New South Wales Supreme Court CITATION : Vameen Pty Ltd v Yamma Pty Ltd [2006] NSWSC 590 HEARING DATE(S) : 15 May 2006 JUDGMENT DATE : 15 May 2006 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Interlocutory injunction granted to restrain sale of poker machine entitlements and matter sent to Expedition List. CATCHWORDS : GAMING AND WAGERING [50] – Other matters – Poker machines – Entitlements – Statutory scheme – Dealings possible under contract or trust – Circumstances in which interlocutory injunction should be granted to protect contractual rights – Gaming Machines Act 2001 ss 15 and 19. LEGISLATION CITED : Gaming Machines Act 2001 s 19(3)(c) Jabetin Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602 Killen v Rennie [2005] NSWCA 392 CASES CITED : Masters v Garcia [2005] NSWCA 287 Wonall Pty Ltd v Clarence Property Corporation Ltd (2003) 58 NSWLR 23 Meagher Gummow and Lehane, Equity Doctrines and Remedies (4th ed 2002) [21-045] Vameen Pty Ltd (P) Yamma Pty Ltd (D1) PARTIES : Ross Leslie Jenkins (D2) Boydah Pty Ltd (D3) Owner of Hotelier's Licence for Caves Beach Hotel (D4) FILE NUMBER(S) : SC 2694/06 P Singleton (P) COUNSEL : A J Rollins, Solicitor (D1 & 2) No appearance (D3 & 4) Austen Brown, Boog (P) Deutsch Partners Lawyers (D1 & 2) SOLICITORS : O'Sullivan Saddington Lawyers (D3) No appearance (D4) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J MONDAY, 15 MAY 2006 2694/06 VAMEEN PTY LTD v YAMMA PTY LTD & ORS JUDGMENT 1 HIS HONOUR: This is a contested interlocutory injunction application which has been close fought and raises considerable complexity and difficulties. Those difficulties largely arise out of the subject matter of the application, which is poker machine entitlements, and the difficulties largely arise out of the novelty and complexity of the Gaming Machines Act 2001 ("the GMA") under which those entitlements are created. 2 In this case the plaintiff granted a lease of hotel premises to the defendant prior to the commencement of the GMA. At that time, poker machine entitlements did not exist and the right to operate poker machines was regulated by conditions imposed on the hotelier's licence. 3 It is clear from the lease that seven gaming machines were leased with the premises and the plaintiff is entitled to a reversion of those machines as chattels at the end of the lease. 4 Upon the commencement of the GMA, seven poker machine entitlements were issued to the lessee as the holder of the hotelier's licence at that time. The defendant now seeks to sell three of those poker machine entitlements. The plaintiff seeks to restrain that sale. The plaintiff claims that there was an implied term in the contract for lease to the effect that, if a change of statutory regime came into effect regarding the right to operate poker machines during the currency of the lease, the lessee would at the end of the lease take all steps in its power to effect the reversion of the right to operate poker machines to the lessor. 5 There is also a claim made upon the basis of a resulting trust, arising from the fact that the lease amounted to a transfer of property, but did not wholly dispose of the beneficial interest, so that the beneficial interest not disposed of comes back to or remains with the transferor after the transfer: see Killen v Rennie [2005] NSWCA 392 at [69]. 6 I have come to the conclusion that there is a serious question to be tried in relation to the plaintiff's claim of the implication of a term to the effect or along the lines of that set out above. I do not come to any conclusion that there is a serious question to be tried in relation to the trust issue. 7 There have been a number of decisions as to the incidents of this rather strange new animal: see the decision of Campbell J in Wonall Pty Ltd v Clarence Property Corporation Ltd (2003) 58 NSWLR 23 and the decisions of the Court of Appeal in Jabetin Pty Ltd v Liquor Administration Board (2005) 63 NSWLR 602 and Masters v Garcia [2005] NSWCA 287. 8 In my view, Jabetin does not govern the situation. It was concerned with the question of whether or not there could be any equitable interest in poker machine entitlements in the circumstances of that case, which was decided in the negative. 9 In Masters v Garcia, it was made plain in the Court of Appeal that, even though a person may have an interest in a poker machine entitlement (which is in the nature of property), that person does not thereby have a financial interest in the relevant hotelier's licence within the meaning of s 19(3)(c) of the GMA, so as to be a person required to support a transfer of entitlements. But it is possible that that person may have rights under contract or by way of trust in respect of the poker machine entitlements, which may be enforceable by the Court in appropriate circumstances. 10 The case which is perhaps closest to the present question is the decision of Campbell J in Wonall, where his Honour dealt with the effect of a reversion clause in a lease and negatived in the circumstances of that case the creation of relevant rights in favour of the lessor: see [48] - [52]. 11 However, I am not entirely certain that that passage was necessary to his Honour's decision; more importantly, the terms of the lease relied on in that case differ from those of the present lease and the question of whether or not some term is implied is one which turns in every case upon the terms of the particular instrument. 12 There are difficulties in the way of the argument which Mr Singleton, of counsel, has put on behalf of the plaintiff. Mr Hatzis, of counsel for the defendant, has relied particularly on the passage in Wonall that I have cited as negativing that there is any serious question to be tried in this case, but I do not accede to his submission that it completely destroys the argument. 13 Here, the argument depends upon the fact that seven machines were leased with the premises; that the lessee, through the new legislation, had issued to it seven poker machine entitlements upon the GMA coming into effect; and that the lease contains, along with other provisions that Mr Singleton has referred to, a provision for the retransfer of the hotelier's licence to the lessor at the end of the lease. The poker machine entitlements are, under the legislation, issued "in respect of" the hotelier's licence. 14 I do not do full justice to the arguments of the plaintiff, nor, indeed, the arguments of the defendant, in this judgment delivered among the exigencies of a busy Duty List. But the above paragraphs reflect a general outline of the plaintiff's arguments, which I find to raise a serious question to be tried. 15 The defendant may lose the opportunity of a contract for the sale of the three poker machine entitlements for $375,000 if injunctive relief is granted. On the other hand, the plaintiff will clearly lose any right to obtain those entitlements at the end of the lease if it is not granted. 16 There is evidence from the defendant's solicitor that there is an established market in poker machine entitlements and a suggestion that that market is falling. However, his evidence concerning this is in the most general of terms and I am far from convinced that the calculation of damages in the plaintiff's favour would be an easy matter if it succeeded in establishing a breach of contract. 17 The evidence as to the financial state of the defendant is exiguous. But there is some suggestion in the fact that, when the contract for the lease was entered into, the defendant retained a right to rescind the contract, if it could not obtain finance in a sum of $165,000, that there may be substantial doubts about its ability to meet a judgment for damages if obtained: see Meagher Gummow and Lehane, Equity Doctrines and Remedies (4th ed 2002) [21-045]. 18 The conclusion that I come to overall is that damages would not be an adequate remedy in the present case and that the balance of convenience favours the grant of injunctive relief until further order. I say this on the assumption that this matter should proceed in the Expedition List, so that the time before which the proceedings are heard and the question is finally determined will be relatively short. 19 Whilst I cannot and do not attempt to constrain the exercise of discretion by the Expedition Judge, it seems to me that any substantial delay in the finalisation of the matter, in view of what has been said of the market in these commodities, could be substantially detrimental to the defendant. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.