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[2009] FCA 536
Federal Court of Australia
2009-05-21
Perram J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 There are two questions to be determined. The first is whether the respondents are entitled to have discovery from the applicant ("Betfair") in the terms of the categories which they have proposed. The second is the question of who should bear the costs of a motion brought by Betfair seeking certain (now agreed) categories of discovery from the respondents.
Respondents' categories of discovery 2 By a notice of motion filed 17 April 2009 the respondents seek discovery of certain categories of documents from Betfair. By the time the motion was heard, all that remained in dispute were categories 2 to 7, 9 to 11, 13 to 15, 17 to 20, 25 and 26 in the document handed up at the commencement of the hearing entitled "Categories of discovery for the applicant proposed by the first and second respondents". 3 Before descending into the resolution of these issues it is useful to deal with a general proposition advanced by the respondents. They say that Betfair's case is that the relevant approvals impose a discriminatory burden upon it and that that burden affects its profitability. That case rests, so say the respondents, on two premises: (a) that the burden alleged is, in fact, imposed as a result of the respondents' approvals; and (b) that the effects on Betfair's profits have been caused by the discriminatory burden alleged. 4 The respondents argue that they should be entitled to test, and if necessary, displace these premises. As to the former, the respondents suggest that it may be possible that the burden under which Betfair alleges it toils is self-imposed and not inflicted by the respondents' approvals. As to the latter, they similarly submit that it is possible that Betfair's profitability has been impacted, not by the alleged protectionist effects of the approvals, but as a consequence of Betfair's own commercial decisions. 5 At the root of both arguments is a single concept. It is the idea, well-known in the law, that a plaintiff must prove causation and that a defendant is generally free to seek to contest the connexion between conduct impugned and damage suffered. In that context, it is always open to a defendant to allege that the true cause of a plaintiff's loss lies elsewhere. 6 This case, however, is not a claim for loss and damage resulting from delict. Instead, it is a complaint that certain behaviour is protectionist and, hence, unconstitutional. Viewed at that level of generality, it is difficult to see why the position of Betfair is relevant beyond issues of standing. The question is whether the respondents' approvals impose a discriminatory burden on interstate trade. What the internal affairs of the interstate traders happen to be seems to be largely irrelevant. 7 That initial impression of irrelevance is not dispelled by a close consideration of the respondents' arguments. They say, for example, that it is relevant to know the terms of Betfair's dealings with other state regulators because those dealings may, in turn, throw light on why Betfair has selected its particular business model. But why Betfair has chosen to operate in a particular way is no answer to a claim that those who chose to operate that way are deleteriously affected by the consequences of discriminatory protectionism. A law which prohibited the importation of goods from Tasmania would not evade the prohibitions in s 92 of the Constitution by showing that a particular plaintiff had decided to operate from Tasmania because of its pleasing climate and pleasant environs. So too, the reasons for which Betfair has decided to operate a betting exchange seem to me to have no relevance to a claim that a State law said to discriminate against such operations infringes s 92. 8 It is true that Betfair alleges in paragraphs 96 and 97 of the amended statement of claim that its profitability has been adversely affected by the approvals. However, that allegation is not caught up in the central claims concerning s 92 at paragraph 98 to 104 and 105 to 109. Paragraphs 96 to 97 appear in a section of the pleading entitled "Betfair's payments to the racing industry" to which they do not appear naturally apposite. It may be that they are relevant to standing although I need not presently determine that question. A significant point to be made is the minor role the allegations play both in the pleading as framed and in the constitutional issues engaged. I would not regard discovery directed to the allegations in those paragraphs as a sensible use of time or resources. That matters because of the terms of Practice Note 14 which make plain that discovery in this Court is not a right and is governed by notions of necessity and proportionality. Betfair drew my attention to the comments of Hill J in Cassidy v Medical Benefits Fund of Australia Ltd [2001] FCA 700 who at [24] confirmed the need to assess the relevance of the material sought against the burden involved in its production. There is evidence that the burden is non-trivial. 9 In light of those general marks I turn to the disputed categories.
Categories 2-5 10 I will not set these out. Compendiously, they seek documents which will reveal Betfair's dealings in other States. The avowed purpose of this is, apparently, to explore whether Betfair is suffering from a self-imposed burden. For reasons already given I will not permit discovery on this basis. 11 The respondents also submitted that the material was relevant for another reason. Necessarily Betfair alleges that the approvals are not reasonably appropriate or adapted to a legitimate object. To that end Betfair points to the position in Tasmania where a more benign regime is said to be in place. The respondents say that they are entitled to explore why Tasmania has implemented this particular regime so that they may test the notion that it is reasonably and appropriately adapted to the legitimate end. 12 I do not think that this is relevant. It may be that the respondents can establish that the alternate means suggested by the Tasmanian approach may not be as reasonable or as appropriately adapted as Betfair might contend. However, the materials which Betfair has concerning that seem to me to be a decidedly indirect way of obtaining such information. Particularly where there are obviously more direct ways of obtaining the material, for example, by issuing a subpoena to Tasmania. I do not propose to permit this category.
Category 6 13 This category seeks to elicit, broadly speaking, instructions provided by Betfair to any provider to it of "IT services". The relevance of this category was said to be that it would reveal the basis on which Betfair charged its clients commission. That point was only to make good the respondents' argument that it is entitled to explore the business structure of Betfair to test whether the source of the burden is the approvals. For reasons already given, I reject the relevance of such a contention.
Category 7 14 The respondents seek discovery of all of the documents that Betfair has relating to the High Court case of Betfair Pty Limited v State of Western Australia (2008) 234 CLR 418. The respondents' points were two. First, it was said that the High Court appeared to take the view that a fee based on turnover might be reasonably appropriate and adapted to a legitimate object. Secondly, they claimed to be entitled to test the assertions to that effect made by Betfair in those proceedings. 15 I do not think that these materials have any relevance to the present proceeding. There is no utility to be had by allowing one army of lawyers to swarm over the written work of another. Even if they were relevant, I would not permit discovery of them, so tangential do they appear.
Categories 9 to 11, 13 to 15 and 17 16 Each of these categories was directed to assessing Betfair's financial position and/or internal arrangements. For reasons already given these are not relevant.
Categories 18-19 17 Category 18 provided: All documents recording consideration of or referring to:
18.1 the Racing Administration Act 1998 (NSW) as amended by the Racing Legislation Amendment Act 2006 (NSW) and/or the Racing Administration Amendment Act 2008 (NSW);
18.2 Racing Administration Regulation 2005 (NSW) as amended by the Racing Administration Amendment (Publication of Race Fields) Regulation 2008 (NSW) and/or the Racing Administration Amendment (Race Field Publications Approvals) Regulation 2008 (NSW);
18.11 these proceedings (except for documents created by, sent to or received from the legal advisers of Betfair);
18 Category 19 is in similar terms. 19 I have no doubt that relevant material might be picked up in the cavernous maw of this category. However, that says little about its appropriateness as a discovery category. The respondents submitted that these documents would be "central" because they would show the consequences to Betfair of the relevant legislation. No doubt some of them may show that; they would also show a great deal of other, almost certainly irrelevant, matters. Thus framed, the categories are far too broad.
Category 20 20 This category sought documents relating to Betfair's communications with Racing Victoria Limited and the Victorian Government. For reasons I have already given, I do not think that such matters are relevant.
Category 25 21 This category seeks documentation which would flesh out the negotiations that gave rise to the agreements referred to in paragraph 103(b)(iii)D of the amended statement of claim. Such matters are clearly ones which go to Betfair's business arrangements. For reasons already given, these are not relevant.
Category 26 22 The respondents seek Betfair's tax returns. Betfair is already producing its financial statements. I can see no reason why it should produce its tax returns as well. 23 It follows that I reject each of the respondents' categories that remain in dispute. The respondents' notice of motion filed 17 April 2009 is dismissed with costs.
Costs of Betfair's notice of motion filed 6 April 2009 24 Until the hearing on 19 May 2009 there was a dispute between Betfair and the respondents about the categories of discovery which should be given by the respondents. That debate was resolved, however, by the time the motion came on for hearing. I made an order on 19 May 2009 giving effect to that agreement. The parties now each seek the costs of the notice of motion. 25 On 25 February 2009 I made directions dealing, inter alia, with the topic of discovery. I directed that the parties agree categories of documents for discovery by 27 March 2009. A previous order relating to this topic was made by me on 16 December 2008 but this timetable was thrown out by the necessity of dealing with the respondents' notice of motion which sought to strike out parts of Betfair's claim. That motion was heard by me on 29 January 2009 and determined largely in favour of Betfair on 19 February 2009: Betfair Pty Limited v Racing New South Wales (No 1) [2009] FCA 111. 26 Pursuant to the previous discovery regime, Betfair's solicitors forwarded proposed categories of discovery to the respondents' solicitors on 27 January 2009. I will not set them out, save to note that they are largely identical to the orders now made by consent. The two differences which do exist relate to the absence of a definition of the expression "race field approval" and a differing date range. 27 On 26 March 2009, and under the new discovery regime, Betfair's solicitors forwarded a revised version of these categories for the comment of the respondents' solicitors. On 27 March 2009 those solicitors replied making a number of points about the proposed categories. For present purposes, it suffices to observe that they suggested a particular approach to the expression "race field approval" and nominated a different general time period. There were also detailed objections to most of the categories on the grounds of relevance. 28 On 31 March 2009 Betfair's solicitors responded, largely accepting the respondents' solicitors point about the time range and the approach to the expression "race field approval", but otherwise rejecting the objections as to relevance. 29 On 1 April 2009 the respondents indicated that they would deal with these points the next day. This, it would appear, did not occur. On 3 April 2009 Betfair's solicitors wrote to the respondents' solicitors noting that they had received no reply and that if no response to their letter was forthcoming that they would make an application for appropriate discovery orders and would, if necessary, seek costs. By 6 April 2009 Betfair's solicitors had not received a response. I interpolate there to note that my directions of 25 February 2009 required the production of verified lists by 17 April 2009 and inspection by 27 April 2009. The timing of Betfair's solicitors request was, therefore, reasonable in the circumstances. 30 On 6 April 2009 Betfair filed a notice of motion seeking to vindicate its discovery categories. The discovery categories sought were the same as those set forth in Betfair's solicitors' letter of 26 March 2009 as amended by their letter of 31 March 2009 to which there had been no substantive response. 31 It is precisely the relief sought in that motion to which the respondents have now consented. A reply to that effect in response to Betfair's solicitors' letter of 26 March 2009 would have forestalled the necessity for the bringing of the present notice of motion. There has never been any indication by the respondents following 27 March 2009 that these categories were not appropriate and their eventual consent to them shows that they were. I detect no element of compromise. Betfair has obtained everything it sought. No explanation has been proffered which explains the respondents' attitude. In all those circumstances, the respondents should pay the costs of Betfair of its notice of motion filed 6 April 2009. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.
Associate: Dated: 27 May 2009 Counsel for the Applicant: Mr A Robertson SC with Ms K Morgan
Counsel for the Respondents: Mr S Kerr with Mr J Emmett
Solicitors for the Respondents: Yeldham Price O'Brien Lusk
Solicitor for the Intervener: Mr P Buchberger on behalf of the Crown Solicitor for the State of New South Wales
Betfair Pty Limited
Racing New South Wales