JABETIN PTY LTD v LIQUOR ADMINISTRATON BOARD & ORS; JABETIN PTY LTD v BENWINE PTY LTD

Gaming Machines Act 2001 LEGISLATION CITED: Liquor Act 1982

Ex parte Berry; Re Kessell (1936) 36 SR(NSW) 485 Bruce v Cole (1998) 45 NSWLR 163 Buck v Bavone (1976) CLR 110 Butts v O'Dwyer (1952) 87 CLR 267 Calverley v Green (1984) 155 CLR 242 Esso Australia Resources Ltd v Commissioner of Taxation (1998) 84 FCR 541 Halwood Corporation Ltd v Chief Commissioner of Stamp Duties (1994) 33 NSWLR 395 In re Vandervell's Trusts (No 2) [1974] Ch 296 Inglis v Federal Commissioner of Taxation (1979) 40 FLR 191 CASES CITED: McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 Miller v Commissioner of Police [2004] NSWCA 356 Napier v Public Trustee (WA) (1980) 32 ALR 153 Queen v Toohey: Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 Sims and Singleton as Liquidators of Enron Australia Pty Ltd v TXU Electricity Ltd & Anor [2005] NSWCA 12 Slatter v Railway Commissioners (NSW) (1931) 45 CLR 68 Tanwer Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853 Tooheys Limited v Housing Commission of New South Wales (1953) 53 SR 407 Wonall Pty Ltd v Clarins Property Corporation Ltd (2003) 58 NSWLR 23

JABETIN PTY LTD; PARTIES: LIQUOR ADMINISTRATION BOARD & ORS; BENWINE PTY LTD

Appellant: J M Ireland QC/ N R Murray Respondent: D F Jackson QC/ A Hatzis (Benwine) COUNSEL: Liquor Administration Board: Submitting

Appellant: Tranter Lawyers 1st Respondent: Deutsch Partners (Benwine) SOLICITORS: 3rd & 4th Respondent: Lundy Lawyers Liquor Administration Board: Crown Solicitor

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 5487/04; SC 1592/04

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40971/2004 CA 40972/2004

MASON P SHELLER JA HODGSON JA

JABETIN PTY LIMITED v LIQUOR ADMINISTRATION BOARD JABETIN PTY LIMITED v BENWINE PTY LIMITED JUDGMENT

1 MASON P: Related proceedings have spawned related appeals. At issue are the entitlements as between lessor and lessee/licensee of hotel premises with respect to valuable "poker machine entitlements" allocated in respect of the hotelier's licence.

Current licensing arrangements at Prince of Wales Hotel, Muswellbrook 2 Jabetin Pty Limited (Jabetin) is the registered proprietor of land at Muswellbrook on which stands the Prince of Wales Hotel (the Hotel). The lessee and holder of the hotelier's licence is Benwine Pty Limited (Benwine). 3 The current Lease, which expires on 27 September 2005, contains usual covenants for a hotel. These include covenants restraining the lessee from using the premises other than as a hotel (or similar use), requiring the lessee to keep the hotelier's licence current and in good standing, and appointing the lessor as the lessee's attorney for the purpose of applying to transfer the licence to the lessor or its nominee and/or applying for a new licence at the end of the tenancy. 4 These covenants recognise that the hotelier's licence is held by the lessee, Benwine, with the statutory incidents provided in the Liquor Act 1982. The covenants nevertheless recognise and protect the interests of the owner Jabetin. To adopt the words of Gavan Duffy CJ, Starke and Dixon JJ in Slatter v Railway Commissioners (NSW) (1931) 45 CLR 68 at 78, 79: These stipulations appear … to be intended to preserve the licence in the interests of the landlord, so that at the end of the term the premises would enjoy the advantage of being licensed …. The tenant remains entitled to exercise the licence for [its] own benefit so long as [it] is entitled to occupy the premises. But the licence is exercisable by its terms only in the premises which the tenant holds of the landlord and when [it] ceases to occupy the premises [it] can no longer exercise the licence. The contractual rights given to the landlord to ensure that the licence is not destroyed or removed to other premises, but is kept on foot and transferred to a person chosen by the landlord, do no more than safeguard the interests of the owner which [various sections of the Liquor Act] recognise.

5 One such section is s42 that reinforces the contractual position of a lessor by deeming it to be the licensee immediately upon the dispossession of a licensee. 6 The covenants undoubtedly enhance the value of the owner's reversionary interest (see generally Tooheys Limited v Housing Commission of New South Wales (1953) 53 SR 407 at 410-11). But they do not confer on the owner a beneficial interest in the licence (Slatter at 79). 7 Between August 1998 and April 2001 Benwine installed a total of 15 poker machines. In this period, its right to do so was regulated through the Liquor Act and a statutory condition of the hotelier's licence (see generally Wonall Pty Ltd v Clarins Property Corporation Ltd (2003) 58 NSWLR 23 at 26[9]-[16]).

Creation of market for poker machine entitlements 8 On 19 April 2001 there was a legislative "freeze" in the number and location of poker machines in hotels (Wonall at 27[17]). The freeze paved the way for the smooth introduction of the Gaming Machines Act 2001 (GMA) which relevantly commenced on 2 April 2002. 9 The GMA abolished the previous automatic entitlement of hotels to install gaming machines. Current numbers were frozen with the intent that the only way that hotels would generally be able acquire additional machines in the future would be to purchase the right to keep those machines from other premises. A transferable entitlement scheme was established. It was summarised in the second reading speech as follows (Wonall at 29[18]).

…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.

10 The GMA repealed the provisions of the Liquor Act that dealt with "approved poker machines" and the authority to keep them. It established an "overall State cap" (s10). The maximum number of approved gaming machines capable of being authorised to be kept in any one hotel was limited to 30 (s11). 11 Key provisions of the GMA that bear on the issues in these appeals were identified in Wonall at [19] as follows:

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.

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 [This key provision is set out below] 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 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."

12 Schedule 1 of the GMA contains savings and transitional provisions. Clause 2(2) states that an existing gaming machine approval or authorisation is, subject to the Act and Regulations, taken to be an approval or authorisation in force under the GMA. 13 Pursuant to s15(2), 15 poker machine entitlements were allocated by the Board in respect of the hotelier's licence at the Hotel. Thereafter, the keeping of 15 poker machines at the Hotel was no longer authorised by licence condition, but by statute (see Wonall at 42[30] and GMA, esp s56). 14 In Wonall, Campbell J helpfully summarised the continuing effect of the provisions in the GMA relating to poker machine entitlements. He said (at 42ff): 31 The Gaming Machines Act 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 Gaming Machines Act itself. The Gaming Machines Act does not say that poker machine entitlements "belong to" or "are the property of " anyone. Rather, the Gaming Machines Act takes the preexisting … 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 Gaming Machines Act . 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. Gaming Machines Act 2001 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 s 10(1) of the Gaming Machines Act 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 s 10(2) of the Gaming Machines Act is also maintained. 33 Also, while s 11 of the Gaming Machines Act 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 s 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. Gaming Machines Act 2001 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 s 15. Section 15(1) imposed on the Board a statutory duty to allocate poker machine entitlements when s 15 commenced. Section 15(1) and s 15(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 s 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 s 19 of the Gaming Machines Act , s19(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 s 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 s 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. Gaming Machines Act 2001 overview - allocation "in respect of" a hotelier's licence 40 By whatever means a poker machine entitlement might be allocated concerning a hotel, the Gaming Machines Act uses the language that it is allocated "in respect of " a hotelier's licence. This is the express language of s15(2)(a) (concerning initial allocations), of s16(1) (concerning further allocations by the Board), of s19(4) (concerning the effect of a transfer of poker machine entitlements), and of s22(1) (concerning exchange of authorizations to keep approved amusement devices for poker machine entitlements). While s31 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, s31(2) says that any poker machine entitlement allocated in that way may be transferred in accordance with Div 2 of Pt 3 of the Gaming Machines Act (the provisions which run from s15 to s25A of the Gaming Machines Act ). 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 s 31 must also be allocated "in respect of " a hotelier's licence. 41 When the Gaming Machines Act 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. …

44 In the present case, one needs to look to provisions of the Gaming Machines Act 2001 besides ss15(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 … [33] supra) 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, s 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 Pt 5 to be kept in the hotel. As s 16(4) makes clear, this certificate of itself confers no entitlement to anything. 47 The third type of connection which the Gaming Machines Act creates between a poker machine entitlement and a hotelier's licence is the regime for transfer of poker machine entitlements arising under ss19, 20, 21 and 23 of the Gaming Machines Act . The relationship which s 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 Gaming Machines Act do not make any requirements of this type concerning transfers, which would attract s19(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 s19(3)(d). However, an application for transfer is one which the Board must reject unless the application satisfies the requirement in s19(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".

Proceedings below 15 On 17 October 2003 Benwine sought the approval of the Liquor Administration Board (the Board), pursuant to s19(3) of the GMA, for the transfer of a block of three poker machine entitlements. Because of s20(3) only two of the three entitlements in the transfer block would actually pass. Benwine had contracted to sell those entitlements to the owner of the Hamilton Station Hotel, Islington. The proposed transferee was the licensee of that hotel. 16 Jabetin contended that it had a financial interest in the hotelier's licence of the Prince of Wales Hotel with the consequence that the transfer could not be approved without its support (cf s19(3)(c)). Benwine contended to the contrary. The parties exchanged detailed written submissions before the Board. 17 On 23 June 2004 the Board indicated its satisfaction that Jabetin did not have the requisite financial interest and that, accordingly, Benwine did not need Jabetin's support to the present application. The Board approved Benwine's application on 2 July 2004, publishing a six page statement of its reasons. 18 On 6 July 2004 Jabetin commenced proceedings by summons in the Supreme Court. These proceedings (hereafter referred to as the proceedings for judicial review) joined the Board as first defendant, Benwine as second defendant, the owner of the transferee hotel as third defendant and the transferee licensee as fourth defendant. Jabetin sought declaratory relief and an order in the nature of certiorari, contending that the Board erred in law in its decision that the plaintiff did not have a financial interest in the hotelier's licence attaching to the Prince of Wales Hotel, Muswellbrook. 19 Benwine commenced proceedings in the Equity Division against Jabetin at about the same time. It pleaded that it had acquired and installed the 15 poker machines pursuant to applications made by it to the Board. It also pleaded the legislative history concerning the "freeze" and the enactment of the GMA which resulted in the allocation of 15 poker machine entitlements in respect of the licence. These matters were not put in issue. 20 The defendant did however dispute the plaintiff's pleaded allegations that the defendant had made no contribution and provided no assistance in respect of the acquisition, installation or operation of the machines. 21 Some of the issues raised in the Equity proceedings overlapped with those in the proceedings for judicial review. What were distinctive were issues that Benwine raised in the Equity proceedings as to its claimed entitlement to retain any poker machine entitlements that had not been transferred away as at the end of the lease. Benwine's pleading invoked the legal concepts of an implied obligation to act reasonably and in good faith, constructive trust, resulting trust, unconscionability and unjust enrichment. 22 The two proceedings were heard concurrently by Gzell J. He dismissed Jabetin's application for judicial review and he made the declarations in favour of Benwine set out below.

Issues in the appeals 23 The active participants in the two appeals were Benwine as appellant and Jabetin as respondent. 24 Jabetin submitted that Gzell J should have found that the Board committed jurisdictional and/or legal error on the face of its reasons in its approach to the construction of s19(3) of the GMA and its decision to approve the transfer of the block of three poker machine entitlements. Secondly, Jabetin submitted that there was no basis for Gzell J to conclude that untransferred poker machine entitlements at the end of the lease were to be held on trust for the former lessee. It was submitted that these entitlements would continue to be regarded as an incident of the hotelier's licence and would thus pass in favour of the incoming licensee nominated by the owner.

First appeal: Was the Board's approval vitiated by error of law in the application of s19(3)(c)? 25 Section 19 of the GMA Act provides: (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. 26 The debate was at times bedevilled by false issues. 27 There was for a time a passage of arms as to whether Jabetin had made a concession as to the proper interpretation of s19 in its submissions before the Board such that it was unjust for it to contend otherwise in the Supreme Court. Gzell J permitted Jabetin to withdraw what his Honour found to have been a concession made before the Board. I strongly doubt that there was any such concession, but I certainly agree that the search for the proper construction of the section ought not to be hampered by this procedural diversion. I do not understand either party to contend otherwise in this Court. 28 There was also some passing debate as to the juridical basis for review of the Board decision to approve the transfer. But at the end of the day I do not think anything turns upon this. The Board's reasoned determination of 23 June 2004 is amenable to judicial review for error of law on the face of the record (cf Supreme Court Act, s69(3)). Naturally, any such error needs to be dispositive before a decision of this nature could be set aside in proceedings for judicial review. 29 A sizeable portion of the Board's reasons deals with "Background". Reference is made to the covenants in the lease, Benwine's acquisition of the fifteen poker machines for which it sought and obtained authority from the Board to keep, use and operate. This translated into fifteen poker machine entitlements being allocated to the hotel upon the commencement of the GMA. 30 I would reject Jabetin's submission that mention of these matters was indicative of legal error or the taking into account of legally extraneous considerations. No suggestion of irrelevance had been raised in Jabetin's written submissions to the Board. The matters were indeed pertinent to understand the relationship between the three poker machine entitlements sought to be transferred and the licensed premises. 31 The Board's statement of reasons correctly set out the issue for determination and the legislative framework, being s19 of the GMA. (It was common ground that the savings provision in cl 8 of Schedule 1 was not determinative of the present issue: see also Wonall at 47[53].) The reasons then refer to the relevant terms of the lease. It was observed that: The lease contains no express reference to poker machine entitlements or to any entitlement, concession or authority dealing with the right to keep, use and operate poker machines. The rent payable under the lease is a set amount per annum and does not fluctuate by reference to the quantity of liquor sold at the hotel, gaming turnover or performance of Benwine's business.

32 Contrary to Jabetin's submission in this Court, I see no error in adverting to these considerations. They explain why the Lease does not confer on the lessor any of the entitlements, benefits or advantages referred to in s19(5). 33 The reasons discuss various sections of the GMA, observing that the Act is relevantly silent as to the ownership of poker machine entitlements (see also Wonall at [47], set out above). 34 The dispositive portion of the Board's reasons was as follows: Section 19(5) Definition The parties agree that s 19(5) provides an exhaustive definition of when a person will have a financial interest in a hotel licence. Jabetin submits that the carrying on of the business by Benwine has the effect of increasing goodwill or the value of the premises and hence this results in Jabetin receiving a "financial benefit" or "financial advantage" within the meaning of s19(5). Benwine says that whilst it could be argued that commercially the carrying on of business increases goodwill and the value of the premises and this results in Jabetin receiving a "financial benefit" or "financial advantage" this does not bring s 19(5) into operation. It argues that the section looks to Jabetin"s "entitlement" to receive a financial benefit or advantage and any present or future accretion or goodwill or the value of the premises from the carrying on of the business cannot be said to be a benefit or advantage to which Jabetin is "entitled". I accept the submission of Benwine that Jabetin is not entitled to receive any financial benefit or financial advantage from the carrying on of the business on account of any accretion to goodwill or the value of the premises. Insofar as the submission seek to establish such an interest by reliance upon s28(4) of the Liquor Act 1982 it should be noted that both that Act and the Gaming machines act 2001 provide a number of definitions which have some common elements to those contained in s19(5). See the definitions of "relevant financial interest" in s4A of the Liquor Act 1982 and s5(3) of the Gaming Machines act 2001. But each of those definitions, along with s38(4) of the Liquor Act exist for different purposes to s19(5). If Parliament had intended the test for the purpose of s19(5) to be that submitted by Jabetin it could have simply adopted the definition of "relevant financial interest" in the same Act. The fact that the substance of only one of the three paragraphs of the definition was adopted clearly conveys that a more restricted range of interests was intended. I am at a loss to understand paragraph 2.4 of Jabetin's submission given the fact that it expressly concedes that s19(5) provides an exhaustive definition of what constitutes a financial interest in the licence. I have referred to Wonall Pty Ltd v Clarence Property Corp Ltd 38 NSWLR 23 and particularly his Honour's statement at p47 when he said: "Neither, however, do I find in the lease any positive right which enables the lessee to sell the poker machine entitlements during the terms 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 in 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 the Gaming Machines Act which I have already outlined." I am of a similar view in this case that the entitlement to transfer the poker machine entitlements is to be solely determined by the provisions of the Gaming Machines Act 2001. I am satisfied that Jabetin does not have the requisite financial interest and accordingly Benwine does not need its support to the present application. In support of that conclusion it is relevant to examine what would be the position if after 2 April 2002 Benwine had at its cost transferred poker machine entitlements to another hotel. If Jabetin's submissions are to be accepted it would prevent such a course of action. I do not accept that is the intention of the legislation. 35 Gzell J rejected the submission that the Board had misdirected itself by confusing interests in poker machine entitlements with interests in the hoteliers licence. I am content to adopt his reasons (at [25] - [32]) in rejecting the similar submission re-agitated in this Court. 36 The principal matter addressed in the judicial review proceedings, both in the Equity Division and in this Court, concerned the relationship between s19(5) and s19(3)(c) of the GMA. The label attached to the dispute on this matter was whether the definition in subs(5) is "exhaustive". 37 Both sides accept that s19(3)(c) makes the Board arbiter of the question whether the proposed transfer is supported "by each person who, in the opinion of the Board, has a financial interest in the hoteliers licence". The language of par (c) is a commonly used drafting device to ensure that judicial review is restricted. (see generally Bruce v Cole (1998) 45 NSWLR 163 at 184). The Board's opinion is nevertheless examinable according to the principles stated by Gibbs J in Buck v Bavone (1976) CLR 110 at 118-9: It is not uncommon for statutes to provide that a board or other authority shall or may take certain action if it is satisfied of the existence of certain matters specified in the statute. Whether the decision of the authority under such a statute can be effectively reviewed by the courts will often largely depend on the nature of the matters of which the authority is required to be satisfied. In all such cases the authority must act in good faith; it cannot act merely arbitrarily or capriciously. Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider matters that it was required to consider or has taken irrelevant matters into account. Even if none of these things can be established, the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. However, where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways, or that its decision could not reasonably have been reached. In such cases the authority will be left with a very wide discretion which cannot be effectively reviewed by the courts. 38 As Campbell J put it in Wonall at 48 [54]:

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. 39 Subsections (5) and (6) provide legislative guidance of a positive (subs (5)) and negative (subs(6)) nature, without removing the necessity that the Board form an opinion that a person has a financial interest in the hotelier's licence before being required to satisfy itself that the proposed transfer is supported by that person. The labels "exhaustive" and "non-exhaustive" with reference to subs(5) do not fit neatly into this analysis, if only because both subsections inform the scope of s19(3)(c).

40 Jabetin submits that the Board erred in law in treating subs (5) as exhaustive or a code for the purpose of s19(3)(c). It argues that the phrase "a person is taken to have a financial interest ….if " does not mean "if and only if". Something may be "taken to have" a particular meaning by way of extension in particular circumstances (cf "includes") without those circumstances being the exclusive criteria. 41 I do not doubt the last proposition. But words must be construed in context. In my view Parliament made itself tolerably and sufficiently clear that, subject to subs(6), subs(5) spells out exhaustively the criteria to be taken into account by the Board when forming its opinion whether or not a person has a financial interest in a particular hotelier's licence. 42 No party contends that subss(5) and (6) are free-standing in the sense that they provide objective criteria that do not have to be refracted through the opinion of the Board. This approach is clearly correct, having regard to the opening words of subs(5). 43 Subsection 6 was inserted later (by Act No 18 of 2002). Its opening word ("However") proclaims that it is to be read as a proviso or qualification to the subsection that precedes it. This alone is a pointer to an "exhaustive" reading of subs(5). 44 It is also relevant, in my view, that subs(5) addresses in detail a range of events or situations whereby a person may be taken to have a financial interest. The appellant was hard pressed to suggest any type of interest in a hotelier's licence lying outside the matters addressed. 45 In my opinion, the situation engages the interpretation principles recently expounded by Spigelman CJ in Sims and Singleton as Liquidators of Enron Australia Pty Ltd v TXU Electricity Ltd & Anor [2005] NSWCA 12 where he said of s568(1B) of the Corporations Act 2001 (at [27]): The position is similar to that which arises where two statutory powers apply in a particular situation, but one is subject to qualifications or restrictions to which the other is not expressly subject. Parliament intends that the qualification or restriction should be of practical significance and, accordingly, the general words of the unconfined power are read down. (See eg Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia (1932) 47 CLR 1 at 7; R v Wallis; Ex parte Employers Association of Wool Selling Brokers & HV Mckay Massey Harris Pty Ltd (1949) 78 CLR 529 at 550; Nintendo Co Ltd v Centronics Systems Pty Ltd (No 2) (1994) 181 CLR 13 at 160; and other authorities set out in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 at 676[67]-[73].)

46 The position becomes even clearer when Jabetin's attempt to walk around subs(5) is examined in greater detail. The essential argument was that Jabetin has a relevant financial interest in the licence because the Lease confers on it the capacity to take control of the licence at the end of the lease term. Yet this ignores the whole thrust of the definitional provision (subs(5)) that speaks of present entitlement ("is entitled") to income derived from the business and of financial benefit or financial advantage from the carrying on of the business. These events refer to the present time, yet they are definitely not the source of the financial interest asserted by Jabetin in these proceedings. Quite the contrary. 47 Jabetin strove to find essential work for s19(3)(c) standing free of subs(5). It posited the situation of a contract to sell a "dormant" licence at a time when there is no business actively being carried on under it, eg after a fire. (I understand "dormant licence" to be a non-statutory concept referring to a continuing but inactive licence that has not been suspended or cancelled, but that relates to a temporally non-existent hotel and/or business.) The argument was that it would be unreasonable if s19(3)(c) was incapable of applying merely because no business was being carried on at the time. 48 The situation of a temporarily interrupted business is an unusual one and it is in my view drawing a long bow to submit that the interpretation of s19 should be driven beyond its natural reading to accommodate it. In any event, it simply does not follow that no business is being "carried on" during such "dormancy" of the licence (cf Inglis v Federal Commissioner of Taxation (1979) 40 FLR 191, Esso Australia Resources Ltd v Commissioner of Taxation (1998) 84 FCR 541). Furthermore, the hypothetical purchaser would be in a position to protect its interests by alternative means (cf Butts v O'Dwyer (1952) 87 CLR 267, McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656). 49 Accordingly, there was no error of law in the Board's decision. 50 Benwine conceded that the Board's decision miscarried if subs(5) was not exhaustive in the sense discussed. Whether this concession would get Jabetin home is however doubtful. In my opinion, Jabetin would still need to show that the error of law vitiated the decision under challenge in a manner attracting the remedy sought in this Court (Miller v Commissioner of Police [2004] NSWCA 356 at [26]). There was in my view simply no material before the Board capable of generating an opinion of the Board that Jabetin had a financial interest in the Hotelier's licence. Perhaps another way of making the same point is that the present facts fell within s19(6) because the only relevant connexion that Jabetin has with the licence is its position as owner of the Hotel subject to a Lease with standard covenants. 51 I would therefore dismiss with costs Jabetin's appeal from the order made in the proceedings for judicial review.

Second appeal: Entitlements remaining at end of lease 52 At the expiry of the lease, by effluxion of time, forfeiture or otherwise, Benwine is required to cooperate in the transfer of the Hotelier's licence to the owner's nominee. Indeed, Jabetin's position is reinforced by s42 of the Liquor Act, already referred to. Not all poker machine entitlements may have been disposed of by this time, for a variety of reasons (cf ss19-21 of the GMA). 53 Gzell J held (at [60]-[67]) that a poker machine entitlement is in the nature of property capable of being the subject matter of a trust. He cited the general statement about the nature of property in the Queen v Toohey: Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 342. He drew the analogy of "transferable floor space" (Halwood Corporation Ltd v Chief Commissioner of Stamp Duties (1994) 33 NSWLR 395) and of a hotelier's licence itself (Ex parte Berry; Re Kessell (1936) 36 SR(NSW) 485 at 488, 492). I do not understand this conclusion to be in dispute. It is, with respect, clearly right, especially since it is consonant with the legislative scheme of the GMA to create a (controlled) market for dealings in entitlements. 54 The real issue is whether the circumstances prior to the commencement of the GMA and the allocation of the newly created poker machine entitlements gave rise to any species of trust relationship. 55 Express trust can be dismissed. Poker machine entitlements only came into existence at the commencement of the GMA. The Lease and the dealings of the parties were silent on the matter. 56 Gzell J concluded that a beneficial interest will spring up in favour of the former licensee at the termination of the lease either by way of resulting or constructive trust. His Honour said:

57 It is true that the discussion of the resulting trust in Calverley v Green (1984) 155 CLR 242 at 246, 266, Muschinski v Dodds (1984-1985) 160 CLR 583 at 589, 612, Nelson v Nelson (1995) 184 CLR 538 at 600 state the principle in terms of a person who has paid the purchase price of property. I doubt, however, that the underlying principle is excluded in the circumstances of this case where, while the entitlements were not purchased by Benwine, it purchased the poker machines which alone gave rise to the allocation of the entitlements in relation to the hotelier's licence. 58 Jabetin further submitted that the poker machine entitlements were not a species of property that could be dealt with separately from the hotelier's licence and on that basis there could be no resulting trust with respect to them. 59 Whether or not poker machine entitlements are a species of property, dealings with respect to them can be made separately from the hotelier's licence, contrary to the submission. The Gaming Machines Act 2001 , s19(1) provided that a poker machine entitlement was transferable. Section 19(4) provided that if transferred to another hotelier's licence, it should be taken to have been allocated in respect of the other hotelier's licence. Such a dealing is constituted separately from either hotelier's licence. Section 23(1) provided that if a hotelier's licence was surrendered or cancelled, any poker machine entitlements allocated in respect of the licence could be transferred. Such a transfer is independent of the hotelier's licence.

… 68 In my view the new legal entity of the poker machine entitlement created under the Gaming Machines Act 2001 is a species of property separate and distinct from the hotelier's licence in which contractual rights and equitable interests may be created. In my view, remedies for their breach are matters within the province of the ordinary courts and not the Board. I am of the view that a resulting trust may exist with respect to a poker machine entitlement and that Benwine's purchase of the poker machines that gave rise to the poker machine entitlements will constitute a resulting trust in its favour with respect to any of the 15 poker machine entitlements held with respect to the hotelier's licence upon the expiry or earlier determination of the lease from Jabetin. 69 If I be wrong in this view, a constructive trust will arise in favour of Benwine if any of the 15 poker machine entitlements remain allocated with respect to the hotelier's licence upon the expiry or earlier determination of the lease. In terms of Muschinski at 615-616 and Baumgartner v Baumgartner (1987) 164 CLR 137 at 147 it would be unconscionable for Jabetin not to recognise the existence of an equitable interest in the favour of Benwine. The unconscionability will arise by the reason of the sole contribution by Benwine to the acquisition and maintenance of the poker machines that gave rise to the poker machine entitlements. 70 I reject the suggestion of Mr Sakno that Jabetin made a financial contribution to the acquisition and maintenance of the poker machines by granting rent relief from time to time. That is too indirect an advantage to constitute financial contribution to the acquisition of the poker machines. No doubt the rent reductions were influenced by commercial considerations in the long-term interests of Jabetin as well as the short-term interests of Benwine. 57 In the case of a hotel, poker machine entitlements are allocated "in respect of the Hotelier's licence" (GMA s15(2)(a)). The size of the initial allocation depends on the "frozen number of approved poker machines" (s15(1)(a)). As Campbell J pointed in Wonall, the GMA is silent as to ownership of entitlements. The Act does not, however, preclude consonant equitable interests being created. 58 Between 4 August 1998 and 13 April 2001 Benwine installed 15 poker machines at the Hotel. Benwine acquired the machines and, as licensee, applied to the Board pursuant to s161 of the Liquor Act (a section repealed on the commencement of the GMA) for authority to keep, use and operate them at the Hotel. That authority was conferred in the form of a licence condition (see esp s161(1)-(4)). 59 No direct or indirect financial contribution was made by Jabetin. Jabetin gave Benwine considerable rent relief, but this indulgence was unrelated to any contract or arrangement touching the poker machines or the licensee's authority to keep, use or operate them at the Hotel. Gzell J correctly held that Jabetin made no financial contribution to the acquisition and maintenance of the poker machines themselves (at [70]). 60 Because there were 15 poker machines approved for the Hotel on the "freeze date", 15 entitlements were allocated by the Board "in respect of the hotelier's licence" (cf GMA, s15(1) and (2)). This represented the number of poker machines authorised to be kept in the Hotel under the Liquor Act as at 19 April 2001, the "freeze" date (cf GMA, s15(3)(a)). 61 Gzell J held that a resulting trust in favour of Benwine arose out of its purchase of the poker machines, the event that "alone gave rise" (at [57]) to the later poker machine entitlements. 62 His Honour also held (at [69]) that, if he be wrong as to resulting trust, a constructive trust would arise in favour of Benwine if any of the 15 poker machine entitlements remain allocated with respect to the hotelier's licence upon expiry or earlier determination of the Lease. It was held to be unconscionable in terms of Muschinski at 615-6 and Baumgartner at 147 for Jabetin not to recognise the existence of an equitable interest in favour of Benwine. The unconscionability would arise by reason of the sole contribution by Benwine to the acquisition and maintenance of the poker machines that gave rise to the poker machine entitlements. 63 These alternative findings treat Benwine's original acquisition of the poker machines as the trigger for a trust. Yet s15(3) of the GMA treated the number of approved and authorised poker machines as at the "freeze" date of 19 April 2001 as the critical event. 64 The vital question is whether Benwine's conduct in acquiring the machines generated a basis for severing the equitable title to the poker machine entitlements from the licence that will have to be yielded up by Benwine on the termination of the Lease. The contractual terms of the Lease and the provisions of the Liquor Act put the licence at Jabetin's disposal at that stage. The onus lies on Benwine to explain why the appurtenant poker machine entitlements do not go with the licence. 65 As indicated, Gzell J held in effect that the critical event was Benwine's acquisition (between 1998 and 2001) of 15 poker machines. Perhaps his Honour also intended to record that it was Benwine's activity and initiative as licensee at the time that procured the necessary authority from the Board pursuant to s161 of the Liquor Act. 66 This case does not involve a dispute as to ownership of poker machines. The 15 that were acquired by Benwine were and are its to dispose of as it wishes. 67 However, the poker machine entitlements are disposable (in accordance with the GMA) independently of the machines. The onus rests upon Benwine to point to something that separated the hotelier's licence and the entitlements "in respect of" it. 68 In In re Vandervell's Trusts (No 2) [1974] Ch 296 Megarry J referred (at 289) to two species of resulting trust, an "automatic" resulting trust arising when a person fails effectively to dispose of a complete beneficial interest; and a "presumed" resulting trust arising when a purchaser has directed that the property be transferred into the name of a third person, where there is nothing to indicate an intention that that person takes the property beneficially (see also R P Meagher and W M C Gummow, Jacob's Law of Trusts in Australia 6th ed, p285). The second category depends ultimately on the intention of the purchaser, with rebuttable legal presumptions offering prima facie indications (Napier v Public Trustee (WA) (1980) 32 ALR 153 at 158, Calverley v Green (1984) 155 CLR 242 at 246, 266, Muschinski at 589-90, 612, Nelson at 600). 69 Nothing in the facts engaged these principles, whether one views the situation when Benwine acquired the original poker machines; or when authority was obtained by Benwine as licensee to keep, use and operate the machines at the Hotel; or later when the poker machine entitlements were allocated by the Board in respect of the hotelier's licence. At the earlier points of time there was simply no question of "purchasing" disposable "property". At the later point of time (when the 15 entitlements were allocated by the Board) there was a purely administrative step, directed by s15 of the GMA. Neither Jabetin nor Benwine had any relevant intention with respect to that transaction, which was not of a nature capable of generating a resulting trust. I have already indicated that the Lease was silent on the matter. 70 Jabetin submits that the distinction between poker machines and poker machine entitlements is important. Jabetin did not provide the consideration for the acquisition of the poker machine entitlements. Rather, Benwine provided the consideration to acquire the poker machines in the Hotel and it has had the ongoing benefit of the revenue derived from those machines, it may remove them as tenant's fixtures at the end of the Lease and sell them or install them in new premises (subject to Jabetin's option to purchase in clause 17 of the Lease). However, they are not co-extensive with the poker machine entitlements. The latter were simply allocated by statute in respect of the Licence; they arose by an Act of the Parliament. 71 I accept these submissions. 72 Gzell J correctly observed (at [59] and [68]) that dealings with respect to poker machine entitlements can be made separately from the hotelier's licence, subject of course to the GMA (esp ss19 and 23). But this does not advance the resulting (or constructive) trust argument. 73 There is also the difficulty of contradicting the statutory scheme that I shall develop in the context of discussing the constructive trust alternative found by the primary judge. 74 The parties agree that the relevant statement of principle concerning constructive trusts is found in the judgment of Deane J (with whom Mason J agreed) in Muschinski at 620: [The circumstances giving rise to a constructive trust] can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do.

This passage was approved in Baumgartner at 148, 157. 75 The touchstone of a constructive trust is unconscionability, not idiosyncratic or vague notions of fairness and justice (Muschinski at 616, Baumgartner at 148. Cf also Tanwer Enterprises Pty Ltd v Cauchi (2003) 77 ALJR 1853 at 1858[24]-[26]). 76 Gzell J held (at [69]) that it would be unreasonable for Jabetin not to recognise the existence of an equitable interest in favour of Benwine at the termination of the Lease. The unconscionability was said to arise by reason of Benwine's sole contribution to the acquisition and maintenance of the poker machines that gave rise to the poker machine entitlements. 77 Once again, this elides the acquisition of the poker machines with the events that gave rise historically to the allocation of poker machine entitlements. Yet the two are quite distinct. The poker machines became and will remain the property of Benwine. The poker machine entitlements were allocated later, in respect of the hotelier's licences at the Hotel and by reference to authorities previously obtained by Benwine as licensee. Those authorities were conferred in the form of licence conditions (Liquor Act, s161). Neither the event of allocation nor any other event served to separate the entitlements from the licence. Indeed the GMA reinforces that connexion (see further below). 78 Quite apart from the implications derived from the scheme of the GMA to which I shall turn, the statutory allocation "in respect of" the hotelier's licence at the Hotel brought about the situation that, absent any separate contract or dealing giving rise to a trust situation capable of recognition consonant with the GMA, the entitlements will go with the licence. The Lease is silent as to separate disposition of the entitlements, but it does provide that the licence is effectively at the lessor's disposal after termination. None of this assists Benwine. 79 In my view, there is nothing in these circumstances to make it unconscionable for Jabetin "not to recognise" Benwine's equitable interest in the entitlements as at the termination of the Lease. Indeed, to speak in terms of a refusal "to recognise the existence of an equitable interest" is to invert the true position. Something positive is required to generate a constructive trust of this nature. 80 In any event, the equitable interest asserted by Benwine contradicts the scheme of the GMA. 81 The declarations made in Benwine's favour that are under challenge in this second part of the appeal were: 1. The Court declares that the Plaintiff is the proper and sole beneficiary of any benefit to be derived from the fifteen poker machine entitlements allocated in respect of the hotelier's licence serial number 116608 (the "Licence") relating to the premises known as "The Prince of Wales Hotel" at Muswellbrook by the Liquor Administration Board of New South Wales pursuant to Section 1592) of the Gaming Machines Act, 2001. 2. The Court declares that immediately upon the transfer of the Licence to the Defendant or its nominee in accordance with the provisions of Lease registered dealing I 592360 ("the Lease") made between the Plaintiff and Defendant, the Defendant and any person to whom the Licence is transferred as a nominee of the Defendant will hold on trust for the benefit of the Plaintiff all poker machine entitlements at that time remaining allocated in respect of the Licence. 82 In his reasons Gzell J had said (at [71]):

I will make a declaration that upon the expiry or earlier determination of the lease, Jabetin will hold any of the 15 poker machine entitlements remaining allocated with respect to the hotelier's licence on trust for Benwine. 83 This statement correctly acknowledged the possibility that some of the 15 entitlements might be disposed of before the Lease came to an end. Declaration 1 seems to go further, suggesting that his Honour was persuaded that the trust relationship descended earlier, presumably from the inception of the Lease. I imply no criticism in this observation. Declaration 1 is consonant with the reasons which hold that the events giving rise to the trust arose before the GMA commenced. 84 Declaration 2 addresses the immediate post-Lease situation and recognises that there might be less than 15 entitlements in respect of the hotelier's licence at that stage. But declaration 2 points up a key aspect of the trust as found, because it envisages that the former lessee/licensee (Benwine) will be capable of holding its equitable interest in the remaining entitlements divorced from any right as lessee or licensee whether held by it or anyone else. 85 These declarations do not conform to the legislative scheme. In the situation hypothesised the lease will have come to an end and the hotelier's licence will have been transferred to Jabetin's nominee (presumably the incoming licensee of the Prince of Wales Hotel). The GMA does not contemplate an entitlement becoming detached from a licence even temporarily, except by passing under the Board's control (cf ss14(3) and 58). An entitlement is transferable (subject to the partial forfeiture scheme in s20), but only to the holder of another licence (see s20(1)). 86 Yet the right asserted by Benwine and upheld in the declarations under appeal places the remaining poker machine entitlements at the disposition of the now departed licensee, a situation that could presumably continue indefinitely. The GMA contemplates the reduction over time of the number of entitlements. But it does not appear to countenance this occurring through entitlements falling into an unlicensed "black hole", no matter how short in duration. Benwine's position presupposes a type of market involving potentially unattached poker machine entitlements disposable by persons who are not licensees and who have no interest in a licence. 87 The trial judge's reasoning, supported in this Court by the respondent, started from the undoubtedly correct premise that a poker machine entitlement is a species of property capable of being owned, disposed of and made the subject of a trust. It does not however follow that ownership, disposal or trust relationship occurs outside the legislative framework. On the contrary, the property incidents which stem from the legislation must conform to its dictates. 88 I therefore propose the following orders:

1. Appeal in matter CA 40971 of 2004 dismissed with costs.

2. Appeal in matter CA 40972 of 2004 upheld. Declarations and orders made on 5 November 2004 set aside. In lieu, summons dismissed with costs. Respondent to pay appellant's costs of the appeal and to have a certificate under the Suitors' Fund Act if qualified. 89 SHELLER JA: I agree with Mason P. 90 HODGSON JA: I agree with the orders proposed by Mason P and, subject to what I say below, substantially with his reasons. 91 In my opinion, in order to determine whether s.19(5) of the Gaming Machines Act 2001 (the Act) is exhaustive of the circumstances in which a person has a financial interest in a hotelier's licence, it is in my opinion relevant to have regard to the definition of "relevant financial interest" in s.5(3) of the Act, and to s.118 of the Act, which are in the following terms: 5 Meaning of "close associate" … (3) In this section: relevant financial interest in a business means: (a) any share in the capital of the business, or (b) any entitlement to receive any income derived from the business, or to receive 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, or (c) any entitlement to receive any rent, profit or other income in connection with the use or occupation of premises on which the business is or is to be carried on (such as an entitlement of the owner of the premises to receive rent as lessor of the premises).

118 Control of business carried on under gaming-related licence (1) If a person (other than a licensee or a financial institution) becomes interested in the business, or the profits of the business, carried on under a gaming-related licence, it is a condition of the gaming-related licence that the licensee must, within 28 days after the other person's becoming so interested, produce to the Principal Registrar an affidavit stating: (a) that the licensee has made all reasonable inquiries to ascertain the information required to complete the affidavit, and (b) the name and date of birth of the person so interested and, in the case of a proprietary company, the names of the directors and shareholders. (2) For the purposes of subsection (1), a person is interested in the business, or the profits of the business, carried on under the licence if the person is entitled to receive: (a) any income derived from the business, 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), or (b) any rent, profit or other income in connection with the use or occupation of premises on which the business is to be carried on. (3) This section does not apply to a licence held as an employee. 92 In my opinion, the definition of "relevant financial interest" in s.5(3) is plainly intended to be exhaustive, because the expression is plainly a term of art, and because the definition uses the word "means". In my opinion also, the provision of s.118(2), as to being interested in a business, or the profits of a business, is also intended to be exhaustive. Although the expression "interested in a business, or the profits of a business" is not a term of art, its very uncertainty and generality calls for an explanation. Further, the use of the word "is" is appropriate to exhaustiveness. 93 However, returning to s.19(5), the expression "financial interest" is not a term of art, nor is it of such uncertainty or generality as to require explanation. Further, the words "is taken to have" are less indicative of exhaustiveness than "means" or "is" (or "has"). Furthermore, as has been pointed out by Mason P, s.19(5) could have used the expression "if and only if", but did not do so. 94 As pointed out by Mason P, the introduction of s.19(6) by the word "However" could suggest that s.19(5) was intended to be exhaustive; but the content of s.19(6) could be considered as pointing the other way, because it might be thought that a person being the owner of a hotel would not of itself satisfy any of the alternative requirements of s.19(5). 95 However, it is well known that it is common for licences to be held by lessees of hotels, under leases with covenants giving control of the licence on expiry of the lease to the owner. In those circumstances, it would be surprising if the legislature had taken the trouble to pass s.19(6) if it only applied to what one would expect to be rare cases where there is no lease with the standard covenants. Furthermore, s.19(5) tends to suggest that it is some present entitlement to a benefit or advantage from the carrying on of the business which is the kind of financial interest to which s.19(3)(c) applies. The case of Tooheys Limited v. Housing Commission of New South Wales (1953) 53 SR(NSW) 407 at 410-411 suggests that the conduct of a business under a licence may have a present financial advantage to an owner, through increased value of the reversion; but this advantage would not be one of entitlement arising at law or equity or otherwise, but rather one that would simply arise as a matter of fact as a consequence of the business activity under the licence. Such an advantage would appear to be the sort of advantage intended to be excluded by s.19(6). 96 For those reasons, with some hesitation, I prefer the view that s.19(5) is exhaustive; although the legislative intention that it be so is not made clear as in s.5(3) or s.118(2). Accordingly, I agree with Mason P's conclusion on the first main issue in the appeal. 97 I agree also with his conclusion on the question of whether a resulting or constructive trust arose. In general terms, a resulting trust arises when money is paid by a person for property which is put into someone else's name, and an intention that the person paying the money retain the beneficial interest in the property is presumed or inferred. In this case, there was relevantly no property at the time of acquisition of the relevant poker machines, there was no money paid for the relevant property, and there was no relevant property placed in the name of some person other than the person paying money or arranging for the acquisition. As regards constructive trust, in general terms that depends upon unconscionability, in a person having a title to property, where that person relies on that title in unexpected circumstances. In this case, there is in effect a windfall gain to either the licensee or the hotel owner or both of them, with the actual incidence of the windfall depending upon the terms of the legislation. In those circumstances, I see no unconscionability in the owner asserting whatever rights the legislation gives. **********

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