Martin and Anor v Kelly and Ors [2008] NSWSC 577 | Case summary

Martin and Anor v Kelly and Ors [2008] NSWSC 577 | Case summary | Zoe

[36]

The Confines of Judicial Review 13 The present hearing involves judicial review of administrative action by way of a claim for prerogative relief. In Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 at 35-36, Brennan J described the duty and jurisdiction of the Court on such an application in the following way: "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." 14 This statement has been applied in subsequent decisions of the High Court of Australia where the confines of judicial review have been emphasised: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 579-580 [195]; Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 at 152-154 [43]-[44]. 15 The limited role of a court reviewing the exercise of an administrative decision must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrative tribunal exercising power which the legislature has vested in that body: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 at 40-41. 16 The reasons for an administrative decision are not to be minutely and finely construed with an eye keenly attuned to the perception of error. The reasons of an administrative decision maker are meant to inform, and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-2; SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 at [25]. The reasons under challenge must be read as a whole and must be fairly read: Cross v McHugh [1974] 1 NSWLR 500 at 503; Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 291.

[37]

Relief in the Nature of Certiorari 17 Relief in the nature of certiorari is not an appellate procedure enabling either a general review of the order or decision, or substitution of the order or decision which the Supreme Court thinks should have been made. Relief enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds - jurisdictional error, denial of procedural fairness, fraud and error of law on the face of the record: Craig v South Australia (1994-1995) 184 CLR 163 at 175-176. 18 The face of the record includes the reasons expressed by the LAB for its ultimate determination: s.69(4) Supreme Court Act 1970. 19 In Craig v South Australia, Brennan, Deane, Toohey, Gaudron and McHugh JJ at 179 identified the scope for intervention by way of relief in the nature of certiorari with regard to administrative tribunals: "If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it." 20 In Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, McHugh, Gummow and Hayne JJ referred to the non-exhaustive list of kinds of error in Craig v South Australia, and continued at 351 [82]: "Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it." 21 Where a decision is challenged upon the basis that it was manifestly unreasonable (in the Wednesbury sense), the test to be applied is stringent. The decision must amount to an abuse of power or be so devoid of plausible justification that no reasonable person could have taken that course: Attorney-General for NSW v Quin at 36-37; Weal v Bathurst City Council (2000) 111 LGERA 181 at 188; [2000] NSWCA 88 at [27]; Wyong Shire Council v MCC Energy Pty Ltd (2005) 139 LGERA 296 at 312; [2005] NSWCA 86 at [79]. 22 In the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power: Minister for Aboriginal Affairs v Peko-Wallsend Limited at 41. 23 Where a challenge is one that relates to the formation of an opinion by an administrative tribunal, then the ground of legal error is somewhat confined by reference to the principles in Buck v Bavone (1976) 135 CLR 110 at 118-119; Bruce v Cole (1998) 45 NSWLR 163 at 183-184. The language used in s.19(3)(c) GM Act is a commonly used drafting device to ensure that judicial review is restricted although the LAB's opinion is nevertheless examinable according to the principles in Buck v Bavone at 118-119: Jabetin at 617 [37]. 24 Any error of law on the face of the record which is established needs to be dispositive before a decision such as that of the LAB could be set aside in proceedings for judicial review: Jabetin at 615 [28].

[38]

Submissions and Materials Provided to the LAB 25 Submissions were sought with respect to the transfer application and were considered by the LAB. It is appropriate to refer to the material which was before the LAB including submissions made concerning the application. 26 On 16 August 2006, the First Defendant lodged a Poker Machine Entitlement Transfer Form seeking approval for transfer to the Black Market Hotel for poker machine entitlements for a total consideration of $341,000.00 including GST. The First and Second Defendants consented to the transfer. 27 On 24 October 2006, the Secretary of the LAB wrote to the First Defendant noting that as a "dispute flag" was lodged on the hotelier's licence, the LAB had directed that a copy of the transfer be served on the Plaintiffs to permit them to make submissions concerning the application. 28 On 14 November 2006, the solicitor for the Plaintiffs made written submissions to the LAB. In that submission, the Plaintiffs claimed a financial interest in the hotelier's licence and stated that they did not consent to the transfer. The submissions annexed a lease dated 22 March 1999 for the Tabulam Hotel and recited communications between the parties since 2004 concerning the lease and an option to renew the lease. Reference was made to clause 21 of the lease concerning option to renew which provided a formula for calculation of rent by reference to a percentage of turnover on poker machines. However, the submission did not assert that rent being paid in, and prior to, October 2006 was calculated in this way. 29 It was the case that the solicitor for the Second Defendant, on 28 July 2004, had confirmed that the Second Defendant wished to exercise the option in respect to the property pursuant to clause 21 of the lease and requested that an option lease be provided as soon as possible. However, no such lease was proffered by the Plaintiffs prior to the LAB decision of 20 December 2006. Instead, the Plaintiffs' solicitor, on 27 January 2005, proposed that rent for the first year be $1,800.00 per week (exclusive of GST) with subsequent years to increase at the rate of 5% per annum as compounded, with weekly rents in the sixth year to be in the sum of $2,297.31. Negotiations continued with respect to the terms of the lease. It is common ground, however, that in 2005 and 2006, rent was being paid for the Tabulam Hotel in the sum of $1,800.00 per week. 30 I pause to place these matters in context in the present proceedings. It was common ground that this rental figure was not calculated by reference to turnover from the licence. As will be seen, this is a critical issue in these proceedings. For the Plaintiffs to succeed in their claim for relief, it is necessary for them to establish, on the balance of probabilities, that the LAB erred relevantly in its decision that the Plaintiffs did not have a financial interest for the purpose of s.19(3)(c) and (5) GM Act. It is necessary for the Plaintiffs to establish that, despite the fact that they had been receiving $1,800.00 per week rent not calculated by reference to turnover, they nevertheless had a legal or equitable interest, so as to give them the relevant financial interest, because of an ability to enforce a rental agreement which was based on turnover. 31 I return to the submissions made to the LAB in 2006. On 20 November 2006, the solicitor for the First and Second Defendants responded to the written submissions advanced for the Plaintiffs. It was said that rent had been paid by weekly instalments of $1,800.00 since the end of the term of the previous lease on 21 March 2005. It was said that there was no doubt that the rent for the new lease was agreed at $1,800.00 per week, subject to increase in accordance with the greater of three per cent or the CPI. It was said that, in any event, as no new lease had been entered into between the parties, the tenants remained in occupation of the premises pursuant to the holding-over clause (clause 10) of the 1999 lease. In those circumstances, it was said that the lessors had no financial interest in the hotelier's licence based upon the decision of the Court of Appeal in Jabetin. Annexed to the written submissions for the First and Second Defendants was correspondence passing between the solicitors for the parties between 11 May 2005 and 2 June 2005. This correspondence appeared to make clear an agreement between the parties that rental be paid at $1,800.00 per week, with a ratchet clause for an increase of the greater between three per cent and the CPI. 32 The submissions to the LAB to this point seemed to demonstrate that rental had been paid since March 2005 by reference to a formula entirely unrelated to turnover at the Tabulam Hotel. The Plaintiffs had not furnished to the First and Second Defendants a new lease since March 2005. 33 On 14 December 2006, the solicitor for the Plaintiffs provided a written submission to the LAB in reply to the submission of 20 November 2006. The submission referred to the history of negotiations in 2005 and 2006. The submission stated (page 2): "It is conceded that rent of $1,800.00 per week plus GST was being paid and accepted. However so far as the Lessors were and are concerned, this was only an interim measure and its finality was dependant upon full and final agreement being reached on all other terms. This didn't happen." 34 Copies of further correspondence were provided with the submission. The Plaintiffs' solicitor concluded (page 4): "I submit that the only conclusion that could be drawn from all of the correspondence and the facts and circumstances is that there was no binding and final replacement lease agreement reached between the parties. Therefore, the Lessee having property [sic] exercise the option under the expired Lease, the terms of that Lease with the new rent as dictated by the option clause must apply. This is so even though the parties had conditionally reached agreement on certain matters, including the rent. However, it is in my unequivocal view that the parties had to reach agreement on all matters before the said conditionally agreed terms became unconditional. It is also my view that at no time did the Lessors waive any rights that they had in respect of the Poker Machine Entitlements. It is also my view that there is no principle at law or at equity (including estoppel) that would prevent the Lessors from asserting their rights in respect of the exercise of the option. This would include seeking an Order from the Supreme Court for specific performance. In the circumstances, it is my submission that the Board must find that the Lessors have a financial interest in the Hotelier's Licence and in view of the fact that they do not consent to the Application to the transfer of the Poker Machine Entitlements, the Board must refuse that Application."

[39]

LAB Decision of 20 December 2006 35 Given the nature of relief being sought and the submissions of the parties, it is appropriate to set out in its entirety the LAB decision of 20 December 2006: "On 16 October 2006 the Board received a Poker Machine Entitlement Transfer Form in relation to the Tabulam Hotel, Tabulam from Robert James Kelly as seller, licensee, and signed by him as licence owner and by Kenneth John Kelly as business owner. No particulars were given for any other person or corporation having a financial interest. The Board directed that the application be served upon the freehold owner. On 14 November 2006 the Board received submissions from Alister Somerville, solicitor for George Owen Martin and Allison Martin as freehold owners. On 20 November 2006 Maxwell and Co, solicitors for the licensee made written submissions in response. On 14 December 2006 the Board received a further response from Alister Somerville. The Board has considered the submissions. The Board's function is to determine whether the lessors, freehold owners, have a financial interest in the hotelier's licence. Section 19 of the Gaming Machines Act 2001 is the relevant provision. In 1999 a 6 year lease was granted for the hotel. In January 2002 the hotel business was sold to Kenneth John Kelly who became the licensee. The licence was transferred to Robert James Kelly in October 2004. The Board does not have documents to confirm this but it appears that the lease was transferred from the previous lessee to one of the Kelly's. Clause 21 of the lease contained an option to renew for a further term of 6 years. That clause provided for rent to be 'equivalent to 10% of the combined total of all liquor purchases made by the lessee together with 10% of the gross turnover of all forms of gambling …'. On 28 July 2004 the lessee exercised the option. As a result of the exercise of the option substantial correspondence was exchanged between lessor and lessee as to the terms of the new lease. No agreement was reached and the negotiations have terminated. The Board finds that accordingly the lessee continues to occupy the premises under the holding over provisions contained in the 1999 lease. The Board does not find that the terms of the option to renew the lease which would provide new provisions are in force. Accordingly the determination of whether the lessor has a financial interest is based upon the 1999 lease. That lease contains no provisions which give the lessors a financial interest within the meaning of s19 or the recent case law upon s19. The lessors do not argue to the contrary but submit that the lessee is bound by the terms of the lease which were required to be entered into as a result of the exercise of the option. As set out the Board does not accept that these provisions are in force. No other financial interest in the lessors within the meaning of s19 is identified. The Board is satisfied, that for the purposes of s19 the only person with a financial interest in the hoteliers licence is the lessee. The Board is satisfied that the Poker Machine Entitlement Transfer Form is accompanied by all necessary signatures and consents required by the legislation and the transfer is approved."

[49]

(c) accordingly, the determination of whether the lessor (the Plaintiffs) had a financial interest was based upon the 1999 lease, and that lease contained no provisions which gave the lessor a financial interest within the meaning of s.19 GM Act. 44 Mr Russell submitted that the errors suggested in the preceding paragraph were jurisdictional errors, manifest errors of law and/or constituted a constructive failure to make a statutory decision for a number of reasons. 45 Firstly, he submitted that as a matter of law, upon the exercise of the option on 28 July 2004, a valid and binding agreement for a further lease arose between the Plaintiffs and the Second Defendant pursuant to clause 21 of the 1999 lease. He submitted that the agreement for lease was specifically enforceable and that, in equity, the lessee (the Second Defendant) was regarded as having a lease for a further term and the parties had rights in relation to that agreement for lease, including the right to call for the execution of a formal lease in accordance with that agreement. Reliance was placed upon Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Ltd (1959) 59 SR(NSW) 122 at 123-124; Bradbrook and Croft, "Commercial Tenancy Law in Australia", Butterworths, 2nd edn, 1997 at [4.8], [14.1], [14.5], [14.8]. Mr Russell noted that, subsequent to the LAB decision, the parties had entered into a new lease in accordance with clause 21 of the 1999 lease. 46 Secondly, Mr Russell submitted that the LAB found (correctly) that the parties had not reached agreement on the terms of a new lease to replace the lease otherwise required under the exercise of the option. He submitted that this finding precluded any possible finding or suggestion that the agreement for lease which arose on the exercise of the option was discharged or otherwise not operative. 47 Thirdly, Mr Russell submitted that the exercise of the option under clause 21 of the 1999 lease was inconsistent with any holding over pursuant to clause 10 of the 1999 lease. He submitted that one cannot exercise an option to renew a lease and, at the same time, hold over under the terms of an existing lease at the end of its term. He submitted that the agreement, demise and obligations of the parties under these separate approaches were mutually exclusive. 48 Fourthly, Mr Russell submitted that there was no evidence or material before the LAB that would allow it to find, or be satisfied, that the lessee was in fact holding over under the 1999 lease. He submitted that there was nothing to suggest that either the Plaintiffs or the Second Defendant were conducting themselves as if the Second Defendant was holding over under the 1999 lease and, in particular, there was nothing to suggest that the Second Defendant was paying the rent provided for in clause 10 of the 1999 lease which, in its terms, required a rent of at least twice the sum paid in the last year of the 1999 lease. 49 Mr Russell submitted that it was apparent that in purporting to reach an opinion as to whether the Plaintiffs had a financial interest in the hotelier's licence, the LAB was seeking to determine the legal relationship between the Plaintiffs as lessors and the Second Defendant as lessee. Mr Russell submitted that:

[57]

(b) that the landlords had agreed, at least conditionally, to accept rent on that basis, and had done so since March 2005. 56 Mr Leeming SC noted that the LAB had found that the terms of the new lease were not in force. He submitted that it was difficult to see how any other finding could reasonably have been made. He submitted that the finding made was plainly open to the LAB upon the material before it, and that it was clear that the Plaintiffs had no financial interest in the hotelier's licence. 57 Mr Leeming SC responded to Mr Russell's submissions. 58 With respect to the Plaintiffs' first submission (at [45] above) that there was a valid and binding agreement for a new lease following the exercise of the option, Mr Leeming SC submitted that this was debatable as the lessee had expressed an intention to exercise the option, but the Plaintiffs certainly had not supplied a lease for execution before 20 December 2006. Even if it be assumed that the letter of 28 July 2004 gave rise to a binding agreement for a new lease, Mr Leeming SC submitted that, unless the agreement was specifically enforceable, there was no equitable interest: Chan v Cresdon Pty Limited (1989) 168 CLR 242 at 249-255; Penrith White Water Stadium Limited v Lesvos Pty Limited [2007] NSWCA 176 at [43]-[44]. 59 Mr Leeming SC submitted that it would be imprudent to assume that specific performance would be awarded as a matter of course: Chan v Cresdon Pty Limited at 255. He contended that it would be speculative in the extreme to assert that, in December 2006, the Plaintiffs would have been entitled to specific performance of an agreement executed in July 2004, when both parties had been acting inconsistently with that agreement for more than a year. In particular, the lessee had been paying, and the lessors accepting, rent at $1,800.00 per week for almost two years. It was the lessors who had been telling their tenant that a turnover rent would be too harsh. Mr Leeming SC submitted that a court would not readily order specific performance of an agreement which would have the lessee paying rent on a basis which the landlord had said was onerous, if not impossible. 60 Further, Mr Leeming SC submitted that it was apparent from the lengthy history of communications between the parties that, in the event of a claim for specific performance, there would be defences of estoppel by representation, estoppel by convention as well as a defence or cross claim for misleading and deceptive conduct. Mr Leeming SC submitted that, at the end of 2006, the Plaintiffs had not sought to enforce any rights they might have pursuant to the exercise of the option in July 2004 (some two-and-a-half years earlier) and thus laches and delay would have been good reason to refuse specific performance had it been sought at the end of 2006. 61 Mr Leeming SC submitted that all those matters entitled the LAB to form the view that the option in the lease was not in force. 62 He submitted further that events which may have occurred months after the LAB decision were irrelevant to the question whether the LAB had made judicially reviewable error in December 2006. 63 With respect to Mr Russell's second submission (at [46] above), Mr Leeming SC contended that the threshold question was whether specific performance was available and, if not, there could be no equitable lease. Further, Mr Leeming SC submitted that the inconsistent conduct of the parties was apt to give rise to defences. 64 With respect to Mr Russell's third submission that the exercise of the option was inconsistent with any holding over (at [47] above), Mr Leeming SC submitted that this does not advance the matter because what happened in the years after the exercise of the option in July 2004 was likewise inconsistent with the equitable tenancy the Plaintiffs asserted to the LAB and in these proceedings. 65 In answer to Mr Russell's fourth submission (at [48] above), Mr Leeming SC contended that the LAB correctly appreciated that it was necessary to have regard to matters occurring after the exercise of an option in order to determine whether the lease the subject of the option was in force. Mr Leeming SC submitted that there was evidence to support the LAB's finding, not least being the fact that the lessee was paying weekly rent in a fixed amount reflective of the incremental fixed rentals under the 1999 lease. 66 Alternatively, Mr Leeming SC submitted that it may be that the lessee continued in possession pursuant to a separate common law tenancy. If that was the preferable analysis, he submitted that this did not vitiate the LAB decision: Jabetin at 619 [50]. Mr Leeming SC submitted that the only relevant question was whether there was an equitable lease with turnover rent. That was the only submission which the Plaintiffs had advanced, and it constituted the only basis upon which the Plaintiffs could seek to demonstrate that they had the relevant "financial interest". 67 In the event that the Plaintiffs did demonstrate relevant error on the part of the LAB, Mr Leeming SC submitted that relief ought be withheld on discretionary grounds. These included delay in commencement of proceedings between December 2006 and July 2007, and suggested prejudice to the First and Second Defendants.

[62]

(d) any equitable right which the Plaintiffs did have was not a present entitlement to receive income from the business as required to satisfy s.19 GM Act. 70 Mr Muddle SC developed submissions in support of these four propositions. With respect to 69 above, he submitted that the Second Defendant gave notice of intention to exercise the option, but did not, in fact, exercise the option. He submitted that clause 21.1 of the 1999 lease required the lessor to proffer a new lease. He submitted that clause 21 did not give rise to an immediate further legal or equitable estate in the Second Defendant, or oblige him to execute the option lease if so proffered. In fact, it was not proffered. He submitted that the approach of the Plaintiffs required the Court to redraft the lease. Further, he submitted that the conduct of the lessors and lessee, viewed as a whole, showed that they did not intend to enter a legally binding lease on the specific option terms in July 2004. The lessee merely said he was desirous of exercising the option, to which the lessors responded that they should negotiate a new and different lease (without a turnover rent). Mr Muddle SC sought to distinguish Gilbert J McCaul (Aust) Pty Ltd v Pitt Club Pty Ltd. 71 With respect to 69 above, Mr Muddle SC submitted that from the outset, the parties had abandoned the terms of the option lease. The Plaintiffs' letter of 13 October 2004 made plain that they did not want the turnover rent provided for in the option lease. Instead, the Plaintiffs proposed that the parties negotiate the term, rent and a further option and that is what then happened for two-and-a-half years. The only term clearly agreed in those years was that the rent would be a fixed (and not turnover) rent, with the sum of $1,800.00 being agreed upon and thereafter paid. Mr Muddle SC pointed to the correspondence and submitted that the option lease had been abandoned in favour of a new and different lease and that ultimately, the new lease was also abandoned. However, the lessee remained in occupation and paid rent and was therefore, by definition, holding over. He submitted that this conclusion was correct whether or not the lessee complied with, or breached, provisions of the original lease as to what should occur during the holding-over period. 72 Mr Muddle SC submitted that, on any view, the conclusion reached by the LAB was one within its jurisdiction and open to it. The fact that the Court might prefer a different finding (if that be the case) was immaterial. He submitted that the entering of a new lease in September 2007 had no significance as it occurred after the LAB decision of 2006 and cannot assist in determining rights which existed at an earlier time. He submitted that the Plaintiffs' argument that the LAB ought to have limited its consideration to events which occurred in July 2004, in determining the position as at late 2006, was self-evidently wrong. 73 With respect to 69 above, Mr Muddle SC submitted that the equitable lease, for which the Plaintiffs contend, is dependent upon their ability to secure an order for specific performance at the time. No such order was sought or made and the Court could not be satisfied that such an order would have been made. He submitted that a delay of two-and-a-half years in enforcing a six-year lease, coupled with payment and acceptance of rent on an entirely inconsistent basis during that period, clearly gave rise to available defences of laches, estoppel and change of position. During this delay of two-and-a-half years, Mr Muddle SC noted that the lessors did not submit for execution a lease conforming to the option terms. In those circumstances, he submitted that any action by the lessors to compel execution of a lease would have been hopeless. 74 With respect to 69 above, Mr Muddle SC submitted that, even if it be assumed that the Plaintiffs had a binding agreement to lease which included a turnover rent as at late 2006 (which he denied), that was not a present (as distinct from prospective) right to receive income from the business within the meaning of s.19(5) GM Act. He submitted that, at best, on their own case, the Plaintiffs had the ability to move the Court for a discretionary order for execution of the option lease by way of specific performance. But that had not occurred, nor had the Plaintiffs served an instrument conforming to the option terms. 75 Mr Muddle SC submitted that if the Plaintiffs had established grounds for relief, it ought be refused in any event on discretionary grounds. He pointed to delay in commencement of proceedings which he submitted had not been satisfactorily explained. He submitted that the Fourth and Fifth Defendants would suffer financial prejudice, which would not be sufficiently protected by their Cross Claim against the First and Second Defendants, whose ability to meet any such claim might be regarded as questionable. Mr Muddle SC did not press the claim for suggested prejudice based upon the gaming social impact statement (T10.41, 29 February 2008).

[63]

Resolution of Competing Submissions 76 Elaborate and detailed arguments have been advanced on behalf of the parties. The resolution of the Summons involves determination of a short point. Is relevant error demonstrated in the decision of the LAB which vitiates the decision to approve the transfer of poker machine entitlements under s.19? 77 I bear in mind the nature and limits of the relief being sought by the Plaintiffs (see [11]-[24] above). In accordance with the principles recited at [16] above, it is necessary to fairly read the decision of the LAB. 78 The critical question for the LAB was whether the Plaintiffs had a "financial interest in the hotelier's licence" so that their consent was required to the transfer of poker machine entitlements. The Plaintiffs and the First and Second Defendants made submissions to the LAB bearing upon this question. It was for the LAB, as the statutory decision maker, to determine whether it was so satisfied for the purpose of exercising its function under s.19 GM Act. 79 The LAB had regard to submissions made to it. The rent clause in the 1999 lease did not involve turnover rent, but specified a weekly figure with an escalation clause unconnected to turnover. The option to renew clause (clause 21) in the 1999 lease did provide for a type of turnover rent clause. However, the material before the LAB demonstrated that the rent payable by the First and Second Defendants between March 2005 and December 2006 was a fixed figure of $1,800.00 per week plus GST. This figure was not calculated by reference to turnover. 80 It is true that the holding-over clause (clause 10) in the 1999 lease would have involved a rental of some $2,800.00 per week. It is clear that this rental was not paid by the lessee to the lessors following the expiration of the 1999 lease in 2005. 81 I accept the submission of the Defendants that it was open to the LAB to conclude that the lessee held over under the 1999 lease, but with an agreed rental ($1,800.00 per week plus GST) that differed from that provided in clause 10. The fact that the rent paid was not that provided for expressly in clause 10 did not mean that there was not a holding over under the 1999 lease. The fact that the lessee had indicated an intention to exercise the option to renew under clause 21 went nowhere, in reality, as the lessors had not furnished a new lease to the lessee by the time of the LAB decision in December 2006. This was a requirement of clause 21 which had not occurred. 82 Mr Russell submitted that the LAB did not make a finding that the rental being paid as at October-December 2006 was $1,800.00 per week plus GST, a sum not connected with licence turnover. However, it was common ground in submissions to the LAB that rent had been calculated and paid on this basis for some time. It was only in the Plaintiffs' submission in reply to the LAB on 14 December 2006 that reference was made (for the first time and in passing) to the prospect of specific performance with respect to a suggested equitable lease. 83 I express the following conclusions concerning the decision of the LAB:

[69]

(f) it was open to the LAB to conclude that the option to renew provisions in the 1999 lease were not in force. 84 The LAB did not accept that the Plaintiffs had demonstrated that they had a relevant financial interest. In my view, this conclusion was open to the LAB as the statutory decision maker. Although a contrary argument was advanced by the Plaintiffs to the LAB, it has not been demonstrated that the decision of the LAB was infected by error of law or jurisdictional error. The conduct of the parties between July 2004 and December 2006, in offering and accepting rent calculated upon a basis unrelated to turnover, was a most significant fact in this respect. 85 The Plaintiffs have not established that the decision of the LAB was so unreasonable that no reasonable decision maker could properly have arrived at it. Indeed, given the fact that rent had been paid for some time at $1,800.00 per week plus GST, being a formula not based upon turnover, it is difficult to see how the LAB could have properly concluded that the Plaintiffs had a "financial interest in the hotelier's licence" for the purpose of s.19(3)(c) GM Act. 86 I accept the submissions of Mr Leeming SC and Mr Muddle SC concerning the equitable lease issue. In particular, I accept Mr Leeming SC's submissions with respect to Chan v Cresdon Pty Ltd. The conduct of the parties, over an extended period of time, would constitute an impenetrable barrier to any claim for specific performance by the Plaintiffs. 87 I accept the submissions of Mr Muddle SC concerning the construction of clause 21 of the 1999 lease. The Plaintiffs did not proffer a new lease for execution before December 2006. This was an essential requirement under clause 21. This conclusion compounds the difficulties surrounding the Plaintiffs and operates as a further impediment to any action which they may have brought for specific performance of a claimed equitable lease. 88 I accept the submission of Mr Muddle SC that, even if the Plaintiffs had demonstrated an equitable lease, this would not have been a present interest in the income of the business so as to constitute a "financial interest" in the hotelier's licence for the purpose of s.19 GM Act. 89 The Plaintiffs have not demonstrated, on the balance of probabilities, relevant error which vitiates the decision of the LAB in its conclusion that the Plaintiffs did not have a "financial interest in the hotelier's licence" for the purpose of s.19. 90 Accordingly, I am not satisfied that the Plaintiffs have demonstrated a basis for relief in the nature of certiorari.

[70]

Discretionary Factors 91 My conclusion on the Plaintiffs' claim for relief does not require any detailed consideration of submissions made concerning discretionary refusal of relief. However, as the matter was fully argued, I will refer shortly to this topic. 92 If a basis for relief had been demonstrated, the Defendants advanced submissions in support of discretionary refusal of such relief. These considerations included alleged unwarrantable delay in commencing proceedings between 20 December 2006 and 6 July 2007. In particular, reliance was placed upon the Plaintiffs' assertion on 21 December 2006 that it intended to commence Supreme Court proceedings as soon as possible and the response of the solicitor for the First and Second Defendants on 22 December 2006 indicating that settlement of the transfer of the poker machine entitlements to the Fourth and Fifth Defendants would not take place until after 8 January 2007, and that the Plaintiffs should commence proceedings by then if they intended to do so. 93 The Plaintiffs' explanation for delay in bringing proceedings was based upon the continuation of negotiations, between January and May 2007, with the First and Second Defendants with respect to issues in controversy. 94 I am not satisfied that delay in itself would have provided a basis for discretionary refusal of relief in this case. 95 Other bases relied upon include suggested prejudice to the Fourth and Fifth Defendants (the price of poker machine entitlements had gone up) and suggested prejudice to the First and Second Defendants in that the transfer of three poker machine entitlements results in one poker machine entitlement being forfeited under s.20(3) of the Act. The latter argument is not sound given that the setting aside of the s.19 transfer (as part of any order of the Court) would remove the statutory basis for forfeiture under s.20 of the Act. Any prejudice to the Fourth and Fifth Defendants may have been met sufficiently by a claim for damages which they assert, by way of Cross Claim, against the First and Second Defendants. 96 If the Plaintiffs had demonstrated an entitlement to relief, I would not have declined to grant relief on discretionary grounds.

Martin and Anor v Kelly and Ors

At a glance

Court

Decision date

Before

Source

Judgment (74 paragraphs)

Parties

Cases Cited (19)

Cited By (18)