By James Atkinson
In an important decision for publicans, the Supreme Court of New South Wales has ruled that a pub's pokies entitlements were the property of the venue operator rather than its landlord.
Bayview Hotel Batemans Pty Ltd operates the south coast pub of the same name on a 20-year lease expiring July 2014.
In a February Supreme Court hearing, the company and licensee Michael O'Brien sought a declaration that it was their right as lessee to sell or transfer the pub's 17 gaming machine entitlements (GMEs), which they acquired between 2001 and 2005.
Enima Pty Ltd, the landlord, made a cross-claim seeking that the lessee be restrained from selling the GMEs, which Enima claimed should be transferred to its ownership at the expiry of the lease.
The landlord argued that GMEs were effectively tied to the liquor licence, and the sale and transfer of GMEs by the operator without Enima's consent would be in breach of the lessee's obligations under the lease.
But the Bayview Hotel operators argued that their lease was entered into before GMEs came into existence and the pub's liquor licence did not extend to cover the GMEs.
On March 25, Justice William Nicholas found that at the time the lease was entered into in 1994, "the parties intended to confine their agreement to the conduct of a hotel business for the sale and consumption of liquor".
"Had the parties contemplated or intended that the business would involve some activity for which a licence was required other than, or different from, the sale of liquor, it is reasonable to assume that an appropriate provision would have been included [in the licence]," he said.
"I am also satisfied that the lease says nothing concerning gaming, or the operation of poker machines, which would justify the inclusion of GMEs… within the definition of 'licence'".
Justice Nicholas declared that the GMEs were the lessee's to sell or transfer and dismissed the cross-claim by Enima.
He ordered Enima to pay Bayview Hotel and Michael O'Brien's legal costs.