FEDERAL COURT OF AUSTRALIA

Sportsbet Pty Ltd v State of New South Wales (No 15) [2010] FCA 697

THE COURT ORDERS THAT:

1.                  The applicant’s notice of motion filed on 24 June 2010 be dismissed.

2.                  The issue of costs be reserved.

3.                  The matter be stood over for further directions on Friday 23 July 2010 at 9.30 am.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     I delivered judgment in this proceeding on 16 June 2010: Sportsbet Pty Ltd v New South Wales [2010] FCA 604 (hereafter “Sportsbet”).  I gave judgment in favour of Sportsbet and against Racing New South Wales in the sum of $2,061,000 together with interest.  At the same time I declared approvals granted by Racing New South Wales and Harness Racing New South Wales to Sportsbet in 2008 to be invalid.  Sportsbet now applies to re-open its case.  During my consideration of the application the respondents have undertaken not to take out the orders.  Those orders not having been perfected I retain jurisdiction to entertain the present application.  The application has two components:  first, it seeks to vary the declaration so that instead of the approvals being invalid what would now be invalid would be the condition imposing the race fields fee.  The point may seem minor but the consequence of the approval being invalid in toto is that Sportsbet was not authorised to use race fields information in 2008-2010 which is an offence: s 33 Racing Administration Act 1998 (NSW).  

2                     Secondly, it seeks to have me extend the effect of the decision to the approval granted in 2009 for the 2009/2010 year.  The consequence of that would be an increase in the judgment sum to $6,188,222 together with interest.

3                                             It is appropriate to deal with these separately.

Fee Condition or Approval

4                     At paragraph [157] in Sportsbet [2010] FCA 604 I said:

Plainly, Sportsbet is entitled to relief.  It seeks declaratory orders which would hold invalid the 1.5% fee condition.  There are two difficulties with that course.  First, the constitutional infirmity springs from the practical operation of the fee condition and I have held that to be an inseverable part of a set of arrangements which includes the thresholds together with the rebates to the TAB and compensation arrangements with the clubs.  If a measure is to be the subject of a declaration then it should involve, as RNSW and HRNSW point out, at least each element of the practical operation case.  Secondly, there are significant problems with declaring only parts of the relevant instruments invalid.  It would not, for example, be correct to leave operational the approvals with no condition as to fee attaching to them altogether.  This raises the question of what the appropriate condition would be and that, so it seems to me, is not a judicial function.  The appropriate course, therefore, is to declare each approval wholly invalid.

5                     Sportsbet’s written submissions at trial contemplated the possibility of that outcome.  They were as follows:

95.        Sportsbet seeks declarations of invalidity in relation to the fee imposed on it.  This may be effected in the following ways:

(a)        A declaration of invalidity in relation to the fee condition (effectively reading down the approvals to be within s 92); or

(b)        A declaration of invalidity in relation to the approvals as a whole.

6                     Mr Bennett QC, for Sportsbet, pointed out that in Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 the conditions themselves had been declared invalid.  This may well be so but I gave considered reasons for not taking that course.  This is not a case of oversight or slip where re-opening might be seen as serving the practical end of nipping in the bud unnecessary appellate litigation.  Rather, this is a case where the result which has occurred was contemplated by Sportsbet and where the issue of whether only the fee condition should be struck down was expressly considered and decided.  I may be wrong in my conclusions on this question but the proper forum for that debate is the Full Court and not a re-opening application.

2009 Approval

7                     Sportsbet’s pleaded case did not include a claim relating to the 2009 approval.  It neither sought to have the approval declared invalid nor to recover any sums of money paid under it.  I infer that this was due to oversight arising from the fact that the proceedings were commenced in the 2008/2009 year prior to its issue.  It was submitted that this finding should not be made in the absence of evidence.  However I was informed by Mr Bennett QC from the bar table that what was in play was an oversight and I accept that. 

8                     The evidence shows that the respondents’ advisors knew that no challenge was being made to the 2009 approval by Sportsbet.  Mr Price, the solicitor for Racing New South Wales and Harness Racing New South Wales, gave evidence to that effect as did Mr Kerr SC who appeared during the trial.   Mr Bennett QC endeavoured to persuade me that there had never been a separate issue about the 2009 approval and that all parties had proceeded on the basis that it should be dealt with in the same manner as the 2008 approval.

9                     I accept the logic of this argument but not its premise.  The logic rests soundly on Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 287 where  Mason CJ and Gaudron J said:

Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted.  It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference.

10                  One needs therefore to examine the way in which the trial proceeded.  At the outset, however, it is important to note that for most of the life of the proceeding the only challenge made by Sportsbet was to the validity of the laws authorising the imposition of the fee and not to the administrative actions in issuing the approvals to which the fee obligation was attached.  This is significant because if that challenge had been upheld there would have been no conceptual basis for distinguishing the position of the approvals in differing years.  It is also important to note that the litigation was commenced prior to the issue of the 2009 approval.  For those reasons, from the inception of the proceeding to the time when a challenge was finally mounted to the actual approvals, the status of the 2009 approvals was unlikely to have been a topic of any significant interest.  Conduct by all parties treating 2008 and 2009 on the same footing is readily understandable.

11                  That state of affairs changed on 9 February 2010 when I permitted amendments which, inter alia, challenged for the first time the approvals themselves:  Sportsbet Pty Ltd v State of New South Wales (No 11) [2010] FCA 59.  From that time different considerations applied.

12                  The contention that the parties should be taken to have conducted the litigation on the basis that the 2009 approval was to be determined on the same basis as the 2008 approval was based on the following matters:

(a)        During the trial the respondents had agreed to a document which set out the full amount of the payments which had been made by Sportsbet to Racing New South Wales including payments in 2009 and 2010 without any indication at all that a point was going to be taken that those sums were not being claimed;

(b)       numerous documents only relevant to the 2009/2010 year had been admitted without any objection by the respondents;

(c)        the closing submissions of the respondents expressly referred, at one point, to the 2009 approvals;

(d)       on 24 September 2009, at a directions hearing, the respondents had accepted that the money collected under the approvals would have to be paid back;

(e)        the Court had proceeded on a similar basis as was evident from Sportsbet Pty Ltd v State of New South Wales (No 3) [2009] FCA 1248 which dealt with, and dismissed, Sportsbet’s application to pay the fees under the 2009 approvals into Court. 

13                  But for the amendment which occurred on 9 February 2010 I would regard submissions (a), (b), (d), and (e) as compelling.  So long as what was under challenge was the laws authorising the approvals rather than the approvals themselves there could be no reason to treat the years differently.  However, once the approvals themselves were challenged the scope of the debate opened up the possibility that different results might obtain with respect to different years.

14                  There was no ambiguity about the respondents’ position which was always that they wished the case to be conducted on the pleading.  Nor is there any real doubt, I think, that the respondents’ advisors well understood that the 2009 approval was not being claimed and that Sportsbet’s representatives were under a misapprehension that it was.  The misapprehension must have been obvious from the fact that Sportsbet’s representative sought and obtained from Racing New South Wales its agreement as to the amounts in question for the 2009/2010 year. 

15                  Others might have corrected that misapprehension but I do not think that the respondents, as litigants, were bound to do so particularly when they were repeatedly emphatic about the fact that the case they were meeting was the pleaded one.  As to matter (c), I do not think that the respondents’ written submissions read as a whole – and taking into account their extensive nature – can really be read as an indication of their consent to the raising of the 2009 approval as an issue.   I was taken to paragraph 201(a) of that document which suggested that, on a particular hypothesis, the  following order might be appropriate:

A declaration that the conditions of the approvals by the second respondent to the applicant to publish New South Wales thoroughbred race fields are invalid insofar as they purport to provide for an exempt turnover threshold.

16                  Strictly this paragraph must be referring to two distinct approvals and since there are only two – the 2008 and 2009 approvals – must be referring to the 2009 approvals.  However, in the context of the entire document it would be reading far too much into that statement to infer that the respondents had signalled their consent to conduct a case about the 2009 approvals.  More is this so in the context of their clear insistence that the case be conducted on the pleadings.

17                  Accordingly, I decline to permit Sportsbet to re-open its case and I dismiss its motion.  The question of costs, including the costs of this motion must now be resolved.  Those arguments should take place at the same time as the costs argument in Betfair.  Any further division between these two cases is to be avoided. 

Associate:

Dated:         5 July 2010