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									                                 BOARD DECISION

                  POKER MACHINE ENTITLEMENT TRANSFER

    GREAT SOUTHERN HOTEL, SYDNEY TO KINGS HEAD HOTEL, SOUTH
                          HURSTVILLE


On 14 September 2007 the Board received a Poker Machine Entitlement (PME)
Transfer Form in relation to the Great Southern Hotel, Sydney from Richard Mark
Haines the licensee, as seller and signed by Great Southern Bar Pty Ltd (“the
lessee”), as business owner. No particulars were given for licence owner and no
particulars given for "Name of any other person or corporation who has a financial
interest". The Board was notified in the lodgement letter of 13 September 2007 by
Back Schwartz Vaughan (“BSV”) that it was the seller's opinion that the lessor did not
have any financial interest because of the contents of the lease and brief reasons
were given. The lease was submitted. The lessors’ solicitor was notified of a right to
respond.

On 5 October 2007, Dominic Stamfords (“DS”) lodged submissions on behalf of GMT
Hotel Holdings Pty Limited (“GMT”), the licence and premises owner (“the lessor”)
claiming a financial interest for several reasons.

The Board has considered the submissions.

The Board's function is to determine whether the lessors have a financial interest in
the hotelier's licence. Section 19 of the Gaming Machines Act is the relevant
provision.

The Board accepts that section 19 (5) is disjunctive. The lessors have a financial
interest if they establish either an entitlement to receive any income derived from the
business carried on under the authority of the licence or an entitlement to receive any
other financial benefit or financial advantage from the carrying on of the business.


THE LICENCE OWNER

GMT claims to be the licence owner, and has not signed the transfer form.

The question of ownership of the licence is a question of relevance only in so far as it
raises an issue of financial interest under section 19 which is the issue for
determination in this decision.

Einstein J in Garcia v Masters 2005 NSWSC 480 at paras 93 to 105, particularly 104
held that the fact that the lessors comprise the licence owner is immaterial. The
declaration that His Honour made consequent upon that finding was set aside but the
Court of Appeal in Masters v Garcia NSWCA 287 at paras 86 and 87, Basten JA,
found “there is no need to address the legal question determined by Jabetin”.
[Jabetin Pty Limited v Benwine Pty Limited NSW Court of Appeal 2005 NSWCA 92].
His Honour adopted the findings of Mason P at paras 41 to 48 and Hodgson JA at 91
to 96 which established the exhaustive nature of the definition in s19(5). Accordingly,

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the finding of law made by His Honour was undisturbed. The Board is satisfied that if
the lessors are in fact the licence owners they are not required, for that reason alone,
to sign the transfer form.

The Board’s records in fact show the lessor, GMT, as the licence owner.


THE LEASE

The prevailing lease of the premises is from the premises owner, GMT to “Great
Southern Bar Pty Limited”, and commenced on 1 August 1998.

DS argues that a number of provisions of the lease prevent the lessee from
transferring the PMEs because they are allocated in respect of the licence. It is
noted however that in fact the transfer here is by the licensee not the lessee.

The Board takes references made to “the lessee” as relating to whether the premises
owner/lessor has a relevant financial interest under section 19 in the licence so as to
be required to consent to the transfer.

The first clause of the lease referred to by DS is clause 10.3 which concerns the use
of the business name in relation to the business conducted pursuant to the licence.
In a letter dated 5 October 2007 DS notes that clause 10.3 provides that

      “the tenant may only conduct its business in the premises under a name
      approved in writing by the landlord prior to the commencement of the lease”

and that

      “if the tenant’s trade name includes or refers to or is similar to the name of the
      building the tenant must upon expiry or termination of the lease deregister the
      name or transfer the registration to the landlord or its nominee”.

The trade name set out in item 9 on the lease is approved and that approved trade
name is Great Southern Bar. There is no dispute between the parties that the
business is currently being carried on under that business name or that on
termination of the lease GMT may carry on the business of the licence under that
name. It is not clear to the Board how this is said to relate to the issue of the
financial interests asserted pursuant to section 19.

The letter also refers to clause 10.4 of the lease which requires the tenant to maintain
and renew from time to time all licences, permits and registrations required for the
carrying on of the business of the tenant and the premises. It is submitted that the
poker machine entitlements transfer breaches clause 10.4 because PMEs “are
required for the carrying on of the lessee’s business in the premises”. That is
asserted because without the PMEs transferred the lessee would lose the right to
operate the corresponding number of machines. However, a poker machine
entitlement is not a licence as Campbell J. found in Wonall (2003) 58 NSWLR 23 at
Para 49. Further the Board has considered this matter in numerous other contested
transfers and has found that the nature of a PME as compared to a licence means
the interest of the premises owner in the PMEs being available at the end of the

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lease does not for that reason alone create a relevant financial interest under section
19. Moreover, the Board does not accept that continued possession of PMEs is a
requirement for the carrying on of the lessee’s business in the premises. Whilst in
the absence of PMEs the lessee would be unable to operate the gaming machines
this would not prevent the business of the hotel from continuing.

Under section 19 (5) it is necessary to focus on any present financial interests in the
business of the hotel, and not to on any reversionary interest.

In the same way the further submission made by DS that there is a resulting or
constructive trust or equitable interest on the part of GMT in the PMEs is not a right
that falls within section 19 (5), as it does not comprise a present financial interest.
The Board acknowledges that it is bound to follow the decision of Mason P. in
Jabetin 2005 NSWCA 92.

The Board finds that the lessor does not establish a section 19 financial interest on
these arguments.


BREACH OF LEASE

The general submissions that the lessee is in some way in breach of the lease from
the premises owner is not a ground upon which the Board should refuse to approve
the transfer. The Board’s function is to determine the section 19 question not to
determine whether there is a breach of the lease. Such issues are appropriately
determined in another forum and the Board does not accept it should refuse to
approve the transfer on this basis. The Board is satisfied that the only relevant
financial interests in the hotel licence are those of the licensee and lessee, that the
lessor has no financial interest, and that the lessor’s consent to the transfer is not
required.

The Board is satisfied that the poker machine entitlements transfer form is
accompanied by all the necessary signatures and consents required by the
legislation and the transfer is approved.




D A Kok
Acting Chairperson on behalf of the Board
2 November 2007




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