circumstances it would, as the High Court said in University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 483,

"… be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."

The principles applicable to an attempt to take a point on appeal not taken below are well established and were recently summarised by this Court in Hypec Electronics Pty Ltd (In liq) v Mead (2004) NSWCA 221 at [71]-[74] and Whitehouse v BHP Steel Ltd (2004) NSWCA 428 at [65]-[69].

14 The present case is one remove from those referred to above where a point was taken on appeal which had not been taken in the court below. In the present case the point has not even been taken on the appeal but appears, with respect, to be suggested by Basten JA in [95] of his judgment as being one which it may be open for the appellants to take in any further submissions they may wish to make with respect to the appropriate form of relief to be granted in order to dispose of the appeal. As far as I am concerned, I would not encourage any such course. Nevertheless, if any such submissions are made, I will deal with them in a principled way upon their merits.

15 In [97]-[105] of his judgment, Basten JA makes reference to the interlocutory consent orders made by the Mason P pending the determination of the appeal. At this point, I am not prepared to endorse his Honour's comments in the paragraphs referred to with respect to those orders. That is not to say that I necessarily disagree with them but only that at present it is inappropriate to deal with those orders and the effect that may have upon the ultimate disposal of the appeal.

16 Nevertheless, I would make this observation. It will be appreciated that I am of the view that, given the basis upon which both the trial and the appeal were conducted, as at the date of the primary judge's judgment Mr Garcia had an enforceable contractual right to direct Mr McAsey to transfer the subject poker machine entitlements to the holder of another hotelier's licence for valuable consideration. It would appear from the orders of the President that Mr Garcia has so directed and Mr McAsey has complied with that direction. Accordingly, there may, on one view of the matter, be no utility in this Court making an order for specific performance of Mr McAsey's contractual obligation under cl 11 to Mr Garcia except to require him to account to Mr Garcia for the proceeds of the transfer of the entitlements.

17 However, it is a matter for the parties as to the effect, if any, the consent orders made by the President may have upon the ultimate disposal of the appeal. It is for that reason that, like Basten JA, I agree that the appropriate course for the Court to take will be to set aside the declarations and orders of the primary judge but to reserve leave to the parties (including Mr McAsey if he wishes) to make submissions as to what, if any, orders the Court should now make. As far as I am concerned those submissions should be made in light of, firstly, my view that upon the basis of the issues litigated both before the primary judge and this Court, Mr McAsey was contractually bound to transfer the subject entitlements to the holder of another hotelier's licence at the direction of Mr Garcia; secondly, that he is bound to account to Mr Garcia for the proceeds of the sale of those entitlements; thirdly, that such a transfer has already occurred but is currently still subject to the approval of the Board; and fourthly, the effect, if any, of the consent orders made by the President.

18 BASTEN JA: The Appellants in these proceedings are the owners and lessors of the Alexandria Hotel (“the Hotel”) in Henderson Road, Alexandria, New South Wales (“the premises”). In July 1994 the Appellants leased the premises to a company known as Goldsands Pty Ltd, which nominated the First Respondent, Mr Garcia, as the licensee of the Hotel, in which capacity he became the holder of an hotelier’s licence. In 1996 Mr Garcia became the assignee of the interest in the leasehold previously held by Goldsands, and purchased Goldsands’ business interest in the hotel.

19 As will be noted below, prior to 1997 hoteliers could not keep poker machines on hotel premises. However, in that year the Liquor Act 1982 (NSW) was amended to permit an hotelier’s licence to provide that a specified number of poker machines “may be kept, used and operated on the premises to which an hotelier’s licence relates”: s 182C. Over the period from 1997 to 19 April 2001 Mr Garcia obtained permission from the Liquor Administration Board (“the Board”) to keep, use and operate nine poker machines on the premises. Although the evidence is unclear, it seems likely that he obtained authority in relation to some of the machines at least prior to 19 December 2000, when he signed a new lease from the Appellants as lessors to him as lessee of the premises. The lease made no reference to poker machines; they were not included in the schedule of property of the lessor appended to the lease. The lease commenced on 1 January 2001 and was for a term of three years terminating on 31 December 2003. In fact, the lease was surrendered on 13 October 2002 and the Appellants entered into a new lease with the Second Respondent, Mr McAsey. That lease was to commence on 14 October 2002 and terminate on 31 January 2005. It is only that lease which is relevant to the issue in the appeal. (It will be necessary to refer below to the steps which have been taken to preserve the position of the parties during the course of the present litigation.)

The covenants in the lease

20 Relevantly for the present proceedings, it is important to note two aspects of the lease. The first was that clause 30 contained the grant of an option to purchase the premises, the substantive part of which (leaving out repetitive terms) was in the following terms:

“The Lessor hereby grants to the Lessee or its nominee on or from the commencing date an option to purchase the land for the sum of $5,000,000 plus one-half of the amount of any compensation (such one-half to be up to a maximum of $250,000) for poker machine entitlements paid to the previous lessee of the premises, namely, Paul Joseph Garcia by the Lessor pursuant to any legislation or court order or for any other reason provided that the total amount of the compensation paid to Paul Joseph Garcia has been notified in writing by the Lessor to the Lessee prior to the exercise of this option to purchase … .”

The basis on which the lessors might become liable to pay Mr Garcia for the poker machine entitlements so referred to is not directly revealed by the lease itself. Nevertheless, it is necessary to note two provisions which may be relevant in this respect.

21 The first concerned the hotelier’s licence in relation to the premises. Clause 29(a) of the lease provided:

“The Lessee shall procure that the licensee shall from time to time shall (sic) do the following –“

and there follow nine separate sub-paragraphs. In the present circumstances, the licensee, being defined as the holder of the hotelier’s licence in respect of the premises, was the lessee, namely Mr McAsey. However three sub-paragraphs are relevant for present purposes and read, in part, as follows:


“(vi) If the time for the exercise of the option to purchase in clause 30 has expired and the option has not been validly exercised within that time, the licensee will, before the expiration of the Lease, execute a transfer of the licence to the Lessor’s nominee to take effect on the expiration or sooner determination of this lease … .

(vii) The licensee shall at the expiration or sooner determination of the lease hand over to the Lessor or its nominee the licence which shall belong to the Lessor absolutely unless the option to purchase contained in clause 30 has been validly exercised.

(viii) It is hereby acknowledged and agreed that the licence is the Lessor’s property and shall remain with the demised premises. The licensee shall not make any application or cause or permit to be made any application for removal of the licence or without the Lessor’s consent seek to vary, revoke or impose any condition upon or in respect of the licence or affecting the demised premises.”

It is not necessary to consider for present purposes whether, and how, each of these paragraphs may be legally effective.

22 The last clause in the lease, clause 34, related to poker machine entitlements and was in the following terms:

“The Lessee acknowledges and covenants with the Lessor that the beneficial ownership of all present and future poker machine entitlements granted during the term by the relevant licensing authorities for the use of poker machines presently on, or in the future to be allowed on, the premises, vests and will vest in the Lessor.”

The word “term” is defined to mean to the term of the lease; so far as the evidence reveals, no poker machine entitlements had been granted during that term. The entitlements which were allocated by the Board in relation to the hotelier’s licence for the premises were allocated during the previous lease held by Mr Garcia. There was (understandably) no equivalent to clause 34 in Mr Garcia’s lease, no such statutory entitlements being in existence at the time it was executed.

23 The regime by which authorisation was given to keep poker machines in hotels by way of conditions attaching to the hotelier’s licence was replaced by an entirely new regime on the commencement on 2 April 2002 of the Gaming Machines Act 2001 (NSW). The whole of Part 11 of the Liquor Act was repealed (Gaming Machines Act 2001, Schedule 2) but the Board was required to allocate one “poker machine entitlement” for each approved poker machine for a hotel: s 15(1). The relevant number of entitlements was to be determined by the Board, according to a formula, the primary factor of which was the number of poker machines authorised to be kept in the relevant hotel as at 19 April 2001: s 15(3). Accordingly, the entitlements allocated to the hotelier's licence for the Hotel was calculated as nine.

24 One other provision of the lease was the subject of argument during the course of the proceedings, namely that which formed a further part of the covenant by the lessee to procure the licensee to do certain things, in this instance in relation to the goodwill of the business.

“(v) The licensee for itself and on behalf of the Lessee hereby acknowledges that the goodwill of the business of the hotel is part of the demised premises and that neither the Lessee nor its successors in title has or will have any interest whatsoever in such goodwill upon the termination or expiration of the lease for whatever reason. All parties agree that upon termination or expiration of the lease for whatever reason, neither the Lessee nor the licensee shall be entitled to receive any payment or compensation in respect of such goodwill.”


The lease to Mr Garcia had not contained any provision equivalent to clause 29 in Mr McAsey’s lease. The only relevant obligation in relation to termination of Mr Garcia’s lease had been a covenant to do all things necessary at the expiration of the term to transfer and assign “unto the Lessors or to such other person as the Lessors may appoint for that purpose the hotelier’s licence of the said premises for the then current year”.

The sale agreement

25 Prior to the surrender of his lease, Mr Garcia entered into an agreement with Mr McAsey for the sale of the hotel business including the stock, goodwill and plant. “Plant” was defined to mean “the plant, fixtures, fittings, equipment, chattels and effects of the Vendor noted in the inventory annexed”. One category in the inventory comprised the nine “pokies”. A value of $55,245 was attributed to the plant. The bulk of the remainder of the sale price of $100,000 was attributed to goodwill. Clause 3.3 of the agreement provided that title to the assets passed to the purchaser on completion. The agreement was conditional upon the grant of an application to transfer the hotelier’s licence to the purchaser and the grant of a new lease by the Appellants to the purchaser.

26 As will be noted below, the legislative scheme provides for the transferability of what is referred to in the legislation for the first time as poker machine entitlements. Because the number of poker machine entitlements under the Gaming Machines Act is capped and the number of poker machines that may be kept upon the premises is directly linked to the number of poker machine entitlements, and because on transfer of a block of three entitlements, one will be forfeited, their market value is considerable. Although the evidence admitted in these proceedings is limited to that relating to the proposed sale of the entitlements by Mr Garcia to a third party, it would appear that the value of each transferable entitlement is of the same order as the value of rest of the business, namely $100,000.

27 As the holder of a hotelier’s licence at the time of the sale agreement, Mr Garcia claimed that he was able, in effect, to retain the right to require Mr McAsey at his discretion to transfer the entitlements granted in respect of his hotelier’s licence with the result that they never formed part of the assets of the hotel business which Mr McAsey purchased from Mr Garcia pursuant to the agreement. It was clear that the price paid by Mr McAsey for the business was not intended to include the poker machine entitlements although it did include the poker machines themselves. It is the success or otherwise of Mr Garcia's claimed right to deal with the entitlements separately from the sale of the business which is the central issue in dispute in these proceedings. Although there is no evidence of the cost of obtaining and maintaining the authority of the Board to keep poker machines, it was common ground that the new statutory scheme has created a valuable transferable entitlement which will enure to the benefit of the first holder, whoever that may be. The phrase “windfall gain” was used more than once in the course of argument.

28 In the present context, the key provision in the sale agreement between Mr Garcia and Mr McAsey was clause 11, which read as follows:

“11 VENDOR’S RIGHT TO COMPENSATION FOR POKER MACHINE ENTITLEMENTS
11.1 The Vendor’s right, if any, to ownership, compensation or damages, arising from the Vendor’s efforts, actions and expenditures in relation to gaming at the premises, resulting in the allocation of the Poker Machine Entitlements, whether statutory or otherwise, and whether now in existence or arising at any time after the date of this Agreement, is not included in the sale under this Agreement.
11.2 If the Vendor has now or acquires any such right in the future, the Vendor will not commence proceedings after 30 November 2004 to exercise or enforce that right in any way so as to deprive the purchaser of the right to own, use and operate the poker machine entitlements, or any of them.
11.3 The Purchaser agrees to do all things, and to cause the holder of the licence from time to time to do all things to enable the Vendor to claim and maintain any such right, including signing all documents and making all applications, at the cost of the Vendor, to assert such right.
11.4 The Purchaser agrees that any compensation or any amount received or receivable by or in the name of the Purchaser or the licensee from time to time arising from such right will be held on behalf of and accounted to the Vendor.
11.5 The Purchaser warrants that prior to 1 December 2004 he will not exercise any option to purchase, or purchase, either in his own name or in the name of another person or entity (including being interested in another entity) of the freehold of the premises, or the licence or the poker machine entitlements.”

The drafter of this clause may be excused for exhibiting some uncertainty as to whether that which Mr Garcia was seeking to do was possible and, if so, how it should be done. Nevertheless, given the potential value of the poker machine entitlements, the lack of clarity is disturbing. It is understandable that the Appellants assert that the provision is simply incomprehensible and that it is not a matter for the Court to redraft it.

29 It is, on its face, curious that the Appellants are litigating in relation to the construction of a clause in an agreement to which they are not party. Mr McAsey, who was otherwise the beneficiary of the sale agreement, took no active part in the proceedings either before the primary judge or in this Court. Because, for the period during which he was to hold the lease of the hotel premises, the entitlements remain allocated in respect of the hotelier's licence and the Board's authorisation to keep the machines attached to the licence, he no doubt obtained the financial benefit of having the machines on the premises during his occupation thereof. That flows from the fact that the holder of an hotelier’s licence may not lawfully share the receipts from the gaming machines with any other person: see below at [26]. Nevertheless, Mr McAsey covenanted in clause 12(k) with the Appellants in the following terms:

“At the expiration of the term hereby granted or other sooner determination thereof transfer and assign and do all acts necessary for the transferring and assigning unto the lessors or to such other person as the lessors may appoint for that purpose the hotelier’s licence for the said premises for the then current year.”


In other words, if Mr Garcia has failed to retain control of the poker machine entitlements so that he has the right validly to dispose of them by way of transfer to another hotelier's licence prior to the termination of the lease between Mr McAsey and the Appellants, the benefit of the entitlements could accrue to the Appellants upon termination of the lease and the transfer or assignment of the licence to the Appellants or their nominee.

Statutory scheme

30 When Mr Garcia first obtained an interest in the Hotel in 1994, gambling and gaming were activities controlled under the Lotteries and Art Unions Act 1901 and the Gaming and Betting Act 1912. The latter Act was replaced with the Unlawful Gambling Act 1998 (NSW). Licensing and authorisation of the keeping, use and operation of gaming machines in hotels and clubs operated by way of exception to the prohibitions contained in that legislation.

31 Changes made to the Liquor Act by the Liquor (Amendment) Act 1993 allowed for “approved amusement devices”, commonly referred to as “card machines”, to be installed in hotels, but did not include poker machines. The authority for an hotelier to keep poker machines on the premises was achieved by the insertion of a new Division 2A “Poker Machines” in Part 11 of the Liquor Act, by the Liquor and Registered Clubs Legislation Further Amendment Act 1996 (NSW), the relevant part of which commenced on 1 April 1997. In substance, the result achieved was to apply the provisions of the Registered Clubs Act 1976 relating to poker machines “to and in respect of hotels in the same way as they apply to and in respect of registered clubs”: Liquor Act, s 182A. Section 182C(1) of the Liquor Act, thus introduced, provided:

“182C Limitation on number of poker machines in hotels
(1) It is a condition of a hotelier’s licence that not more than 15 poker machines may be kept, used and operated on the premises to which a hotelier’s licence relates, unless the licensee holds a permit issued by the Minister for each poker machine in excess of that number that is kept, used and operated on those premises.”

32 As noted above, these provisions were removed from the Liquor Act by the Gaming Machines Act 2001, which made its own provision in relation to the keeping and operation of gaming machines. Section 7 of the Gaming Machines Act provides:

“7 Lawful keeping and operation of gaming machines
Despite anything in the Lotteries and Art Unions Act 1901, the Unlawful Gambling Act 1998 or any other Act or law (other than this Act) it is lawful:
(a) to keep or operate an approved gaming machine in a hotel or registered club, and
(b) to pay or present prizes and bonuses won as a direct or indirect consequence of operating the approved gaming machine,
if the approved gaming machine is kept or operated, and the prizes and bonuses are paid or presented, in accordance with this Act.”

Section 4(1) contains the following definitions of “keep” and “operate” and is not in terms qualified by reference to an exception in so far as the context or subject matter otherwise indicates or requires. The relevant definitions are as follows:

“ keep an approved gaming machine includes acquire or possess the gaming machine.
…
operate an approved gaming machine includes use or play the gaming machine.”

The definition of “approved gaming machine” includes reference to “an approved poker machine”, which is in turn defined to mean a poker machine declared to be an approved machine by the Board under s 64 of the Gaming Machines Act . The terms “hotel”, “hotelier”, and “hotelier’s licence” are defined to have the same meanings as those given in the Liquor Act 1982.

33 The operative provision in relation to gaming machines is contained in Part 5 of the Gaming Machines Act, which provides for an application for authorisation to keep or dispose of gaming machines (s 57), and requires that the Board not authorise a gaming machine to be kept in a hotel unless of the opinion that “the primary purpose test” is satisfied (s 59) and is otherwise satisfied in relation to various limitations imposed by the Act: see ss 59A and 60A. The “primary purpose test” requires that the primary purpose of the business conducted in the hotel is the retail sale of liquor: s 6.

34 The principal operative provision in Part 5 is s 56 which, so far as presently relevant, reads as follows:

“56 Requirement for authorisation to keep or dispose of gaming machines
(1) A hotelier or registered club must not keep or dispose of an approved gaming machine unless:
(a) the keeping or disposal of the gaming machine is authorised by the Board, and
(b) the hotelier or club complies with the requirements of or under this Act in relation to the keeping or disposal of the gaming machine and with the conditions to which the authorisation is subject.
Maximum penalty: 100 penalty units.
(2) The Board may, by instrument in writing, authorise a hotelier or registered club to keep or dispose of approved gaming machines. An authorisation to keep approved gaming machines may be varied by the Board from time to time.
(3) An authorisation to keep approved gaming machines is an authorisation that relates to the total number of approved gaming machines kept in the hotel or registered club concerned at any one time as well as to the keeping of a particular approved gaming machine.
(4) The total number of approved gaming machines that the Board may authorise to be kept in a hotel from time to time consists of the following:
(a) the number of approved poker machines that corresponds to the number of poker machine entitlements allocated for the time being in accordance with this Act in respect of the hotelier’s licence … .
…
(6) An authorisation by the Board under this section is subject:
(a) to such conditions as may be imposed by the Board in relation to the keeping or disposal of the approved gaming machines to which the authorisation relates, and

(b) to such conditions as are specified in this Act or as may be prescribed by the regulations.
(7) The Board may vary an authorisation under this section in relation to a particular approved gaming machine to allow a modification of the gaming machine in accordance with section 64.
(8) In the instrument by which the Board authorises the keeping or disposal of approved gaming machines, or by which varies such an authorisation, the Board is to identify each of the approved gaming machines to which the authorisation relates.”

Pursuant to s 57(1), an application to the Board for such authorisation is to be made “by a hotelier or registered club”. Thus, although the authorisation constitutes a separate statutory instrument, and is no longer a condition of the hotelier’s licence, it is the authorisation under this provision which renders the keeping or disposal of a gaming machine a lawful activity. It may be noted that the authority thus granted is, relevantly, to possess and make a machine available at the hotel the subject of the hotelier’s licence: it is not in terms an authorisation to the hotelier to operate the machine, that being something undertaken by the customer in the hotel or club.

35 Because the number of machines which the Board can authorise to be kept on particular premises is limited by the number of poker machine entitlements allocated “in respect of the hotelier’s licence”, the value of the authorisation given by the Board obviously depends upon the number of those entitlements.

36 As noted above, poker machine entitlements were allocated by the Board on the basis set out in Part 3 of the Gaming Machines Act. Section 15, which provides for the initial allocation of poker machine entitlements, provides in relation to such entitlements:

“15(2) The poker machine entitlements are to be allocated:
(a) in the case of a hotel – in respect of the hotelier’s licence, or
(b) in the case of the premises of a registered club – in respect of those premises,
and are to be allocated in accordance with such arrangements as may be approved by the Director-General.”

Similar provision is made in relation to further allocations in s 16.

37 There are certain general restrictions on the allocation of poker machine entitlements set out in s 18, which, relevantly for present purposes, includes:

“18(2) A poker machine entitlement cannot be allocated in relation to an approved gaming machine unless the keeping of the approved gaming machine is authorised by the Board under Part 5.

There is further provision for the allocation of poker machine entitlements by way of exchange for the surrender of an authorisation to keep approved amusement devices: s 22. Again the allocation is stated to be “in respect of the hotelier’s licence” and the application for such an entitlement must be made “on application by a hotelier”.

38 Although s 15(2) provides that the entitlements are to be allocated, in the case of a hotel, in respect of the hotelier’s licence, but in the case of a registered club, in respect of the premises of the club, the distinction is not one of substance, because the hotelier’s licence is itself issued in relation to specific premises. Thus, s 25 provides:

“25 Transfer of poker machine entitlements if hotelier’s licence is removed to other premises
(1) If a hotelier’s licence is removed under the Liquor Act 1982 to other premises, any poker machine entitlements allocated in respect of the hotelier’s licence may only be transferred to the removed licence if they are transferred in accordance with this Division.
(2) If the other premises to which the hotelier’s licence is removed are situated within 1 kilometre of the previous premises, the forfeiture to the Board of one entitlement per transfer block is not required.”

39 Provision for the transfer of poker machine entitlements is contained in s 19, upon which significant reliance was placed in the course of argument. That section provides:

“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 requirement 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 … 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 … .
(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.”

The effect of s 19(3)(c), in combination with sub-ss (5) and (6), was the subject of consideration by this Court in Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92. The effect of these provisions was also the subject of a declaration made by the primary judge in the present proceedings.

40 The nature of the transfer provisions contained in sub-ss (1), (2) and (4) is subject to certain further general requirements as set out in ss 20 and 21 of the Gaming Machines Act. Thus, s 20 provides in part:

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

Section 20 also requires that a transfer must comprise a block of two or three poker machine entitlements “nominated by the transferor” and that one of the entitlements must be forfeited to the Board.

41 There is also provision in relation to the transfer of poker machine entitlements when an hotelier’s licence is surrendered or cancelled, or the authorisation granted under s 56 is cancelled: s 23. In effect, a transfer of the poker machine entitlements may take place after the surrender or cancellation in question, but if no transfer has been effected within a period of 12 months, the remaining entitlements are forfeited to the Board: s 23(2). As will be noted below, reference was made to this provision, on behalf of Mr Garcia in support of the proposition that an entitlement could be severed from an hotelier’s licence.

42 Other relevant provisions of the Gaming Machines Act include those set out in Part 6, creating offences. It is not necessary to set out these provisions in detail, but it may be noted that s 69(1) makes it an offence for any person (including an hotelier) to be in possession of a poker machine other than an approved poker machine. Further, s 70 provides in part:

“70 Possession of approved gaming machine by unauthorised persons
(1) A person who is in possession of an approved gaming machine is guilty of an offence unless the person:
…
(b) is a hotelier … lawfully in possession of the approved gaming machine… .
(2) This section does not apply to the possession of an approved gaming machine:
(a) by a hotelier if the hotelier’s licence has been cancelled under the Liquor Act 1982 and the possession has not extended beyond a reasonable time after the cancellation… .
(3) This section does not apply to a person in possession of an approved gaming machine if:
(a) the possession resulted from the exercise of a power conferred on the person by a mortgage and has not extended beyond a reasonable time after the exercise of the power, or
(b) if the person obtained possession of the gaming machine by exercising a power or proprietary right under financial or other arrangements approved by the Board and has not retained possession beyond a reasonable time after the exercise of the power.”

In relation to this provision, it is necessary to note the terms of s 74:

“74 Granting interests in gaming machines
(1) A hotelier or registered club must not grant any interest in an approved gaming machine to any other person.
Maximum penalty: 100 penalty units.
(2) This section does not apply:
(a) to an interest in an approved gaming machine that arises from an interest (such as a floating charge) granted over the whole of the hotelier’s or registered club’s assets (or over a portion of hotelier’s or registered club’s assets) that includes, but does not specifically identify, the approved gaming machine, or
(b) to an interest in an approved gaming machine that is granted in accordance with financial or other arrangements approved by the Board.”

The combination of these provisions indicates that the reference to powers and proprietary rights in s 70(3) is in relation to the gaming machine itself, and does not refer to the poker machine entitlements.

43 Section 73 prohibits an hotelier from sharing “any receipts from the operation of an approved gaming machine”. However, sub-s (3) provides:

“(3) A hotelier does not commit an offence under subsection (1) if any such receipts are shared with, or any such payment is made to, a person who:
(a) has a financial interest in the business authorised by the hotelier’s licence, and
(b) is named in an affidavit (as required by sections 38, 41 or 101 of the Liquor Act 1982) in relation to that licence.”

44 The Court was not directed to any other provisions of the Gaming Machines Act which suggested, expressly or by implication, who should be treated as the owner of the poker machine entitlements, assuming that such entitlements are relevantly capable of ownership.

The proceedings below

45 The position adopted by Mr Garcia was that, having been the person responsible for obtaining the poker machine entitlements on the commencement of the Gaming Machines Act, being entitlements “in respect of” the hotelier’s licence then possessed by him, he could take the benefit of the transferability of those entitlements pursuant to s 19(1) of the Gaming Machines Act. He did not transfer them to Mr McAsey on the sale of the business, but retained to himself the right to transfer them for valuable consideration to a third party. Until transferred, the entitlements remained entitlements “in respect of” the hotelier’s licence held by Mr McAsey in relation to the Hotel. Further, they could only be transferred, pursuant to s 20(1) “to another hotelier’s licence”. Nevertheless, Mr Garcia argued that there was nothing in the Gaming Machines Act (or the Liquor Act) which prevented him controlling the transfer of the entitlements and contracting to obtain the financial benefits flowing from such a transfer.

46 However, if it were necessary to take proceedings to enforce his right in such a way as to deprive Mr McAsey of “the right to own, use and operate the poker machine entitlements” then Mr Garcia was required to take such steps, pursuant to clause 11.2 of the sale agreement, on or before 30 November 2004. Accordingly, the present proceedings were commenced on 29 November 2004. The summons was supported by an affidavit sworn by Mr Garcia which contained the following statement in relation to clause 11 of the sale agreement.

“My interest in the poker machine entitlements was not included in the assets sold to the third defendant pursuant to the business sale agreement. In [sic] intended through the business sale agreement to retain and reserve all my rights of any kind in the poker machine entitlements. I have never at any time purported to sell or deal with my interest in the poker machine entitlements to any person, whether pursuant to the business sale agreement or otherwise.”

The last sentence was objected to but was treated as evidence of the subjective state of mind of the deponent and was admitted for that limited purpose pursuant to s 136 of the Evidence Act 1995 (NSW). On that evidence, Mr Garcia had taken no steps to sell the entitlements prior to 30 November 2004.

47 According to an affidavit sworn by Mr Garcia on 18 May 2005 there was a conversation between him and the managing director of another hotel group to purchase the entitlements. That conversation took place on 28 April 2005. The following morning, he apparently had a further conversation with the third party who agreed to purchase three blocks of entitlements (presumably two entitlements per block, with one forfeited) at a price of $100,000 per entitlement.

48 Mr Garcia also gave evidence of a conversation with Mr McAsey pursuant to which Mr McAsey affirmed that he was seeking to buy the freehold title to the Hotel, presumably pursuant to the option to purchase contained in the lease the terms of which, by that stage, had been extended to 31 May 2005. The following further conversation was deposed to:

“[Garcia]: Well, we want to get the sales of the entitlements moving now. My solicitor is going to prepare some papers and we’ll send it through to you so we can get it signed and processed.
[McAsey]: Well, I’m not signing anything. I would be mad if I did. Who would buy a hotel with no poker machines? You wouldn’t either, would you?
[Garcia]: But you agreed when we first kicked off that you would sign documents.
[McAsey]: No, I won’t be signing any documents unless somebody orders me to.”

As noted above, Mr McAsey entered a “submitting appearance” in the Court below and took no part in the proceedings. He adopted the same course in this Court. Whether, in these circumstances, clause 11.2 of the sale agreement had been engaged and what, precisely, was its effect, was apparently not agitated below, nor in this Court.

49 Although his Honour did not make declarations in the form in which they were sought, the declarations proposed by the plaintiff (Mr Garcia) in the proceedings below are of some significance. Thus, when the proceedings commenced, he sought a declaration that he “is the proper and sole beneficiary of any benefit to be derived from the nine poker machine entitlements”. A declaration in these terms would have been bad in form and it was abandoned prior to the trial. The amended summons, sought a primary declaration in the following form:

“A declaration that in the events which have occurred and on the true construction of the various agreements and leases between the parties, [Mr McAsey] is bound to do everything necessary on his part to transfer and enable the transfer to the plaintiff or as the plaintiff directs of the 9 poker machine entitlements …”

Further, paragraph 9 sought an order in the following amended form:

“An order that each of the defendants must do all such acts, execute all such documents and do all such things necessary on the part of each to enable the allow the plaintiff to transfer any and all of the poker machine entitlements to any third party upon request of the plaintiff, including providing any evidence of support or consent to the transfer reasonably required by the plaintiff or as otherwise may be required by the [Liquor Administration Board] from time to time.”

In addition, Mr Garcia sought declarations that the Appellants had no financial or other interest in the poker machine entitlements “to prevent the plaintiff disposing or directing the disposal of those entitlements”. In the alternative, a declaration was sought that the Appellants held the poker machine entitlements on trust for Mr Garcia and a similar declaration that Mr McAsey “holds the benefit of” the entitlements “on trust for” Mr Garcia.

50 The trial judge made the following two declarations:

1. The First and Second Defendants do not have any financial interest in Hotelier’s Licence serial number 100094 relating to the premises known as the “Alexandria Hotel” at Alexandria for the purposes of Section 19 of the Gaming Machines Act 2001 or within the meaning of that section.
2. The Third Defendant holds the benefit of the nine poker machine entitlements allocated in respect of the hotelier’s licence serial number 100094 by the Liquor Administration Board of New South Wales (“LAB”) pursuant to section 15(2) of the Gaming Machines Act 2001 on trust for the Plaintiff, such trust to continue until the Third Defendant ceases to be licensee of the Hotelier’s Licence serial number 100094.

51 Paragraph 3 of the orders made below discharged certain interlocutory orders. The Court then made the following final orders:

4. Up to and until the Third Defendant ceases to be licensee of Hotelier’s License serial number 100094, that the Third Defendant do all such acts, execute all such documents and do all such things necessary on his part to enable the transfer of such of the nine poker machine entitlements allocated in respect of Hotelier’s License serial number 100094 as the plaintiff may in writing direct to such holder of an hotelier’s licence issued under the Liquor Act 1982 as the plaintiff may in writing nominate.
5. Order up to and until the Third Defendant ceases to be licensee of Hotelier’s Licence serial number 100094, that upon the plaintiff:
(i) giving to the Third Defendant a direction to transfer any or all of the nine poker machine entitlements allocated in respect of Hotelier’s Licence serial number 100094 to such holder of an hotelier’s licence issued the Liquor Act 1982 as the plaintiff may in writing nominate.
(ii) notifying the First and Second Defendants in writing of the giving of the direction set out in (i)
each of the First and Second Defendants do all such acts, execute all such documents and do all such things necessary on the part of each to enable the transfer referred to in (i) to be effected.
6. Up to and until the Third Defendant ceases to be licensee of the Hotelier’s License serial number 100094 restraining the Defendants and each of them from dealing with or disposing of or purporting to deal with or dispose of any or all of the nine poker machine entitlements allocated in respect of Hotelier’s Licence serial number 100094 except to such holder of an hotelier’s license issued under the Liquor Act 1982 as the plaintiff may in writing direct.
7. Until the Third Defendant ceases to be licensee of Hotelier’s Licence serial number 100094, is bound to do everything necessary on his part to transfer and enable the transfer to such holder of an hotelier’s licence issued under the Liquor Act 1982 as the plaintiff in writing directs, of the nine poker machine entitlements allocated in respect of Hotelier’s Licence number 100094.
8. Until the Third Defendant ceases to be licensee of Hotelier’s Licence serial number 100094 restraining the Defendants and each of them from taking any action or doing any thing to obstruct or hinder the sale by the Plaintiff or at his direction of the nine poker machine entitlements allocated in respect of the hotelier’s license serial number 100094 to a holder of an hotelier’s license issued under the Liquor Act 1982.

103 These matters aside, the third condition is more problematic. It is necessary to set it out in full:

“(iii) in the event that it is determined (in these proceedings or this appeal) that Einstein J did not err in making the declarations and the substance of the other and consequential orders made on 23 May 2005, the parties will jointly apply to the Liquor Administration Board for any conditional transfer of the poker machine entitlements to be made final and effective as of the date of the original conditional approval and do all things on the part of each necessary to make the transfer final and effective as of that date.”

Reference to a determination that Einstein J did not err in making “the substance of” the orders in the nature of injunctive relief, suggests that the parties intended to leave open to the Court the possibility that those orders might be varied in some respect. For the reasons noted above, the Court is not presently in a position to deal with that possibility, in large part because no submissions have been presented to it as to how the orders might be varied, where they are not supportable on the basis accepted by the primary judge. Further, the use of the conjunctive “and” leaves ambiguous the result if the Court considers that his Honour erred in making the declarations, even if his Honour did not err in making some or other injunctive orders.

104 There are additional problems: as noted above, the Board does not make a “conditional transfer”; whether the Board can give “conditional approval” is unclear, and whether the parties can determine the date from which the transfer is effective is also unclear.

105 The next undertaking is given by the Appellants, in the event that the matter last discussed has application. There is apparently no undertaking given by Mr McAsey to do anything in the event identified.

106 Because the orders were made by consent, it seems likely that none of these matters was raised before the President and the ramifications of those orders on any relief this Court should grant by way of variation of the primary judge's orders have not been addressed. In the circumstances, it is therefore inappropriate for the Court to make any orders at this stage: accordingly the Court will direct that the parties indicate in writing within 7 days what further order should be made or further steps taken to dispose of the appeal. I would grant liberty to apply with respect to any proposed extension of that time, such application to be made, by direction of the Presiding Judge, to me.

107 M W CAMPBELL AJA: In this matter I have had the benefit of reading in draft the judgments of Tobias and Basten JJA.

108 I agree with their Honours that, at present, it is inappropriate for the Court to make any order for the disposal of the appeal and that the Court should give the directions to which Basten JA refers in [106] of his judgment.

109 I agree with the reasons of Basten JA subject to the qualifications and comments made by Tobias JA in his judgment with which I agree.

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