Mylne Pty Ltd v Marklyn Enterprises Pty Ltd
[2005] QSC 274
•30 September 2005
SUPREME COURT OF QUEENSLAND
CITATION:
Mylne Pty Ltd & Ors v Marklyn Enterprises Pty Ltd & Anor [2005] QSC 274
PARTIES:
MYLNE PTY LTD (IN LIQUIDATION)
(ACN 101 315 335)
OWEY ENTERPRISES PTY LTD (IN LIQUIDATION)
(ACN 104 387 387)
CASHMAN HOLDINGS PTY LTD (IN LIQUIDATION)
(ACN 104 319 495)
(plaintiffs)
v
MARKLYN ENTERPRISES PTY LTD
(ACN 010 689 380)
(first defendant)
THE STATE OF QUEENSLAND(second defendant)
FILE NO/S:
BS 7546 of 2005
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court, Brisbane
DELIVERED ON:
30 September 2005
DELIVERED AT:
Brisbane
HEARING DATE:
21 September 2005
JUDGE:
Moynihan J
ORDER:
1. Application dismissed.
CATCHWORDS:
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GENERALLY – where the plaintiff seeks an interlocutory injunction restraining the second defendant from proceeding with or granting the first defendant’s application in respect of the issue and transfer of a gaming licence and gaming authorities under the provisions of the Gaming Machine Act 1991.
Commercial and Consumer Tribunal Act 2003 (Qld);
Gaming Machine Act 1991 (Qld).
COUNSEL:
Mr P Hackett for the applicant;
Mr P Flanagan SC for the first defendant;Mr S McLeod for the second defendant.
SOLICITORS:
Crouch & Lyndon Lawyers for the applicant;
Tucker & Cowen Solicitors for the first defendant;
MOYNIHAN J: The plaintiffs in this action seek an interlocutory injunction restraining the second defendant from proceeding with or granting the first defendant’s application in respect of the issue and transfer of a gaming licence and gaming authorities under the provisions of the Gaming Machine Act 1991 (the Act).
The application is brought to restrain the second defendant’s statutory function in processing and issuing a licence to the first defendant. There is no question about the validity of that application. The second defendant appeared to abide the outcome of the interlocutory application save as to costs, and took no part in the proceedings.
The first defendant resists the application for an interlocutory injunction on the basis that damages are an adequate remedy, there is no serious question to be tried and the balance of convenience does not favour the granting of an interlocutory injunction.
The first defendant offers undertakings that it will not deal with that tavern’s gaming machine licence or gaming machine authorities until trial or earlier order and not to encumber the property to which the applications relate up to the amount of $500,000.
The first defendant owns premises known as the CBD Tavern in Toowoomba. The premises were leased to the plaintiffs for 10 years commencing 1 July 2003 by a lease agreement entered into in April 2003.
The first defendant acquired ownership of the tavern subject to the registered lease by a contract dated 8 October 2003. On 4 May 2005 it exercised its rights of re-entry to determine the lease pursuant to clause 44.2 of the lease and take possession of the plaintiff’s property until payment of outstanding money, such right was expressed by the lease as constituting “a legal lien”. It continues to operate the tavern on the basis of temporary arrangements with the relevant authorities.
The plaintiffs commenced this action on 7 September 2005. In it they claim against the first defendant a declaration that they are the owners of (relevantly for present purposes) the general liquor licence, gaming machine licence and 35 operating authorities under the Act in respect of the 35 poker machines in the CBD Tavern. They seek recovery of possession of the licences and authorities and associated relief.
It is to be noted, although of no present consequence, that there are other proceedings in this court in relation to the continuing use of the premises by the first defendants.
The lease relevantly provided:
Gaming machine licence means the licence required under the provisions of the Gaming Machine Act 1991 to be issued in respect of the premises so as to allow the installation and operation of gaming machines.
Leasemeans the Form 7 Lease and this schedule
Liquor licence means the general licence required under the provisions of the Liquor Act 1992 authorising the sale of liquor on the premises.
Our property means all plant, equipment, fixtures, fittings, furniture, furnishings, signs and other property the Lessor provides in the Premises or in the Centre.
Premisesmeans the premises described item 3 and includes all of the improvements and our property
Your business means the business carried on from the premises
Your property means all property inside the premises, except our property, and includes all fixtures, fittings, signs, equipment and goods.
41.You acknowledge that any fitout in the premises, whether or not the fitout is effected or installed or paid for by you, is our property. Without limiting the application of any other provisions of this lease, the following shall apply in relation to the fitout:-
(a) you may use the fitout during the term of the lease;
(b) you must at your expense insure the fitout;(c) you must at your cost keep the fitout in the good condition and repaid and must at your cost promptly replace worn or damaged items with items of similar quality.
42.Notwithistanding clause 41, we acknowledge that at the expiry of the initial term of this lease, if you are not in breach of the lease, that part of the fitout that is effected or installed or paid for by you, shall become your property.
PART P: OPTION OF PURCHASE
47.1If:
(a) you wish to remove the liquor licence from the premises; or
(b)
you wish to surrender or transfer to another premises any right to use gaming machine licence at the premises; or
(c) you wish to sell your business; or
(d) upon the expiry of earlier termination of this lease you must, before undertaking any such removal,
surrender or transfer, give us a written notice advising of your intention and offering to sell us your business for the Market Value of your business (“Offer Notice”).
47.2 We may accept the offer in the “offer Notice” by written notice to you within 14 business days of receipt of such notice. If we accept the offer in the Offer Notice, we will pay you the Market Value of your business, the liquor licence and the gaming machine licence within ninety (90) days of the Market Value being determined or agreed under clause 47.4. You must (upon receipt of the Market Value of your business, the liquor licence, the gaming machine licence and any necessary consents required under the Liquor Act 192 and the Gaming Machine Act 1991) transfer your business and the liquor licence to us or our nominee.
47.3 If we do not accept the offer in the Offer Notice within 14 business days of receipt of such notice, you may undertake such removal, surrender or transfer as specified in the Offer Notice.
47.4 For the purposes of clauses 47.1 and 47.2 the Market Value of your business, the liquor licence and the gaming licence is the amount you and we agree is the market value of your business and the liquor licence immediately prior to the time of the issuing of the Offer Notice. If we are unable to agree within fourteen (14) days of your notice, the amount determined to be the market value shall be that determined by an independent valuer (with not less than five (5) years experience in the valuation of hotels in Queensland) appointed at the request of either of us by the President of the Australian property Institute (Qld). The valuer shall act as an expert and not an arbitrator. The cost of the valuer shall be born equally by both of us”.
The scheme of the Act may for present purposes be summarised as follows. Section 96(1) of the Act provides that -
“If a liquor licence is cancelled, transferred or surrendered, any associated gaming licence is cancelled.”
An “associated gaming licence” is “a gaming machine licence for the premises, or part of the premises, to which the liquor licence relates[1].
[1]Gaming Machine Act 1991; s 96(5)
Gaming machine licences cannot be transferred[2]. Section 78 of the Act contemplates that, where a liquor licence is transferred and any associated gaming licence is cancelled, a new gaming machine licence will be issued contemporaneously with such transfer and cancellation.
[2]Gaming Machine Act 1991; s 77
Section 78(3),(4),(5) and (6 )of s 78 provide –
‘(3) If a person –
(a)makes a liquor licence transfer application relating to a club liquor licence, general liquor licence or prescribed liquor licence; and
(b)applies at the same time for a gaming machine licence for the premises to which the application mentioned in paragraph (a) relates; and
(c) the liquor licensing authority is prepared to transfer the liquor licence; and
(d)the commission is prepared to grant the gaming machine licence;
the chief executive and the liquor licensing authority are to make arrangements so that the transfer of the liquor licence and the issue of the gaming machine licence happen at the same time.
(4)Subsection (5) applies if, under subsection (3), arrangements are made for a gaming machine licence (a ‘new licence’) to be issued at the same time as the transfer of a liquor licence and an associated gaming licence for the liquor licence is cancelled under section 96(1) because of the transfer of the liquor licence.
(5)All operating authorities, if any, for the licensed premises under the cancelled associated gaming machine licence are transferred by operation of this subsection to the holder of the new licence.
(6) In subsection (5) -
‘operating authority’, for the licensed premises under the cancelled associated gaming machine licence, does not include an operating authority that must be sold at an authorised sale
The Act deals with what it describes as allocation disputes. Such a dispute is defined by s 408 as ‘a dispute arising from the allocation of an operating authority to a category 1 licensee under s 409 and affecting existing arrangements between parties’.
It should be noted that gaming machine authorities were introduced by legislation which became law after the lease was signed. Sections 408 to 427 inclusive of the Act are contained in Division 8 of the Act which is entitled ‘Provisions for Gaming Machine and Other Legislation Amendment Act 2003’ which came into force on 1 July 2003.
Subsection 409(2) provides that immediately after the commencement of s 408, the number of operating authorities equal to the approved number of gaming machines for the licensee’s licensed premises are allocated to the licensed premises by operation of s 409(2).
Section 419 provides that, subject to subdivision 2 of division 8, a proceeding for an allocation dispute must be heard and decided under the Commercial and Consumer Tribunal Act 2003. Section 420(1) provides that the tribunal may make an order ‘in relation to an allocation dispute about dealing with operating authorities of a party to the dispute’.
The subsection gives as examples of the orders which may be made, orders –
‘(a)about the sharing, as between the parties, of any amounts payable to a party under section 109E; or
(b)about compensating a party in another way for the sale or other disposal of an operating authority.”
Whatever rights the plaintiff has in respect of the relevant gaming authority are determined by the Act and do not comfortably conform to the notion of “ownership”. The Act is quite specific as to what can and cannot be done with respect to licences and authorities.
Given the scheme and provisions of the Act the plaintiffs are unlikely to obtain the declarations of “ownership” they presently seek or relief founded on “ownership”.
The statement of claim alleges that the plaintiffs gave the first defendant an offer notice in accordance with clause 47 of the lease on 27 July 2005 and on 9 August 2005 the first defendant advised it would not respond to the offer.
It then alleges that the first defendant, not having accepted the notice of offer within the specified period, the plaintiffs are entitled to remove the licences and authorities. That assertion appears to be founded on a concept of ownership and does not reflect the statutory scheme.
The statement of claim goes on to allege that the fist defendant, having entered the premises, continued to use for its benefit and for the operation of the tavern the licences and authorities and refuses to allow the plaintiffs to remove them.
The plaintiff’s claim for an interlocutory injunction turns on the allegation in paragraph 15 of the statement that the plaintiff together with the fist defendant’s predecessor in title made a declaration prior to 14 July 2003 to the Gaming Authority. This was said to be contained in the registration form for operating authority where it is alleged the plaintiffs and the first defendant’s predecessor in title declared that they were not in dispute regarding the future disposal of the authorities on the basis that this was adequately dealt with by an existing arrangement particularly clause 47 of the lease.
The pleading in paragraph 15 in particular is properly criticised by the first defendant for its lack of particularity. I assume for present purposes that could be cured.
As I have said Clause 47 of the lease deals with the offer to sell the refusal of which is relied on by the defendant. It is noteworthy that clause 47.1(b) which deals with a proposal by the tenant to deal with the gaming machine licence has been struck out.
Clause 18.5 of the lease however deals with “liquor licence, gaming machine licence or any other licence”.
It provides that there is to be no dealing with such licences save with the first defendant’s written consent which is not to be withheld “where the rights under the various licences are not materially affected”.
It follows that there are formidable obstacles in the plaintiff’s path to a successful outcome in their action on the pleadings as they presently stand. These relate to the application of clause 47.1 of the lease in the circumstances both given clause 18 and to the statutory regime.
In addition the plaintiffs argument that there was an oral agreement that the original parties agreed clause 47 applied in the present circumstances appears somewhat tenuous.
The statements are sworn, relied on by the plaintiffs to establish an agreement have scant detail of the terms of the alleged oral agreement, they are more in the nature of an assertion of intention rather than demonstrated agreement.
In any event it became clear in the course of argument that the right the plaintiffs seek to protect is the right to surrender the relevant entitlements giving the plaintiffs “bargaining power” in dealing with the first defendant under clause 47 of the lease[3].
[3]Transcript of submissions T 14 ll 1-35
In other words at best what the plaintiffs are claiming is the loss of a chance to get more money than would otherwise be the case. The affidavit by John McNulty filed by the plaintiff deals with the difficulties in placing a value on this loss.
The principles of assessing the loss of a chance are well settled. Their application in particular circumstances may be difficult because of the contingencies which have to be taken into account.
The evidence does not establish the rights are unique and cannot be valued. The difficulties relied on do not change the essential character of the claim.
The first defendant’s submission that damages are an adequate remedy if there has been any breach of the plaintiffs’ rights is well founded.
If it was necessary to consider the balance of convenience given the proffered undertakings and the importance of the gaming authorities to the viable operation of the tavern it would favour refusing the injustice.
The considerations being those canvassed, the application is dismissed.
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