FEDERAL COURT OF AUSTRALIA

The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174

THE COURT ORDERS THAT:

1.    The Victorian Commission for Gambling and Liquor Regulation be substituted as the Fourth Respondent to the appeal.

2.    The appeal be allowed.

3.    The First and Second Respondents pay the Appellant’s and the Third Respondent’s costs of and incidental to the appeal.

4.    In respect of the orders made by the Honourable Justice Gordon dated 9 September 2011 in proceeding VID808/2010, set aside paragraphs 1, 3, 5, 6 and 7 and in lieu thereof order that:

4.1    The Amended Application filed on 1 March 2011 be dismissed.

4.2    In addition to the costs referred to in paragraph 2 of the order dated 9 September 2011, the Applicants pay the balance of the Third Respondent’s costs of and incidental to the proceeding from 22 December 2010.

4.3    The Applicants pay the First and Second Respondents’ costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The Victorian Commission for Gambling and Liquor Regulation be substituted as the Fourth Respondent to the appeal.

2.    The appeal be allowed.

3.    The First and Second Respondents pay the Appellant’s and the Third Respondent’s costs of and incidental to the appeal.

4.    In respect of the orders made by the Honourable Justice Gordon dated 9 September 2011 in proceeding VID808/2010, set aside paragraphs 1, 3, 5, 6 and 7 and in lieu thereof order that:

4.1    The Amended Application filed on 1 March 2011 be dismissed.

4.2    In addition to the costs referred to in paragraph 2 of the order dated 9 September 2011, the Applicants pay the balance of the Third Respondent’s costs of and incidental to the proceeding from 22 December 2010.

4.3    The Applicants pay the First and Second Respondents’ costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1    Reasons for judgment in these appeals were published on 12 October 2012. On this date too, the Court directed the appellants to file short minutes of orders to give effect to these reasons. In the event of disagreement about the orders as to costs, the parties were to file short written submissions.

2    There is no disagreement about the substantive orders that should be made to give effect to the reasons for judgment in this matter; and we would make the substantive orders that have been proposed. These reasons are concerned with the question of costs, about which there is disagreement.

3    The State of Victoria (“the State”) and Tabcorp Holdings Limited (“Tabcorp”) seek orders that Sportsbet Pty Ltd (“Sportsbet”) and Eureka Hotel Holdings Pty Ltd (“Eureka”) — the unsuccessful respondents in the appeals — pay the State’s and Tabcorp’s costs of and incidental to each appeal. The State and Tabcorp also propose orders that Sportsbet and Eureka pay the costs of the State and the Victorian Commission for Gambling and Liquor Regulation (“VCGLR”) of and incidental to the proceeding at first instance and the balance of Tabcorp’s costs of and incidental to the proceeding at first instance from 22 December 2010.

4    Sportsbet and Eureka oppose the orders as to costs that the State and Tabcorp seek. In both appeals, Sportsbet contends that the following orders as to costs would be appropriate:

1.    Sportsbet pay 80% of the State’s costs of the appeal and the proceeding at first instance including any reserved costs;

2.    Sportsbet pay 25% of Tabcorp’s costs of the proceeding at first instance;

3.    There be no order as to the costs of the appeal as between Tabcorp and Sportsbet.

Eureka filed no separate submissions.

5    The appellants were successful in both appeals. The State was successful in VID1000 of 2011 and Tabcorp was successful in VID1002 of 2011. Each was also a respondent in the other’s appeal; and each supported the appeal of the other.

6    Ordinarily, a successful party, whether at first instance or on appeal, is entitled to an award of costs in its favour: see Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67] (McHugh J) and 120–122 [134] (Kirby J). Where an appellant is successful in its appeal, the Court would ordinarily order the unsuccessful respondent to pay the costs of the appeal and the proceeding at first instance: see Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at 237 [16] (Black CJ and French J).

7    Of course, there is no hard and fast rule: the costs of an appeal are ultimately in the discretion of the court. Sportsbet argued that it was appropriate to apportion the costs on appeal and in respect of the trial at first instance to take account of the appellants’ failure on the issue as to whether the transactions burdened by the impugned provisions were in trade and commerce between Victoria and the Northern Territory. Sportsbet drew attention to the primary judge’s statement that “[a] significant part of the respondents’ case was directed at establishing that Sportsbet conducts its business in and out of Victoria”: see Sportsbet Pty Ltd v Victoria (2011) 282 ALR 423 at 442 [84]. Sportsbet also submitted that, on the appeals, a significant part of the appellants’ submissions were concerned with this issue.

8    We do not consider that the outcome of the issue as to whether the impugned provisions burdened transactions in trade and commerce between Victoria and the Northern Territory justifies departure from the ordinary position. The outcome of this issue did not relevantly qualify the success of either appellant on its appeal. Both appellants were ultimately wholly successful. The mere fact that a court does not accept all of a successful party’s arguments does not make it appropriate to deal with costs on an issue by issue basis. It cannot be supposed that the issue in question was unreasonably raised at trial or on appeal. There is nothing else disclosed in the circumstances of the case that would support the proposition that the court should depart from the usual order as to costs: compare Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385 at 402–403 [99]–[100] (Campbell JA, with whom Macfarlan and Young JJA agreed).

9    Sportsbet also submitted that either Tabcorp should not have its costs of the appeal or any costs order should reflect the overlap between the State’s and Tabcorp’s submissions. Sportsbet relied on the fact that Tabcorp’s initial status in the proceeding was limited to that of an intervener (subject to conditions); that Tabcorp’s second joinder application succeeded only after Sportsbet amended its pleading to allege that Tabcorp’s fixed odds approval was not lawfully given; and that the primary judge’s rejection of this part of Sportsbet’s case was not challenged on appeal. Sportsbet submitted that “Tabcorp’s interest in the subject matter of appeal has to be read in the light of the initial refusal to join it as a party in relation to the issues that were the subject of the appeal”. According to Sportsbet, these circumstances and “significant overlap in the written submissions as between the State and Tabcorp” meant that “Sportsbet should not be subjected to two costs orders to meet the same argument”.

10    We would reject Sportsbet’s argument that Tabcorp’s “interest in the subject matter of appeal” is in some way lessened by its prior procedural history. Once Tabcorp was joined as a party, its status, both in the proceeding at first instance and on appeal, was that of a party: see Federal Court Rules 1979 (Cth), O 6 r 8; Federal Court Rules 2011 (Cth), Rule 9.05(1). From this point, Tabcorp acquired a party’s rights and obligations with respect to the proceeding, including a party’s entitlement to participate in the trial and to appeal. This principle has been affirmed in considering the principles relevant to an award of non-party costs: see, for example, Symphony Group PLC v Hodgson [1994] QB 179 at 193, accepted in Australasian Academy of Natural Medicine Pty Ltd v Walters (2003) 85 SASR 36 at 49 [63] and Western Ventures Pty Ltd v Resource Equities Ltd (2005) 53 ACSR 568 at 576 [46]. In conformity with general principle, a joined party is a “party” for the purposes of Rule 36.01(1) and may institute an appeal pursuant to this rule: compare Forestry Tasmania v Brown (No 2) (2007) 159 FCR 467 at 470 [12].

11    Further, we would reject Sportsbet’s submission that it should not be required to bear the costs of both the State and Tabcorp. There was no undue overlap between the submissions of the State and Tabcorp. Rather, the appellants conducted their appeals efficiently, having regard to their different interests. Both appellants evidently sought to eschew the unnecessary duplication of submissions. It cannot be said that Tabcorp acted unreasonably in conducting its case separately from the State and the VCGLR since Tabcorp’s commercial interest was different from the public interest of the State: compare Re Octaviar Ltd (No 8) [2010] QCA 57 at [3]–[5]; Statham v Shephard (No 2) (1974) 23 FLR 244 at 246–247. Furthermore, as Tabcorp observed in its written submissions, prior to the hearing of the appeal, Sportsbet took no steps to seek to confine Tabcorp’s conduct as an appellant or to challenge its separate conduct of its case. In this circumstance, Tabcorp was entitled to conduct itself in the manner it did. It is too late to complain of its separate representation and its role as an appellant at this stage with a view to affecting costs orders: compare Credit Lyonnais Australia Ltd v Darling (1991) 5 ACSR 703 at 710.

12    There is one final matter to consider. Tabcorp proposed that its costs at first instance be paid from 22 December 2010, as opposed to 3 March 2012 when the order for its joinder as a party was made. The former date was the date upon which Sportsbet and Eureka filed their Reply, which first raised the allegations as to fixed odds betting. Pursuant to O 6 r 8(1)(a) of the Federal Court Rules 1979 (Cth), which applied when a person “ought to have been joined as a party”, the primary judge granted Tabcorp leave to be joined on the basis of these new allegations: see Sportsbet Pty Ltd v The State of Victoria [2011] FCA 170 at [4], [17]–[21]. Her Honour also held that Tabcorp was entitled to be joined as a respondent under O 6 r 8(1)(b) since, by virtue of these new allegations, Tabcorp’s joinder was necessary to ensure that all matters in dispute in the proceeding might be “effectually and completely determined and adjudicated upon”.

13    Although Tabcorp was not formally joined until 3 March 2011, Tabcorp submitted that, in the period 22 December 2010 to 3 March 2011, it was necessary for it to conduct itself as though it would be joined as a respondent because

the hearing date had already been set down for 11 April 2011; the pleadings were closed and the evidence was due to be filed before Tabcorp’s joinder application was heard; and Tabcorp was given only 2 business days after being joined to file its Defence and to adduce any additional evidence.

In these circumstances — all of which appear on the court file — Tabcorp’s submission should be accepted. Had it not so conducted itself, the brief period between its formal joinder and the trial fairly indicates that Tabcorp would not have been in a position to file its defence as ordered and to adduce evidence and participate in the trial as scheduled. The fact that it had placed itself in this position was also a factor that the primary judge considered when her Honour granted Tabcorp’s joinder application: see Sportsbet Pty Ltd v The State of Victoria [2011] FCA 170 at [20]. Subject to what is said below, we would order that Tabcorp’s costs be paid from 22 December 2011, rather than 3 March 2012.

14    There is no in-principle objection to Tabcorp’s recovering costs from 22 December 2010, rather than 3 March 2011. The authorities show that an order for costs of and incidental to an application may include costs incurred in the preparation for litigation, as well as in the litigation, providing they satisfy the relevant test for determining the recoverability: see Société Anonyme Pêcheries Ostendaises v Merchants’ Marine Insurance Co [1928] 1 KB 750 at 756–757, 762–763, 765; Scheff v Columbia Pictures Corporation Ltd [1938] 4 All ER 318 at 323 (Slesser LJ), 324 (MacKinnon LJ); Re Gibson’s Settlement Trusts [1981] 1 Ch 179 at 188–189; Higgins v Nicol (No 2) (1972) 21 FLR 34 at 37–38; Quick R, Quick on Costs (Lawbook Co., subscription service) at [6.740] (update 64); and Costs Guide New South Wales (Lawbook Co., subscription service) at 2-7066 (update 92). In all the above cases, the relevant test for recoverability was whether the expense was “necessary or proper for the attainment of justice or for defending the rights of any party”.

15    Under the Federal Court Rules 2011 (Cth), an order allowing “costs as between party and party” is defined to mean those costs “fairly and reasonably incurred by the party in the conduct of the litigation”: see the Dictionary in sch 1. Rule 40.30 makes provision for costs that are to be disallowed on taxation. These provisions replace the general provision for the recovery of costs “necessary or proper for the attainment of justice or for maintaining or defending the rights of a party” in O 62 r 19 of the previous Rules, which also made provision for disallowance. We would not construe the words “in the conduct of the litigation” as precluding the recovery of costs incurred before a party was formally joined. Rather, the definition of costs as between party and party is directed to the substance of the matter: that is, an order for party and party costs will encompass such costs as were fairly and reasonably incurred in the conduct of the litigation by a person who is a party to the litigation at the time the costs order is made. Depending on the circumstances of the case, this not only covers costs incurred in the litigation (when a party) but also costs incurred in preparation for the litigation (prior to becoming a party). Whether or not any costs claimed by Tabcorp from 22 December 2010 are recoverable will ultimately depend on whether they are accepted as satisfying the conditions for recoverability in the current Rules.

16    Accordingly, for the reasons stated, we would order that, in each appeal, Sportsbet and Eureka pay the appellant’s and the third respondent’s costs of and incidental to the appeal. We would also order that, in addition to the costs referred to in paragraph 2 of the primary judge’s order of 9 September 2011, Sportsbet and Eureka pay the balance of Tabcorp’s costs of and incidental to the first instance proceeding from 22 December 2010; and that Sportsbet and Eureka pay the State’s and VCGLR’s costs of and incidental to that proceeding.

Associate:

Dated: