Masters v Garcia

Gaming Machines Act 2001 (NSW) Liquor Act 1982 Lotteries and Art Unions Act 1901 Gaming and Betting Act 1912 LEGISLATION CITED: Unlawful Gambling Act 1998 Liquor (Amendment) Act 1993 Liquor and Registered Clubs Legislation Further Amendment Act 1996 Registered Clubs Act 1976 Evidence Act 1995 (NSW)

Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92 University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 Hypec Electronics Pty Ltd (In liq) v Mead (2004) NSWCA 221 Whitehouse v BHP Steel Ltd (2004) NSWCA 428 Jack v Smail (1905) 2 CLR 684 Slatter v Railway Commissioners (NSW) (1931) 45 CLR 68 CASES CITED: Wonall Pty Ltd v Clarence Property Corporation Ltd (2002) 58 NSWLR 23 Yanner v Eaton (1999) 201 CLR 351 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100

Raymond Henry Masters (First Appellant) Gweneth Hazel Masters (Second Appellant) PARTIES: Paul Joseph Garcia (First Respondent) Darren McAsey (Second Respondent)

M L D Einfeld QC/R Lancaster (Appellants) COUNSEL: J Garnsey QC/A Hatzis (Respondents)

Verekers (Appellants) SOLICITORS: Deutsch Partners Lawyers Pty Ltd (First Respondent) Angela M Frost (Second Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40425/05 ED 6442/04

TOBIAS JA BASTEN JA CAMPBELL AJA

26 August 2005 MASTERS & ANOR v GARCIA & McASEY The Appellants own hotel premises, which in 1994, they leased to Goldsands Pty Ltd, which in turn, nominated Mr Garcia as the licensee of the hotel. In 1996 Goldsands transferred the lease to Mr Garcia. In 1997 the Liquor Act 1982 (NSW) was amended to permit an hotelier's licence to provide that a specified number of poker machines "may be kept, used and operated" on the premises to which the hotelier's licence relates. Between 1997 and April 2001, Mr Garcia obtained permission from the Liquor Administration Board (the Board) to keep, use and operate nine poker machines on the premises. Mr Garcia and the Appellants signed a new lease in December 2001 but it was surrendered in October 2002 and the Appellants entered into a new lease with Mr McAsey, who simultaneously purchased the hotel business from Mr Garcia under a sale agreement. However, Mr Garcia sought to exclude from the sale agreement the poker machine entitlements, so that he had the right to deal with the entitlements separately from the sale of the hotel business. Clause 11 of the sale agreement contemplated that the poker machine entitlements were held by Mr McAsey and not Mr Garcia and provided, in effect, that Mr McAsey was to act at the direction of Mr Garcia in relation to the poker machine entitlements. However, the contract required Mr Garcia to take proceedings on or before 30 November 2004, if he sought to enforce his rights with respect to those entitlements in such a way as to deprive Mr McAsey of "the right to own, use and operate the poker machine entitlements." Proceedings were commenced in the Equity Division of the Court on 29 November 2004. The primary judge, at the request of Mr Garcia, granted a number of declarations and orders, including declarations that the Appellants had no financial interest in the hotelier's licence for the purposes of s19 of the Gaming Machines Act 2001 (the Act); that Mr McAsey held the benefit of the nine poker machine entitlements on trust for Mr Garcia; and that McAsey was to do all acts, execute all such documents and do all such things necessary on his part to enable the transfer of the poker machine entitlements to such holder of an hotelier's licence as the plaintiff may nominate. The issues for determination by the Court of Appeal were: (i) whether Mr Garcia could retain the benefit of the transferability of poker machine entitlements pursuant to s19(1) of the Gaming Machines Act and whether the poker machine entitlements were property that was capable of being the subject of a trust, the benefit of which was held by a person other than the holder of the hotelier's licence; (ii) whether the primary judge erred in granting the declaration that the Appellants had no financial interest in the hotelier's licence for the purposes of s19 of the Gaming Machines Act; and (iii) the appropriate course to be taken if the orders and declarations made by the primary judge were made in error. Held as to (i): By Tobias JA (Campbell AJA agreeing):

1. A poker machine entitlement is in the nature of property; as such it may be the subject matter of a trust under which the equitable interest therein may vest in a person other than the holder of the hotelier's licence in respect of which the entitlement has been allocated; the entitlement and the right to transfer that entitlement pursuant to s19(1) of the Act may be the subject of a separate contract or dealing which may give rise to a trust, provided that the contract or trust (including any equitable interest arising under that trust) is consonant with the Act.
2. Accordingly, consonance with the Act in terms of the creation of a trust requires that the holder of the equitable or beneficial interest under the trust must at all times retain an interest in the hotelier's licence in respect of which the poker machine entitlements have been allocated. The fact that there may be more than one person who has a financial interest in a hotelier's licence is recognised in ss18 (3)(c) and 19(5) of the Act.
3. Because, at the relevant time, Mr Garcia had no interest, financial or otherwise, in an hotelier's licence, Mr McAsey could not and did not hold the subject entitlements on trust for him as a consequence whereof Mr Garcia was not entitled to the declarations made by the primary judge. Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92 explained and applied By Basten JA:
4. The beneficial ownership of a poker machine entitlement cannot vest in any person, whether by way of trust or otherwise, who is not at the relevant time the holder of an hotelier's licence.
5. Once Mr Garcia ceased to hold any hotelier's licence, he was not entitled to the declarations that Mr McAsey held the entitlements on trust for him or that Mr McAsey was required to take such steps as might be necessary to give effect to his equitable interest in the entitlements, as he had no such interest which was consonant with the Gaming Machine Act. Held as to (ii) By Basten JA (Tobias JA and Campbell AJA agreeing)
6. Section 19(3)(c) confers on the Board the obligation to form the relevant opinion. If the Board were to formulate such an opinion on a wrong legal basis, its opinion could be reviewed. However, if the Board were to apply itself properly to the correct legal question, it would be entitled to reach a different view on the facts from that determined by his Honour. A declaration sought in terms that involved mixed findings of fact and law should not have been made. Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 referred to.
7. Where there is no absence of jurisdiction in the Board, nor any clear indication that it will not exercise its powers properly according to law, the proper exercise of the primary judge's discretion should have been to refuse to make a declaration in the terms of the first declaration made below. Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 distinguished. Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558 followed. Held as to (iii) Per Basten JA (Tobias JA and Campbell AJA agreeing): Because the primary judge was correct in holding that clause 11 of the agreement for sale is not void for uncertainty, but was incorrect in making orders based on the existence of an equitable interest, Mr Garcia may be entitled to an order for specific performance. This is an issue on which the Court needed to hear further from the parties.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40425/05 ED 6442/04

TOBIAS JA BASTEN JA CAMPBELL AJA

26 August 2005 MASTERS & ANOR v GARCIA & McASEY Judgment 1 TOBIAS JA: In this matter I have had the benefit of reading in draft the judgment of Basten JA. Subject to what appears hereunder, I agree with his Honour that, at present, it is inappropriate for the Court to make any orders for the disposal of the appeal and that the Court should give the directions to which Basten JA refers in [106] of his judgment. 2 His Honour has set out the history of the matter, the relevant facts and an analysis of the Gaming Machines Act 2001 (the Act) with which I generally agree. I also agree with his Honour's conclusion that the declarations made by the primary judge should be set aside. In my opinion, the foundation adopted by the primary judge for the making of those declarations was contrary to this Court's reasoning in Jabetin Pty Ltd v Liquor Administration Board [2005] NSWCA 92. Those declarations proceed upon the basis that the beneficial interest in the relevant poker machine entitlements was vested in Mr Garcia at a time when he was neither the holder of the hotelier's licence in respect of which they had been allocated nor the lessee of the Hotel in respect of which that licence had been granted. In other words, Mr Garcia had at the relevant time ceased to have any legal, equitable or financial interest in the licence. 3 Thus, as Basten JA points out in [62] of his judgment, the effect of the second declaration in particular made by the primary judge that Mr McAsey held the benefit of the subject poker machine entitlements on trust for Mr Garcia until such time as the former ceased to be the licensee of the Hotel, is at odds with this Court's reasoning in Jabetin which establishes that under the Act a person cannot hold either a legal or equitable interest in a poker machine entitlement allocated in respect of a hotelier's licence in which that person no longer holds an interest. 4 However, I would observe, lest there be any misunderstanding, that in my opinion the reasoning in Jabetin does not mandate that only the holder of the hotelier's licence has a sufficient interest therein to support under the Act a right to or in the poker machine entitlements allocated in respect of that licence. Paragraphs 53, 57 and 78 of the judgment of Mason P establish that firstly, a poker machine entitlement is in the nature of property; secondly, that as such it may be the subject matter of a trust under which the equitable interest therein may vest in a person other than the holder of the hotelier's licence in respect of which the entitlement has been allocated; thirdly, the entitlement and the right to transfer that entitlement pursuant to s 19(1) of the Act may be the subject of a separate contract or dealing which may give rise to a trust; provided, fourthly, that contract or trust (including any equitable interest arising under that trust) is consonant with the Act. 5 Accordingly, consonance with the Act in terms of the creation of a trust requires that the holder of the equitable or beneficial interest under the trust must at all times retain an interest in the hotelier's licence in respect of which the poker machine entitlements have been allocated. The fact that there may be more than one person who has a financial interest in a hotelier's licence is recognised in ss 19(3)(c) and 195(5) of the Act. 6 However, in the present case Mr Garcia had no interest, financial or otherwise, in the hotelier's licence for the Hotel so that Mr McAsey could and did not hold the subject entitlements on trust for him. But this does not mean that he had no contractual rights with respect to those entitlements authorising him to direct Mr McAsey, as the holder of the hotelier's licence, to transfer them to the holder of some other hotelier's licence in accordance with the Act. Whether he had any such rights depended on the construction of cl 11 of the sale agreement to which I refer hereunder. 7 Accordingly, as Basten JA correctly observes in [63] of his judgment, it does not follow that Orders 4, 6 and 8 made by the primary judge must necessarily fail because the declarations must be set aside for the reasons referred to. As his Honour observes, to uphold those orders or any variation of them it is necessary for Mr Garcia to rely solely upon the contractual arrangements set forth in cl 11 of the sale agreement and to seek relief in the nature of specific performance in relation thereto. It is to be noted that this was one approach adopted by Mr Garcia before the primary judge as recorded in [66] of his Honour's judgment. 8 As Basten JA then observes in [65] and [75] of his judgment, whilst the primary judge accepted that Mr McAsey was bound under cl 11 of the sale agreement to deal with the subject entitlements for the benefit of and as directed by Mr Garcia (by which I take his Honour to mean that Mr McAsey was bound to transfer the entitlements at the direction of Mr Garcia to the holder of another hotelier's licence in accordance with ss 19 and 20(1) of the Act), nevertheless he did not make an order in the nature of specific performance but, apparently, considered that a more appropriate form of relief was the imposition of a trust. For the reasons given by Basten JA in [74] of his judgment, it was not open for the primary judge to take that course. 9 Both before the primary judge and this Court the appellants contended that cl 11 of the sale agreement was void for uncertainty. The primary judge rejected this argument (at [80]) finding, correctly in my opinion, that subject to the provisions of ss 19 and 20(1) of the Act, Mr McAsey whilst he remained the holder of the hotelier's licence was contractually bound to deal with the subject entitlements for the benefit of and as directed by Mr Garcia (see at [79]). 10 Basten JA has analysed cl 11 in [90]-[92] of his judgment with which, subject to the matter to which I refer in [11] below, I generally agree. Thus in the last sentence of [92] his Honour says: "Subject to temporal constraints, that right of ownership must include the right to transfer the entitlements pursuant to s 19(1)."

If this be so (deleting the reference to temporal constraints), which I consider it is, then Mr Garcia's "right" under cl 11 at least included the contractual right to direct Mr McAsey to transfer the subject entitlements pursuant to and in accordance with ss 19 and 20(1) of the Act . This was the construction of cl 11 adopted by the primary judge (at [79]-[80]) and I agree with it. 11 However, I am not presently prepared to consider whether that contractual right of Mr Garcia is possibly subject to the temporal constraints referred to by Basten JA particularly in [94] of his judgment. No submission was made to the primary judge or to this Court to suggest any such constraint or limitation. It seems to me that the references by Basten JA to which I have referred constitute at least an implied invitation to the appellants now to take a point upon the construction of cl 11 which was neither raised before the primary judge nor on the appeal. 12 The primary argument of the appellants with respect to cl 11 was that it was void for uncertainty. That argument was rejected by the primary judge and, in my opinion, correctly so. I do not understand Basten JA to be of a different view. 13 It is trite law that a party is bound by the conduct of his case and that except in the most exceptional circumstances it would, as the High Court said in University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 483, "… be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so."

The principles applicable to an attempt to take a point on appeal not taken below are well established and were recently summarised by this Court in Hypec Electronics Pty Ltd (In liq) v Mead (2004) NSWCA 221 at [71]-[74] and Whitehouse v BHP Steel Ltd (2004) NSWCA 428 at [65]-[69]. 14 The present case is one remove from those referred to above where a point was taken on appeal which had not been taken in the court below. In the present case the point has not even been taken on the appeal but appears, with respect, to be suggested by Basten JA in [95] of his judgment as being one which it may be open for the appellants to take in any further submissions they may wish to make with respect to the appropriate form of relief to be granted in order to dispose of the appeal. As far as I am concerned, I would not encourage any such course. Nevertheless, if any such submissions are made, I will deal with them in a principled way upon their merits. 15 In [97]-[105] of his judgment, Basten JA makes reference to the interlocutory consent orders made by the Mason P pending the determination of the appeal. At this point, I am not prepared to endorse his Honour's comments in the paragraphs referred to with respect to those orders. That is not to say that I necessarily disagree with them but only that at present it is inappropriate to deal with those orders and the effect that may have upon the ultimate disposal of the appeal. 16 Nevertheless, I would make this observation. It will be appreciated that I am of the view that, given the basis upon which both the trial and the appeal were conducted, as at the date of the primary judge's judgment Mr Garcia had an enforceable contractual right to direct Mr McAsey to transfer the subject poker machine entitlements to the holder of another hotelier's licence for valuable consideration. It would appear from the orders of the President that Mr Garcia has so directed and Mr McAsey has complied with that direction. Accordingly, there may, on one view of the matter, be no utility in this Court making an order for specific performance of Mr McAsey's contractual obligation under cl 11 to Mr Garcia except to require him to account to Mr Garcia for the proceeds of the transfer of the entitlements. 17 However, it is a matter for the parties as to the effect, if any, the consent orders made by the President may have upon the ultimate disposal of the appeal. It is for that reason that, like Basten JA, I agree that the appropriate course for the Court to take will be to set aside the declarations and orders of the primary judge but to reserve leave to the parties (including Mr McAsey if he wishes) to make submissions as to what, if any, orders the Court should now make. As far as I am concerned those submissions should be made in light of, firstly, my view that upon the basis of the issues litigated both before the primary judge and this Court, Mr McAsey was contractually bound to transfer the subject entitlements to the holder of another hotelier's licence at the direction of Mr Garcia; secondly, that he is bound to account to Mr Garcia for the proceeds of the sale of those entitlements; thirdly, that such a transfer has already occurred but is currently still subject to the approval of the Board; and fourthly, the effect, if any, of the consent orders made by the President.

18 BASTEN JA: The Appellants in these proceedings are the owners and lessors of the Alexandria Hotel ("the Hotel") in Henderson Road, Alexandria, New South Wales ("the premises"). In July 1994 the Appellants leased the premises to a company known as Goldsands Pty Ltd, which nominated the First Respondent, Mr Garcia, as the licensee of the Hotel, in which capacity he became the holder of an hotelier's licence. In 1996 Mr Garcia became the assignee of the interest in the leasehold previously held by Goldsands, and purchased Goldsands' business interest in the hotel. 19 As will be noted below, prior to 1997 hoteliers could not keep poker machines on hotel premises. However, in that year the Liquor Act 1982 (NSW) was amended to permit an hotelier's licence to provide that a specified number of poker machines "may be kept, used and operated on the premises to which an hotelier's licence relates": s 182C. Over the period from 1997 to 19 April 2001 Mr Garcia obtained permission from the Liquor Administration Board ("the Board") to keep, use and operate nine poker machines on the premises. Although the evidence is unclear, it seems likely that he obtained authority in relation to some of the machines at least prior to 19 December 2000, when he signed a new lease from the Appellants as lessors to him as lessee of the premises. The lease made no reference to poker machines; they were not included in the schedule of property of the lessor appended to the lease. The lease commenced on 1 January 2001 and was for a term of three years terminating on 31 December 2003. In fact, the lease was surrendered on 13 October 2002 and the Appellants entered into a new lease with the Second Respondent, Mr McAsey. That lease was to commence on 14 October 2002 and terminate on 31 January 2005. It is only that lease which is relevant to the issue in the appeal. (It will be necessary to refer below to the steps which have been taken to preserve the position of the parties during the course of the present litigation.)

The covenants in the lease 20 Relevantly for the present proceedings, it is important to note two aspects of the lease. The first was that clause 30 contained the grant of an option to purchase the premises, the substantive part of which (leaving out repetitive terms) was in the following terms: "The Lessor hereby grants to the Lessee or its nominee on or from the commencing date an option to purchase the land for the sum of $5,000,000 plus one-half of the amount of any compensation (such one-half to be up to a maximum of $250,000) for poker machine entitlements paid to the previous lessee of the premises, namely, Paul Joseph Garcia by the Lessor pursuant to any legislation or court order or for any other reason provided that the total amount of the compensation paid to Paul Joseph Garcia has been notified in writing by the Lessor to the Lessee prior to the exercise of this option to purchase … ."

The basis on which the lessors might become liable to pay Mr Garcia for the poker machine entitlements so referred to is not directly revealed by the lease itself. Nevertheless, it is necessary to note two provisions which may be relevant in this respect. 21 The first concerned the hotelier's licence in relation to the premises. Clause 29(a) of the lease provided: "The Lessee shall procure that the licensee shall from time to time shall (sic) do the following -"

and there follow nine separate sub-paragraphs. In the present circumstances, the licensee, being defined as the holder of the hotelier's licence in respect of the premises, was the lessee, namely Mr McAsey. However three sub-paragraphs are relevant for present purposes and read, in part, as follows: "(vi) If the time for the exercise of the option to purchase in clause 30 has expired and the option has not been validly exercised within that time, the licensee will, before the expiration of the Lease, execute a transfer of the licence to the Lessor's nominee to take effect on the expiration or sooner determination of this lease … .

(vii) The licensee shall at the expiration or sooner determination of the lease hand over to the Lessor or its nominee the licence which shall belong to the Lessor absolutely unless the option to purchase contained in clause 30 has been validly exercised.

(viii) It is hereby acknowledged and agreed that the licence is the Lessor's property and shall remain with the demised premises. The licensee shall not make any application or cause or permit to be made any application for removal of the licence or without the Lessor's consent seek to vary, revoke or impose any condition upon or in respect of the licence or affecting the demised premises."

It is not necessary to consider for present purposes whether, and how, each of these paragraphs may be legally effective. 22 The last clause in the lease, clause 34, related to poker machine entitlements and was in the following terms: "The Lessee acknowledges and covenants with the Lessor that the beneficial ownership of all present and future poker machine entitlements granted during the term by the relevant licensing authorities for the use of poker machines presently on, or in the future to be allowed on, the premises, vests and will vest in the Lessor."

The word "term" is defined to mean to the term of the lease; so far as the evidence reveals, no poker machine entitlements had been granted during that term. The entitlements which were allocated by the Board in relation to the hotelier's licence for the premises were allocated during the previous lease held by Mr Garcia. There was (understandably) no equivalent to clause 34 in Mr Garcia's lease, no such statutory entitlements being in existence at the time it was executed. 23 The regime by which authorisation was given to keep poker machines in hotels by way of conditions attaching to the hotelier's licence was replaced by an entirely new regime on the commencement on 2 April 2002 of the Gaming Machines Act 2001 (NSW). The whole of Part 11 of the Liquor Act was repealed (Gaming Machines Act 2001, Schedule 2) but the Board was required to allocate one "poker machine entitlement" for each approved poker machine for a hotel: s 15(1). The relevant number of entitlements was to be determined by the Board, according to a formula, the primary factor of which was the number of poker machines authorised to be kept in the relevant hotel as at 19 April 2001: s 15(3). Accordingly, the entitlements allocated to the hotelier's licence for the Hotel was calculated as nine. 24 One other provision of the lease was the subject of argument during the course of the proceedings, namely that which formed a further part of the covenant by the lessee to procure the licensee to do certain things, in this instance in relation to the goodwill of the business. "(v) The licensee for itself and on behalf of the Lessee hereby acknowledges that the goodwill of the business of the hotel is part of the demised premises and that neither the Lessee nor its successors in title has or will have any interest whatsoever in such goodwill upon the termination or expiration of the lease for whatever reason. All parties agree that upon termination or expiration of the lease for whatever reason, neither the Lessee nor the licensee shall be entitled to receive any payment or compensation in respect of such goodwill."

The lease to Mr Garcia had not contained any provision equivalent to clause 29 in Mr McAsey's lease. The only relevant obligation in relation to termination of Mr Garcia's lease had been a covenant to do all things necessary at the expiration of the term to transfer and assign "unto the Lessors or to such other person as the Lessors may appoint for that purpose the hotelier's licence of the said premises for the then current year".

The sale agreement 25 Prior to the surrender of his lease, Mr Garcia entered into an agreement with Mr McAsey for the sale of the hotel business including the stock, goodwill and plant. "Plant" was defined to mean "the plant, fixtures, fittings, equipment, chattels and effects of the Vendor noted in the inventory annexed". One category in the inventory comprised the nine "pokies". A value of $55,245 was attributed to the plant. The bulk of the remainder of the sale price of $100,000 was attributed to goodwill. Clause 3.3 of the agreement provided that title to the assets passed to the purchaser on completion. The agreement was conditional upon the grant of an application to transfer the hotelier's licence to the purchaser and the grant of a new lease by the Appellants to the purchaser. 26 As will be noted below, the legislative scheme provides for the transferability of what is referred to in the legislation for the first time as poker machine entitlements. Because the number of poker machine entitlements under the Gaming Machines Act is capped and the number of poker machines that may be kept upon the premises is directly linked to the number of poker machine entitlements, and because on transfer of a block of three entitlements, one will be forfeited, their market value is considerable. Although the evidence admitted in these proceedings is limited to that relating to the proposed sale of the entitlements by Mr Garcia to a third party, it would appear that the value of each transferable entitlement is of the same order as the value of rest of the business, namely $100,000. 27 As the holder of a hotelier's licence at the time of the sale agreement, Mr Garcia claimed that he was able, in effect, to retain the right to require Mr McAsey at his discretion to transfer the entitlements granted in respect of his hotelier's licence with the result that they never formed part of the assets of the hotel business which Mr McAsey purchased from Mr Garcia pursuant to the agreement. It was clear that the price paid by Mr McAsey for the business was not intended to include the poker machine entitlements although it did include the poker machines themselves. It is the success or otherwise of Mr Garcia's claimed right to deal with the entitlements separately from the sale of the business which is the central issue in dispute in these proceedings. Although there is no evidence of the cost of obtaining and maintaining the authority of the Board to keep poker machines, it was common ground that the new statutory scheme has created a valuable transferable entitlement which will enure to the benefit of the first holder, whoever that may be. The phrase "windfall gain" was used more than once in the course of argument. 28 In the present context, the key provision in the sale agreement between Mr Garcia and Mr McAsey was clause 11, which read as follows: "11 VENDOR'S RIGHT TO COMPENSATION FOR POKER MACHINE ENTITLEMENTS 11.1 The Vendor's right, if any, to ownership, compensation or damages, arising from the Vendor's efforts, actions and expenditures in relation to gaming at the premises, resulting in the allocation of the Poker Machine Entitlements, whether statutory or otherwise, and whether now in existence or arising at any time after the date of this Agreement, is not included in the sale under this Agreement. 11.2 If the Vendor has now or acquires any such right in the future, the Vendor will not commence 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, or any of them. 11.3 The Purchaser agrees to do all things, and to cause the holder of the licence from time to time to do all things to enable the Vendor to claim and maintain any such right, including signing all documents and making all applications, at the cost of the Vendor, to assert such right. 11.4 The Purchaser agrees that any compensation or any amount received or receivable by or in the name of the Purchaser or the licensee from time to time arising from such right will be held on behalf of and accounted to the Vendor. 11.5 The Purchaser warrants that prior to 1 December 2004 he will not exercise any option to purchase, or purchase, either in his own name or in the name of another person or entity (including being interested in another entity) of the freehold of the premises, or the licence or the poker machine entitlements."

The drafter of this clause may be excused for exhibiting some uncertainty as to whether that which Mr Garcia was seeking to do was possible and, if so, how it should be done. Nevertheless, given the potential value of the poker machine entitlements, the lack of clarity is disturbing. It is understandable that the Appellants assert that the provision is simply incomprehensible and that it is not a matter for the Court to redraft it. 29 It is, on its face, curious that the Appellants are litigating in relation to the construction of a clause in an agreement to which they are not party. Mr McAsey, who was otherwise the beneficiary of the sale agreement, took no active part in the proceedings either before the primary judge or in this Court. Because, for the period during which he was to hold the lease of the hotel premises, the entitlements remain allocated in respect of the hotelier's licence and the Board's authorisation to keep the machines attached to the licence, he no doubt obtained the financial benefit of having the machines on the premises during his occupation thereof. That flows from the fact that the holder of an hotelier's licence may not lawfully share the receipts from the gaming machines with any other person: see below at [26]. Nevertheless, Mr McAsey covenanted in clause 12(k) with the Appellants in the following terms: "At the expiration of the term hereby granted or other sooner determination thereof transfer and assign and do all acts necessary for the transferring and assigning unto the lessors or to such other person as the lessors may appoint for that purpose the hotelier's licence for the said premises for the then current year."

In other words, if Mr Garcia has failed to retain control of the poker machine entitlements so that he has the right validly to dispose of them by way of transfer to another hotelier's licence prior to the termination of the lease between Mr McAsey and the Appellants, the benefit of the entitlements could accrue to the Appellants upon termination of the lease and the transfer or assignment of the licence to the Appellants or their nominee.

Statutory scheme 30 When Mr Garcia first obtained an interest in the Hotel in 1994, gambling and gaming were activities controlled under the Lotteries and Art Unions Act 1901 and the Gaming and Betting Act 1912. The latter Act was replaced with the Unlawful Gambling Act 1998 (NSW). Licensing and authorisation of the keeping, use and operation of gaming machines in hotels and clubs operated by way of exception to the prohibitions contained in that legislation. 31 Changes made to the Liquor Act by the Liquor (Amendment) Act 1993 allowed for "approved amusement devices", commonly referred to as "card machines", to be installed in hotels, but did not include poker machines. The authority for an hotelier to keep poker machines on the premises was achieved by the insertion of a new Division 2A "Poker Machines" in Part 11 of the Liquor Act, by the Liquor and Registered Clubs Legislation Further Amendment Act 1996 (NSW), the relevant part of which commenced on 1 April 1997. In substance, the result achieved was to apply the provisions of the Registered Clubs Act 1976 relating to poker machines "to and in respect of hotels in the same way as they apply to and in respect of registered clubs": Liquor Act, s 182A. Section 182C(1) of the Liquor Act, thus introduced, provided: "182C Limitation on number of poker machines in hotels (1) It is a condition of a hotelier's licence that not more than 15 poker machines may be kept, used and operated on the premises to which a hotelier's licence relates, unless the licensee holds a permit issued by the Minister for each poker machine in excess of that number that is kept, used and operated on those premises." 32 As noted above, these provisions were removed from the Liquor Act by the Gaming Machines Act 2001, which made its own provision in relation to the keeping and operation of gaming machines. Section 7 of the Gaming Machines Act provides: "7 Lawful keeping and operation of gaming machines Despite anything in the Lotteries and Art Unions Act 1901, the Unlawful Gambling Act 1998 or any other Act or law (other than this Act) it is lawful: (a) to keep or operate an approved gaming machine in a hotel or registered club, and (b) to pay or present prizes and bonuses won as a direct or indirect consequence of operating the approved gaming machine, if the approved gaming machine is kept or operated, and the prizes and bonuses are paid or presented, in accordance with this Act."

Section 4(1) contains the following definitions of "keep" and "operate" and is not in terms qualified by reference to an exception in so far as the context or subject matter otherwise indicates or requires. The relevant definitions are as follows: " keep an approved gaming machine includes acquire or possess the gaming machine. … operate an approved gaming machine includes use or play the gaming machine."

The definition of "approved gaming machine" includes reference to "an approved poker machine", which is in turn defined to mean a poker machine declared to be an approved machine by the Board under s 64 of the Gaming Machines Act . The terms "hotel", "hotelier", and "hotelier's licence" are defined to have the same meanings as those given in the Liquor Act 1982. 33 The operative provision in relation to gaming machines is contained in Part 5 of the Gaming Machines Act, which provides for an application for authorisation to keep or dispose of gaming machines (s 57), and requires that the Board not authorise a gaming machine to be kept in a hotel unless of the opinion that "the primary purpose test" is satisfied (s 59) and is otherwise satisfied in relation to various limitations imposed by the Act: see ss 59A and 60A. The "primary purpose test" requires that the primary purpose of the business conducted in the hotel is the retail sale of liquor: s 6. 34 The principal operative provision in Part 5 is s 56 which, so far as presently relevant, reads as follows: "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 … . … (6) An authorisation by the Board under this section is subject: (a) to such conditions as may be imposed by the Board in relation to the keeping or disposal of the approved gaming machines to which the authorisation relates, and (b) to such conditions as are specified in this Act or as may be prescribed by the regulations. (7) The Board may vary an authorisation under this section in relation to a particular approved gaming machine to allow a modification of the gaming machine in accordance with section 64. (8) In the instrument by which the Board authorises the keeping or disposal of approved gaming machines, or by which varies such an authorisation, the Board is to identify each of the approved gaming machines to which the authorisation relates."

Pursuant to s 57(1), an application to the Board for such authorisation is to be made "by a hotelier or registered club". Thus, although the authorisation constitutes a separate statutory instrument, and is no longer a condition of the hotelier's licence, it is the authorisation under this provision which renders the keeping or disposal of a gaming machine a lawful activity. It may be noted that the authority thus granted is, relevantly, to possess and make a machine available at the hotel the subject of the hotelier's licence: it is not in terms an authorisation to the hotelier to operate the machine, that being something undertaken by the customer in the hotel or club. 35 Because the number of machines which the Board can authorise to be kept on particular premises is limited by the number of poker machine entitlements allocated "in respect of the hotelier's licence", the value of the authorisation given by the Board obviously depends upon the number of those entitlements. 36 As noted above, poker machine entitlements were allocated by the Board on the basis set out in Part 3 of the Gaming Machines Act. Section 15, which provides for the initial allocation of poker machine entitlements, provides in relation to such entitlements: "15(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."

Similar provision is made in relation to further allocations in s 16. 37 There are certain general restrictions on the allocation of poker machine entitlements set out in s 18, which, relevantly for present purposes, includes: "18(2) A poker machine entitlement cannot be allocated in relation to an approved gaming machine unless the keeping of the approved gaming machine is authorised by the Board under Part 5.

There is further provision for the allocation of poker machine entitlements by way of exchange for the surrender of an authorisation to keep approved amusement devices: s 22. Again the allocation is stated to be "in respect of the hotelier's licence" and the application for such an entitlement must be made "on application by a hotelier". 38 Although s 15(2) provides that the entitlements are to be allocated, in the case of a hotel, in respect of the hotelier's licence, but in the case of a registered club, in respect of the premises of the club, the distinction is not one of substance, because the hotelier's licence is itself issued in relation to specific premises. Thus, s 25 provides: "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." 39 Provision for the transfer of poker machine entitlements is contained in s 19, upon which significant reliance was placed in the course of argument. That section provides: "19 Transfer of poker machine entitlements (1) A poker machine entitlement allocated in respect of a hotelier's licence or the premises of a registered club is transferable. (2) The transfer of a poker machine entitlement does not have any effect unless the transfer: (a) is approved by the Board, and (b) complies with the requirements of this Division and any requirement 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 … 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 … . (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."

The effect of s 19(3)(c), in combination with sub-ss (5) and (6), was the subject of consideration by this Court in Jabetin Pty Ltd v Liquor Administration Board & Ors [2005] NSWCA 92. The effect of these provisions was also the subject of a declaration made by the primary judge in the present proceedings. 40 The nature of the transfer provisions contained in sub-ss (1), (2) and (4) is subject to certain further general requirements as set out in ss 20 and 21 of the Gaming Machines Act. Thus, s 20 provides in part: "(1) Poker machine entitlements allocated in respect of a hotelier's licence may be transferred only to another hotelier's licence."

Section 20 also requires that a transfer must comprise a block of two or three poker machine entitlements "nominated by the transferor" and that one of the entitlements must be forfeited to the Board. 41 There is also provision in relation to the transfer of poker machine entitlements when an hotelier's licence is surrendered or cancelled, or the authorisation granted under s 56 is cancelled: s 23. In effect, a transfer of the poker machine entitlements may take place after the surrender or cancellation in question, but if no transfer has been effected within a period of 12 months, the remaining entitlements are forfeited to the Board: s 23(2). As will be noted below, reference was made to this provision, on behalf of Mr Garcia in support of the proposition that an entitlement could be severed from an hotelier's licence. 42 Other relevant provisions of the Gaming Machines Act include those set out in Part 6, creating offences. It is not necessary to set out these provisions in detail, but it may be noted that s 69(1) makes it an offence for any person (including an hotelier) to be in possession of a poker machine other than an approved poker machine. Further, s 70 provides in part: "70 Possession of approved gaming machine by unauthorised persons (1) A person who is in possession of an approved gaming machine is guilty of an offence unless the person: … (b) is a hotelier … lawfully in possession of the approved gaming machine… . (2) This section does not apply to the possession of an approved gaming machine: (a) by a hotelier if the hotelier's licence has been cancelled under the Liquor Act 1982 and the possession has not extended beyond a reasonable time after the cancellation… . (3) This section does not apply to a person in possession of an approved gaming machine if: (a) the possession resulted from the exercise of a power conferred on the person by a mortgage and has not extended beyond a reasonable time after the exercise of the power, or (b) if the person obtained possession of the gaming machine by exercising a power or proprietary right under financial or other arrangements approved by the Board and has not retained possession beyond a reasonable time after the exercise of the power."

In relation to this provision, it is necessary to note the terms of s 74: "74 Granting interests in gaming machines (1) A hotelier or registered club must not grant any interest in an approved gaming machine to any other person. Maximum penalty: 100 penalty units. (2) This section does not apply: (a) to an interest in an approved gaming machine that arises from an interest (such as a floating charge) granted over the whole of the hotelier's or registered club's assets (or over a portion of hotelier's or registered club's assets) that includes, but does not specifically identify, the approved gaming machine, or (b) to an interest in an approved gaming machine that is granted in accordance with financial or other arrangements approved by the Board."

The combination of these provisions indicates that the reference to powers and proprietary rights in s 70(3) is in relation to the gaming machine itself, and does not refer to the poker machine entitlements. 43 Section 73 prohibits an hotelier from sharing "any receipts from the operation of an approved gaming machine". However, sub-s (3) provides: "(3) A hotelier does not commit an offence under subsection (1) if any such receipts are shared with, or any such payment is made to, a person who: (a) has a financial interest in the business authorised by the hotelier's licence, and (b) is named in an affidavit (as required by sections 38, 41 or 101 of the Liquor Act 1982) in relation to that licence." 44 The Court was not directed to any other provisions of the Gaming Machines Act which suggested, expressly or by implication, who should be treated as the owner of the poker machine entitlements, assuming that such entitlements are relevantly capable of ownership.

The proceedings below 45 The position adopted by Mr Garcia was that, having been the person responsible for obtaining the poker machine entitlements on the commencement of the Gaming Machines Act, being entitlements "in respect of" the hotelier's licence then possessed by him, he could take the benefit of the transferability of those entitlements pursuant to s 19(1) of the Gaming Machines Act. He did not transfer them to Mr McAsey on the sale of the business, but retained to himself the right to transfer them for valuable consideration to a third party. Until transferred, the entitlements remained entitlements "in respect of" the hotelier's licence held by Mr McAsey in relation to the Hotel. Further, they could only be transferred, pursuant to s 20(1) "to another hotelier's licence". Nevertheless, Mr Garcia argued that there was nothing in the Gaming Machines Act (or the Liquor Act) which prevented him controlling the transfer of the entitlements and contracting to obtain the financial benefits flowing from such a transfer. 46 However, if it were necessary to take proceedings to enforce his right in such a way as to deprive Mr McAsey of "the right to own, use and operate the poker machine entitlements" then Mr Garcia was required to take such steps, pursuant to clause 11.2 of the sale agreement, on or before 30 November 2004. Accordingly, the present proceedings were commenced on 29 November 2004. The summons was supported by an affidavit sworn by Mr Garcia which contained the following statement in relation to clause 11 of the sale agreement. "My interest in the poker machine entitlements was not included in the assets sold to the third defendant pursuant to the business sale agreement. In [sic] intended through the business sale agreement to retain and reserve all my rights of any kind in the poker machine entitlements. I have never at any time purported to sell or deal with my interest in the poker machine entitlements to any person, whether pursuant to the business sale agreement or otherwise."

The last sentence was objected to but was treated as evidence of the subjective state of mind of the deponent and was admitted for that limited purpose pursuant to s 136 of the Evidence Act 1995 (NSW). On that evidence, Mr Garcia had taken no steps to sell the entitlements prior to 30 November 2004. 47 According to an affidavit sworn by Mr Garcia on 18 May 2005 there was a conversation between him and the managing director of another hotel group to purchase the entitlements. That conversation took place on 28 April 2005. The following morning, he apparently had a further conversation with the third party who agreed to purchase three blocks of entitlements (presumably two entitlements per block, with one forfeited) at a price of $100,000 per entitlement. 48 Mr Garcia also gave evidence of a conversation with Mr McAsey pursuant to which Mr McAsey affirmed that he was seeking to buy the freehold title to the Hotel, presumably pursuant to the option to purchase contained in the lease the terms of which, by that stage, had been extended to 31 May 2005. The following further conversation was deposed to: "[Garcia]: Well, we want to get the sales of the entitlements moving now. My solicitor is going to prepare some papers and we'll send it through to you so we can get it signed and processed. [McAsey]: Well, I'm not signing anything. I would be mad if I did. Who would buy a hotel with no poker machines? You wouldn't either, would you? [Garcia]: But you agreed when we first kicked off that you would sign documents. [McAsey]: No, I won't be signing any documents unless somebody orders me to."

As noted above, Mr McAsey entered a "submitting appearance" in the Court below and took no part in the proceedings. He adopted the same course in this Court. Whether, in these circumstances, clause 11.2 of the sale agreement had been engaged and what, precisely, was its effect, was apparently not agitated below, nor in this Court. 49 Although his Honour did not make declarations in the form in which they were sought, the declarations proposed by the plaintiff (Mr Garcia) in the proceedings below are of some significance. Thus, when the proceedings commenced, he sought a declaration that he "is the proper and sole beneficiary of any benefit to be derived from the nine poker machine entitlements". A declaration in these terms would have been bad in form and it was abandoned prior to the trial. The amended summons, sought a primary declaration in the following form: "A declaration that in the events which have occurred and on the true construction of the various agreements and leases between the parties, [Mr McAsey] is bound to do everything necessary on his part to transfer and enable the transfer to the plaintiff or as the plaintiff directs of the 9 poker machine entitlements …"

Further, paragraph 9 sought an order in the following amended form: "An order that each of the defendants must do all such acts, execute all such documents and do all such things necessary on the part of each to enable the allow the plaintiff to transfer any and all of the poker machine entitlements to any third party upon request of the plaintiff, including providing any evidence of support or consent to the transfer reasonably required by the plaintiff or as otherwise may be required by the [Liquor Administration Board] from time to time."

In addition, Mr Garcia sought declarations that the Appellants had no financial or other interest in the poker machine entitlements "to prevent the plaintiff disposing or directing the disposal of those entitlements". In the alternative, a declaration was sought that the Appellants held the poker machine entitlements on trust for Mr Garcia and a similar declaration that Mr McAsey "holds the benefit of" the entitlements "on trust for" Mr Garcia. 50 The trial judge made the following two declarations: 1. The First and Second Defendants do not have any financial interest in Hotelier's Licence serial number 100094 relating to the premises known as the "Alexandria Hotel" at Alexandria for the purposes of Section 19 of the Gaming Machines Act 2001 or within the meaning of that section. 2. The Third Defendant holds the benefit of the nine poker machine entitlements allocated in respect of the hotelier's licence serial number 100094 by the Liquor Administration Board of New South Wales ("LAB") pursuant to section 15(2) of the Gaming Machines Act 2001 on trust for the Plaintiff, such trust to continue until the Third Defendant ceases to be licensee of the Hotelier's Licence serial number 100094. 51 Paragraph 3 of the orders made below discharged certain interlocutory orders. The Court then made the following final orders: 4. Up to and until the Third Defendant ceases to be licensee of Hotelier's License serial number 100094, that the Third Defendant do all such acts, execute all such documents and do all such things necessary on his part to enable the transfer of such of the nine poker machine entitlements allocated in respect of Hotelier's License serial number 100094 as the plaintiff may in writing direct to such holder of an hotelier's licence issued under the Liquor Act 1982 as the plaintiff may in writing nominate. 5. Order up to and until the Third Defendant ceases to be licensee of Hotelier's Licence serial number 100094, that upon the plaintiff: (i) giving to the Third Defendant a direction to transfer any or all of the nine poker machine entitlements allocated in respect of Hotelier's Licence serial number 100094 to such holder of an hotelier's licence issued the Liquor Act 1982 as the plaintiff may in writing nominate. (ii) notifying the First and Second Defendants in writing of the giving of the direction set out in (i) each of the First and Second Defendants do all such acts, execute all such documents and do all such things necessary on the part of each to enable the transfer referred to in (i) to be effected. 6. Up to and until the Third Defendant ceases to be licensee of the Hotelier's License serial number 100094 restraining the Defendants and each of them from dealing with or disposing of or purporting to deal with or dispose of any or all of the nine poker machine entitlements allocated in respect of Hotelier's Licence serial number 100094 except to such holder of an hotelier's license issued under the Liquor Act 1982 as the plaintiff may in writing direct. 7. Until the Third Defendant ceases to be licensee of Hotelier's Licence serial number 100094, is bound to do everything necessary on his part to transfer and enable the transfer to such holder of an hotelier's licence issued under the Liquor Act 1982 as the plaintiff in writing directs, of the nine poker machine entitlements allocated in respect of Hotelier's Licence number 100094. 8. Until the Third Defendant ceases to be licensee of Hotelier's Licence serial number 100094 restraining the Defendants and each of them from taking any action or doing any thing to obstruct or hinder the sale by the Plaintiff or at his direction of the nine poker machine entitlements allocated in respect of the hotelier's license serial number 100094 to a holder of an hotelier's license issued under the Liquor Act 1982.

The Appellants seek to have each of the declarations and orders set aside.

Dealing with poker machine entitlements 52 The Appellants took issue with the contention that Mr Garcia, as the then holder of an hotelier's licence, could exclude the poker machine entitlements from the sale agreement, because, so it was argued, he could not sever them from the hotelier's licence in respect of the hotel. His Honour dealt with this issue at [71]: "At the time when Mr Garcia entered into the agreement for sale of the hotel business he was still the licensee and consistently with Jabetin , he held what in other circumstances may be described as "the property" in the subject entitlements … . Clearly his rights in the subject entitlements were contingent upon the requirement that they be tethered to a hotelier's licence. Equally clearly, subject to that contingency, the rights to the entitlements were capable of being disposed of and made the subject matter of a trust relationship."

(The emphasis was that of his Honour and the words omitted referred back to a comment at [68] that labels such as "property" are of limited significance.) 53 On dealing with clause 11 of the agreement, his Honour concluded at [79] that - "… the clause, and in particular sub-clause 11.3 properly construed, sufficiently clearly identifies the parties (sic) objective intent which was that Mr McAsey be bound to deal with the subject entitlements for the benefit of and as directed by Mr Garcia. Clause 11.4 is confirmatory of that construction."

His Honour was satisfied that the clause was not "void for uncertainty": at [80]. 54 His Honour went on to say at [81]: "The present circumstances justify the above finding in terms of contractual rights and the findings which follow in terms of rights in trust. Both the contractual and trust rights are needed to give full ambit to the rights of Mr Garcia."

At [82] his Honour noted that the effect of clause 11 may be to create an express trust or alternatively a resulting trust, although it appears that what his Honour had in mind was an implied trust. At [83] his Honour concluded: "However, ultimately I have come to the conclusion that a constructive trust is seen to arise. … I accept that it is seen to have been the plain intention of Mr Garcia and Mr McAsey under the sale agreement that Mr McAsey was not paying for and was not purchasing the property rights to the subject entitlements and that Mr Garcia should retain the right to deal with the entitlements and the benefit of them, provided that no breach of the Act would take place. To my mind subject to what is said below, the creation of this trust is capable of recognition consonant with the Act."

The qualification to which his Honour adverted was identified at [84] as being that Mr McAsey continue to hold the hotelier's licence. For the trust to extend beyond that period, his Honour concluded, was a result which "clearly contradicts the scheme of the Act". 55 The Appellants argued that to uphold this conclusion, it was necessary to accept that the statutory poker machine entitlements constituted a form of property capable of being held in trust. Either the Gaming Machines Act did not contemplate a division of legal and equitable interests in the entitlements, or, if it did, the equitable interest could not be vested in someone other than the holder of the relevant hotelier's licence. Since the holder of the licence would also hold the legal interest in the entitlements, the statutory scheme demonstrated that no trust could be created. 56 To the extent that the judgment below relied upon passages in the judgment of this Court in Jabetin, the Appellants sought leave to argue that those passages were wrong. 57 As it was by no means clear that the Appellants were suggesting that the result in Jabetin was wrong, and as it was necessary in any event to consider the reasoning of the Court in Jabetin, in order to understand the arguments being presented in this appeal, the Appellants were invited to develop their arguments fully, the Court reserving for consideration in this judgment, whether the Appellants were indeed seeking to reargue Jabetin and, if so, whether they should have leave. As appeared during the course of argument, the Appellants went so far as to submit that Jabetin, although not wrongly decided in terms of its outcome, nevertheless contained some statements relating to the construction of the Gaming Machines Act which were wrong. This was because they were inconsistent with the propositions established by the High Court in Jack v Smail (1905) 2 CLR 684 and Slatter v Railway Commissioners (NSW) (1931) 45 CLR 68, that an hotelier's licence did not constitute "property", from which it followed, so it was argued, that the statutory poker machine entitlements which were allocated "in respect of" an hotelier's licence could not themselves constitute "property" which could be owned or the beneficial interest in which could be subject to a trust. 58 For reasons which are set out below, the Court is not satisfied that it is necessary, in order to determine the present case, to adopt a construction of the relevant provisions of the Gaming Machines Act which would conflict with the reasoning in Jabetin. Accordingly, the question of leave does not arise. Nor, in context, should the statements in Jabetin be seen as inconsistent with the High Court authority referred to above. In addition, the Court is not persuaded that there is any sufficient reason to doubt the correctness of what was said by the President in Jabetin (Sheller JA agreeing and Hodgson JA agreeing subject to some additional comments), when those statements are read in their context. 59 As the primary judge correctly identified, the proposition on which Mr Garcia was entitled to succeed could not involve a severance of the poker machine entitlements from the hotelier's licence which he agreed to transfer to Mr McAsey. Although s 19(1) of the Gaming Machines Act is silent as to the person who is entitled to transfer a poker machine entitlement, it may reasonably be inferred that the transferor must be the holder of the hotelier's licence in respect of which the entitlements are allocated. The relief sought by Mr Garcia in the amended summons was consistent with this conclusion: he recognised that whatever interest he might have in the disposition of the entitlements, he could only effect a transfer of the entitlements by directing Mr McAsey to transfer the entitlements to another hotelier's licence and to have Mr McAsey account for the proceeds of the transfer to him. 60 The parties did not seek to demonstrate at trial the means by which the hotelier's licence was transferred to Mr McAsey. Nevertheless, it may be inferred from the terms of the sale agreement that an application for transfer was made pursuant to either ss 41 or 42 of the Liquor Act, being an application which may be granted under s 61. The parties apparently envisaged that there might be a provisional grant of the application for transfer pursuant to s 61(3). It may also be inferred that any application made did not suggest that Mr Garcia was seeking to reserve to himself any legal or equitable interest in the hotelier's licence. 61 It follows that Mr Garcia, who presently holds no interest in the hotelier's licence, cannot hold any legal or equitable interest in the poker machine entitlements allocated in respect of that licence. That conclusion is, for reasons noted below, not only consistent with Jabetin but required by its reasoning. That aspect of the reasoning is not challenged by the Appellants: nor did Mr Garcia seek to reargue Jabetin, although at times his arguments came close to challenging parts of the reasoning. 62 The second declaration made below did not expressly state that the poker machine entitlements were held by Mr McAsey on trust for Mr Garcia: rather, what was declared to be held was "the benefit" of the entitlements. If that terminology was intended to avoid the conclusion that some interest in the entitlements was vested in a person who did not hold an hotelier's licence, there is no substance to the distinction. It follows that that declaration should not have been made. 63 It does not follow from that conclusion that orders 4, 6 and 8 which require Mr McAsey to do certain things, for so long as he retains the hotelier's licence in relation to the Hotel, must necessarily fail. However, to uphold those orders, it is necessary to rely solely upon the contractual arrangements and the grant of relief must be in the nature of specific performance. 64 However, as appears from his Honour's judgment at [78], the Appellants argued that specific performance of such a clause could not be ordered unless and until it had been determined that Mr Garcia in fact had a right to "ownership, compensation or damages" within the meaning of clause 11 of the sale agreement. 65 The primary judge rejected this argument (at [79]) finding that clause 11 was not void for uncertainty (at [80]) and was intended to bind and did contractually bind Mr McAsey to deal with the subject entitlements for the benefit of and as directed by Mr Garcia (at [79]). However, rather than ordering that that obligation be specifically performed, for reasons that are not entirely clear, his Honour appears to have relied on the existence of a trust as the appropriate basis on which to found a remedy to enforce Mr Garcia's rights: at [81]-[83]. If that finding as to the existence of a trust cannot be sustained because it involves an equitable interest in Mr Garcia in relation to the entitlements, then, the basis for the declaration to that effect and the consequential orders in the form adopted by his Honour disappears. 66 Before leaving the question of the validity of the second declaration, it is necessary to consider whether the view expressed above, namely that no equitable interest arose in Mr Garcia as a result of the sale agreement, or otherwise, is inconsistent with the approach taken by this Court in Jabetin.

Re-arguing Jabetin 67 The application by the Appellants for leave to reargue the decision of this Court in Jabetin was in one sense precautionary and reflected a concern that the arguments sought to be presented by the Appellants might be inconsistent with the reasoning, if not the conclusions, of the Court in that case. However, on a fair reading of Jabetin, those concerns do not arise. 68 The first matter dealt with in Jabetin concerned the "financial interest" of the lessors in that case in the hotelier's licence: this will be addressed below. The second matter dealt with in Jabetin was an appeal in separate proceedings in which the lessee and licensee, Benwine, sought a declaration that upon the expiry or earlier determination of the lease, Jabetin would hold any of the poker machine entitlements which remained allocated in respect of the hotelier's licence of the premises, on trust for Benwine. That would have resulted in Benwine retaining an equitable interest in the entitlements at a time when it no longer held the hotelier's licence. Nevertheless, the President agreed (at [53]) with the trial judge, Gzell J, that a poker machine entitlement is in the nature of property capable of being the subject matter of a trust provided that any such trust is consonant with the legislative scheme of the Gaming Machines Act. Thus, as Campbell J held in Wonall Pty Ltd v Clarence Property Corporation Ltd (2002) 58 NSWLR 23, that Act does not preclude consonant equitable interests being created: Jabetin at [57]. 69 The President thus concluded (Sheller JA agreeing) at [86] and [87] in the following terms: "[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 [ Gaming Machines Act ] 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 the 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."

Accordingly, the declaration was set aside. 70 These passages are consistent with the case put by the Appellants. As Mr Garcia pointed out, the comments of the President may overstate the matter in one respect, because the Gaming Machines Act does envisage particular circumstances in which a right to transfer a poker machine entitlement may exist after a licence has been surrendered or cancelled: s 23. That express exception, however, tends to confirm rather than undermine the central proposition explained by the President, namely that a poker machine entitlement is allocated "in respect of" a hotelier's licence and can only be transferred to the holder of another hotelier's licence. Subject to a separate contract or dealing giving rise to a trust situation capable of recognition consistent with the Gaming Machines Act (Jabetin at [78]), a former licensee cannot retain any form of ownership (be it a legal or equitable interest) in an entitlement (unless, of course, he or she has obtained another hotelier's licence to which the entitlements have been transferred): Jabetin at [84]. This reasoning is consistent with that presented by the Appellant in this appeal and accepted above. As the President noted at [80]: "In any event, the equitable interest asserted by Benwine contradicts the scheme of the [ Gaming Machines Act ]." 71 The concern raised by the Appellants was apparently directed to the proposition in the first sentence of [87] that a poker machine entitlement "is a species of property capable of being owned, disposed of and made the subject of a trust". That proposition, it was asserted, was inconsistent with the conclusions of the High Court in Jack v Smail (supra), affirmed in Slatter v Railway Commissioners (NSW) (supra) that a hotelier's licence does not constitute a form of property. However, it is not necessary for present purposes to enter into the metaphysical debate as to the meaning of such terms as "property" and "ownership": it is sufficient to agree with the trial judge that such labels should be used with caution. (See further Yanner v Eaton (1999) 201 CLR 351 at [17]-[20] (Gleeson CJ, Gaudron, Kirby and Hayne JJ) and [85]-[86] (Gummow J).) 72 To the extent that poker machine entitlements are transferable interests, that follows from the terms of the statute and is not in dispute. To the extent that they can be the subject of a trust, the question would arise as to whether the legal and equitable interests in the entitlements can be separated and separately held. All that the Court needed to determine in Jabetin, and all one would understand the President to be saying, is that the beneficial ownership of such an entitlement cannot vest in any person, whether by way of trust or otherwise, who is not at the relevant time the holder of a hotelier's licence. Nor can it be transferred to any person, including the holder of a hotelier's licence, unless it is approved by the Board. The comments of the President should not be read out of context: read in context they support the submissions advanced by the Appellants. There were times when senior counsel for Mr Garcia seemed to recognise the fact that it might be he, rather than the Appellants, who should be seeking to reagitate Jabetin. Nevertheless, he did not seek to take such a step. 73 For present purposes it is not necessary to give any further consideration to that matter except to say that the result in Jabetin, together with the reasoning of the Court as explained above, is entirely consistent with the approach adopted in this judgment. Accordingly, far from being clearly wrong, the Court is satisfied that the statutory analysis provided by the President in Jabetin was relevantly correct. 74 On the basis that the reasoning of the President in Jabetin does not dictate any conclusion contrary to that proposed above, Mr Garcia was not entitled, once he ceased to hold the hotelier's licence, to obtain either the declaration that Mr McAsey held the entitlements on trust for him, or, on the same basis, that Mr McAsey was required to take such steps as might be necessary to give effect to his equitable interest in the entitlements as he had no such interest which was consonant with the Act. The question may then arise as to whether the orders made by the trial judge can be supported on a different basis, namely an entitlement to specific performance of the contractual obligations in clause 11 of the sales agreement between Mr Garcia and Mr McAsey. 75 It should be clear that that question arises not because Mr Garcia had any equitable interest in the entitlements once he had ceased to be the lessee and licensee of the hotel but because, to adopt the language of the President in Jabetin at [78], there was a separate contract with Mr McAsey, who held both the legal and beneficial interest in the entitlements as licensee of the Hotel, requiring him to dispose of those entitlements by way of transfer at Mr Garcia's direction pursuant and subject to ss 19 and 20(1) of the Gaming Machines Act. As will appear, the case was not decided by the primary judge on that basis in that the relief granted by his Honour was on the basis of Mr McAsey holding an equitable interest in the entitlement on trust for Mr Garcia.

Declaration as to "financial interests" 76 Before turning to the question just identified, it is convenient to deal with the first declaration, namely that the present Appellants, being the lessors of the premises, had no financial interest in the hotelier's licence, for the purposes of s 19 of the Gaming Machines Act. The effect of par (c) of sub-s 19(3) (set out at [22] above) is that the application for the Board's approval must "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". 77 The reason why Mr Garcia sought a declaration in relation to whether the Appellants had such a financial interest in the hotelier's licence held by Mr McAsey was, as indicated in the reasons of the trial judge at [37] that, the Appellants having "written to the Board asserting that they have a financial interest in the hotelier's licence … and requesting that the Board refrain from approving any transfers" until the Court proceedings had been finalised, it appeared unlikely that the Board would approve the transfers prior to the expiry of Mr McAsey's tenancy. Mr Garcia asserted that, in such an eventuality, he might be unable to assert his rights under his agreement with Mr McAsey. 78 This concern, however, highlights two difficulties in granting a declaration in the form sought by Mr Garcia. First, the declaration is in terms which involve mixed findings of fact and law. To the extent that there are findings of fact, they are those made by the Court: s 19(3)(c), however, confers on the Board the obligation to form the relevant opinion. If the Board were to formulate such an opinion on a wrong legal basis, its opinion could be reviewed: see authorities referred to by Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [128]-[136]. However, if the Board were to apply itself properly to the correct legal question, it would be entitled to reach a different view on the facts from that determined by his Honour. 79 Secondly, although no considered argument was directed to the point in this Court or, apparently, in the Court below, the time at which the relevant factual matters must be addressed is either the time at which the transfer is executed, or the time at which it is approved by the Board. If it is the latter, the very fact that Mr Garcia fears that circumstances may change, suggests that it would be inappropriate for the Court to make a declaration in relation to the very matter upon which the opinion of the Board must be sought at a time, and in circumstances which may differ from those which will need to be considered by the Board. 80 Putting the second issue to one side, and assuming that the relevant time at which a financial interest must be demonstrated is the time at which the transfer was executed by the parties, the contracts negotiated by Mr Garcia appear not to have been entered into at the date of the hearing: Judgment at [36]. 81 It is possible that Mr Garcia could have sought a declaration along the lines that, on the basis of the lease (properly identified) entered into between the Appellants and Mr McAsey, it was not open to the Board to form the opinion that the Appellants had a financial interest in the hotelier's licence. However, no declaration was sought in those terms; nor was that the form of the declaration made. 82 Even if such a declaration had been sought, and again leaving to one side the temporal issues, it is by no means clear that such a declaration should have been made by the Court, in the exercise of is discretion. On one view, that course would have been premature. That was the view taken by Campbell J in Wonall Pty Ltd v Clarence Property Corporation Ltd (2002) 58 NSWLR 23 at [54]-[59]. 83 Mr Garcia submitted that such a declaration would be appropriate on the basis of the approach adopted by the High Court in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421. However, that case does not assist Mr Garcia. The question before the High Court concerned the interest asserted by Jododex under an exploration licence, which had been the subject of renewals, when the mining warden was being asked by Forster to issue an exploration licence. The mining warden had no power to issue such a licence over land which was the subject of an existing mining tenement held by another person. That constraint on the exercise of power was not dependent upon the opinion or satisfaction of the mining warden, a point addressed by Gibbs J in considering whether the Court should have made the declaration at the suit of Jododex, which had the effect of denying the mining warden power to grant the licence sought. At 436 his Honour stated: "With all respect, I find it difficult to see any reason why the court should have lacked jurisdiction to declare that Jododex held the right which it claimed, namely the right of the holder of an exploration licence validly renewed. There is no provision in the Act that gives to any other tribunal exclusive jurisdiction to decide the question whether a person is the holder of a valid exploration licence, or that otherwise withdraws the determination of that question from the jurisdiction of the Supreme Court."

Indeed, at 437, his Honour went further: "The Act does not provide a specific remedy to which the holder of an exploration licence who seeks to establish the rights which it gives him is bound to resort." 84 There was, accordingly, a question as to whether the Supreme Court should, in the exercise of its discretion have granted relief, as it did. The High Court upheld the grant of relief, but, for the reasons noted above, it is clear that the circumstances differed in a significant respect from those in the present case. 85 In Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558, at [136] Spigelman CJ (Mason P and Handley JA agreeing) stated: "There was a well-established principle that this Court should exercise restraint with respect to the exercise of its supervisory jurisdiction in relation to the Commission. This principle is reflected in a body of case law both in this Court and the High Court with respect to the Commission and its predecessors or equivalent tribunals."

After considering authority, including comments in the joint judgment in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 118-119 and Forster v Jododex Australia Pty Ltd (supra) the Chief Justice continued at [142]: "The determination of jurisdictional facts frequently overlaps with the fact-finding required for the exercise of the jurisdiction. There are numerous comments in the cases which indicate that a court exercising supervisory jurisdiction should be slow to intervene in such circumstances and should permit the tribunal which has been designated by Parliament to make such findings to do so in the first instance."

That principle was qualified, as his Honour held, in circumstances where a privative clause might prevent the exercise of any appellate or supervisory jurisdiction. However, in other cases the weight of authority is, as his Honour noted, against premature, pre-emptive, intervention. 86 In the present circumstances, there is no legal requirement to intervene at this stage; there is no reason to think that the Board will fail to exercise its powers properly - indeed, having the assistance of this Court in Jabetin Pty Ltd v Liquor Administration Board [2005] NSWCA 92, handed down before the hearing before the primary judge in the present matter, one would expect it to apply what is now established as the proper construction of the relevant provisions of the Gaming Machines Act. In circumstances where it cannot be said that there is any clear absence of jurisdiction in the Board - all parties recognising that the Board has both authority and power to deal with the matter before it - the proper exercise of the primary judge's discretion should have been to refuse to make a declaration in the terms of the first declaration made below. 87 It may have been thought that the judgment of his Honour in this respect was reflective of the approach of this Court in Jabetin, in circumstances which were not reasonably distinguishable. However, such reasoning would repeat the error already identified. The issue which arose in Jabetin concerned the construction of s 19(5) and (6) of the Gaming Machines Act. The issue arose in judicial review proceedings, in which it was asserted that the Board had erred in law in determining that the lessors of the premises (Jabetin) had no financial interest in the hotelier's licence attaching to the leased premises. The construction of the section adopted by the Board was found by the Court not to be attended by legal error: [2005] NSWCA 92 at [36]-[49]. In the present case, the Board has made no decision; if it adheres to the approach it adopted in Jabetin (found not to be in error by this Court on appeal) as to the construction of the section, any decision it makes will be effectively unreviewable on that ground, because it will be consistent with the conclusion of this Court in Jabetin. Because, for the reasons set out above, the declaration adverse to the Appellants should not have been made, there is no need to address the legal question determined by Jabetin.

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."

Reference to a determination that Einstein J did not err in making "the substance of" the orders in the nature of injunctive relief, suggests that the parties intended to leave open to the Court the possibility that those orders might be varied in some respect. For the reasons noted above, the Court is not presently in a position to deal with that possibility, in large part because no submissions have been presented to it as to how the orders might be varied, where they are not supportable on the basis accepted by the primary judge. Further, the use of the conjunctive "and" leaves ambiguous the result if the Court considers that his Honour erred in making the declarations, even if his Honour did not err in making some or other injunctive orders. 104 There are additional problems: as noted above, the Board does not make a "conditional transfer"; whether the Board can give "conditional approval" is unclear, and whether the parties can determine the date from which the transfer is effective is also unclear. 105 The next undertaking is given by the Appellants, in the event that the matter last discussed has application. There is apparently no undertaking given by Mr McAsey to do anything in the event identified. 106 Because the orders were made by consent, it seems likely that none of these matters was raised before the President and the ramifications of those orders on any relief this Court should grant by way of variation of the primary judge's orders have not been addressed. In the circumstances, it is therefore inappropriate for the Court to make any orders at this stage: accordingly the Court will direct that the parties indicate in writing within 7 days what further order should be made or further steps taken to dispose of the appeal. I would grant liberty to apply with respect to any proposed extension of that time, such application to be made, by direction of the Presiding Judge, to me. 107 M W CAMPBELL AJA: In this matter I have had the benefit of reading in draft the judgments of Tobias and Basten JJA. 108 I agree with their Honours that, at present, it is inappropriate for the Court to make any order for the disposal of the appeal and that the Court should give the directions to which Basten JA refers in [106] of his judgment. 109 I agree with the reasons of Basten JA subject to the qualifications and comments made by Tobias JA in his judgment with which I agree.

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