Centrebet Pty Limited v Baasland [2012] NTSC 100

Centrebet Pty Limited v Baasland [2012] NTSC 100 | Case summary | Zoe

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(c) in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory) - that court is invested with federal jurisdiction with respect to that matter; or

(d) in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory) - jurisdiction is conferred on that court with respect to that matter.

[5] The genesis of the claim is an internet betting agreement and account set up by the Defendant with the Plaintiff on 26 May 2004. The evidence is sufficient to inferentially find that the Defendant was a professional gambler. The Plaintiff is a sports bookmaker licensed to carry on business in the Northern Territory. It predominantly transacts business by way of the internet. Its operations are based in Sydney where its computers are also located. The agreement was made over the internet by the Defendant completing an application for an account. The Defendant could not complete that process without accepting the terms and conditions set out on the Plaintiff's website. Those terms provide that the agreement was to be construed in accordance with the laws of the Northern Territory of Australia and that the parties submitted to the jurisdiction of the courts of the Northern Territory, albeit not exclusively.

[6] The account operated by way of an initial deposit and thereafter bets were debited and winnings were credited to that account on an ongoing basis. Substantial sums were transacted through the Defendant's account. The evidence shows total deposits by the Defendant were, in round figures, NOK32.8 million. In 2008 the exchange rate was approximately 5 Norwegian kroner to the Australian dollar. The current exchange rate is approximately 5.90 Norwegian kroner to the Australian dollar. Hence, at the time of that initial deposit it represented approximately AUD6.5 million. The Defendant made drawings on the account in the sum of NOK16.7 million in round figures which, at the time was the equivalent of AUD3.4 million. The Defendant's losses over the relevant period were, again in round figures, NOK15.9 million or approximately AUD3.2 million at that time. When the account was finally closed the Defendant had a small credit in the account namely NOK2.63 which is the equivalent of approximately 53c in Australian currency. That small credit has since been repaid to the Defendant.

[7] The evidence in relation to the operation of the account is voluminous. The Defendant's betting was on an extensive and varied range of sports, on a regular basis and for large amounts, hence my conclusion that the Defendant was a professional gambler.

[8] For extended periods the Defendant was gambling profitably. If I interpret the Plaintiff's records correctly, total bets placed were of the order of NOK285 million and total winnings were of the order of NOK268 million. In the end the Defendant has lost approximately NOK15.9 million. This appears to be only part of his total gambling losses as the evidence shows that there were losses with other internet betting operators which took the Defendant's total losses to approximately NOK70 million.

[9] The evidence reveals that at least part of the funds used by the Defendant for gambling purposes were obtained by way of loans from family and friends and under false pretences. The result was that the Defendant was convicted and imprisoned in Norway for fraud and remains incarcerated at the present date.

[10] On 13 November 2008 the Defendant gave notice of his intention to claim damages from the Plaintiff in the Norwegian courts. The Plaintiff denied liability to the Defendant. Proceedings were commenced by the Defendant against the Plaintiff in the District Court of Oslo on 7 May 2009.

[11] The Plaintiff challenged the jurisdiction of that Court and on 25 November 2009 that Court found that it had no jurisdiction. That decision was upheld on appeal to the Norwegian Court of Appeal but subsequently overturned on further Appeal to the Norwegian Supreme Court. The case was then remitted to the District Court of Oslo. In a recent decision, that Court decided that Norwegian law was the appropriate law to apply. An appeal by the Plaintiff against that ruling is pending.

[12] The Plaintiff's claim in the proceedings in this Court is based in contract, on misleading and deceptive conduct pursuant to section 52 of the Trade Practices Act and at common law. The Plaintiff seeks declarations firstly, that the laws of the Northern Territory of Australia exclusively govern the rights of the parties, secondly, a no liability declaration, thirdly an anti-suit injunction and lastly, damages.

[13] With that background the issue of leave to serve is a preliminary one and in that respect relevant issues for determination on the application are:-

Whether the Supreme Court of the Northern Territory has jurisdiction in the proceedings (SCR 7.02(2)(a) and FCR 10.43(4)(a));

Whether the proceedings are of a kind mentioned in SCR 7.01 and FCR 10.42 (SCR 7.02(2)(b) and FCR 10.43(4)());

Whether the Plaintiff has a prima facie entitlement to the relief claimed (SCR 7.02(2)(c) and FCR 10.43(4)(c));

Whether service of the proceedings in Norway is permitted and on what legal basis (SCR 7.02(3) and FCR 10.43(3));

Whether it is otherwise appropriate to grant leave.

[14] The requirements referred to in sub-paragraphs (1)-(4) of the preceding paragraph derive from the SCR and the FCR. They are threshold requirements but they are not the only requirements. The grant of leave is a discretionary matter and other factors are relevant to the exercise of the discretion. Most obvious in the current case are considerations related to forum non conveniens. This is potentially always an issue when proceedings are served in a foreign country, something which is readily apparent in the current case given that there are proceedings between the parties in the Norwegian courts.

[15] There is some uncertainty as to whether the Plaintiff is able to rely on some of the jurisdictional facts specified in rule 7.01 of the SCR. For example, for the reasons discussed more fully below, the making of the contract depends on where the Plaintiff's computers are located. To that extent, the corresponding jurisdictional facts in the FCR can apply given that section 4 of the Act confers the necessary jurisdiction on this Court. For this reason the Plaintiff also sought leave pursuant to the FCR.

[16] There also appears to be some controversy regarding the test to be applied in determining the jurisdictional facts. In Commonwealth Bank v White,[1] it was held that a plaintiff was only required to show a strongly arguable case in respect of the relevant jurisdictional facts to satisfy the specified pre-requisites.

[17] The position was considered by the High Court in Agar v Hyde.[2] The case concerned the corresponding rule relating to service outside Australia applicable in New South Wales at the time. The procedure in New South Wales at the time was different to that specified in the SCR and the FCR. Leave was not required to serve proceedings outside of Australia for proceedings of a specified type. Once service was effected, absent an appearance by the named defendant, leave was then required to proceed further. Furthermore, if there was an appearance by the named defendant then the rules provided that the defendant could apply for various orders, such as to set aside service, or a declaration that the court did not have jurisdiction, or an order that the court decline to exercise jurisdiction. The rules did not specify the grounds upon which those orders could be made.

[18] In respect of the possible grounds the High Court said[3]:-

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[19] Unless there is a relevant distinction between the rules as applied in Agar and the corresponding rules in the SCR and the FCR which would restrict the general application of the decision in Agar, and at present I cannot see any, then the case confirms that there are other relevant considerations in the exercise of the discretion to grant leave which include at least considerations as to forum and considerations as to whether there are insufficient prospects of success.

[20] Even if Agar could be distinguished, which I do not think is the case, the additional factors referred to in that case are valid factors to take into account in determining whether leave should be granted under the SCR and the FCR. In Agar, in the context of the question of insufficient prospects of success, it was noted that the objective of that requirement was to ensure that putting an overseas defendant to the time trouble and expense of defending the claim was warranted. That consideration is at least equally important at the initial stage where, as is the case here, leave is sought as a pre-requisite to service overseas.

[21] For those reasons I am of the view that in addition to establishing a strong arguable case, the Plaintiff must also satisfy the Court in respect of all other relevant factors including that the Australian courts are not a clearly inappropriate forum and that the claims made in the proceedings cannot be said to have poor prospects of success. I note that the test to be applied in determining the adequacy of the prospects of success is the same test as is applied in the context of applications for summary judgment.[4] Having said that, I have no doubt that the Plaintiff's case has sufficient prospects of success for the reasons which appear below.

[22] With that background I deal first with the specified matters prescribed by the SCR and the FCR (see sub-paragraphs 13(1)-(4) above). The first of those is that the Court has the required jurisdiction.

[23] This can be dealt with quickly as there can be no argument that this Court has jurisdiction to grant the declarations and other relief arising under the laws of the Northern Territory and laws of the Commonwealth of Australia.

[24] Secondly I must be satisfied that the proceedings are within at least one the categories described in SCR 7.01 or FCR 10.42.

[25] For the reasons which follow I am of the view that the proceedings are of a kind described in Rule 7.01(1)(f)(iii), (h) and (j) of the SCR and in Items 1, 2, 3(a) and (c), 4, 5, 12, 15 and 19 of the table to Rule 10.42 in the FCR:-

FCR 10.42, Item 1: The cause of action arose in Australia: The evidence shows that the computers which received the communications via the internet from the Defendant are all based in Australia, specifically in Sydney, as are the bank accounts which held his funds. The relevant transactions all occurred in Australia and that is sufficient nexus, see Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd,[5] Telesto Investments Ltd v UBS AG.[6]

FCR 10.42, Item 3(a): The contract was made in Australia: The evidence is that although the Plaintiff is licensed to carry on its business in the Northern Territory, its management is located in Sydney. More relevantly its computers which receive internet communications are also located in Sydney. Olivaylle Pty Ltd v Flottweg AG[7] is authority for the proposition that in situations where a contract is accepted by instantaneous communication such as email or internet, the contract is made where the acceptance is received. Given that the Plaintiff's computers are located in Sydney, therefore the contract cannot be said to be made in the Northern Territory. It is made in Sydney. That however satisfies the requirements of the FCR.

FCR 10.42, Item 2: The proceedings are based on a breach of contract in Australia: The corresponding jurisdictional fact in the SCR is that in SCR 7.01(g). For the same reasons as apply in relation to FCR 10.42 - Item 3(a), the factor in SCR 7.01(g) cannot be satisfied as the breach cannot be said to have occurred in the Northern Territory. However for the same reasons the breach will have occurred in New South Wales and that is sufficient for the purposes of this item in the FCR.

SCR 7.02(1)(f)(iii) and FCR 10.42, Item 3(c): The contract is governed by the law of the Northern Territory/Australia: This applies given the express provision in the agreement that the contract is to be construed in accordance with the laws of the Northern Territory of Australia. The FCR requirement is thereby also necessarily satisfied.

SCR 7.02(1)(i) and FCR 10.42, Item 4: The proceeding is founded on a tort committed in the Northern Territory/Australia: The relief sought pursuant to section 52 of the Trade Practices Act has been held to be the equivalent of a claim in tort for the purposes of the rule corresponding to SCR 7.01(1)(i) and FCR 10.42, Item 4 in the Victorian court rules. As to where a tort with an international aspect is committed for the purpose of the rule, the tort is committed at the place to which it is directed. Relying again on the evidence that the Plaintiff's computers are located in Sydney, the tort is committed in New South Wales. Hence, although the provision in the FCR is satisfied, the evidence does not satisfy the jurisdictional fact in SCR 7.02(1)(i).

[26] The next pre-requisite derives from SCR 7.02(3) and 10.43(3) of the FCR, which are in near identical terms. The affidavit evidence satisfactorily establishes these matters. The foreign state is Norway. The proposed method of service is to deliver the documents to the Defendant in prison. A copy of the Hague Convention, more properly referred to as 'The Convention of 15 November 1965 Of Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters', has been put in evidence together with evidence that both Australia and Norway have ratified the Hague Convention. The evidence establishes that the proposed method of service on the Defendant in Norway is permitted by the Hague Convention process.

[27] The last of the requirements in the SCR and FCR is that the Plaintiff has a prima face case for the relief claimed. This requirement derives from SCR 7.02(2)(c) and FCR 10.43(4)(c), which again are in near identical terms.

[28] The authorities establish what is required to establish a prima facie case: see ACCC v April International Marketing Services Australia Pty Ltd,[10] ACCC v April International Marketing Services Australia Pty Ltd (No.6.)[1] In summary form the principles are:-

The existence of a prima facie case is to be determined on a broad examination of the proceedings rather than by way of an intense scrutiny;

As the application is interlocutory in nature, hearsay evidence is admissible for this purpose;

In the case of claims based on multiple causes of action, it is sufficient if a prima facie case is established on any one cause of action;

A prima facie case exists if facts are established or inferences are open which, if translated into findings of fact, would support the grant of relief;

Ultimately it is sufficient if the material shows a controversy which justifies the use of the court process to resolve and which justifies causing the proposed defendant to be involved in the proceedings in Australia.

[29] The declaration of no liability is out of the ordinary. However the Plaintiff seeks the same relief as was granted by the English High Court of Justice against the Defendant in favour of another internet betting operator. This was in the case of Hillside (New Media) Limited v Baasland.[11] The making of the declaration will of course depend on the evidence adduced at the trial. The evidence before me is sufficient to satisfy the prima facie case requirement. Firstly the evidence shows that the credit in the Defendant's account has been paid to the Defendant. Therefore, prima facie the Plaintiff is entitled to the declaration. The Defendant might assert, as he has done in the Norwegian Courts, that the Plaintiff still has some liability to the Defendant. Based on the allegations in the pleadings in the Norwegian proceedings, damages for breach of duty appears to be the only readily apparent basis for any liability in Australia.

[30] Although at present I can only gauge what the Defendant might allege on this account by reference to the allegations in the Norwegian proceedings, it is fairly well settled in Australia that gamblers are not owed a duty of care by the person with whom bets are placed: Reynolds v Katoomba RSL All Services Club Limited,[12] Foroughi v Star City Pty Ltd[13] and Kakavas v Crown Melbourne Ltd.[14] Hence, on the current law, the Defendant will not have a case against the Plaintiff on that basis.

[31] The Plaintiff submits that even if the existence of a duty was established then the claim would fail as there is no suggestion that the Plaintiff knew or should have known that the Defendant was gambling with money he has procured by fraud from others. It is not known at this stage precisely what evidence the Defendant will rely on in this respect but that is not an issue at a prima facie case stage.

[32] The Plaintiff seeks to shore up its claim to a no liability declaration by pointing out that there are a number of obstacles which the Defendant would need to overcome to successfully claim against the Plaintiff. The first of these is that his claim may be precluded by the principle of ex turpi causa non oritur actio. The Plaintiff relies on Stone & Rolls Ltd v Moore Stephens[15] and submits that a defence based on the principle arises because the duty which the Defendant would need to establish is a duty to prevent him gambling with money he had procured by fraud. The defence would prevent the Defendant from founding a claim based on his own fraud. This does not sit very well with the submission of the Plaintiff as described in the preceding paragraph. The principle of ex turpi causa non oritur actio operates most clearly in contract claims. Although it can apply to claims in tort, it is then more problematic. Its application in tort is the clearest where, unlike in the present case, there is joint involvement between a plaintiff and a defendant in an illegal activity. However the illegality of a particular enterprise does not automatically negate the duty of care which otherwise exists between the parties.[16] Although at least arguable, I am not convinced that is the case. Establishing that the fraud in procuring the funds to gamble would not necessarily be a part of any duty owed to the Defendant (assuming for the purposes of argument that any such duty can be established). In any case the defence only applies where the tort is an essential part of the illegal activity[17] and I do not think that the application of the principle to the current case is that clear cut.

[33] The Plaintiff also submits that even if a duty was found to exist and even if a breach was found to occur then the Defendant would have to establish that he would not have gambled the money elsewhere. In this respect the evidence reveals that the Defendant had a substantial betting history with Bet365. The evidence shows that he lost almost GDP 3 million in a period roughly corresponding to the period of his losses with the Plaintiff. I think this causation issue could be a significant obstacle for the Defendant given his gambling history. It is noteworthy that Bet365 took proceedings in relation to the matter in England and was found not to be liable to the Defendant in any way, see Hillside (New Media) Limited v Baasland.[18]

[34] Although I am not in a position to determine or assess what the result might ultimately be, that is not necessary at the current procedural stage of the proceedings. Overall, I am satisfied that the Plaintiff has a prima facie entitlement to the relief claimed.

[35] There remains consideration of other matters relevant to the exercise of the discretion to grant leave. The fact that proceedings are underway in Norway raises forum considerations. A stay of one or the other appears inevitable, albeit that it is not inconceivable that proceedings could continue in both jurisdictions.

[36] The power to dismiss or stay proceedings which have been regularly instituted on inappropriate forum grounds is a discretionary one which involves the balancing of all of the relevant factors.[19] The most recent High Court authority in this respect is Puttick v Tenon.[20] The High Court there restated the test in Voth v Manildra Flour Mills Pty Ltd,[21] in the following terms:-

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[37] In turn Voth adopted the test propounded by Deane J in Oceanic Sun Line Special Shipping Company Inc. v Faye[22] to determine when a forum is a clearly inappropriate one namely, where the continuation of proceedings in a court would be oppressive and vexatious, oppressive in the sense of "being seriously and unfairly burdensome, prejudicial or damaging"[23] and vexatious in the sense of "meaning productive of serious an unjustified trouble and harassment".[24]

[38] With that background the principles I have extracted from the various cases relevant to the determination of whether a local court is a clearly inappropriate forum, in summary form are:-

The test is whether a forum is a clearly inappropriate forum not the comparative appropriateness of a foreign court.[25]

It is prima facie vexatious and oppressive in the strict sense to commence proceedings in Australia if an action is already pending in another country, although that does not automatically mean that a stay will be granted[26] and it does not of itself render litigation in Australia inappropriate.[27]

The existence of proceedings in another jurisdiction does not of itself establish that subsequent action is vexatious and that will only found to be the case if it can be shown that there is no legitimate interest or point in the subsequent proceedings.[28]

The substantive law of the forum is relevant but is not to be given undue emphasis to the exclusion of other factors.[29]

Whether orders of one forum are enforceable or are recognised in the other forum is a relevant consideration.[30]

A stay is inappropriate if the proceedings are fundamentally different notwithstanding a common factual base,[31] or if the evidence to be adduced will differ in each case.[32]

Likewise if there is a variance in the availabilities of certain remedies.[33]

The parties' connection with the jurisdiction is a relevant consideration.[34]

The stage that the proceedings in the other jurisdiction have reached[35] and the jurisdiction where the proceedings can be more efficiently resolved[36] are also relevant factors.

The grant of the stay is not to be done without great caution.[37]

[39] A very telling consideration here is that any judgment obtained in the Norwegian proceedings may not be able to be enforced in Australia. The Foreign Judgments Act does not apply as Norway is not a nation whose courts are included in the list in the Foreign Judgments Regulations.

[40] That leaves only the possibility of enforcement of a foreign judgment at common law. Emanuel & Ors v Symon,[38] (which has been followed in Australia in Independent Trustee Services Ltd v Morris[39]), sets out the circumstances where that can occur. In Emanuel, Buckley LJ said[40]:-

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