Betfair Pty Limited v Racing New South Wales - [2009] FCA 111 - FCA 2009 case summary — Zoe

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Betfair Pty Limited v Racing New South Wales

[2009] FCA 111

Federal Court of Australia|2009-02-19|Before: Perram J

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Court

Federal Court of Australia

Decision date

2009-02-19

Before

Perram J

Source

Original judgment source is linked above.

Judgment (68 paragraphs)

[1]

Introduction 1 By an amended notice of motion the respondents, Racing New South Wales ("RNSW") and Harness Racing New South Wales ("HRNSW"), seek to have the applicant ("Betfair") provide further particulars of its statement of claim ("the pleading"). Alternatively, they seek to have portions of the pleading struck out. 2 To understand the issues which arise it is necessary to say something by way of background. Betfair conducts a "betting exchange" from Tasmania under the terms of a licence issued pursuant to the Gaming Control Act 1993 (Tas). The operator of a betting exchange does not take bets or have a stake in the outcome of a future and uncertain event. Instead, such an operator provides a medium whereby gamblers may bet against each other. The operator of such an exchange derives profit not from the betting (in which it is not directly involved) but rather from commission charged on the winnings of successful punters. 3 Betting exchanges are not limited in their operation to the racing of horses. It is, however, only in the context of horse racing that the present issue arises. 4 As a matter of practicality those who wish to offer betting services in relation to horse races need to know which horses are running and in which race. This information is known as race field information. In order for Betfair to operate its betting exchange on horse races run in New South Wales it needs to obtain and publish that information. 5 In New South Wales, however, it is apparently a criminal offence for a "wagering operator" to "use NSW race field information" unless that operator holds an approval to do so or is otherwise authorised by the regulations to do so: s 33 of the Racing Administration Act 1998 (NSW) ("the Act"). Betfair is a "wagering operator". There are a number of unusual features of this law which should not pass without mention. 6 First, the expression "use NSW race field information" is defined in s 32A to include the publication or communication of such information by a person "whether in Australia or elsewhere". Thus the Parliament of New South Wales has created a criminal offence of extra-territorial operation. Its power to do so is undoubted provided there is some nexus with New South Wales which, in this case, is clearly provided both by the racing and the horses themselves: s 2(1) of the Australia Act 1986 (Cth); Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14. Secondly, the offence is not trivial. For an individual the maximum penalty is 12 months imprisonment or a fine of 50 penalty units ($5,500) for a first offence. Thirdly, an approval issued pursuant to s 33 is granted by a "relevant racing control body" (s 33A), an expression defined in s 27 to mean RNSW, HRNSW or Greyhound Racing New South Wales. 7 RNSW is a body corporate established by s 4 of the Thoroughbred Racing Act 1996 (NSW). Section 5 of that Act provides: Racing NSW does not represent the Crown and is not subject to direction or control by or on behalf of the Government.

[2]

Equivalent provisions under the Harness Racing Act 2002 (NSW) establish the same position in relation to HRNSW. The apparent independence of these entities from the State is de jure and need not be de facto. In the case of RNSW, this is so because the Minister appoints both the members and Chief Executive of RNSW from a list of nominees put forward by the "Selection Panel". The Selection Panel, however, is established by the Minister: s 7. Nevertheless, as a matter of form, the licensing process is put in the hands of an organisation not under Crown control. 8 This is not the first time the operation of betting exchanges has been subject to the criminal law. Previous Western Australian legislation underpinning a ban on the publication of race field information for races held in that State was held by the High Court to infringe s 92 of the Constitution: Betfair Pty Limited v State of Western Australia (2008) 234 CLR 418. The Western Australian law contained, as the NSW law does, provisions enabling the grant of a licence to operate a betting exchange. However, the long title to the relevant law included the statement that the purpose of the law was "to prohibit betting through, and the establishment and operation of, betting exchanges". Betfair's application for a licence was refused by the Minister for reasons including the regulatory policy of the WA Act: 234 CLR 471 [74]. The High Court concluded that the ability to grant a licence did not, in that circumstance, avert a breach of s 92. 9 Section 33A of the Racing Administration Act 1998 (NSW) permits the grant of an approval to use NSW race field information subject to conditions. By reason of s 33A(2)(a) it is permissible to include a condition that the holder of the approval pay a fee. Clause 16 of the Racing Administration Regulation 2005 (NSW) ("the Regulation") provided at the relevant time: (1) A relevant racing control body may impose a condition on an approval (in addition to any other condition relating to fees) that the holder of the approval must pay a fee to cover the cost of assessing the application for the approval.

[9]

17 The respondents submit that the words "purports to" should be struck out because they imply that cl 16(2) of the Regulation is not valid. They emphasise that Betfair's challenge is to the exercise by RNSW of the statutory power regulated by cl 16(2) and not to the validity of cl 16(2) itself. Betfair, on the other hand, submits that cl 16(2), despite the breadth of paragraph 64, only permits the imposition of a fee which complies with s 92 of the Constitutionand that was all that was sought to be captured by the words "purports to". 18 This issue is more important than may appear at first glance. There is a passage in Cole v Whitfield (1988) 165 CLR 360 at 408 which suggests that a relevant inquiry in this area includes a determination of the "real object" of the law in question. If Betfair's challenge were to the validity of cl 16(2) itself this would necessitate an examination of the object of cl 16(2). Where, however, the challenge is made to the exercise of statutory power conferred by s 33A and cl 16(2) then, so it would seem, the inquiry is into the object of RNSW's approval of 15 August 2008. That approach leads, in this case, to the provision by Betfair of particulars to paragraph 102 (to which it will be necessary to return) which rely upon various statements by officials of RNSW. 19 It may be doubted - I express no view - whether material of that kind could be received in a case which challenged directly cl 16(2). Of course, that problem did not arise in the previous Betfair case. For, as noted above, the objects of the Western Australian law plainly included the extirpation of betting exchanges altogether. By contrast, the title of the Racing Administration Amendment Act 2008 (NSW) (which introduced the regime in its current form) contained no such clear statement of intent and, to the contrary, the explanatory memorandum accompanying its introduction as a bill expressly recited the pursuit of equality between racing operators as an object: The object of this Bill is to amend the Racing Administration Act 1998 (the Principal Act) as follows in response to the recent court cases of Betfair Pty Limited v Western Australia [2008] HCA 11 (the Betfair Case) and Tom & Bill Waterhouse Pty Ltd v Racing New South Wales [2008] NSWSC 1013 (the Waterhouse Case):

[30]

29 Statements such as these exhibit caution at pre-emptorily excluding as irrelevant factual material in an area of discourse in which the threshold between the pertinent and the extraneous is indistinct. That caution is, with respect, well-founded. Betfair emphasised that the respondents' application was one seeking to strike out a pleading and that this brought it within the rubric of O 11 r 16 of the Federal Court Rules. The long course of authority about such applications showed that it was a power to be used only sparingly and only where a case was manifestly hopeless. This may not be an answer to the respondents' argument which focuses, not on the hopelessness of the allegations, but on their relevance. However, it is appropriate to conclude, I think, that nothing should be struck from a pleading as irrelevant unless it is clearly irrelevant. 30 I do not think at this stage of the proceeding that it can be said with the necessary level of clarity that the position of the licensed bookmakers and on-course totalizators is so obviously devoid of any legal significance that it must be struck out. For example, in a case which alleges that the TAB is singled out for protection, is it not useful to know what the position of other intrastate traders might be? If they are deleteriously affected by the discrimination might that not suggest the absence of a breach of s 92? If they are not so affected might that not show the discriminatory practice is wider than thought? Alternatively, if they are apparently protected from the discriminatory burden is it not useful to know how? Further, the respondents' submission that such material is irretrievably irrelevant is difficult, at a pleading level, to reconcile with the High Court's consideration of market evidence in the previous Betfair case: 234 CLR 480 [114]-[116]. 31 I accept the respondents' natural concern that permitting the paragraphs to stand may be to permit a second s 92 case to linger behind the arras. However, that concern does not diminish their relevance. Further, Betfair is in any event confined to its present pleadings; if it wishes to put some other case it will need to amend. Of course, permitting the paragraphs to stand may broaden the respondents' discovery obligations. Without expressing a concluded view, however, there may be something to be said for the notion that if the paragraphs are only relevant, as Betfair submits, to establish a factual background then discovery on those issues might be correspondingly circumscribed. The paragraphs will not be struck out.

[32]

33 There is an ambiguity in this paragraph. It is not clear whether it alleges that there may be objects consistent with s 92 which the approval serves but that the approval is not reasonably appropriate and adapted to such objects or whether it alleges that the approval simply does not serve any objects consistent with s 92. That ambiguity reflects, I think, a lack of procedural guidance in s 92 cases about who has to prove what. In this case, there is already agreement that the ultimate questions for this Court will be, first, whether the approval imposes a discriminatory burden upon interstate trade, commerce or intercourse; secondly, whether that burden is of a protectionist character; thirdly, in answering the second question, whether any such burden is appropriate and adapted to securing a legitimate object: Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 471-472 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ. It may be broadly accepted that Betfair bears the onus of proving that the approval is of a protectionist nature. But it is unclear whether it is to allege and prove the absence of any legitimate object, the existence of such an object but the presence of disproportionate measures to achieve it, or both. 34 The course of recent authority in the High Court throws little light on the resolution of this issue because none of the cases heard in the High Court resulted from trials. Cole v Whitfield (1988) 165 CLR 360 resulted from the dismissal of a complaint by Inspector Cole laid before the Court of Petty Sessions in Hobart. The complaint was tried before the magistrate on an agreed statement of facts. The magistrate dismissed the complaint and the inspector appealed to the Supreme Court. Whilst that was pending it was removed into the High Court. Bath v Alston Holdings Pty Ltd (1988) 165 CLR 411, decided shortly thereafter, proceeded as questions reserved on agreed facts. Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 was a special case conducted on agreed facts as were both APLA Ltd v Legal Services Commissioner (2005) 224 CLR 322 and Betfair Pty Ltd v Western Australia (2008) 234 CLR 418. I do not think, therefore, that much procedural guidance on pleading questions can be found in these cases. 35 It is against that backdrop of procedural uncertainty that the respondents' present complaints fall to be considered. Before dealing with those complaints it is useful to observe that the juridical nature of the approval is not that of a law or a regulation. It is, in effect, the consequence of the making of an administrative decision similar in some way to the grant of a licence subject to conditions. Whilst it may be useful to speak of the object or purpose of a law (or a regulation) or of the decision-maker who decides to grant a licence there are difficulties in talking of the object or purpose of the document which constitutes a licence. No doubt the current pleading is a consequence of the jurisprudence on s 92 which has been predicated for the most part on litigation concerning laws or regulations. 36 However, without foreclosing the possibility that it may be possible to speak of the object of a licence as opposed to the object of the issuing authority, it is more likely that what is intended is a reference to the object of the decision-maker. I express no concluded view in that regard. However, as will be apparent, I propose to proceed on the basis that the references in paragraphs 101 and 102 to objects include references to the objects of the decision-maker. 37 Paragraph 102 of the statement of claim is as follows (excluding its particulars): In particular, without limiting the generality of the previous paragraph:

[37]

38 Returning to the argument at hand, the respondents argue that this allegation can go nowhere and should be struck out. Having made the allegation in paragraph 101 that the approval was not reasonably appropriate and adapted to any object consistent with s 92 there was nothing more to be alleged. If that allegation were accepted then Betfair would win; otherwise it would lose. If it lost then there was no further work which could be done by paragraph 102. There could be no infringement of s 92 merely because a law had a protectionist object for that forbidden purpose also had to be linked to some burden on interstate trade. Since paragraph 101 made no connexion between the impermissible object and any burden imposed it should be struck out. 39 As Betfair correctly submitted, this submission ignores the opening words of paragraph 102: "[i]n particular, without limiting the generality of the previous paragraph …" which is logically inconsistent with the respondents' treatment of the paragraph as if it were freestanding. This shows that the allegation in paragraph 102 merely particularises the allegation in paragraph 101. That, however, is not a complete answer to the respondents' argument for, as an aspect of the same point, they submitted that paragraph 102 properly belonged in a reply and not in the statement of claim. On this view of things, the substantive allegation about the approval's object was to be found in paragraph 101. The respondents could now plead to that paragraph that there was some legitimate object or objects proportionately achieved by the approval and then, the case having been made, Betfair could take issue with that case in its reply disputing, at its choice, the legitimacy of the suggested objects and/or the proportionate nature of the means adopted to achieve them. 40 There are attractions to this argument. It does away with the apparent need for an applicant to choose between proving an illegitimate object or disproportionate means in advance of knowing what a respondent's suggested legitimate object might be. It reduces, potentially, the scope of the debate about the legitimacy and proportionality of the means adopted to achieve the object nominated by the respondent. 41 Despite its attractions the argument should be rejected for at least two reasons. First, the argument assumes that the procedural rules about proof in s 92 cases sufficiently establish that a pleading of illegitimate objects in chief is so untenable that it must be struck out. However, I was referred to no authority which would suggest the existence of such a procedural rule and, as I have endeavoured to show, the High Court's decisions in this area represent lean pickings for connoisseurs of the procedural. Secondly, in any event there are statements which would suggest that debate in s 92 cases may not necessarily take place, at least insofar as the legitimacy of a measure's object is concerned, entirely upon grounds of a respondent's choosing. Betfair pointed to a statement in Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 472 which is in these terms: The fact that a law imposes a burden upon interstate trade and commerce that is not incidental or that is disproportionate to the attainment of the legitimate object of the law may show that the true purpose of the law is not to attain that object but to impose the impermissible burden.

[39]

Alternative objects 43 The respondents had other objections to paragraph 102. Subparagraphs (b) and (c) suggested the existence of a "dominant" or "substantial" object. The respondents submit that the inquiry required by s 92 was strictly into the legal or practical effect of the approval. There was no place for a further inquiry into the dominant or substantial object of the measure. I would reject this argument for a number of reasons. 44 First, the respondents pointed to a passage in Cole v Whitfield (1988) 165 CLR 360 at 399-400 which was said to indicate that it was the legal or practical effect of the law which needed to be examined to determine whether the law infringed s 92. The passage in question, however, is concerned only with the first limb of the s 92 test, being the issue of whether a law discriminates or not. The second limb involves an inquiry into whether any such discrimination is reasonably appropriate and adapted to a legitimate end: Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 at 472. It follows that some inquiry into the end that is sought to be achieved by the law (or by the executive action) is a necessary step in determining whether s 92 has been infringed. Where there are multiple ends it may well be necessary to make some comparison of those ends and of their relative dominance. 45 Secondly, as Betfair pointed out, the respondents' view appears to be inconsistent with what was said by Hayne J in APLA Ltd v Legal Services Commissioner (2005) 224 CLR 322 at 462 [423] which was in these terms: Identifying the purpose of a law is an exercise in construction. That task must begin with the words in which the law is expressed but, as has been repeatedly noticed, that is a task that requires more than sitting with the words of the Act in one hand and a dictionary in the other. Determination of the meaning to be given to a law requires consideration of various sources. Although the inquiry must begin and end with the words that are used, account must be taken of the whole of the context in which those words were and are used and, in appropriate cases, account must be taken of the various extrinsic sources to which relevant interpretation legislation permits, and in some cases requires, recourse.

[41]

Subjectivity 48 For a period the respondents took issue with paragraph 102 on the basis that there might be concealed within it a case alleging that the object of the approval for s 92 purposes was to be determined subjectively. Mr Robertson SC who appeared with Ms Morgan for Betfair eschewed this allegation submitting that the correct approach was for the Court to determine "the object objectively". There is no formal occasion, at this stage, to resolve this issue. However, it is an area in which care should be exercised. 49 Where s 92 is applied to a law made by a legislature it is natural to pursue an analysis of the purpose or intent of that law by reference to principles of statutory construction. In that field it is accepted that intention is a relevant part of the interpretative context: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ. However, that role is attenuated in statutory interpretation because it is established that intention, in the context of a law made by a legislature, is limited to "the intention expressed by the words used": Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304 per Gibbs CJ; CTM v R (2008) 247 ALR 1 at 48 [203] per Heydon J. Of course, in the context of s 92 the purpose, intent or object of a law goes from being a relatively minor interpretative tool to being a decisive constitutional consideration. But it may be a mistake to assume that statements about purpose in s 92 cases which are concerned with laws have any necessary connexion with the operation of s 92 in cases concerned with administrative action. 50 This is because administrative law has a different approach to purpose or intention. Unlike the rules of statutory interpretation where intention, though extant as an interpretative device, is a relatively minor consideration, in administrative law there is an entire discourse devoted to an examination of improper purposes. And, it is plain that that discourse can include an examination of the very kinds of things which the respondents in this case say should be eschewed viz the actual motives of the decision maker albeit discerned by objective means. In such an inquiry the focus is by no means limited, as the respondents would contend here, to the face of the instrument produced: cf The Queen v Toohey; ex parte Northern Land Council (1981) 151 CLR 170 at 193 per Gibbs CJ, 202-203 per Stephen J, 217 per Mason J, 264 per Aickin J. 51 If that were accepted the question would become whether the approach to purpose exhibited in s 92 cases concerned with the validity of laws has any necessary application to a s 92 case concerned with administrative action. It seems to me that Mr Gleeson's contention amounts to the argument that the approach to purpose under s 92 where administrative action is concerned must be the same as the approach to purpose where a law is involved. On this application, the respondents must take that argument one step further and say that that proposition is beyond argument. I think it is simply impossible to embrace such a view. In that regard, it is useful to note the dictum of Latham CJ in Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 at 68: But the purpose of legislation is to be ascertained by considering the true nature and operation of the law and the facts with which it deals, and … not by examining the motives of the legislative authority … No such limitation applies in the case of administrative acts.

[56]

53 The respondents submitted that these particulars were incapable of supporting paragraph 102 and that further particulars should be provided, and if not provided, that the paragraph should be struck out. There was also a complaint that the individual pages relied upon in the book of particulars had not been, despite request, identified. In its written submissions, Betfair pointed to pages 562, 565-7, 573-4, 613, 625, 627, 636, 640 and 641 as showing what it claimed was the obvious link between the TAB and RNSW, to pages 571-4, 594, 598, 612-5, 621-2, 623, 625, 631 and 635 as showing "the explicit and often inaccurate characterisation of betting exchanges … as a threat to the industry" and to pages 625 and 627 as showing "unambiguous protectionist language employed by the first respondent's CEO". During the hearing Mr Robertson also pointed to pages 650 and 651. In that circumstance, I do not propose to deal with the suggestion that further particularisation by reference to particular pages should be provided since this has already occurred. In taking that course, it should not be assumed such a degree of particularisation would have been necessary. 54 Turning to the substance of the matter the respondents submit that the first eight documents were so old that they were 'stale' and could throw no light on the object of the approval in August 2008. The public statements particularised in (i) to (viii) occurred between 2004 and 2006. The respondents submitted that the statements (except for (viii)) occurred before 10 January 2006 when Betfair obtained its Tasmanian licence, more than two years before the High Court's decision in the previous Betfair case (on 27 March 2008) and more than two and a half years before the amendments which introduced the provisions enabling the approval. Thus, it was said, these documents could not found an allegation about the real object of the approval in 2008. 55 Betfair, on the other hand, stressed the difference between the question of whether an inference can be drawn from material and the question of whether it should be. It suggested that the inferences were open and that, at a pleading level, this sufficed. No doubt the effluxion of time may provide a basis for suggesting that the materials do not establish the real object of the approval in 2008 but that observation itself provides no support for the notion that it must do so. The respondents submitted that the particularised matters provided no support for the object identified in paragraph 102 viz the purpose of protecting the TAB from competition with Betfair. The particularised matters include a statement from the Daily Telegraph for 18 July 2005 attributed to the Chief Executive of RNSW as follows: V'Landys maintained Racing NSW would do "everything in its powers" to protect the industry from Betfair, who will not return anything to the NSW industry.

Betfair Pty Limited v Racing New South Wales

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