FEDERAL COURT OF AUSTRALIA

Sportsbet Pty Ltd v State of New South Wales (No 7) [2009] FCA 1585  

SPORTSBET PTY LTD v STATE OF NEW SOUTH WALES, RACING NEW SOUTH WALES and HARNESS RACING NEW SOUTH WALES

NSD 1821 of 2008

PERRAM J

23 DECEMBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                   Vacate the hearing of the trial fixed for Tuesday 1 December 2009.

2.                  Order the Applicant to pay the costs of the Respondents thrown away by reason of the vacation of the trial together with the costs of the adjournment application.

3.                  Reserve the question of whether the costs in order 2 should be on an indemnity basis to the trial.

4.                  Fix the trial for hearing for 7 days commencing on Friday 5 February 2010, comprising Friday 5 February, Monday 8 February, Tuesday 9 February, Wednesday 10 February, Friday 12 February, Monday 15 February and Tuesday 16 February 2010.

5.                  Direct that the Applicant file and serve any application to amend the pleadings by Tuesday 8 December 2009, such application to be returnable for directions on 11 December 2009.

6.                  Direct that the Applicant is not to rely upon any affidavit evidence in chief on the issue of the structure of the national wagering market.

7.                  Direct the Applicant and the Respondents to serve upon their respective solicitors and the solicitors for Tabcorp any proposed tender lists by 11 January 2010.

8.                  Direct the Applicant and the Respondents to serve upon their respective solicitors, and the solicitors for Tabcorp, objections to those tender lists, any claims for confidentiality in the documents  relied upon together with any objections to affidavit evidence by 18 January 2010.

9.                  Direct Tabcorp to notify all other parties of its claims for confidentiality in respect of the lists served upon it by 21 January 2010.

10.              Direct the Applicant to prepare a paginated court book with the following features by 25 January 2010:

10.1          Section One consisting of pleadings and affidavits;

10.2          Section Two consisting of the documents on all parties’ tender lists in chronological order which are not subject to objection and to the extent that confidentiality claims are made redacted versions to be provided;

10.3          Section Three consisting of the documents on the parties’ list which are subject to objection and to the extent that confidentiality claims are made redacted versions to be provided

10.4          Section Four consisting of documents in respect of which confidentiality claims are made in unredacted form (whether objected to or not).

[Each section is to be provided in a separate (or separate set of) lever arch folders]

11.              Direct the Applicant to serve a copy of the court book on each other party by 6pm 27 January 2009 and to serve a complete list of the contents of the court book on the solicitors for Tabcorp by the same date.

12.              Direct that the cost of the preparation of the court book be shared equally between all parties.

13.              Direct the Applicant to forward two copies of the court book to my associate by close of business 29 January 2010.

14.              Order, pursuant to s 50 of the Federal Court of Australia Act, that the contents of the Section 4 of the Court book remain confidential to the legal representatives of the parties until 5pm on 5 February 2009.

15.              Direct any party (including Tabcorp) who wishes to apply for s 50 orders in respect of documents situated in Section 4 of the court book to file and such application by  1 February 2009 such applications to be returnable at 10:15am on 5 February 2009.

16.              Direct all parties to serve written opening submissions by 5pm 3 February 2010 cross-referenced to the court book such submissions to be in redacted and unredacted form (on the assumption that all claims for confidentiality are made good).

17.              Direct the Applicant to serve a copy of these orders on the solicitors for Tabcorp.

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                                             The present issue is whether these proceedings should be adjourned and, if so, on what terms.  The trial was initially listed for hearing on Monday 16 November 2009 at the same time as Betfair Pty Ltd v Racing New South Wales.  I had previously directed that they would commence immediately after Betfair.  A period of three weeks was fixed for the hearing of both cases to conclusion.

2                                             On Friday 13 November 2009 I adjourned Betfair for two days following a contested adjournment application: Betfair Pty Ltd v Racing New South Wales (No 11) [2009] FCA 1394.   I made no specific order postponing the Sportsbet proceedings, but the consequence of a slightly later start in Betfair meant that Sportsbet would, in all likelihood, be pushed back as well.

3                                             Whilst the Betfair case was underway the applicant (“Sportsbet”) made an extensive application relating to the allegedly inadequate provision of discovery by the respondents.  That application commenced outside Court hours on Friday 13 November 2009.  It was substantively dismissed at 3.30pm on Tuesday 25 November 2009: Sportsbet Pty Ltd v Racing New South Wales (No 4) [2009] FCA 1509.  Immediately following the refusal of the discovery application, Sportsbet applied for an adjournment which, on Wednesday 26 November 2009, I declined: Sportsbet Pty Ltd v Racing New South Wales (No 5) [2009] FCA 1510.  I directed that that trial proceed immediately following the conclusion of the Betfair proceedings on Monday 1 December 2009.

4                                             On Thursday 27 November 2009 an application by Sportsbet for leave to appeal from the discovery and adjournment applications was refused by Rares J.

5                                             As events transpired the Betfair trial did not conclude until lunchtime on Tuesday 2 December 2009.  The Sportsbet matter was called on at 2.15pm, at which time Sportsbet again made an application for an adjournment. On Wednesday 2 December 2009, following lengthy argument, I acceded to that application and adjourned the proceedings for trial to Friday 5 February 2010 (a date which has subsequently been changed to Thursday 4 February 2010).  These are my reasons for taking that course.

6                                             The question of whether the proceedings should be adjourned and, if so, on what terms is one which requires a balancing of a number of disparate considerations.  That process is complicated in this case by the intricacy of the proceedings, by the clear need for them to be resolved with a degree of expedition, by their relationship with the now completed Betfair proceeding and by the fact that the outcome of the proceeding has significant consequences for the New South Wales racing industry, for the future ongoing business operations of Sportsbet and Betfair and, more generally, for the national wagering market.

7                                             It is necessary, therefore, to say something of the circumstances giving rise to the present application.  The second and third respondents are statutory bodies charged with the administration of thoroughbred horse and harness racing.  Although most of their functions are directed to the administration of the races themselves much of it is also directed towards the administration of those who bet on the outcome of the races.  At the heart of that system of administration is the concept of race field information which is the information about the horses running in a particular race.  It includes, for example, the name or number of the horse and the intended race.

8                                             For reasons which are readily self-apparent it is very difficult, if not impossible, to wager on the outcome of horse races unless the parties to the wager are in possession of the race field information for that race.

9                                             That practical matter provides the lynchpin on which regulation of the horse race wagering industry rests.  It is an offence for a “wagering operator” to use race fields information unless it holds a “race fields information use approval”.  The respondents are responsible for the granting of such approvals and may impose conditions on their use with which the holder must comply.

10                                          Sportsbet is a bookmaker which conducts business from the Northern Territory.  In order to take bets on New South Wales horse racing events it must use New South Wales race fields information about those races and hence finds itself obliged to hold a race fields approval from the second and third respondents.

11                                          The approvals which it holds are subject to a condition which requires it to pay the respondents 1.5% of its “wagering turnover”, which is 1.5% of the sum of all “back” bets placed with it.  A back bet is a wager that a particular horse and jockey (or rider) will cross the finishing line first.

12                                          Sportsbet’s complaint is that some wagering operators conducting business within New South Wales do not have to pay this 1.5% fee for their use of the race fields information.  There are presently two targets of this complaint.  The first is all bookmakers with a turnover of less than $5 million per annum who are exempted from having to pay the turnover fee.   Sportsbet says that, in reality, this operates so that the turnover fee is directed only at interstate traders such as itself.  The second is the TAB Ltd which conducts a very substantial off-course totalisator in New South Wales which, so Sportsbet alleges, is entitled to have the 1.5% fee refunded to it by the second and third respondents.

13                                          If Sportsbet makes good these allegations it contends that the putting in place of such arrangements is an imposition on freedom of interstate trade and, thereby, a breach of s 49 of the Northern Territory (Self-Government) Act 1978 (Cth) (which applies the requirements of s 92 of the Constitution to trade and commerce between the States and the Northern Territory).  I have not referred to the position of the third respondent but, for present purposes, it may be assumed to be equivalent.

14                                          The legislation authorising the respondents’ entitlements to impose the 1.5% turnover condition commenced on 1 September 2008.   Since then Sportsbet has paid the 1.5% fee to the second and third respondents but only under protest.  The present proceedings were commenced by Sportsbet on 21 November 2008; the Betfair proceedings were commenced on 3 October 2008.

15                                          A possible outcome of the proceeding is that it may be held that the laws authorising the imposition of the 1.5% fee are constitutionally invalid.  One possible downstream consequence of that conclusion may ultimately be an obligation on the second and third respondents’ part to refund to all wagering operators the turnover fee which has been collected from them.  That sum presently stands, so I was informed, at about $44 million.  The second and third respondents provide funding to the various racing clubs in New South Wales, in large part from the revenues collected through the fee.   Distribution of the fee is presently largely suspended whilst the constitutionality of the fee is determined.  Consequently, a number of third parties – such as racing clubs and their employees – are prejudiced by the continued existence of these proceedings.  The validity of the fee must therefore be promptly determined one way or the other so that the industry may move forward.  It was for those reasons that I accepted, at an early stage in these proceedings, that a degree of expedition was appropriate.   That need forms an important part of the backdrop to the present adjournment application. 

16                                          It is useful then to turn to the adjournment application itself.  The evidence consisted of three affidavit of Sportsbet’s solicitor, Mr Fitzpatrick, sworn respectively on 12 November 2009, 19 November 2009 and 30 November 2009.   All parties made reference to a number of other documents during the course of argument.  No party sought to tender the documents; no party objected to their use.  The particular documents in question were:

(a)        a single page extract from cl 8 of an agreement known as the Racing Distribution Agreement (“RDA”);

(b)       a proposed second further amended statement of claim;

(c)        a confidentiality undertaking dated 20 November 2009 signed by Professor Phillip Williams; and

(d)       page 10 of the transcript of a directions hearing which took place on 30 October 2009.

17                                          Since the parties treated these documents as being in evidence I propose to admit them into evidence.  They will be exhibits 1, 2, 3 and 4 on the present application.

18                                          Sportsbet’s application was said to be justified by two independent, but somewhat overlapping, considerations.  First, Sportsbet contended that it had received a large volume of documentation in the period leading up to the commencement of the trial in the Betfair proceedings and continuing thereafter.  The volume of such documentation was such that Sportsbet’s lawyers had not had a sufficient opportunity to assess, in an appropriate and considered fashion, their import.  Further, as an aspect of the same problem, Sportsbet was logistically unable to commence the case: the court book was not ready; there was instead only a list of some 1600 documents which were to be tendered; the nature of the applicant’s case could not adequately, or responsibly, be made clear.  This set of connected submissions I will collectively refer to as the “administrative concerns”.   

19                                          The second group of matters concerned the content of some documents which had only recently become available on discovery.  These documents suggested that:

(a)        TAB Limited did not have to pay the 1.5% race fields fee because of cl 8 of the Racing Distribution Agreement;

(b)       the off-course totalizators in Queensland, the Northern Territory and South Australia would be entitled to look to their respective State racing industries for payment of the race fields fee and so would not, as a matter of economic substance, be affected by it; and

(c)        there was a threshold of $2.5 million below which a fee did not have to be paid to the third respondent which operated practically to exempt New South Wales bookmakers from the fees.

20                                          What these matters showed, Sportsbet submitted, was that the 1.5% fee it was obliged to pay had to be seen in the context of the entire national market for wagering on New South Wales equine events.   To understand the true nature of the impost on it one needed to understand that market.  Consequently, the materials only recently discovered necessitated the calling by Sportsbet of an economist, or similar witness, to explain the operation of that market.  I will collectively refer to these matters as the “market concerns”. 

21                                          It is useful to deal with the market concerns in the first instance.  Since 26 March 2009 Sportsbet has alleged in its pleading as follows:

68.       TAB Limited is not required to pay a race field publication fee or race field information use fee to Racing NSW. 

Particulars

The Racing Distribution Agreement dated 11 December 1997.

Tabcorp Holdings Limited results for half year ended 31 December 2008 (page 3).

Further particulars will be provided after discovery.

22                                          Clause 8.2 of the Racing Distribution Agreement is as follows:

TAB shall be entitled, subject to clauses 8.3 and 8.4, to (and to the extent required, NSWR will procure the grant to TAB of a non-exclusive, royalty-free licence (‘Licence”) to):

(a)       disclose, use, copy, publish and transmit to the public (using any form of technology) (‘use’) the NSW Racing Information and each NSW Racing Programme; and

(b)       sub-licence or otherwise permit others to use the NSW Racing Information and each NSW Racing Programme,

23                                          An arguable view of cl 8.2 is, as Sportsbet contends, that TAB Limited’s entitlement to a “royalty-free licence” to use the race fields information imposes an obligation on the second and third respondents to compensate TAB Ltd to the extent that it is now legally obliged to pay a fee for the same information under its race fields approval.  That matter is contestable; it might be thought that “royalty-free” referred only to the actual licence under the RDA; alternatively it might be that the RDA has itself been frustrated by the introduction of the race fields legislation.  No doubt other arguments may be conceived.  Without passing on the correctness or otherwise of any of those arguments, it suffices to observe the apparent capacity of cl 8 and the introduction of the race fields fee to give rise to a dispute between TAB Ltd and the second and third respondents.  There is, in fact, just such a dispute. 

24                                          I was informed from the Bar table that the present position is that the second respondent (and I assume the third respondent) had refunded to TAB for the most recent financial year the amount of the race fields fee, but that the more general issue of whether that should always happen had not yet been resolved.

25                                          Be that as it may, I do not think that the fact that documents have been produced suggesting cl 8.2 of the RDA requires the second respondent and/or the third respondent to compensate TAB Limited for the race fields fee is of great moment in terms of the present application.  Precisely that allegation has been in Sportsbet’s pleading since March this year.  Mr North QC who, with Mr Tokley, appeared for Sportsbet, submitted that it was relevant to know the circumstances surrounding the respondents’ agreement to pay compensation for the previous year to the TAB Limited for it could throw light on the protectionist nature of the arrangement.

26                                          As a matter of law, cl 8.2 of the RDA either requires compensation to be paid to TAB Limited for the imposition of the race fields fee or it does not.  That is an issue which is raised by the pleading and, in due course, it will be resolved (although, since TAB Ltd is not a party to these proceedings, the capacity to bind it to that outcome is questionable).  The fact that an interim arrangement has been reached resolving that debate for one year does not seem to me to advance matters very much.  More particularly, I do not see why it would be necessary to call an economist to discuss that interim payment (as opposed to the effect of cl 8.2 itself).    

27                                          Sportsbet submits that it has recently discovered that the off-course totalizators in Queensland, the Northern Territory and South Australia are protected from the race fields fee and that this makes necessary an investigation into the national market for wagering on New South Wales equine events.  This submission has more substance.  Sportsbet has, as already noted, long pursued an allegation that TAB Limited is protected from the race fields fee by reason of the RDA.  Now, so it contends, it has recently become apparent that a number of interstate totalizators are also protected because they pass the fee on to their local industries.  In order to understand the effect of the fee on Sportsbet it is, so the argument runs, necessary to understand how the national market works and the significance and operation of the fee in that market.  Sportsbet further submitted that the additional fact that most on-course interstate bookmakers had a turnover which was below the threshold at which the race fields fee became payable added force to that argument.  Since those matters had only recently become known as a result of lately discovered documents the case for adjournment so that they could be investigated was, so it was said, compelling. 

28                                          The difficulty with this submission, which has a superficial appeal, is that it assumes that these are matters which ought not to have been already known to Sportsbet.  For reasons I will shortly give, I think this is wrong:  that Sportsbet’s case has always necessarily involved an examination of the national market in wagering on New South Wales equine events; that it did little to advance that case; and that the information which has recently come to light only reveals that which Sportsbet should long ago have realised.  Putting the matter shortly, the true cause of Sportsbet’s lateness in seeking to prove the nature of the particular market is not the failure of the respondents to produce the documents in question in a more timely fashion (a contestable proposition) but rather because of its own failure properly to prepare its case at a much earlier time.  

29                                          Those matters are, I venture to suggest, laid bare by an examination of the pleadings.  They show that Sportsbet appreciated that the position of off-course totalizator operators in other States was a significant issue in the proceedings more or less from their inception.  In the original statement of claim, for example, Sportsbet alleged at paragraph 69:

None of the operations of off-course totalizators in States and Territories other than New South Wales are required to pay a race field publication fee to Racing New South Wales.

Particulars

The operations of off-course totalizators are specified in the particulars to paragraph 18 above.

30                                          The operators referred to in the particulars included Unitab Limited in Queensland, South Australia and the Northern Territory.  The original allegation in paragraph 69 was, therefore, that the interstate off-course totalizators did not have to pay the fee.  This is the same proposition which Sportsbet now claims to have become aware of by reason of the allegedly late discovery.  Leaving aside immaterial amendments, there was a reversal of what paragraph 69 alleged on 25 September 2009, when Sportsbet amended paragraph 69 in its Further Amended Statement of Claim thus:

With the exception of TAB Limited and Tabcorp Holdings Pty Ltd the operators of off-course totalizators in States and Territories other than New South Wales are required to pay a race field publication fee or race field information use fee to Racing New South Wales. 

31                                          The allegations went, therefore, from one which suggested that off-course interstate totalizators did not have to pay the fee to one where it was alleged that they did (except in the case of TAB and Tabcorp). 

32                                          There are two significant aspects to this. First, Sportsbet originally alleged the same matter it now claims to be surprised by.  To an extent that is something of a debating point although it is not without some significance.   Secondly, and more importantly, it shows, an appreciation from the outset of the proceedings that the position of interstate off-course totalizators was an important a matter.  

33                                          That importance was underscored by the respondents’ denial of the allegation in their respective defences to the pleading   Accordingly, the position of the interstate off-course totalizators and the implications of that position for a s 92 analysis always needed to be addressed. 

34                                          How might such matters be proved?  One thing which is obvious is that the issues involved are not issues about the positions of the second and third respondents.  They are instead concerned with particular interstate operators and their financial positions.  To my mind, if Sportsbet was going to make, as it did, allegations about the financial burdens to which Unitab Limited was subjected it was inevitably going to have to prove those allegations.  How that proof was procured was, of course, a matter for Sportsbet.  

35                                          It was not, however, reasonably to be expected that the liability of Unitab Limited to pay the New South Wales turnover fee was a matter which could reliably be proved through documents discovered by the second and third respondents.  The reasons for these are various but include the disparate natures of the undertakings involved and the absence of any apparent regulatory need for New South Wales’ regulators to understand the extent to which interstate totalizators were reimbursed by their own State industries. 

36                                          It is in that context that Sportsbet’s recent awareness of the position of Unitab Limited falls to be examined.  It is true that the principle document indicating that Unitab Limited was not substantially liable to the fee only appears to have been made available to Sportsbet on Friday 13 November 2009.  It is true that it was not the only document of that kind discovered.  I accept also that it is perhaps only recently that Sportsbet’s legal advisers have begun to explore the economic significance of the position of the off-course interstate totalizators.  Those matters, however, do not explain why, in light of the pleadings, Sportsbet was not investigating the position of Unitab Limited at a much earlier date.

37                                          Two considerations which could well lead to the opposite conclusion are absent.  First, there is nothing which inherently links the affairs of Unitab Limited  with those of the second and third respondents.  If Unitab Limited were part of the business of the second or third respondents or if there were arrangements, perhaps like the RDA,  between Unitab and the second and third respondents which might naturally lead to the inference that they knew of Unitab Limited’s position, then this might have lent support to the idea that Sportsbet could rely on these questions being answered through the respondents’ discovery.  I perceive, however, no such arrangements. 

38                                          Secondly, if it were shown that the idea that Unitab Limited did have to pay the fee was somehow sown by conduct of the second and third respondents then this might place the matter in a different light.  For, so viewed, the respondents’ erroneous beliefs could trace their headwaters to conduct of the respondents.  But there was nothing before me to suggest such a connexion either. 

39                                          Ultimately, therefore, I am left with the impression that Sportsbet ought, as a part of its reasonable preparation for the case, to have inquired into the positions of the interstate  off-course totalizator operators and that it did not do so.  As I have said, I accept that it has only recently realised the need to do so.  However, whilst Sportsbet now finds itself having to attend to this issue at the eleventh hour the true cause of that state of affairs is its own preparation.  The recent discovery of documents may well have taken Sportsbet by surprise.  The point, however, is that they should not have. 

40                                          Sportsbet made a similar complaint about the issues arising from the threshold imposed by the third respondent below which the race fields fee is not due. In its case the level of the threshold is $2.5 million.  That fact appears to have become known to Sportsbet on 27 November 2009 when certain unredacted portions of the third respondent’s discovery were provided.  It would now appear that that threshold means that New South Wales bookmakers do not have to pay the fee as they all have a turnover below the threshold.  Unsurprisingly, Sportsbet sees this as buttressing its case.

41                                          I do not think that that provides a reason to adjourn the proceedings.  This is so for three reasons.  First, insofar as the material now available shows that the fee is not paid by New South Wales bookmakers that is a matter which is able to be established already.  Secondly, I do not think that Sportsbet should now be permitted to call an economist or some such a witness to comment on the significance of the threshold.  This is, in part, because I do not see that such evidence could be of great assistance compared to the disruption to the trial proceedings which would attend its use.  In particular, the impact of the threshold on interstate trade is reasonably obvious: the interstate traders pay the fee; the intrastate traders do not.  However, there is a third reason which, by itself forms an independent basis for the same conclusion.  Sportsbet has since the inception of the proceedings alleged that the threshold set by the second respondent effectively exempts New South Wales bookmakers.   As originally filed, paragraph 67 of Sportsbet’s initial statement of claim provided:

All or most licensed bookmakers in New South Wales are exempt from having to pay a race field publication fee to Racing NSW as they have a wagering turnover that is less than $5 million per annum.

42                                          Precisely the kind of economic evidence now suggested as the basis for an adjournment could (and on this view should) have been called on that case.  None ever was.

43                                          Put another way, there already existed a case put by Sportsbet on discrimination caused by threshold levels.  Having declined to lead any economic evidence about that in chief it is difficult to understand, given the timings of this case, why it should be permitted to recall that decision simply because it has noticed the same issue arises in relation to the third respondent. 

44                                          Elaborate directions were made to facilitate the preparation of Sportsbet’s evidence.  On 27 May 2009 Sportsbet was first directed to file and serve its evidence in chief by 4 August 2009.  Subsequent directions made on 17 July 2009 extended the time for compliance with this order to 28 August 2009.  At a further directions hearing on 24 September 2009, Sportsbet was given until 2 October 2009 to file any further affidavit evidence upon which it relied. On 9 October 2009 I was informed from the Bar table that all of the evidence upon which Sportsbet relied, that being an affidavit of Mr Nicholas Tyshing sworn on 13 October 2009, had been filed, save that they wished to add several additional paragraphs to the affidavit. On 9 October 2009 Sportsbet were directed to file and serve their final affidavit evidence by 12 October 2009.   At a further directions hearing on 16 October 2009, I was informed from the Bar table that Sportsbet’s evidence-in-chief was complete. Despite that, Sportsbet now seeks to be relieved of its former position and to be permitted to rely upon evidence not previously hinted at. 

45                                          I do not doubt that the evidence in question is likely to be relevant to the issues in the case.   An understanding of the national wagering market for equine racing in New South Wales clearly forms the backdrop to an appreciation of the impact on interstate trade of various state imposts under consideration. So too, as the High Court’s decision in Betfair Pty Ltd v State of Western Australia (2008) 234 CLR 418 at 480-481 [115], [121] and [122] itself suggests, notions of substitutability and cross elasticity of demand are likely to be more than passingly relevant.    

46                                          How should these various matters be resolved?  It is, I think, important to characterise correctly the application.  It is an application to adjourn a trial to permit fresh evidence in chief to be prepared and relied upon.  Thus whilst the application is in form about adjournment it is in substance about the preparation of further evidence in chief at the start of a trial.   Putting from my mind for present purposes Sportsbet’s other contention that it is not ready, in fact, to commence the trial, it seems to me that I would only accede to this aspect of the adjournment application if I were of the view that Sportsbet should be permitted to depart from its previous position that it was only calling one witness in chief, Mr Tyshing, and now more widely to cast its net to include national wagering market evidence.

47                                          It is necessary to assess what the consequences of such a grant of permission might be.  Mr North QC submitted that a report by an economist, a Professor Williams, was nearly ready and would be served within the next few days.  If Sportsbet is permitted to rely upon that evidence there would be a necessity for the respondents to engage their own witnesses in response.  Locating, retaining and briefing such an expert are likely to take time.  Sportsbet submitted that the respondents could have such evidence ready by the beginning of February (the only time before June 2010 when the case could be heard).   Submissions of that kind necessarily take one into the realm of the speculative.  That said, I do not share Sportsbet’s optimism.  There are likely to be real difficulties in locating suitable witnesses in the weeks before Christmas and securing evidence about the operation of the national wagering market in the four weeks in January 2010.   It is not to be forgotten that January is part of the law vacation and that there are likely to be difficulties, particularly in the early parts of that month, in securing appropriate lawyers to work with the witnesses. 

48                                          Nor is the selection of early February 2010 to be seen as an arbitrary date.   I will be unavailable from Friday 26 February 2010 for one month and I have substantial trial and Full Court commitments which disable me from hearing this case before June 2010.  Having regard to the circumstances which have lead to these proceedings receiving a degree of expedition I do not think that such a delay is to be tolerated unless it is absolutely unavoidable. 

49                                          I have considered whether I ought not to permit the economic evidence to be relied upon to see whether, in fact, the respondents can respond by the beginning of February 2010.  However, I do not think that such a course commends itself.  It would leave the parties up in the air as to what was being tried; worse, the respondents would be provided with a subconscious motive to fail which in turn is only likely to lead to further interlocutory disputation.  

50                                          The Federal Court Rules do not presently contain a rule which makes plain that their purpose is to facilitate the just resolution of the real issues in civil proceedings with a minimum of delay and expense.   Nor are there provisions in the Rules specifying as mandatory objectives the pursuits of justice, timely disposition and thriftiness.  In that regard, the Rules of this Court appear to stand in contrast to the rules of all other general superior courts except the Tasmanian Supreme Court: Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14 at 41 [91] (footnote 153).   Despite the absence of such a rule it nevertheless appears to be established in this Court that there is a case management system and that that system “is the backdrop against which the relevant rules must be considered and applied”: Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 395 per Wilcox and Gummow JJ.  The compact between the Court and the profession which such a system necessarily embodies was described by their Honours in these terms:

They go to a Court which seeks to minimise the delays of litigation by issuing procedural directions to the parties which they are expected to observe.   In return, the Court does its best to provide to the parties an early hearing date.

51                                          The presence in this Court of a fully functioning case management system which has been on foot for nearly a quarter of a century has meant that provisions exhorting parties and Court alike to aspirational maxims such as “quick, just and cheap” have proved heretofore unnecessary.  That state of affairs will soon change on the introduction of s 37M to the Federal Court of Australia Act 1976 (Cth).  That provision will, for the first time, declare that the overarching purpose of civil practice and procedure will be the facilitation of “the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible”.  The legislation inserting s 37M, the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth) has passed both houses of Parliament and received assent on 4 December 2009.  It commences in the New Year. 

52                                          To the extent that s 37M will make plain that the rules concerning civil litigation are no longer to be considered as directed only to the resolution of the dispute between the parties to the proceeding, it will merely re-state what appears to have been the position originally set forth in Sali v SPC Ltd (1993) 116 ALR 625 at 629 per Brennan, Dean and McHugh JJ, 636 per Toohey and Gaudron JJ. 

53                                          There was at one stage a debate as to whether the subsequent decision of the High Court in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 in which Dawson, Gaudron and McHugh JJ had said (at 154) that case management was “not an end in itself” was in reality inconsistent with what had been held in Sali.  For example, in Inamed Development Co v Morton Surgical Pty Ltd (2007) 73 IPR 308 Gyles J expressed the view (at 30[7]) that the effect of JL Holdings had “been exaggerated”.  However, Aon resolves that debate decisively in favour of the Sali position: 258 ALR 14 at 46 [11].

54                                          It follows that the desire of Sportsbet to put its case about the nature of the national wagering market is not to be seen as the only interest that needs to be assessed.  Substantial ongoing prejudice exists to the respondents whilst this litigation remains on foot; further, the existence of the litigation actively prejudices third parties.  The evidence now sought to be relied upon should have been investigated much earlier. 

55                                          It is implicit in those observations that I reject Sportsbet’s explanation for the delay for, as I have said, the failure to obtain this evidence has been caused by Sportsbet’s own forensic decisions.  It should have investigated the position of the interstate off-course totalizators at the beginning of these proceedings when it first raised the issue in its pleading.  If it was going to call economic evidence about the impact of the thresholds it should have started preparing that evidence from the time it made the allegation that the threshold set by the second respondent operated to protect local bookmakers.  Sportsbet chose not to pursue these matters in the case of the second respondent.  It cannot, at the heel of the hunt, reverse the consequences of that decision by adopting a different position in relation to the third respondent.

56                                          Nor, as I have said, do I think I can safely put in place a regime whereby the evidence in question might be feasibly permitted to Sportsbet in order to test whether the respondents, in fact, can muster a reply in the short time available.  Such a course only invites a further real risk of losing the trial date. 

57                                          For those reasons, it is inappropriate to permit an adjournment so that evidence about the national wagering market may be obtained.  I should note for completeness that Sportsbet sought originally to argue that it should be allowed to use such evidence in reply: Sportsbet v State of New South Wales (No. 5) [2009] FCA 1510 at [8]. As I noted at the time there was, however, no such evidence from the respondents to which it might properly be seen as replying. 

58                                          I turn then to the question whether this trial can now sensibly proceed.  There is no doubt that the descent of Sportsbet into the trial of this action has been vertiginous.  Mr Fitzpatrick gave evidence, which I accept, that significant quantities of documentation had been delivered by the respondents at, or on the eve of, the trial.   As at 19 November 2009, the quantity of that documentation stood at about seven lever arch folders of paper.  By 30 November 2009 a further 12 lever arch folders, together with a medium size folder and a small bundle of documents, had additionally been provided.   Mr Fitzpatrick is effectively a sole practitioner.  He has retained four counsel, although only three seem presently to be engaged.   His points were essentially three:

(a)        the documentation provided was provided late by the second and third respondents;

(b)       it was simply not possible in the time available properly to review the documents and prepare the case; and

(c)        the Court book itself had not been prepared. 

59                                          I do not find it especially useful to analyse where the blame lies for the late production of documents.   A significant number of the documents have been produced as a result of recent decisions of this Court about privilege claims asserted by the respondents; others have become available as a result of decisions made by Messrs Hunter QC and Whitlam QC under Court encouraged private arrangements.  I am far from persuaded, however, that the blame lies entirely in one camp or the other.  In particular, I am far from persuaded that some of the present difficulties do not arise from the belligerence with which this litigation has been conducted. 

60                                          A more useful tool than the calculus of blame is the apparent fact that Sportsbet is actually not in a position to proceed.   Mr Fitzpatrick swore as much and Mr North QC frankly told me the same thing from the Bar table.  There is no agreed bundle.  Instead, there is a tender list, 62 pages in length, containing 1600 documents which it is proposed, presumably seriatim, to tender. 

61                                          The notion of 1600 documents being tendered, some perhaps subject to objection, and each assigned an individual exhibit number is one which does not naturally commend itself to me.  Nor, accepting as I do Mr North’s submission that he is not properly familiar with content of those documents, is it is easy to discount his submission that his opening on those documents will not be of great assistance to me.  It is obvious that Sportsbet’s representatives are in no condition now to proceed.  I make that observation not only because of the contents of Mr Fitzpatrick’s affidavits but also because it is apparent that a good part of Sportsbet’s resources in the last few weeks have been used up in making largely unsuccessful applications: see Sportsbet Pty Ltd v New South Wales (No 4) [2009] FCA 1509; Sportsbet Pty Ltd  v New South Wales (No 5) [2009] FCA 1510; Sportsbet Pty Ltd v State of New South Wales (No 6) [2009] FCA 1511. 

62                                          The respondents submit that the position in which Sportsbet now finds itself in is largely of its own making.   It is said that it was obvious from the start that its legal team was too small, that it has used the few resources at its disposal wastefully by making unmeritorious applications and that, in effect, Sportsbet’s lawyers needed to work harder. 

63                                          There is force in the proposition that the Sportsbet legal team is under-resourced for the conduct of litigation of the present kind.  To my mind, to embark upon a challenge to the constitutional validity of the funding arrangements upon which the News South Wales racing industry rests was inevitably to invite determined resistance from the respondents.  When one brings to account also the nature of the litigation, depending as it does on a miscellany of economic, commercial and constitutional propositions, the likely field of contest was inevitably going to broad and the manner of that contest more then usually robust.  It was, I think, naïve for Sportsbet to think that such a case might be feasibly litigated by a firm which is effectively a sole practitioner.  In what was an expedited trial involving well-resourced and vigorous respondents it was inevitable that heavy burdens would fall on the shoulders of the legal representatives for Sportsbet.  Sportsbet’s resource allocation decisions have effectively guaranteed that its own capacity to conduct the litigation would turn out to be inadequate.

64                                          I do not know why such resourcing decisions were made, for Sportsbet does not appear to be a small operation.   Be that as it may, in the ledger of what is procedurally just it is difficult to avoid the conclusion that the negative consequences of those decisions should rest with Sportsbet.  I reject, however, the respondents’ insinuations that Sportsbet’s problems were caused by a lack of diligence on the part of its lawyers.  The evidence before me disclosed an inadequately sized team doing the best they could in very difficult circumstances.  Further, I reject the suggestion that there was anything unreasonable in Sportsbet pursuing its discovery application or its earlier adjournment applications.  To bring an application which fails is by no means the same as bringing an unreasonable application.

65                                          The practical realities are that if the case commences now—that is at 2.15pm on Wednesday 2 December 2009 – there are only two days remaining in the allotted trial period.  The respondents indicated that they were also available to continue the trial on Thursday and Friday of the following week.  They submitted that the two days remaining this week and the two days next week would be sufficient to allow the case to run to its final conclusion.  I do not agree.  This is a case where there is no agreed bundle but instead merely a tender list of imposing proportions; where the applicant’s senior counsel tells me he cannot open the case properly; and where, on any view, leaving aside blame, significant documentation has only just become available.   I do not regard it as remotely possible that this case in its current state  can be finished in four days.  I have just finished hearing the not dissimilar Betfair case and, with one witness, it took nine days.  This case also has one witness.   I was told from the Bar table that that witness’ cross-examination would be short, but even allowing for the possibility that that might be so, in the administrative disarray which will attend forcing Sportsbet onto the field in its current state of preparation I think this case is bound to take at least seven days, possibly many more. 

66                                          Accordingly, even if the case now commences it is inevitable that it will go part-heard over to next February.  I regard the prospect of being part heard as especially unalluring.  There is ample time to hear this case in February 2010.   At that time, a sufficient period of trial time can be allocated, and more importantly, the evidence in the case can be put on a proper basis.  There are real savings in terms of Court time in permitting Sportsbet a short period of time to get its house in order.

67                                          The most substantial discretionary matter standing in the way of that conclusion is, so it seems to me, the unavailability of counsel for the first respondent in February 2010.   This is a real concern and one which has troubled me.  The issues presented by this litigation are both novel and difficult.   Counsel for the first respondent has already appeared in the entirety of the Betfair case and, it may be assumed, has a considerable knowledge of the litigation which will not readily be replaced.   A change of counsel as this stage is a most unsatisfactory outcome from the first respondent’s point of view. 

68                                          However, it is also pertinent to note that the first respondent has filed no evidence and that the arguments it will advance are likely to be legal in nature.  In the end, the public interest in the orderly and expeditious conduct of a trial should, I think, be given preference. 

69                                          I have not disregarded the prejudice to respondents engendered by the delay implicit in this conclusion.  However, the delay will be minor.  I had originally intended to deliver judgment at the start of the new law term, on Monday 1 February 2010.  The consequence of the present decision is that the judgment will be delivered by the end of February 2010.  The four week delay is not, in context, a significant matter; more is this so when the probability of appeals is brought to account. 

70                                          I conclude, therefore, that the trial should be adjourned to a date in early February 2010.  This raises the issue of whether, in those circumstances, it would be appropriate to permit Sportsbet to rely upon its proposed evidence about the national wagering market which, earlier in these reasons, I concluded did not provide a sufficient basis for adjourning the proceedings.

71                                          The answer to that question turns again on the likelihood of the use of that evidence to derail the hearing in February 2010.  I remain of the opinion that the respondents cannot be expected to meet such evidence by 4 February 2010 when the trial will commence.  I have already given my reasons for that conclusion; I will not repeat them.

72                                          I turn them to some residual issues.  The second and third respondents submitted that I should impose as a condition upon the grant of any adjournment an undertaking by Sportsbet not to seek the recovery of the race fields fee which would fall for payment during the period caused by the adjournment.  I do not think that it is appropriate to impose such a condition which, in substance, amounts to a denial of relief for the period in question.  The case was to start with only two and a half days of the allotted period to run.  It would inevitably have gone over to February 2010.  The shortness of the time left for Sportsbet’s case was not its fault. 

73                                          All respondents sought to have Sportsbet pay the costs of the adjournment on an indemnity basis and forthwith. 

74                                          There is no doubt that Sportsbet should pay the costs of the adjournment.    It is not appropriate that it be ordered to pay such costs forthwith.  There was no evidence which tended to suggest that the respondents lacked the ongoing means to defend the litigation without such a costs order.

75                                          There may be much to be said for the view that an indemnity costs order is appropriate in light of Sportsbet’s underresourcing of the litigation.  However, it would be premature to decide that now.  The reasons for that underresourcing are not apparent, nor is its precise relationship with the discovery issues altogether clear. The issue of whether such a costs order should be on an indemnity basis should be reserved for the trial.

76                                          It is for these reasons that I made the orders I did on Wednesday 2 December 2009.

Associate:

Dated:         23 December 2009