Specific performance
88 It is clear both from his Honour's reasoning and from the making of the declarations that the injunctive relief granted below was provided on the basis that the poker machine entitlements were, at the date of the judgment, held on trust for Mr Garcia. If that approach is not accepted, it is necessary to consider whether other orders may be made on a different basis, such as orders by way of specific performance of a contractual obligation. However, no notice of contention was filed on behalf of Mr Garcia seeking to support the orders made on a basis other than that relied upon by the primary judge, nor was argument presented to this Court on the propriety of such an approach.
89 If this question had been raised, separate issues would have arisen as to whether Mr McAsey was in default under the agreement when the proceedings were instituted and, indeed, whether he was in default at any stage thereafter, prior to trial. This in turn would invite attention to the precise terms of the contractual obligation which it was said had not been fulfilled, together with questions as to whether damages would be an adequate remedy for breach of that term. On one analysis of clause 11, it is arguable that the right which Mr Garcia had reserved to himself under the contract to direct a transfer of the entitlements was a right which had to be exercised prior to 1 December 2004.
90 The argument pressed on this Court on behalf of the Appellants was that clause 11 was, in effect, void for uncertainty. It was submitted that clause 11.1 did not identify with sufficient clarity any particular "right" in relation to the poker machine entitlements, which was not to be included in the sale to Mr McAsey. If clause 11.1 is read on its own, there is some substance to that submission. There are at least three rights which are encompassed within an allocation of poker machine entitlements. The first and substantive right is to seek authorisation under s 56 of the Gaming Machines Act to keep a number of poker machines for use and operation in the hotel. It is not suggested that Mr Garcia sought to reserve any aspect of the use and operation of poker machines to be subject to his direction and control. Had he done so, such an attempt would arguably have been inconsistent with the scheme of the Gaming Machines Act, which seeks to ensure the control of gaming machines is in the hands of the hotelier.
91 The second right which might inhere in an entitlement is a right to the proceeds of the use of the machines. Again, there is no suggestion that Mr Garcia was seeking to retain that right. Subject to the operation of the exception in sub-s (3) (which was not relied on by Mr Garcia), that would be likely to constitute an offence under s 73(1) of the Gaming Machines Act.
92 The third right accruing to the holder of an hotelier's licence in respect of an entitlement is the right to transfer the entitlement to a third party who is the holder of a hotelier's licence for valuable consideration. It is the ability to control the exercise of that right which Mr Garcia seeks to assert in the present proceedings. However, as the Appellants note, there is no express reference to that right in clause 11.1 as being a right which is "not included in the sale". Putting to one side clause 11.2, the right identified in clause 11.3 is "such right", which is clearly dependent upon the construction of clause 11.1. Clause 11.3 envisages that the purchaser may need to sign documents or make application, in order for the vendor to "maintain any such right". Clause 11.4 is also neutral as to the nature of the right, except that it may give rise to the receipt of some amount by the purchaser or the licensee from time to time. Clause 11.5 is properly to be read as complementary to clause 11.2, because it is a warranty by the purchaser not to take certain steps on his own account prior to 1 December 2004, and is thus consistent with the temporal limitation, under clause 11.2, preventing the vendor from commencing proceedings after 30 November 2004 "to exercise or enforce that right in any way so as to deprive the purchaser of the right to own, use and operate the poker machine entitlements". Subject to temporal constraints, that right of ownership must include the right to transfer the entitlements pursuant to s 19(1).
93 It may be that in October 2002 when the sale agreement was executed, the nature of the option to purchase under the lease was being negotiated between Mr McAsey and the Appellants, but that its terms had not been settled. In addition, Mr Garcia may have been conscious of the fact that if Mr McAsey surrendered the lease, in taking up his option to purchase, the licence might be transferred to the Appellants, with the result that Mr Garcia would not, as he claimed in his affidavit that he feared, be able to enforce his contractual rights with respect to the poker machine entitlements against Mr McAsey. That is consistent with the terms of clause 11.2. Although that clause in terms prevents Mr Garcia from commencing proceedings after 30 November 2004, as noted in the preceding paragraph, the proceedings are identified as being proceedings in exercise of his right "so as to deprive the purchaser of the right to own, use and operate" the entitlements. The concept of operating an entitlement is obscure. However, it may reasonably be understood to refer to operating a poker machine pursuant to an authorisation obtained in respect of an entitlement. The effect of Mr Garcia commencing the identified proceedings would thus be achieved by an order enforcing a transfer of the entitlement from the hotelier's licence for the Hotel to another licensee. Such a transfer would deprive Mr McAsey of the entitlement and all of the benefits which flowed from its existence as allocated in respect of his licence. These derivative rights are, of course, enjoyed by the holder of the hotelier's licence from time to time and, after the sale agreement, not by Mr Garcia but by Mr McAsey. The only relevant right which Mr Garcia can be understood to have reserved to himself under the terms of clause 11 taken as a whole, is the right to direct Mr McAsey to transfer the entitlements to the holder of another hotelier's licence and to account to him for the proceeds of that transfer.
94 The date identified in sub-clauses 11.2 and 11.5 is a date approximately two years and one month after the date of the agreement. This date would seem to impose a temporal constraint suggesting that Mr Garcia was not entitled to exercise his reserved right after 30 November 2004 and that, after that date, Mr McAsey had an unqualified right to deal with the entitlements. Any order for specific performance of the contract may need to take into account the possible temporal limitation, unless it has been varied or waived by arrangements between the parties. The effect of the orders made by the trial judge is arguably to remove the temporal limitation and to require Mr McAsey to comply with a direction given at any time whilst he remains the holder of the hotelier's licence. The commencement of proceedings by Mr Garcia on 29 November 2004 cannot by itself change the nature of the right, nor is it any kind of proceeding which will be sufficient to satisfy the terms of clause 11.2. Absent any attempt to exercise the contractual right to direct a transfer of the entitlements prior to 30 November 2003, it is arguable that no proceedings have been commenced "to exercise" that right or to "enforce" that right. If the effect of an order for specific performance would effectively extend that right, absent some agreement between the parties, arguably such an order may be inappropriate. These are questions on which the Court needs to hear from the parties.
95 I accept, as Tobias JA has noted at [11], that this construction was not addressed in submissions. Nevertheless, if the argument that the clause is void for uncertainty is rejected, the clause must have some meaning. It is not possible to give adequate reasons for rejecting the voidness argument, without identifying a relevant meaning. What the consequences are in terms of available relief is another issue, which needs now to be addressed by the parties.
96 Accordingly, the appropriate course for the Court is to set aside the judgment and orders of the Court below, but reserve leave to Mr Garcia to indicate what, if any, other orders the Court should make in the light of this result.
97 While it is proposed that the declarations and injunctions granted by the primary judge should be set aside, the Court is conscious that certain interlocutory orders were made by the President, with the consent of all the parties, pending this appeal. There are aspects of those orders which are unclear to the Court, and were not the subject of argument on the appeal. On a minor point, no stay was obtained in relation to order 7 below. Order 7, as entered, appears to reflect the declaration proposed by his Honour as order 7 in the judgment. It appears that the parties may have treated that as intended to be a declaration. It can therefore be disregarded for present purposes.
98 In relation to the injunctive relief more substantial questions arise. The parties agreed to a stay on conditions which in effect required the parties to "jointly execute transfers" to the holder or holders of an hotelier's licence, as directed by Mr Garcia. Those transfers were to be submitted to the Board for its approval, but on condition that "the transfers not be effected until the parties request the Board to make the transfers effective". That is presumably terminology intended to reflect the statutory condition that a transfer "does not have any effect" unless it is approved by the Board: s 19(2)(a).
99 There was a further condition "that the parties deal with the approval subject to and in accordance with" certain other conditions. There is no evidence before the Court as to whether the Board has given an approval of the kind referred to in s 19(2)(a). If it has not, the following conditions are apparently not yet relevant.
100 The conditions are themselves fraught with difficulties and implicit assumptions. Thus, the first deals with the situation that the Court may determine that the trial judge erred in declaring that the Appellants do not have a financial interest in the hotelier's licence for the purposes of s 19 of the Gaming Machines Act. In that case it is said that "the Appellants may make such objection as they see fit" to the Board, on the ground that they have a financial interest in the hotelier's licence. This condition appears not to contemplate the possibility that the declaration might be set aside, not because it is held that the Appellants have a financial interest in the hotelier's licence, but because the making of the declaration was otherwise inappropriate. Further, the form of the condition ignores the fact that s 19(3)(c), to which the declaration implicitly relates, says nothing about "objection" to a transfer, nor does it permit the parties to usurp the statutory requirement that the Board be satisfied of certain matters.
101 In addition, the first condition provides that the Appellants may in the event identified "apply for any conditional transfer granted by the Board to be revoked". The assumption in the premises is that the Board will give "conditional approval" to the transfers. The statutory power of the Board to grant such a "conditional approval" is not identified. It may be that such a power exists: what does not exist is a power to grant a "conditional transfer", let alone for the Board to revoke such a transfer.
102 The second condition deals with the situation in which the Court holds that the finding that the poker machine entitlements "are held … on trust" for Mr Garcia was in error and that Mr Garcia "was not and is not otherwise entitled thereto". With respect, Einstein J did not hold that Mr Garcia is or was "entitled" to the poker machine entitlements: nor is it clear what that entitlement might mean. Assuming it involves some proprietary element, similar to that resulting from a trust, it is inconsistent with the structure of the Gaming Machines Act, at least in relation to the period when Mr Garcia no longer held the relevant hotelier's licence. However, assuming that this state of affairs has been realised, by the proposed setting aside of the second declaration, the condition then provides that the parties will jointly apply to the Board "for the revocation of any conditional transfer of the poker machine entitlements". For the reasons noted above, the effect of this condition is unclear.
103 These matters aside, the third condition is more problematic. It is necessary to set it out in full:
"(iii) in the event that it is determined (in these proceedings or this appeal) that Einstein J did not err in making the declarations and the substance of the other and consequential orders made on 23 May 2005, the parties will jointly apply to the Liquor Administration Board for any conditional transfer of the poker machine entitlements to be made final and effective as of the date of the original conditional approval and do all things on the part of each necessary to make the transfer final and effective as of that date."