Wonall Pty Ltd v Clarence Property Corporation Ltd

Case •

[2003] NSWSC 497

•

23 June 2003

No judgment structure available for this case.

Reported Decision:

 58 NSWLR 23

Supreme Court


CITATION: Wonall Pty Limited v Clarence Property Corporation Limited [2003] NSWSC 497
HEARING DATE(S): 27 May 2003
JUDGMENT DATE:
23 June 2003
JURISDICTION:
Equity
JUDGMENT OF: Campbell J
DECISION: Declarations and order refused
CATCHWORDS: LIQUOR LAW - licensing - poker machine entitlements - whether lessee of hotel can transfer poker machine entitlements to another person without consent of lessor of hotel - appropriateness of Supreme Court making declarations on matters dependent upon the state of mind of Liquor Administration Board - WORDS AND PHRASES - "in respect of"
LEGISLATION CITED: Gaming Machines Act 2001
Liquor Act 1982
Registered Clubs Act 1976
CASES CITED: Attrill v Richmond River Shire Council (1995) 38 NSWLR 545
Evans v Button (1988) 13 NSWLR 57
Mellor v Liquor Administration Board [2003] NSWSC 38
Rogers v Wentworth (1986) 7 NSWLR 88
Workers Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642

PARTIES :

 Wonall Pty Limited - First Plaintiff
Peter James Durning - Second Plaintiff
Clarence Property Corporation Limited - Defendant
FILE NUMBER(S): SC 1333/03
COUNSEL: P Clay; S Berveling - Plaintiffs
S Austin QC; M Darke - Defendant
SOLICITORS: Rummerys - Plaintiffs
Phillips Fox - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

23 June 2003

1333/03 WONALL PTY LIMITED & ANOR v CLARENCE PROPERTY CORPORATION LIMITED

JUDGMENT

1 HIS HONOUR: The issue in this case concerns whether the lessee of premises in relation to which a hotelier’s licence has issued can sell, without the consent of the lessor of the premises, poker machine entitlements which have issued in respect of that hotelier’s licence.

2 The first plaintiff, Wonall Pty Limited (“Wonall”) is the lessee of licensed premises known variously as “Maggie Moores Pub” or “Maggie Moore’s Pub & Bistro”. Those premises are part of the ground floor of a building located on the corner of Molesworth and Woodlark Streets, Lismore. The defendant is the property manager of those premises, and the case has been conducted on the basis that its actions concerning this litigation bind the lessor. The lease is one for a term of 15 years, which commenced on 21 October 1999. Wonall is a company of which the second plaintiff, Mr Peter Durning, is the sole director and shareholder. Mr Durning holds the hotelier’s licence concerning the premises.

3 Mr Durning has been involved in the operation of the premises since about March 1993. In about March 1993 a partnership consisting of Mr Durning, and various of his relatives, became the lessees of the premises. At that time Havenrim Pty Ltd (“Havenrim”) was formed to conduct the business of the hotel. Mr Durning and one of his relatives were the sole directors and shareholders of Havenrim. Havenrim rented from the partnership all the inclusions of the licensed premises, and owned the stock in trade of the hotel from time to time.

4 Beginning probably at some time in 1998, poker machines were installed in the premises. At first there were four poker machines, installed by the poker machine manufacturer without charge as a promotional exercise. In March 1999 an additional five poker machines were installed. Two of these were machines which Havenrim leased from a financier, while three were older machines which the owner permitted to be installed without charge.

5 In 1999 the hotel encountered both trading difficulties, and a dispute within the partnership. The dispute was resolved by Havenrim and the partnership entering an agreement on 20 October 1999 to sell to the then landlord all their right title and interest in the stock in trade or any other interest in the business carried on under the name “Maggie Moores Pub & Bistro”, all their right title and interest in the business name of that business, the fixtures and fittings of the business, the goodwill of the business, and to surrender the lease of the premises. Mr Durning agreed to transfer the license relating to the premises to his landlord or his nominee.

6 The next day, 21 October 1999, the then landlord sold to Wonall the business, including the goodwill and all stock in trade, plant, equipment and furnishings. On that same day the then landlord granted to Wonall the lease of the premises which is now current. I infer that the lessor either waived his right to have Mr Durning transfer the licence, or else nominated Mr Durning to be the licensee. One way or another, Mr Durning continued without interruption as the licensee, even though the identity of the lessee of the premises changed.

7 After the new lease was entered, Wonall took over making the rental payments on the two poker machines that were leased. Additional poker machines were acquired by Wonall. I infer that prior to 19 April 2001 some or all of the poker machines which had originally been placed in the hotel without payment, were removed.

8 As at 19 April 2001 there were 10 poker machines on the premises. Two of them had been installed before the new lease was granted, and eight after the new lease had been granted.

Legal Basis of Entitlement to Keep Poker Machines in the Hotel Before 19 April 2001

9 The Liquor Act 1982 has at all material times contained the following definitions in section 4.

          “ Board means the Liquor Administration Board constituted by section 72.
          Hotel means the premises to which a hotelier’s licence relates.
          Hotelier means the holder of a hotelier’s licence.
          Hotelier’s licence means a licence that, subject to this Act and the conditions of the licence, authorises the licensee to sell liquor by retail on the licensed premises, whether or not for consumption on those premises, being a licence that is granted as a hotelier’s licence.
          Licensed premises means:
              (a) in case of an on-licence to sell liquor at a function …
              (a1) in the case of a caterer’s licence …
              (b) in the case of any other licence to sell liquor – the premises or part of premises on which the sale of liquor is authorised by the licence …

10 Prior to 2 April 2002 section 4 Liquor Act 1982 contained definitions:

          “ approved gaming device means an approved amusement device, an approved poker machine or an authorised poker machine.
          approved poker machine and authorised poker machine have the same meanings as in the Registered Clubs Act 1976 .
          poker machine has the same meaning as in the Registered Clubs Act 1976 .”

11 At all material times the Liquor Act 1982 contained the following provisions:

          18(1) Subject to this Act, the court may grant a licence in a form approved by the Board authorising the licensee to sell liquor on the premises specified in the licence.
          (2) The court may, under subsection (1), grant:
              (a) a hotelier’s licence, being a licence that is granted as a hotelier’s licence and, subject to this Act and the conditions of the licence, authorises the licensee to sell liquor by retail on the licensed premises, whether or not for consumption on those premises.
          19A(1) A licence remains in force until its surrender in writing is accepted by the Board, except as provided by this section.

12 At all material times section 20 of the Liquor Act 1982 made provision for licences to have conditions imposed on them. Prior to 2 April 2002 section 20(2)(c1) said that a licence was subject to “any conditions imposed under this Act in relation to an approved gaming device …”.

13 Prior to 2 April 2002 section 160 Liquor Act 1982 provided:

          “Despite anything in the Lotteries and Art Unions Act 1901 , the Unlawful Gambling Act 1998 or any other Act except this Act, and despite any law, it is lawful:
          (a) to keep, use and operate an approved gaming device in a hotel, and
          (b) to pay or present prizes and bonuses won as a direct or indirect consequence of operating the device,
          if the device is kept, used and operated, and the prizes and bonuses are paid or presented, as authorised by this Act and any conditions of the hotelier’s licence.”

14 Section 161 Liquor Act 1982 gave the authority referred to in section 160, and the power to impose conditions concerning approved gaming devices on a hotelier’s licence. Section 161 said:

          “ 161 Authority to keep approved gaming devices
          (1) On the application of an hotelier, the Board may impose a condition of the hotelier's licence authorising the licensee to acquire and keep in the hotel, and to permit the use and operation of, not more than 30 approved gaming devices.
          (2) A condition in force under this section may be varied or revoked by the Board as provided by section 20 (Conditions of licences) but such a variation may not authorise the keeping, use or operation of more than 30 approved gaming devices.
          (3) In the instrument by which it imposes, varies or revokes a condition, the Board is to identify the device or devices to which the condition, variation or revocation relates. …

15 Section 182A and section 182B Liquor Act 1982 prior to 2 April 2002 applied to hotels and hotelier’s licences the same regime, mutatus mutandis, concerning the keeping and operation of poker machines as was applied to registered clubs by the Registered Clubs Act1976. Section 182C provided, prior to 2 April 2002:

          “(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.
          (4) Nothing is this section affects the overall limit, imposed by section 161, of 30 approved gaming devices per hotelier’s licence.”

16 It is common ground in the present case that immediately prior to 19 April 2001 the licence issued to Mr Durning was endorsed with a condition permitting the keeping of the 10 poker machines which were then on the hotel premises.

The Freeze

17 On 19 April 2001 the New South Wales Government took steps to ensure that, for three months from that date, no hotel could acquire more poker machines than it had on 19 April 2001. This “freeze” on the number and location of poker machines in hotels was intended to provide a period of stability before the introduction of new legislation governing the manner in which poker machines might be kept in hotels. The regulations and legislation which imposed that freeze have been summarised by Whealy J in Mellor v Liquor Administration Board [2003] NSWSC 38 at [20]-[23], in terms which I gratefully adopt:

          “The Liquor Amendment (Approved Gaming Devices) Regulation 2001 , published in Government Gazette No 70 on 19 April 2001, inserted Clause 46AA into the Liquor Regulation 1996 . It was in the following terms: -
              "46AA Number of approved gaming devices
              (1) It is a condition of a hotelier's licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device:
                  (a) that was not acquired, and
                  (b) the acquisition, keeping, and the use or operation of which was not authorised and permitted by the court or the Board,
                  immediately before the commencement of this clause.
              (2) A hotelier cannot apply to the court or the Board to impose, vary or revoke a condition of the hotelier's licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the commencement of this clause.
              (3) The court or the Board cannot, while this clause is in force, determine an application made to it by a hotelier before the commencement of this clause to impose, vary or revoke a condition of the hotelier's licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the application was made.
              (4) This clause expires 3 months after the commencement of this clause."
          It is apparent the Regulation was promulgated with a degree of haste. There was a need to make certain amendments to it. The Liquor Further Amendment (Approved Gaming Devices) Regulation 2001 was published in Government Gazette No 76 on 2 May 2001. There were two substantive changes made to the earlier Regulation. First, the terms of the condition which had been imposed by sub-clause 1 of the original Regulation was altered. The condition was now in the following terms: -
              "(1) It is a condition of a hotelier's licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device so as to exceed the maximum number of approved gaming devices that were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the commencement of this clause."
          The second change to the original Regulation related to exemptions from the freeze which are not relevant to the issues in these proceedings.
          The original freeze had been for a period of three months. Legislation came into force on 17 July 2001 which in effect put into final form the terms of the original short term freeze. The Liquor Amendment (Gaming Machine Restrictions) Act 2001 amended the Liquor Act 1982 so as to insert new sections 180D, 180E and 180F. Sections 182D and 182E were in the following terms: -
              " 182D Definitions
              (1) In this Division:
                  application for additional gaming devices means an application by a hotelier to the court or the Board to impose, vary or revoke a condition of the hotelier's licence so as to authorise the acquisition, keeping, or the use or operation of more approved gaming devices than were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the period of the freeze.
              period of the freeze means the period:
                  (a) commencing on 19 April 2001 (being the date on which clause 46AA of the Liquor Regulation 1996 took effect), and
                  (b) ending on the date appointed by proclamation.
              (2) The date appointed for the end of the period of the freeze may be altered by a further proclamation or proclamations published before the date so appointed.
              182E Number of approved gaming devices in hotels not to be increased during the period of the freeze
              (1) It is a condition of a hotelier's licence that the hotelier cannot acquire, keep in the hotel, or permit the use or operation in the hotel of, any approved gaming device so as to exceed the maximum number of approved gaming devices that were lawfully acquired, kept in the hotel and used or operated in the hotel immediately before the period of the freeze.
              (2) A hotelier cannot, during the period of the freeze, make an application for additional gaming devices.
              (3) The court or the Board cannot, during the period of the freeze, determine an application for additional gaming devices.
              (4) This section is subject to the other provisions of the Division."”

The Gaming Machines Act 2001

18 The Minister for Gaming and Racing introduced the Bill for this Act in the Legislative Assembly on 30 November 2001. The general nature of the Bill can be gathered from the Second Reading speech which the Minister gave on that day:

          “Under the proposed legislation, the previous automatic entitlement of clubs and hotels to install gaming machines will be abolished. The current numbers of gaming machines will be frozen, and the only way that clubs and hotels will generally be able to acquire additional machines in future will be to purchase the right to keep those machines from other premises. At the time of the announcement, it was noted that the development of a new scheme for transferable entitlements for gaming machines was such a significant reform that the Government was keen to involve key industry bodies in the development of that scheme. As I said in my opening remarks, that process took time and delayed presentation of this bill. …
          Prior to 1997 clubs could not operate approved amusement devices and hotels could not operate poker machines. In 1997 the legislation was amended by cross-applying relevant provisions of the Registered Clubs Act to hotels in respect of poker machines, and by cross-applying relevant provisions of the Liquor Act to registered clubs in relation to approved amusement devices [AADs]. The overall legislation is complex, unwieldy and incomprehensible to all but a few specialist lawyers. … It is proposed to take this opportunity to transfer all gaming machine provisions relating to clubs and hotels from the Liquor and Registered Clubs Acts, and place them in a new Gaming Machines Act. As I said earlier, this bill, which is a complete rewrite of the Act, is fairly voluminous. …
          I would like to turn now to the details of the statewide and venue limits for gaming machines in clubs and hotels. The announcement on 26 July indicated that here would be an overall cap of 104,000 on the total number of gaming machines in clubs and hotels in New South Wales. The bill specifies that this limit is to be broken down into a cap of 25,980 gaming machines in hotels, and 78,020 in registered clubs.
          The bill also specifies that the maximum number of gaming machines that can be kept by a single hotel is 30. The current restriction on poker machine numbers for hotels will be removed. … The key features of that transferable entitlement scheme are as follows: Poker machine entitlements will be issued for all poker machines which clubs and hotels are entitled to keep as at the date of the relevant freeze – which is 28 March 2000 for clubs and 19 April 2001 for hotels.
          Clubs can sell their entitlements to other clubs, hotels can sell their entitlements to other hotels, but for every two entitlements sold, another one must be forfeited into a forfeiture pool. Forfeiture will not be required if a club or hotel is moving to a new venue within one kilometre …If a hotel licence or a club is moved to a venue more than one kilometre away, one entitlement will need to be forfeited for every two machines that are moved.
          Country hotels will only be permitted to transfer a maximum of two entitlements per year to metropolitan hotels—with another one required to be forfeited to the pool. If a hotel or club licence is surrendered or cancelled, a period of 12 months will be allowed for all entitlements to be transferred to another hotel or club. After 12 months, any remaining entitlements will also be forfeited. I think that that measure will prevent owners from sitting on a licence, in some cases denying people in the country access to an hotel. …
          The hotel industry has expressed strong interest in which party or parties will have the beneficial ownership of the new poker machine entitlements.
          It is not proposed to confer ownership rights through the legislation. Entitlements will be issued in respect of a particular hotel licence or a certificate of registration for a club. In the case of a hotel, the licensee will be permitted to apply for the transfer of entitlements to another licence, provided the licensee can satisfy the board that the licence owner has consented. Many hotel licences are owned by one party and leased to another under contracts that may last as long as 20 years. There is concern that lessors may attempt to force the lessee from the business, thereby allowing the lessor to take advantage of the poker machine entitlements that are issued in respect of the licence. The bill includes a savings provision to give protection for the existing contractual rights of lessees.”

19 The Gaming Machines Act 2001 (“GMA”) came into operation on 2 April 2002. It amended the Liquor Act 1982 by deleting the definitions of “approved gaming device”, “approved poker machine”, “authorised poker machine”, and “poker machine”. It omitted section 20(2)(c1), and also omitted the entire Part containing sections 160, 161, 182A, 182B and 182C. Though the GMA has been amended since it first came into effect, tracing those amendments is not necessary for the purpose of this litigation. The GMA presently provides, in 4(1):

          “In this Act:-
          … approved gaming machine means an approved poker machine or an approved amusement device, and includes any specially approved gaming machine within the meaning of section 141.
          approved poker machine means a poker machine declared under section 64 to be an approved poker machine and includes:
          (a) any subsidiary equipment approved by the Board for use in connection with the poker machine, and
          (b) any component of the poker machine (other than a component prescribed by the regulations as not being part of the poker machine).
          …
          hotel , hotelier and hotelier’s licence have the same meanings as in the Liquor Act 1982 .
          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.
          10. Overall State cap on number of gaming machines
              (1) The maximum number of approved gaming machines that the Board may authorise to be kept in all hotels and registered clubs in the State is 104,000 ("the overall State cap").
              (2) The overall State cap comprises:
                  (a) a maximum number of 25,980 approved gaming machines in respect of hotels, and
                  (b) a maximum number of 78,020 approved gaming machines in respect of registered clubs.
          11. Limit on number of gaming machines in hotels
              The maximum number of approved gaming machines that the Board may authorise under Part 5 to be kept in any one hotel is 30.
          14 General provisions
              (1) The allocation of poker machine entitlements and the approval to keep hardship gaming machines under this Part:
                  (a) are subject to the overall State cap, and
                  (b) do not affect the requirement under Part 5 for the Board’s authorisation to keep approved gaming machines in a hotel or registered club.
              (2) Accordingly, the Board cannot allocate a poker machine entitlement or approve the keeping of a hardship gaming machine if the allocation or approval would:
                  (a) result in the overall State cap being breached, or
                  (b) exceed the total number of approved gaming machines authorised under Part 5 to be kept in the hotel or registered club concerned.
              (3) The administrative arrangements that may be approved by the Director-General for the purposes of this Part include the setting up of a forfeiture pool (one each for hotels and registered clubs) in respect of the poker machine entitlements and hardship gaming machines that are forfeited to the Board under this Part.
          15 Initial allocation of poker machine entitlements
              (1) On the commencement of this section, one poker machine entitlement is to be allocated by the Board:
                  (a) for each approved poker machine that comprises the frozen number of approved poker machines for a hotel, and
                  (b) for each approved poker machine that comprises the frozen number of approved poker machines for the premises of a registered club.
              (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.
              (3) For the purposes of subsection (1) (a), the frozen number of approved poker machines for a hotel is the number that is determined by the Board after taking into account:
                  (a) the number of poker machines authorised to be kept in the hotel under the Liquor Act 1982 as at 19 April 2001, and
                  (b) any increase in that number after that date and before the commencement of this section that has been authorised by the Board.
              (4) In determining the frozen number of approved poker machines for a hotel, the Board is to disregard any poker machine for which a Liquor Act poker machine permit is held.
              (6) Despite subsection (1), the Board is not required to allocate a poker machine entitlement for any such approved poker machine unless the Board is satisfied that the hotel or registered club concerned:
                  (a) was lawfully in a position to keep the poker machine when the authorisation to keep the poker machine was granted, or
                  (b) would have been lawfully in a position to keep the poker machine by the date nominated in the application for the authorisation.
              (7) If a poker machine entitlement has been allocated in respect of a hotelier’s licence or the premises of a registered club but the Board would, had subsection (6) been in force when the entitlement was allocated, not have been required to allocate the entitlement in accordance with that subsection, the hotelier or club must forfeit the entitlement to the Board.
          16. Further allocation of poker machine entitlements and certificate of entitlements
              (1) Following the initial allocation of poker machine entitlements under section 15, poker machine entitlements may, in accordance with this Act and such arrangements as may be approved by the Director-General, be allocated by the Board from time to time in respect of hoteliers' licences or the premises of a registered club.
              (2) The number of poker machine entitlements allocated from time to time in respect of a hotelier's licence or the premises of a registered club, along with the corresponding number of approved poker machines authorised under Part 5 to be kept in the hotel or on those premises in accordance with those poker machine entitlements, is to be specified in a certificate issued by the Board to the hotelier or club concerned.
              (3) The certificate issued under subsection (2) to a hotelier or registered club may also specify the SIA threshold for the hotel or the premises of the club concerned.
              (4) Any such certificate does not, by itself, confer any entitlement of any kind under this Act.
          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) Subjection (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 transferring 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.
          23 Transfer of poker machine entitlements when hotelier’s licence cancelled or surrendered
              (1) If a hotelier’s licence or a hotelier’s authorisation under Part 5 to keep approved poker machines is surrendered or cancelled, any poker machine entitlements allocated in respect of the licence concerned may, in accordance with this Division, be transferred.
              (2) If, at the end of the period of 12 months immediately following the surrender or cancellation of the hotelier’s licence or authorisation under Part 5, any such poker machine entitlements have not been transferred, the remaining entitlements are automatically forfeited to the Board.
              (3) This section does not apply merely because:
                  (a) the hotelier’s licence or authorisation under Part 5 to keep approved gaming machines is suspended, or
                  (b) the hotel has, for the time being, ceased to trade.
          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.
              (3) However, subsection (2) does not apply if the hotelier’s licence has been removed on more than one occasion in any period of 3 years and the premises to which the licence is removed are situated more than 1 kilometre from the premises where the hotelier last carried on business under the licence.
          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,
                  (b) the number of approved poker machines that corresponds to the number of Liquor Act poker machine permits held by the hotelier,
                  (c) the number of hardship gaming machines kept in the hotel,
                  (d) the number of approved amusement devices kept in the hotel.
          58 Cancellation of authorisations
              (1) An authorisation by the Board to keep or dispose of an approved gaming machine ceases to have effect if the authorisation:
                  (a) is suspended or cancelled by the Board or the Licensing Court, or
                  (b) is cancelled by the operation of a provision of this Act, or
                  (c) relates to a poker machine or approved amusement device that has, in accordance with section 64, ceased to be an approved gaming machine.
              (2) If, under the Liquor Act 1982 , a hotelier’s licence is removed to other premises (whether or not those other premises are outside the neighbourhood of the previous premises), the removal of the hotelier’s licence has the effect of cancelling the hotelier’s authorisation to keep any approved gaming machine.”

20 Pursuant to section 211 of the GMA, certain savings, transitional and other provisions set out in Schedule 1 of that Act were enacted. Schedule 1 included the following clauses.

          “2 Preservation of existing gaming machine approvals and authorisations
              (1) In this clause:
                  " existing gaming machine approval or authorisation " means any approval or authorisation in respect of a poker machine or approved amusement device:
                  (a) granted under a provision of the Liquor Act 1982 or the Registered Clubs Act 1976 repealed by this Act, and
                  (b) in force immediately before the repeal of the provision.
              (2) An existing gaming machine approval or authorisation is, subject to this Act and the regulations, taken to be an approval or authorisation in force under this Act.
              (3) The conditions to which an existing gaming machine approval or authorisation is subject are, subject to the regulations, taken to be conditions imposed by or under this Act and may be revoked or varied in accordance with this Act.”
          8. Protection of existing contractual arrangements (hotel lessees)
              (1) In this clause:
                  hotel owner means a person who owns the business conducted under the authority of the hotelier’s licence concerned.
                  lessee means a person who exercises the authority conferred by a hotelier’s licence under a lease, as in force at the commencement of this clause, with the hotel owner.
              (2) If:
                  (a) poker machine entitlements are allocated in respect of a hotelier’s licence, and
                  (b) a lessee is exercising the authority conferred by the licence,
                  the poker machine entitlements are, for the purposes of this Act, taken to be allocated in respect of the lessee and the lessee is, for the duration of the lease, authorised (subject to this Act) to keep approved gaming machines in accordance with any such poker machine entitlements.
              (3) If the lessee assigns the lease to another person in accordance with the terms of the lease, the lessee may, in accordance with this Act, transfer any poker machine entitlements held by the lessee to the other person as part of the assignment.
              (4) For the purposes of subclause (2), the duration of the contractual arrangements includes any extension of those arrangements that is legally enforceable (such as an option for renewal).”

      Part 5 of the GMA runs from section 56 to section 67 inclusive.

The Hotelier’s Licence

21 The hotelier’s licence relating to the premises is presently in the following form.

      “ HOTELIER’S LICENCE
      PREMISES LICENCE NUMBER 114664
          To the Licensee
          Maggie Moore’s Pub & Bistro
          Woodlark & Molesworth Streets
          LISMORE 2480
          The Person named in this licence is authorised to sell and dispose of liquor for consumption whether or not on the licensed premises in accordance with the Liquor Act 1982.
          Except during any period of suspension this licence continues in force provided the licence has not been surrendered or cancelled.
          Location of Licensed Premises:
          Woodlark & Molesworth Streets LISMORE
          Date of Grant: 15 July, 1957
          Current Holder: Durning Peter James
          Date of Appointment of Current Holder: 30th April, 1993”

22 The licence goes on to identify extended trading hours which are applicable, the authorised areas, and various special conditions. The present form of the licence does not contain any special condition relating to the keeping or use of poker machines.

Certificate of Gaming Machine Entitlement

23 The Liquor Administration Board has issued a Certificate of Gaming Machine Entitlement, in the following form:

      “Certificate of Gaming Machine Entitlement
      Hotel: Maggie Moore’s Pub & Bistro Licence Number: 114664
      For Premises at Woodlark & Molesworth Streets
      LISMORE 2480      		 Classification: Country

      ENTITLEMENTS
      10 Transferable poker machine entitlements

      10 Total Entitlements Held
      Transferable with forfeiture
      AUTHORISATION LIMITED
      10 Poker Machines may be authorised subject to application.
      SIA THRESHOLD 10
      This certificate is issued by the Liquor Administration Board of New South Wales.
      A replacement will be issued if any details change.

The Dispute Between the Plaintiffs and the Defendant

24 Wonall wishes to sell the hotel business and the poker machine entitlements. Wonall does not, as yet, have in mind any particular purchaser for either the hotel business or the poker machine entitlements. It is common ground between the parties that Wonall owns the hotel business. It is also common ground between the parties that if Wonall wanted to sell the hotel business and the poker machine entitlements by a transaction which took the form of an assignment of the lease, on the basis that the assignee would have the right to have 10 poker machines in the hotel for the balance of the lease term, Wonall would be entitled to do so. The difference of opinion between the plaintiffs and the defendant concerns whether Wonall would be able to assign the lease to one person, but sell the poker machine entitlements to another person.

25 The summons in these proceedings as originally filed sought the following declarations:

          “1. A Declaration that the First Plaintiff is the beneficial owner of the ten (10) poker machine entitlements granted to the Second Plaintiff by the Liquor Administration Board on or as at 2 April 2002.
          2. Alternatively, a Declaration that the Second Plaintiff is the beneficial owner of the ten (10) poker machine entitlements granted to the Second Plaintiff by the Liquor Administration Board on or as at 2 April 2002.”

26 In the course of argument, counsel for the plaintiffs accepted that declarations in these terms were wider than was needed to enable the plaintiffs to decide what course they should follow in seeking to sell the hotel business and the poker machine entitlements. The relief which, by the end of the argument, the plaintiffs were seeking was as follows:

          “3. A Declaration that the First Plaintiff, or alternatively the Second Plaintiff, is entitled to transfer the ten (10) poker machine entitlements referred to in the Certificate issued by the Liquor Administration Board to Maggie Moores Pub & Bistro subject to s.19 of the Gaming Machines Act 2001.
          4. A Declaration that the Defendant has no financial interest in Hotelier’s Licence Serial No. 114664 for the purpose of Section 19(3)(c) of the Gaming Machines Act 2001.
          5. An order that the Defendant support any application for transfer pursuant to Section 19 of the Gaming Machines Act 2001 made by the First or Second Plaintiff of the 10 poker machine entitlements issued by the Liquor Administration Board in respect of Maggie Moores Pub & Bistro in or about 2002.”

27 Other forms of declaration set out in paragraphs 5 and 6 of the Amended Summons filed on 27 May 2003, were no longer pressed.

Provisions of the Lease

28 Counsel for the parties drew my attention to the following provisions of the Lease. The premises leased were identified as:

          “PART FOLIO IDENTIFIER 12/789825
          That portion containing approximately 417m2 and known as “Maggie Moores Pub” of portion of the Ground Floor Level of Premises situated at the Corner of Molesworth and Woodlark Street, Lismore and known as the Manchester Unity Building, 29 Molesworth Street, Lismore and the one carpark in the basement of the Building as is shown on the plans annexed hereto and marked “B”.
          5.1 Usage of Premises
              The Lessee agrees to use the demised premises for the purpose set forth in Part 8 of the Schedule hereto and not to use the leased premises for any other purpose without the consent in writing of the Lessor first had and obtained.
          (Part 8 of the Schedule said, “licensed hotel and associated activities” .)
          7.2 Yielding Up
              At the expiration or sooner determination of the term or any extension or renewal thereof yield and deliver up possession of the demised premises to the Lessor in such good condition and state of cleanliness as existed when the Lease commenced but excluding fair wear and tear structural variations which shall be the responsibility of the Lessor, acts of God war fire flood storm tempest earthquake riot explosion or aircraft damage and on the date of vacation surrender all keys of the leased premises to the Lessor and inform the Lessor of all combinations of locks safes and vaults (if any) remaining on the leased premises.
          7.3 Removal of Fixtures and Fittings
              (a) Unless there is prior agreement with the Lessor to the contrary, before the expiration or sooner determination of the term or any extension or renewal thereof the Lessee shall remove from the demised premises all fixtures and fittings equipment and furnishings which shall have been erected or installed by the Lessee or purchased by the Lessee from any previous tenant of the demised premises and make good to the reasonable satisfaction of the Lessor any damage whatsoever caused to the demised premises and or the building by such erection installation or removal.
              (b) should the Lessee fail to meet the conditions of Clause 8.03(a), the Lessor may remove the fixtures etc at the cost of the Lessee.
          9.1 Lessee not to Assign etc
              (a) The Lessee shall not assign this Lease without the prior consent in writing of the Lessor, such consent to be not arbitrarily or unreasonably refused or withheld PROVIDED THAT:
              (i) the proposed assignee is a respectable and financially responsible person with potential in conducting a business substantially similar to that of the Lessee; the onus of proving such things to the satisfaction of the Lessor shall be upon the Lessee;
              (ii) the Lessee pays to the Lessor a reasonable fee to cover costs, charges and expenses incurred by the Lessor and of incidental to any enquiries which may be made by or on behalf of the Lessor as to the respectability, responsibility, solvency, fitness and suitability of any proposed assignee and otherwise relating to the proposed assignment;
              (iii) all rent and other moneys due or payable as at the date of assignment shall have been paid by the Lessee and there shall not then be any existing unremedied breach of the terms, covenants, conditions and restrictions herein contained which has not been waived by the Lessor;
                  (iv) the proposed assignee, by deed, covenants with the Lessor to observe and perform the terms, covenants, conditions and restrictions as provided herein including the obligation to indemnify the Lessor and shall have appointed the Lessor as its attorney for the purposes described in Clause 21 hereof. Such deed to be prepared and stamped by the Lessor’s solicitors at the cost and expense of the Lessee and to be in such form as the Lessor’s solicitors may reasonably require;
              (v) the Lessee and the guarantors of the Lessee shall in no way be released from any obligations hereunder;
          11.3 Suitability of Premises
              The Lessor does not warrant that the demised premises are suitable for all or any of the purposes referred to in this Lease or for any other purpose and the Lessee shall take such steps and do all such acts, matters and things as may be necessary or desirable to enable the demised premises to be used for the purposes for which they are leased.
          12.5 Ownership of Fixtures and Fittings
              All fixtures fittings equipment and furnishings and other material or articles (except shop fronts and the doors fitments and plate glass thereof) brought onto the demised premises by the Lessee shall be deemed trade or tenants’ fixtures and subject to the Lessee’s rights of removal referred to clause 7.3. All fixtures fittings equipment and furnishings and other materials or articles installed by the Lessor in the demised premises at the Lessor’s cost shall remain the property of the Lessor and the Lessee shall not remove destroy alter or otherwise dispose of the same without the prior written consent of the Lessor or the Management Agent.
          14.1 The Lessee will not use the Hotel otherwise than as an hotel and will each year cause application to be made and do all other acts and things necessary to obtain all such licences as are or may be necessary for keeping open the Hotel as a hotel duly licensed and shall comply with all provisions of the Liquor Act 1982 and other Statutes relating thereto and will do nothing in or about the Hotel whereby the licence may be or may become liable to be suspended or forfeitured or the renewal thereof refused.
          14.10 The Lessee shall annually cause application to be made and use their best endeavours to obtain all such licences at their own expenses as are or may be necessary for keeping open the demised premises as a Hotel duly licensed for the sale and consumption therein of spirituous and fermented liquors by retail.
          14.11 The Lessee shall not do or suffer any act matter or thing in or about the said premises during the said term whereby the Licence may be or become liable to be suspended or forfeited or the renewal thereof refused.
          14.13 The Lessee will not make any application for removal of the Licence of the Hotel without the consent of the Lessor first had and obtained in writing.
          14.16 For the more effectual preservation of the Licence of the Hotel the Lessee and the Licensee hereby irrevocably appoint the Lessor the true and lawful Attorney of them to transfer or cause to be transferred the Hotelier’s Licence for the time being in connection with the demised premises to any person whomsoever and to apply for the renewal or removal of the Licence or any new Licence and to sign all notices transfers and documents for the purpose of such transfer renewal or removal or new Licence or Licences in the name of the Lessee or other person or persons in whose name the Licence or Licences for the time being shall stand and to appear before any Licencing Court or Magistrate and employ a Solicitor on behalf of the Lessee or other person or persons in whose name the Licence or Licences shall then be on any application for such transfer renewal or removal or new Licence to consent thereto or apply therefore and to receive all licenses and certificates and other documents and to give valid receipts for same AND to pay all fees
          14.19 The Lessee hereby covenants with the Lessor that they the Lessee will deliver to the Lessor a true copy of the Licence as renewed each year and copies of all declarations of liquor purchases as supplied to any authority during the term of this Lease within fourteen (14) days of same being so supplied.
          21. Transfer of Licences At End of Lease
              When the Lease ends for any reason, the Lessee must do everything necessary to transfer to the Lessor or its nominee any transferable licences or permits that are required to carry on the hotel business.

Overview of how GMA Operates, as Relevant to this Dispute

29 None of the poker machines located on the premises which are the subject of this litigation are poker machines for which a Liquor Act poker machine permit is held, nor or any of those poker machines ones which are hardship poker machines. In the account which follows I will not be focusing on the way in which the provisions of the GMA operate in relation to poker machines held pursuant to a Liquor Act poker machine permit, or hardship poker machines.

30 Upon the coming into effect of the GMA the power of the Board to impose a condition under section 161 Liquor Act 1982 came to an end. Pursuant to Clause 2 of Schedule 1, the condition in licence number 114664 whereby the licensee was permitted to have poker machines in the hotel changed its legal nature, so that it was taken to be an authorisation to keep gaming machines granted under section 56 GMA, and any conditions in the licence were taken to be ones imposed under section 56(6). It is because of the condition attached to the licence being transmuted into a deemed approval under section 56, in this way, that, after the commencement of the GMA Wonall committed no offence by continuing to keep on its premises the 10 poker machines which it had had immediately prior to the GMA coming into operation.

31 The GMA brought into existence a new species of legal entity, the “the poker machine entitlement”. The attributes of that new legal entity are those which arise from the GMA itself. The GMA does not say that poker machine entitlements “belong to” or “are the property of” anyone. Rather, the GMA takes the pre-existing the legal institution of a hotelier’s licence, and sets up a mechanism whereby any poker machine entitlement is at any time linked to a particular hotelier’s licence, or else has the status of being forfeited to the Board. While it is linked to a particular hotelier’s licence, it has consequences, for the hotelier and other people interested in that licence, which arise from the GMA. Further, an administrative procedure is laid down for the poker machine entitlement to cease to be linked to one hotelier’s licence, and either become linked to another hotelier’s licence, or be forfeited.

GMA Overview - Poker Machine Entitlements as a Constraint on the Board’s Powers

32 There are some respects in which the new legal entity of a “poker machine entitlement” operates as a constraint on the exercise of powers by the Board. All the decisions of the Board relating to approved gaming machines must be made within the confines that the overall State cap on the number of approved gaming machines, set out in section 10(1) GMA is maintained, and that the subdivision of that overall State cap between approved gaming machines in respect of hotels, and approved gaming machines in respect of registered clubs, set out in section 10(2) GMA is also maintained.

33 Also, while section 11 GMA provides that the maximum number of approved gaming machines that the Board may authorise to be kept in any one hotel is 30, an additional restriction on the number of approved poker machines that the Board may authorise to be kept in the hotel from time to time arises under section 56(4). It is that, save to the extent that a hotelier has Liquor Act poker machine permits, or has been granted permission to have hardship gaming machines kept in the hotel, and no poker machine entitlement has been allocated with respect to those machines, there must be a poker machine entitlement allocated in respect of the hotelier’s licence in respect of each poker machine which is on the premises.

GMA Overview - Allocation of Poker Machine Entitlements

34 A poker machine entitlement can become allocated for the time being in respect of a hotelier’s licence in five ways – either as a result of an initial allocation made by the Board, as a result of a subsequent allocation by the Board, as a result of an exchange, as the result of a transfer, or as the result of a hotel being approved to have a hardship poker machine.

35 Initial allocation of poker machine entitlements takes place under section 15. Section 15(1) imposed on the Board a statutory duty to allocate poker machine entitlements when section 15 commenced. Section 15(1) and (2) set out the manner in which the initial allocation is to occur. The initial allocation of poker machine entitlements is something which can occur only once in history.

36 After the initial allocation, the Board is empowered to make further allocation of poker machine entitlements under section 16(1). Any such further allocation would need to be made within the limits of the State cap.

37 If a transfer of a poker machine entitlement takes place pursuant to section 19 GMA section 19(4) results in there being a deemed allocation of the poker machine entitlement which has been transferred, that deemed allocation being in respect of the transferee’s hotelier’s licence.

38 The fourth way in which allocation of a poker machine entitlement can occur is pursuant to section 22, which enables a poker machine entitlement to be allocated in exchange for a number (the precise number depending on the location of the hotel) of authorisations to keep approved amusement devices.

39 The fifth way of allocating a poker machine entitlement is under section 31, which empowers the Board to allocate a poker machine entitlement in certain circumstances for a hardship gaming machine approved to be kept in the hotel.

GMA Overview - Allocation “in respect of” a Hotelier’s Licence

40 By whatever means a poker machine entitlement might be allocated concerning a hotel, GMA uses the language that it is allocated “in respect of” a hotelier’s licence. This is the express language of section 15(2)(a) (concerning initial allocations), of section 16(1) (concerning further allocations by the Board), section 19(4) (concerning the effect of a transfer of poker machine entitlements), and of section 22(1) (concerning exchange of authorisations to keep approved amusement devices for poker machine entitlements). While section 31 does not in terms say that a poker machine entitlement relating to a hardship gaming machine is allocated “in respect of” the hotelier’s licence, section 31(2) says that any poker machine entitlement allocated in that way may be transferred in accordance with Division 2 of Part 3 GMA (the provisions which run from section 15 to section 25A GMA). As those provisions concerning transfer permit transfer of poker machine allocations only when allocated in respect of a hotelier’s licence, it follows as a matter of necessary implication that any poker machine entitlement allocated under section 31 must also be allocated “in respect of” a hotelier’s licence.

41 When GMA says that the poker machine entitlements are to be allocated “in respect of the hotelier’s licence” the legislature said no more, it seems to me, than that there was to be a link or connection between the poker machine entitlement, and the hotelier’s licence. In Rogers v Wentworth (1986) 7 NSWLR 88 at 92 Young J (as his Honour then was) said:

          “The phrase “in respect of” was described as “colourless words” by Lord Greene MR in Cunard’s Trustees v Inland Revenue Commissioners [1946] 1 All ER 159 at 164 but in Trustees Executors and Agency Co Ltd v Reilly [1941] VLR 110 at 111, Mann CJ said:
              “… The words ‘in respect of’ are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer.”
          In applying this passage Wilcox J, in Frost v Collector of Customs (Qld) (1985) 63 ALR 297 at 308; 9 FCR 174 at 185, gives six other cases where Mann CJ’s words have been applied. The passage has at least twice been referred to with approval in the High Court; see State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 at 416 and McDowell v Baker (1979) 144 CLR 413 at 419.”

42 In Evans v Button (1988) 13 NSWLR 57 at 72 Mahoney JA (with whom Priestley and McHugh JJA agreed) said, “the words ‘in respect of’ have traditionally … been given a wide operation …”. In Attrill v Richmond River Shire Council (1995) 38 NSWLR 545 at 554 Kirby P (with whom Clarke and Powell JJA agreed) described “in relation to” as one of “the classic phrases of wide connection”.

43 However, while the words “in respect of” can have this width of meaning, it is not necessary that they have it. In Workers Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642 at 646-647 Wilson and Gaudron JJ said:

          “It has been said, perhaps somewhat extravagantly, that the words “in respect of” “have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which the words refer”: Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110, at p 111, cited in State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412, at p 416. The words were cited again by Gibbs J in McDowell (1979) 144 CLR at p 419, and by Mason J in State Government Insurance Office (Qld) v Rees (1979) 144 CLR 549 at p 561, when his Honour added the comment: “But, as with other words and expressions, the meaning to be ascribed to “in respect of” depends very much on the context in which it is found.

      In that same case, Deane, Dawson and Toohey JJ said, at 653-654:
          “Undoubtedly the words “in respect of” have a wide meaning, although it is going somewhat too far to say, as did Mann CJ in Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at p 111, that “they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer”. The phrase gathers meaning from the context in which it appears and it is that context which will determine the matters to which it extends.”

44 In the present case, one needs to look to provisions of the GMA besides section 15(2), 16(1), 19(4) and 22(1) to decide just what is the nature of the link or connection between the poker machine entitlement and the hotelier’s licence, which consists in the poker machine entitlement being allocated “in respect of” the hotelier’s licence.

45 The nature of the connection between the hotelier’s licence and the poker machine entitlement includes the way in which (explained at paragraph 33 above) the total number of approved gaming machines that the Board may authorise to be kept in a hotel from time to time depends, in part, on the number of poker machine entitlements which are allocated for the time being in respect of the hotelier’s licence.

46 As well, section 16(2) entitles the hotelier who holds the hotelier’s licence to receive from the Board from time to time a certificate which states the number of poker machine entitlements allocated from time to time in respect of the hotelier’s licence, and the corresponding number of approved poker machines authorised under Part 5 to be kept in the hotel. As section 16(4) makes clear, this certificate of itself confers no entitlement to anything.

47 The third type of connection which the GMA creates between a poker machine entitlement and a hotelier’s licence is the regime for transfer of poker machine entitlements arising under sections 19, 20, 21 and 23 GMA. The relationship which section 19 establishes between the poker machine entitlement, and the hotelier’s licence in respect of which it is allocated does not include any requirement about who must be, or is entitled to be, the applicant for such a transfer. At present, the regulations made under the GMA do not make any requirements of this type concerning transfers, which would attract section 19(2)(b). Nor is there any evidence of the Board having determined any particular form or manner for transfer of a poker machine entitlement, in a way which attracts section 19(3)(d). However, an application for transfer is one which the Board must reject unless the application satisfies the requirement in section 19(3)(c) that it “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”

Effect of the Lease

48 The plaintiffs contend that the lease was one of the premises alone, that the plaintiff has at all relevant times owned the business of the hotel, that provisions about what is required to be yielded up at the end of the term of the lease relate only to corporeal things, not incorporeal things, and that, while there was an obligation under Clause 21 to transfer back the hotelier’s licence at the end of the lease, there was no obligation under the lease to transfer back any poker machine entitlements. The defendant contends that Clause 21 of the lease should be construed bearing in mind that when the lease was entered, poker machine entitlements did not exist. The defendant submits that, at the time the lease was entered, the right to keep and use poker machines on the hotel premises arose by reason of a condition on the licence and, if the GMA had not been introduced, the effect of the obligation contained in the lease to return the hotelier’s licence at the end of the lease would have been to require the hotelier’s licence to be returned subject to the conditions which permitted the licensee to keep and use poker machines. The defendant submits that clause 21 should be construed in a way which achieves, as nearly as can be now that poker machine entitlements have been introduced, the same result as the parties are likely to have had in mind when the lease was entered concerning who would in effect be entitled to the benefit of a right to keep poker machines in a hotel at the end of the lease. So construed, it requires the lessee to transfer back the poker machine entitlements at the end of the lease. And, if the lessee is required to transfer back those poker machine entitlements at the end of the lease, an implied term in the lease will prevent the lessee from making performance of that obligation impossible – as would be the case if the lessee were to transfer the poker machine entitlements to someone else before the end of the lease.

49 I have some doubt about whether a poker machine entitlement counts as a “transferable licence or permit” within the meaning of Clause 21 of the lease. A poker machine entitlement is transferable, but it is not clear to me that it is a “licence or permit”. A “licence” in its ordinary meaning, is an authorisation to do something which would otherwise be unlawful. A poker machine entitlement does not, of itself, permit a hotelier to keep poker machines – it is the authorisation under section 56 which has that effect. However under section 56(4) the existence of a poker machine entitlement is a necessary precondition for the granting of that authorisation, at least in relation to poker machines which are not ones for which a Liquor Act poker machine permit is held, and are not hardship gaming machines. However, even if I were to assume, without deciding that a poker machine entitlement counts as a “transferable licence or permit” within the meaning of Clause 21 of the lease, that would not be sufficient to reach the conclusion that, at the end of the lease the lessee would be required to transfer some particular number of poker machine entitlements to the lessor. Making the assumption that a poker machine entitlement counts as a “transferable licence or permit”, Clause 21 of the lease has the effect that, at the end of the lease, the lessee must do everything necessary to transfer to the lessor any poker machine entitlements that are required to carry on the hotel business in the form it took within the time shortly before the termination of the lease. There is no requirement under the lease for the lessee to operate the hotel with any particular number of poker machines, or indeed with any poker machines at all. While Clause 5.1 together with Part 8 of the Schedule positively requires the lessee to use the hotel premises for the purpose of “licensed hotel and associated activities”, and both parties would have known that at the time of commencement of the lease there were some poker machines on the premises, the clause does not require the lessee to continue to engage in all of those activities associated with operating the premises as a licensed hotel which were engaged in at the commencement of the lease.

50 Another argument of the lessor is that, even if the poker machine entitlement is not properly described as a licence or permit, it should be regarded as an adjunct of the hotelier’s licence, because of being issued “in respect of” the hotelier’s licence. The clear contractual entitlement of the lessor to receive a transfer back of the hotelier’s licence carries along with it an entitlement to receive the poker machine entitlements.

51 I would be prepared to accept that Clause 21 requires the transfer back at the end of the lease of any poker machine entitlements which might at that time be allocated in respect of the hotelier’s licence – but neither the terms of section 21, nor any implication, goes so far as to prevent the lessee from transferring poker machine entitlements prior to the end of the term. I conclude that the lease does not require the lessor to transfer the poker machine entitlements at the end of the lease. Hence there is no scope for the operation of an implied term in the lease, that the lessee would not disentitle itself from being able to perform an obligation to transfer back the poker machine entitlements at the end of the lease.

52 Neither, however, do I find in the lease any positive right which enables the lessee to sell the poker machine entitlements during the term of the lease. The plaintiffs submit that under the lease all they are required to give back at the end of the lease is the premises – the poker machines now on the premises are theirs, and they are entitled to take them away at the end of the lease. They say that, in those circumstances, it is inconsistent with the scheme of the lease for them not to also be able to take away the poker machine entitlements. In my view, the lease is simply silent on the topic, and no implication can be made in it that the lessee is entitled to deal in any particular way with poker machine entitlements. Whether any of the declarations which the plaintiffs seek should be made therefore depends on the statutory provisions in GMA which I have already outlined.

Schedule 1 Clause 8

53 Both parties agree that Schedule 1 Clause 8 of GMA has no bearing upon the present application. The defendant in this case is not a “hotel owner” within the meaning of Schedule 1 Clause 8, because the defendant does not own the business conducted under the authority of the hotelier’s licence – rather, that business belongs to Wonall. Further, because the definition of “lessee” in Clause 8 of Schedule 1 requires the lessee to be a person who is party to a lease “with the hotel owner”, Wonall is not a lessee within the meaning of Clause 8 of Schedule 1. There are some difficulties of construction in matching the language of Schedule 1 Clause 8 with the rest of the language of the GMA, but in the circumstances where both parties agree that the clause will not affect the outcome I say nothing further about those difficulties of construction.

Application of the GMA to this Case

54 I turn, then, to the specific relief which the plaintiffs seek. I would accept that either Wonall, or Mr Durning, is entitled to make an application for the transfer of poker machine entitlements issued in respect of licence number 114664. However, any such application for transfer is, pursuant to section 19(2)(a) ineffective until approved by the Board. A precondition of the Board granting that approval is, under section 19(3)(c) that the application should “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.” The expressions “to the satisfaction of the Board”, and “in the opinion of the Board”, show that this prerequisite to the Board’s approval is one which is dependent upon the state of mind of the Board, in two separate ways – its opinion about who has a financial interest in the hotelier’s licence, and its satisfaction about whether each such person has supported the transfer of the poker machine entitlements. Of course, if the Board is to exercise its discretions in accordance with the law, those states of mind must be ones which the Board arrives at within the boundaries which administrative law imposes on administrative decision makers. The point, for present purposes, is that, within those boundaries, it is to the Board that the Parliament has entrusted the decision making process, both of deciding who has a financial interest in the hotelier’s licence, and whether it is satisfied that each such person supports the application for a transfer.

55 As a matter of construction, a person would “support” an application for a transfer if that person not only knew about the application for the transfer, but also took the view that the application for a transfer should succeed.

56 Section 19(5) and (6) impose some legal limits within which the Board must operate in deciding whether a person has a financial interest in the hotelier’s licence. Section 19(5) would have the effect of requiring the Board to come to the view that a person had a financial interest in a hotelier’s licence if that person was 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). However, section 19(5) does not purport to state exhaustively the circumstances in which the Board must conclude that a person has a financial interest in a hotelier’s licence.

57 Section 19(6) imposes another legal limit within which the Board must form its opinion about whether a person has a financial interest in the hotelier’s licence – if the only relevant fact about a person is that he or she is the owner of the hotel (which, given the definition of “hotel” in GMA, means “the premises to which a hotelier’s licence relates”) then the Board cannot reach the conclusion that that person has a financial interest in the hotelier’s licence. However, if a person is the owner of a hotel, and as well had some other connection with the hotel licence, it might in some circumstances be appropriate for the Board to decide that that person had a financial interest in the hotelier’s licence. In the present case, the defendant points to various connections that the lessor has with the hotelier’s licence, beyond owning the premises – the lessor has the benefit of the covenant in Clause 14.1 of the lease, the benefit of the covenant in Clause 14.10 of the lease, the benefit of the covenant in Clause 14.13 of the lease, a right under Clause 14.15 of the lease to terminate the lease early if the hotelier’s licence is (in broad terms) cancelled or subject to certain identified risks of cancellation or forfeiture, the power of attorney enabling transfer of the licence in certain circumstances under Clause 14.16, and the right to receive the licence back at the end of the term under Clause 21. Within the statutory framework, is a matter for the Board, not for this Court, to decide whether these matters, or any others which the lessor might point to, enable the Board to form an opinion that the lessor has a financial interest in the hotelier’s licence. While this Court has a supervisory jurisdiction over decisions of the Board, that supervisory jurisdiction is exercised in relation to decisions which the Board has actually made, and examines whether those decisions are made within permissible legal limits, or occasions when the Board has been asked to make a decision and it has wrongly declined to do so.

58 In these circumstances, it is not appropriate for this Court, at a time when the Board has not had the opportunity to consider the matter, to make a declaration that the Defendant has no financial interest in hotelier’s licence serial number 114664 for the purposes of section 19(3)(c) of the GMA.

59 When the question of whether the Board will approve any particular transfer is one which depends upon matters involving the Board’s subjective opinion, on questions which have not yet been presented to the Board, it is not appropriate, at this stage, to make the declaration that the first or second plaintiff is entitled to transfer the 10 poker machine entitlements subject to section 19 of the Act.

60 A further reason why it is not appropriate to make that declaration is that a declaration in that form has no utility because it does not deal with the matters which are really in contention between the plaintiffs and the defendant. One essential matter which is in contention between the plaintiff and the defendant, concerns exactly what the requirements of section 19 of the Act are, in the present factual circumstances. That dispute would not be resolved by making a declaration in the form which has been asked.

61 A further problem with the precise form of declaration asked for is that it is not accurate to say that the certificate relating to the 10 poker machine entitlements was “issued by the Liquor Administration Board TO Maggie Moore’s Pub & Bistro”. The form of the certificate (set out in paragraph 23 above) does not say that it is issued to anyone. This point is one which could be cured by changing the drafting of the order sought, if it were otherwise appropriate to make the declaration.

62 The final relief which the plaintiffs seek is an order that the defendant support any application for transfer pursuant to section 19 of the Gaming Machines Act 2001 made by the first or second plaintiff of the 10 poker machine entitlements issued by the Liquor Administration Board in respect of Maggie Moores Pub & Bistro in or about 2002. The defendant has made clear that it proposes to not support any application for transfer which the first or second plaintiff makes.

63 The basis on which the plaintiffs sought that order was that the lessor had an entitlement under the lease only to receive back the hotelier’s licence, and in consequence there was an implied term in the lease preventing the lessor from frustrating that aspect of the contract contained in the lease.

64 I do not construe the lease as conferring a positive contractual right on the lessee to transfer back to the lessor at the end of the lease nothing but the licence. The only obligation of the lessee at the end of the lease is to transfer back the licence, but that is not to say that the lessee has a positive contractual right to keep all things connected with the operation of the hotel which are not positively required to be transferred back. When that is the correct construction of the lease, there is no basis for the order which the plaintiffs seek.


      1. Summons dismissed.

      2. Plaintiffs to pay costs of defendant.
      **********

Last Modified: 12/16/2003

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Cases Citing This Decision

29

New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338
New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338
New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338
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