FEDERAL COURT OF AUSTRALIA

Sportsbet Pty Ltd v Harness Racing Victoria (No 7) [2012] FCA 1093

THE COURT DECLARES THAT:

1.    The condition imposed by the First Respondent on the approval granted to the Applicant on 19 December 2008 requiring the Applicant to pay 1.5% of assessable turnover derived from Victorian Harness Racing (the Turnover Condition) is invalid.

2.    The purported decision to revoke and/or refuse approval to the Applicant under s 2.5.19D of the Gambling Regulation Act 2003 (Vic) on the grounds of the Applicant’s refusal to pay in accordance with the Turnover Condition is invalid.

THE COURT ORDERS THAT:

3.    The application is otherwise dismissed.

4.    The First Respondent pay to the Applicant 50% of its costs of the application including reserved costs, save that the Applicant’s costs shall only include fees for one Senior Counsel and one Junior Counsel.

5.    The Applicant pay to the Second Respondent 90% of its costs of the application including reserved costs.

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

REASONS FOR JUDGMENT

1    On 21 August 2012, I published reasons for judgment in this matter: Sportsbet Pty Ltd v Harness Racing Victoria (No 6) [2012] FCA 896 (the primary judgment). I made no orders, other than directing the parties to provide draft orders to give effect for the reasons for decision, and to make such submissions as to costs as they considered appropriate.

2    I have now had the benefit of having received and considered the respective submissions of the parties and their proposed orders.

3    I propose to make declaratory orders in the terms put forward by Sportsbet Pty Ltd (Sportsbet), and accepted as appropriate by Harness Racing Victoria (HRV) and by the State of Victoria (the State) concerning the Turnover Condition (as described in the primary judgment). In addition, as the attack upon the validity of certain provisions of the Gaming Regulation Act 2003 (Victoria) (the GRA) itself failed, I think it is appropriate to order that the application itself otherwise be dismissed. That is as suggested by the State. The intervenor Tabcorp Holdings Ltd made no submissions on the form of orders or as to costs.

4    As to costs, Sportsbet seeks orders that:

(a)    HRV pay Sportbet’s costs of the proceeding including any reserved costs.

(b)    In the event that the costs ordered to be paid by HRV do not include all of the costs in relation to the participation of the State in the proceeding, the State should pay 20% of those additional costs.

In seeking those alternative orders, it contends that the costs should be determined on an issues basis, and it identified six issues which required to be addressed in the primary decision. Its analysis of the outcome of those issues was said to support the costs orders it sought.

5    HRV accepted that, in the circumstances of this matter, costs should be allocated on an issues basis. It adopted a wider view of the relevant issues, and on its analysis Sportsbet succeeded only on between 30% and 50% of its case. In addition, it argued that Sportsbet’s costs in any event should not include an allowance for three counsel. Thirdly, it argued that the costs of the issue the subject of the judgment in Sportsbet Pty Ltd v Harness Racing Victoria (No 3) [2010] FCA 1420, which at the time were reserved, should be awarded to HRV against Sportsbet in any event as HRV achieved very substantial success on the interlocutory applications the subject of that decision.

6    Consequently, it proposed the following costs orders (leaving it to the Court to fix the particular percentages, in the light of the submissions):

(a)    Sportsbet pay HRV’s costs of the interlocutory applications the subject of Sportsbet Pty Ltd v Harness Racing Victoria (No 3) [2010] FCA 1420.

(b)    HRV pay [x%] of Sportsbet’s costs of the proceeding including [x%] of reserved costs, save that Sportsbet’s costs shall only include fees for one Senior Counsel and one Junior Counsel.

(c)    Sportsbet pay [x%] of HRV’s costs of the proceeding including [x%] of reserved costs.

7    The State contended that Sportsbet should be ordered to pay its costs of the proceeding, including any reserved costs, and further it opposed the alternative submission of Sportsbet that the State should pay any part of its costs.

8    The starting point for the award of costs is set out in Esso Australia Resources Pty Ltd v Commissioner of Taxation (No 2) [2012] FCAFC 7 at [5] where the Full Court (Keane CJ, Edmonds and Perram JJ) said:

The disposition of the costs of a proceeding is a matter within the discretion of the Court: s 43(1) of the Federal Court of Australia Act 1976 (Cth). Usually, that discretion is exercised on the basis that costs follow the event in the absence of special circumstances justifying some other order. There may be circumstances that make it reasonable that a litigant who has been only partly successful should bear the expense of litigating that portion of the case upon which it has failed. And a successful party who has failed on certain issues may not only be deprived of the costs of litigating those issues but may be ordered to pay the other party’s costs of those aspects of the litigation.

As I have noted, I accept the submissions of both Sportsbet and HRV that, as between them, it is in this matter appropriate to separately consider the resolution of particular issues.

9    I do not, however, conclude that it is appropriate in the circumstances to order that each of Sportsbet and HRV should separately benefit from an order for the recovery of a percentage of their costs. I accept that it is appropriate for the Court to make a percentage estimate of the costs which each of those parties might recover, rather than to make an order for the costs of specific issues – leaving it to a taxing Registrar to somehow allocate particular parts of the pre-trial work and the hearing to particular issues. That would be an onerous and almost impossible task. But, once the rough percentages can be arrived at, in my view it is preferable for there to be only one taxation of costs, so the percentage I fix for Sportsbet to recover its costs from HRV will be set to reflect that HRV should otherwise have been entitled to recover certain of its costs from Sportsbet, as well as Sportsbet recovering certain of its costs from HRV.

10    Sportsbet largely succeeded in the issues it raised against HRV, including certain issues HRV waged with the State. Sportsbet was found to be engaging in trade and commerce between the Northern Territory and the States, including Victoria, as a wagering service provider in relation to bets taken on harness racing in Victoria, and the turnover condition was found to be discriminatory and inappropriately so. HRV (and the State) did not persuade the Court that Sportsbet could avoid the burden of the Turnover Condition by registering in Victoria.

11    On the other hand, Sportsbet failed to show that the impugned provisions themselves were invalid, and there was quite extensive evidence and submissions on that issue extending to the purpose of the impugned provisions, and to the background of them including the perceived desirability of all wagering service providers making an economic contribution to the conduct of harness racing in Victoria. In addition, Sportsbet failed to demonstrate that the basis of Tabcorp’s contribution to harness racing in Victoria was significantly less than that imposed on Sportsbet and other non-Victorian wagering service providers in relation to harness racing in Victoria. Ultimately, also, Sportsbet did not pursue in its final submissions on the claim of a breach by HRV of a settlement agreement between itself and HRV.

12    Before addressing the particular proportion of recoverable costs, there are two further matters to mention.

13    In Sportsbet Pty Ltd v Harness Racing Victoria (No 3) [2010] FCA 1420, I ruled on Sportsbet’s request for unredacted copies of documents discovered by HRV, Sportsbet’s request for further discovery from HRV, and HRV’s claim for orders protecting the confidentiality of certain of its discovered documents. As HRV contends, it was largely successful in relation to those interlocutory issues, although it was required to produce for inspection a few of its discovered documents in an unredacted form. I do not propose to make a separate order for costs of those interlocutory applications. That would require separate taxation, and potentially at least the difficulty of isolating the particular work involved on the part of the respective solicitors to determine what was covered by the order. I propose to reduce the percentage of costs recoverable by Sportsbet by a small margin to reflect the fact that it was, in essence, unsuccessful on those interlocutory issues.

14    In making the order for costs which I propose, I will make it clear that the costs of Sportsbet should only include fees for one Senior Counsel and one Junior Counsel. Of course, I do not know the particular reasons why Sportsbet engaged two Senior Counsel and a Junior Counsel for the hearing. I have no doubt it had good reasons for doing so. But, as the authorities indicate, it is necessary to go beyond its subjective reasons to allow the costs of three counsel on taxation. I do not have material, beyond the nature of the case itself, to be satisfied that, as a matter of justice between Sportsbet and HRV, it was necessary and proper that HRV should bear the costs burden of three counsel. There were ultimately only six lay witnesses and two expert witnesses, and the hearing occupied 10 days; the extensive documentary material was not so complex or apparently indigestible as to require the special expertise of a particular counsel. The legal arguments, although complex, largely involved the application of principles established by the High Court to the particular evidence, and the analysis of the evidence towards securing the findings of fact sought by Sportsbet. See generally Sundell v Queensland Housing Commission (1954) 94 CLR 531 at 535; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 at [46].

15    Having regard to the matters I have mentioned, in my view an appropriate order is that Sportsbet should recover from HRV 50% of its costs of the proceeding, including reserved costs. That percentage reflects my rough analysis of the time spent during the hearing on the respective issues, which I have assumed in the absence of any other submission, is also roughly representative of the pre-trial work. It is arrived at on the basis that I should allow Sportsbet costs on the issues it succeeded on, and then reduced that allowance to take account of the fact that HRV succeeded on other issues which might otherwise have been the subject of a separate order for costs, and I have further reduced the percentage arrived at having regard to the particular interlocutory issues specifically referred to above.

16    I see no reason why the liability for costs of HRV should be further reduced because it shared the conduct of certain issues with the State, particularly as the percentage I have decided upon reflects the extent to which HRV succeeded, in part on issues in common with the State.

17    In relation to the costs as between Sportsbet and the State, the position is less complex.

18    In the proceeding, Sportsbet challenged the validity of ss 2.5.19B and 2.5.19D of the GRA; and the validity of the Turnover Condition imposed by HRV pursuant to s 2.5.19D of the GRA, even if those legislative provisions were valid.

19    The State was joined to the proceeding as second respondent by order made on 12 March 2010. In the State’s Defence, dated 16 April 2010, the State contested both the challenge to the validity of the impugned provisions and the challenge to the validity of the turnover condition. However, in the State’s Amended Defence dated 16 July 2010, filed and served by leave given on 1 July 2010, the State withdrew its defence of the turnover condition.

20    Thus, from 16 July 2010, the State confined its position to defending the impugned provisions. It did not call or cross-examine any witness, or make any submission, directed to the validity of the turnover condition separate from the validity of the impugned provisions.

21    The primary judgment means that Sportsbet’s challenge to the validity of the impugned provisions failed.

22    In the ordinary course, therefore, as between Sportsbet and the State, costs should follow that event. In deciding whether to adopt that position, or to adopt a more subtle position, I have taken into account that for a period of three months the State joined with HRV in also supporting the validity of the Turnover Condition. However, that issue was already alive when the State was joined as a respondent, and there is nothing to indicate that the State’s position on the issue over that period led to any additional costs than those incurred as between Sportsbet and HRV.

23    I have also taken into account that there were several arguments advanced by both Sportsbet and by the State as to the validity or invalidity of the impugned provisions, on some of which Sportsbet succeeded but on some of which (including obviously a critical issue) the State succeeded. At the end, the State successfully contended that the impugned provisions were not invalid. I do not regard the State as having presented its unsuccessful contentions unreasonably, so I do not consider that it is appropriate to separately deal with costs on the basis of particular arguments: cf Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81 at 84. Nor do I consider that the interests of justice are served by addressing the costs of arguments between Sportsbet and the State separately: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 per Black CJ and French J at 236.

24    There is one qualification to that approach. It concerns the proposed amendment to the defences of both HRV and the State to assert as a matter of fact and as a matter of law that Sportsbet was a Victorian trader only, and so any discrimination against it by the impugned provisions was only discrimination against intrastate trade, and in any event that the business of Sportsbet does not constitute trade or commerce between the Northern Territory and the States. Leave to amend was given to argue the matter of law in the course of the hearing. That matter is addressed in the primary judgment at [72]-[85] and on the amendment application itself in Sportsbet Pty Ltd v Harness Racing Victoria (No 5) [2011] FCA 954. I did not at the time deal with the costs of the amendment application.

25    As between Sportsbet and the State, in my view it is appropriate to reflect the costs of that application, and the outcome of the contention allowed by the limited leave to amend the State’s defence, by reducing the costs otherwise to be awarded to the State. There is no science in selecting a particular figure or percentage. There are in the State’s submissions detailed analyses of the time occupied on the issue. I think the appropriate reduction should be 10%. I have taken into account the amendment application, and the time taken to argue the issue and the evidence, particularly that of Mr Tyshing, upon which the contention was advanced. Whilst the State itself did not take time in cross-examination of Mr Tyshing, its contention was based in large measure upon the evidence he gave.

26    In other respects, and in particular as to whether the impugned provisions were discriminatory at all, and as to whether Sportsbet could obtain registration in Victoria so as to avoid the burden of the turnover condition imposed under the impugned provisions, and as to the appropriateness of the impugned provisions themselves, I consider that the costs of the State should follow the event.

27    I order that Sportsbet pay to the State 90% of its costs to be taxed.

Associate:

Dated:    10 October 2012