FEDERAL COURT OF AUSTRALIA

Betfair Pty Limited v Racing New South Wales (No 9) [2009] FCA 1349

BETFAIR PTY LIMITED v RACING NEW SOUTH WALES , HARNESS RACING NEW SOUTH WALES  and ATTORNEY-GENERAL (NEW SOUTH WALES)

NSD 1566 of 2008

PERRAM J

11 NOVEMBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                  Until further order, special protection be granted over the portions of the documents listed in the Schedule appended to the applicant’s statement of brief reasons for claims for special protection dated 20 September 2009, which are highlighted in pink, green, yellow or orange in the exhibits to the affidavit of Joshua Paul Blanksby .

2.                  The respondents pay the applicant’s costs of the motion of 26 October 2009.

3.                  The applicant’s motion of 5 November 2009 be dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     These proceedings, which are set down for a three week trial commencing next Monday 16 November 2009, have involved at various times the making of claims for confidentiality.  On 9 September 2009 I gave judgment on an application by Betfair to have a confidentiality regime imposed in relation to various classes of document (see Betfair Pty Ltd v Racing New South Wales (No 5) [2009] FCA 1011).  One of the consequences of that judgment was a series of orders which provided for an orderly way in which such claims might be made, examined, challenged and, if necessary, resolved.  Betfair has now activated that regime and the issue which arises is the resolution of a set of claims.  The documents in question are comprised in various highlighted portions of a set of 16 lever arch folders. 

2                     In my opinion, Betfair is entitled to the confidentiality orders which it seeks for the following reasons.  Betfair conducts a betting exchange upon which gambling on a large number of semi-random events is facilitated.  Dogs and horses are some of the events covered.  Many others are covered as well.  Tabcorp Limited (“Tabcorp”) also provides gambling services to members of the public who wish to bet on a large range of events.  There is no doubt in my mind that Tabcorp and Betfair are trade rivals.

3                     It is inappropriate that either’s commercially sensitive documentation should come to the attention of the other for reasons explained by Hayne JA in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34.  Tabcorp is not a party to these proceedings however, and the ordinary issue of confidentiality does not therefore directly arise.  Instead, Betfair seeks to prevent the respondents, not Tabcorp, from having access to its documents.  It does this because it says the respondents are effectively in such a closely symbiotic relationship with Tabcorp that they should be treated as being in an analogous state to it.

4                     On the evidence as it presently stands, and that is the evidence which exists in a purely interlocutory hearing, I accept this submission.  The evidence discloses the existence of an agreement known as the Racing Distribution Agreement to which each of the respondents and Tabcorp is a party.  That agreement provides for revenue sharing across a range of gambling endeavours beyond dogs and horses.  It also provides for a formal organ known as the Strategy Committee whose purpose is the formulation between the various participants to the agreement of strategy decisions for their common good.

5                     Mr Hutley SC, who appeared for Betfair, submitted, and I accept, that Tabcorp and the respondents have very closely aligned interests and a motive to pursue cooperation shaped to meet those interests.  Quite apart from the legal effect of the Racing Distribution Agreement, there was evidence placed before me (to which I will not advert in any detail due to its confidential nature) which showed that the state of affairs which might reasonably be anticipated to flow from the Racing Distribution Agreement did in fact flow - that is, there was evidence (which I accept) that showed that Tabcorp and the respondents did in fact cooperate on strategic decisions and did so outside the formal framework of the Strategy Committee. 

6                     On the present application, the respondents proffered undertakings from their senior executives not to participate in the deliberations of the Strategy Committee.  The consequence of this was said to be an avoidance of any difficulty arising from inadvertent use of the information in formulating a joint strategy. 

7                     I do not think that those undertakings are sufficient to resolve the present problem.  I have already accepted that Tabcorp and the respondents cooperate at a broader level than merely through the Strategy Committee.  In a sense, that committee is merely a formal organ which constitutes the apex of a cooperative venture of a broader scope.  That statement ranges somewhat further than my initial analysis of the problem in Betfair (No 5) but this is only because the evidence is now more extensive.  I do not doubt that the undertakings may reduce the size of the problem, but they do not eliminate it.  Indeed, I do not think the problem is likely to be, in reality, much reduced by the undertakings.

8                     The respondents’ solicitor, Mr Price, gave evidence that the confidentiality regime was preventing him from obtaining instructions from his clients in relation to the documents in question.  No doubt this is true, but nothing was placed before me to indicate why that presented any particular prejudice to the preparation of the trial. 

9                     In his submissions, Mr Kerr SC, who appeared for the respondents, put that having in place such a regime was going to complicate the orderly running of the case.  I accept that that is so, but I do not regard it, in what is effectively a trade rival situation, as providing a strong reason not to uphold the claim. 

10                  Accepting, as I do, a degree of inconvenience for all parties, I nevertheless think it is appropriate to uphold Betfair’s contentions.  Tabcorp and Betfair are trade rivals.  The respondents’ interests and actions are intertwined with those of Tabcorp.  That degree of symbiosis makes it unrealistic to expect that the import of commercially confidential information could be kept from the mainstream of decision-making.  In the balancing exercise which this area of the law inevitably invites the scales favour Betfair.

11                  There are three further matters which I should mention.  First, I have taken into account the respondents’ submission that the risk suggested by Betfair was merely one of inadvertent disclosure.  I rejected such a risk in Betfair (No 5) as being sufficient to justify a confidentiality order.  It is a question of degree.  Given the extent of the relationship now revealed by the evidence, I do not think that it is realistic to expect that the Harman obligation (Home Office v Harman [1981] QB 534; Hearn v Street (2008) 235 CLR 125) will be sufficient to prevent the kind of mixing of information and decision-making which the current situation throws up.

12                  Secondly, the respondents submitted that Betfair could not step outside the grounds it had asserted in the brief statement of reasons which the previous machinery orders required to be proffered.  There is no basis for that suggestion in my orders and I reject it.

13                  Thirdly, Mobil Oil suggests that ordinarily a judge confronted with a claim for confidentiality should inspect the documents in question for himself. I have not taken that course.  The reasons for this are:

(a)                I have already surveyed a collection of the documents in Betfair (No 5) and was satisfied that, in principle, they were commercially sensitive in a trade rival sense;

(b)                the parties accepted that they were relevantly confidential and that the ordinary approach in Mobil Oil should not be followed;  and

(c)                the extent of the Court’s resources to determine the issue prior to the commencement of the trial is greatly limited.  I am sitting every day this week and it would not be physically possible for me to read the 8000 or so pages before the case commences.

14                  In all those circumstances, I make the order sought in Betfair’s notice of motion filed on 26 October 2009.  The respondents are to pay Betfair’s costs of that application.

15                  I turn then to Betfair’s notice of motion of 5 November 2009 by which it seeks an order that the respondents comply with orders 1 and 2 made by me on 30 September 2009.  Those orders were as follows:

(1)       The first respondent file and serve an affidavit, within seven days, deposing to the steps taken to discover the emails from or to Mr V’Landys in the period 1 July 2004 to 31 December 2007. 

(2)       The second respondent file and serve an affidavit, within seven days, deposing to the steps taken to discover the emails from or to Mr Poole. 

16                  Other orders were made.  They are not presently material. 

17                  Orders 1 and 2 followed from a judgment given by me on the same day, entitled Betfair Pty Ltd v Racing New South Wales (No 6) [2009] FCA 1120.  On 8 October 2009, Mr Price, in apparent compliance with orders 1 and 2 of 30 September 2009, filed an affidavit setting out, on information and belief, the steps which had been taken to consider the email issue.  My order did not require an affidavit from a person other than Mr Price.  My reasons for making the orders of 30 September 2009 appeared at [6] of Betfair (No 6), in which I said:

At this stage, however, I do not think that I can say that there are grounds for believing that the documents have not been discovered within the meaning of O 15 r 11 of the Federal Court Rules.  I do, however, propose to direct that the first respondent, within seven days, provide an affidavit explaining the processes and steps by which it has approached the discovery of Mr V’Landys’ emails.  Once that affidavit has been provided it will be possible to ascertain whether the process of discovery has gone awry or not.

18                  I made similar remarks in relation to Mr Poole. 

19                  In light of that, I do not understand the basis for Betfair’s present application.  No doubt it might have been useful to Betfair if Orders 1 and 2 had in fact provided for a direct affidavit to be provided rather than merely being couched, as it was, in general terms but, couched as it is, that order did not require that the affidavit be by way of direct evidence. 

20                  Betfair has not applied to vary the orders I made on 30 September 2009.  In those circumstances, I do not think that the present application has any basis. 

21                  The motion is dismissed with costs.

Associate:

Dated:         11 November 2009