Racing New South Wales v Betfair Pty Limited

HARNESS RACING NEW SOUTH WALES (ABN 16 962 976 373)

The Court: 1 On 21 May 2009 the primary judge dismissed a notice of motion filed by the appellants, Racing New South Wales and Harness Racing New South Wales (together, Racing NSW), seeking that the respondent in this appeal, Betfair Pty Limited (Betfair), discover nominated categories of documents (Betfair Pty Limited v Racing New South Wales (No 3) [2009] FCA 536 (Betfair No 3)). 2 On 18 August 2009 we granted leave to and allowed an appeal against the primary judge's orders. 3 These are our reasons for granting leave and allowing the appeal.

THE PROCEEDING GENERALLY 4 In the latter half of 2008 the first and second appellants, the statutory bodies that regulate thoroughbred and harness racing in New South Wales (NSW) respectively, granted Betfair approvals to publish NSW thoroughbred and harness race fields. These approvals are necessary by reason of s 33 of the Racing Administration Act 1998 (NSW). Each approval is subject to a standard condition known as the "turnover fee condition". The condition requires Betfair to pay to Racing NSW a fee of 1.5% of Betfair's NSW thoroughbred or harness racing turnover (with "turnover" being a defined term in the approvals). 5 By an application filed on 3 October 2008 Betfair claims that these conditions are invalid because they are contrary to s 92 of the Commonwealth of Australia Constitution Act(Imp) (the Constitution). Section 92 provides that "(o)n the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free". 6 Betfair filed an amended statement of claim in support of its application dated 24 February 2009. In its amended statement of claim Betfair asserted the material facts in support of its allegation that the approvals and standard turnover fee condition contravened s 92 of the Constitution. According to the amended statement of claim: (1) Betfair is the holder of a Tasmanian Gaming Licence under the Gaming Control Act 1993 (Tas) (para 4(b)). (2) Betfair is the only licensed operator of a betting exchange in Australia (para 4(c)). As the primary judge explained in Betfair Pty Limited v Racing New South Wales (No 1) [2009] FCA 111 (Betfair No 1) at [11] a betting exchange is different from a totalisator. Hence: It is to be emphasised that Betfair's income does not derive from the betting turnover on its exchange but instead on the commission due to it on successful punters' winnings. In this regard it differs from the position of the off-course totalizator conducted by TAB Ltd ("the TAB"). This is because, in the case of a totalizator, bets are collected from punters and pooled. An amount is then deducted from the pool for the totalizator and the balance is distributed amongst the winning bets. It will be seen that under such an arrangement the profits of the totalizator are a linear function of the total value of all bets placed. On the other hand, the commission earned by a betting exchange is a function of the value of the proceeds of the winning bets. (3) On Betfair's betting exchange registered players may bet on events throughout Australia including horse races and a range of other sporting events (para 12). (4) Betfair's commission on a registered player's net winnings varies between 2 to 5% (para 16(k)). (5) TAB Limited holds the exclusive licence to conduct the off-course totalizator in NSW under s 14 of the Totalizator Act 1997 (NSW) (para 20). (6) A fee of 1.5% of turnover imposed on a totalizator with a take out rate of 16% will mean that the totalizator will have to pay a fee representing 9.375% of its gross revenue (para 67). (7) For the years 2006, 2007 and 2008 a fee of 1.5% of turnover, if imposed on Betfair, means that Betfair would have been required to pay a fee representing the following percentages of its gross revenue for each of those years respectively: - 56.76%, 55.86%, and 60.73% (para 71). (8) Racing NSW's standard turnover fee condition was imposed on the approvals granted to Betfair on 15 August 2008 (for thoroughbred racing) and 1 September 2008 (for harness racing) respectively, being a condition that the holder of the approval must pay a fee of an amount equal to 1.5% of turnover as defined in the condition (paras 73-86). (9) By reason of its Tasmanian Gaming Licence, Betfair is required to pay the Tasmanian Treasurer: - (a) a product levy of 20% of its commission on Australian racing, and (b) tax at the rate of 15% on its commission in respect of brokered waging events held in Australia (para 91). (10) If the approvals and the standard turnover fee condition are valid, the total amount of taxes, fees and levies required to be paid by Betfair in relation to offering wagering services on NSW thoroughbred and harness racing "would be such as to mean Betfair could not profitably offer those services" (paras 96-97). (11) Betfair's activity of operating a betting exchange is, or is in, interstate trade, commerce and intercourse (para 98) (12) The approvals and standard turnover fee condition, in their practical operation, require a wagering operator in another State (being Betfair) to pay a fee in a sum that exceeds, in terms of a proportion of gross revenue, the amount of the fee imposed on TAB Limited for the same approval (para 99). (13) By reason of the matter referred to in paras 98 and 99: - (a) the approvals and standard turnover fee condition impose on interstate trade, commerce and intercourse a burden or disadvantage which they do not impose on intrastate trade, commerce and intercourse of the same kind, and (b) the legal and practical effect of the approvals and standard turnover fee condition is to protect a wagering operator in NSW (being TAB Limited) from competition from a wagering operator in another State (being Betfair) (para 100). (14) This burden or disadvantage on interstate trade, commerce and intercourse is not reasonably appropriate and adapted to any object which is consistent with s 92 of the Constitution (para 101). (15) In particular (and amongst other things): (a) to the extent that an object of the approvals and standard turnover fee condition is to raise funds to contribute to thoroughbred and harness racing in NSW, they are not reasonably adapted and appropriate to that object in that they are "likely to hinder or prevent Betfair from continuing to offer wagering in relation to" NSW thoroughbred and harness racing and thereby reduce the amount of wagering on NSW thoroughbred and harness racing (paras 103(a)(ii) and 109(a)(ii)). (b) there is a less restrictive means of achieving that object in that Racing NSW could set a fee based on gross revenue rather than turnover, which is an accepted form of calculating contributions, referring to Greyhound Racing NSW and Racing Victoria Limited (paras 103(b) and 109(b)). 7 When asked to particularise the references in paras 96 and 97 to its capacity to "profitably offer those services", Betfair referred to offering services in circumstances where revenues received from those services exceeded the expenses incurred in providing those services. 8 When asked to provide particulars of its claims about it being hindered or prevented from offering the services (paras 103(a)(ii) and 109(a)(ii)), Betfair responded by repeating the assertions in paras 96 and 97 of the amended statement of claim. In other words, the particulars to an allegation of breach of s 92 of the Constitution are the matters contained in paras 96 and 97 of the amended statement of claim. 9 Racing NSW, in its amended defence filed on 12 March 2009, does not admit the allegations in paras 71 and 96-99 of the amended statement of claim. Racing NSW also denies paras 100 and 101-103. In response to the latter Racing NSW alleges that any burden or disadvantage imposed by the approvals and standard turnover fee condition is reasonably appropriate and adapted to the legitimate object of ensuring that those who use race field events for profit make a contribution to the racing industry commensurate with their use. The particulars of this allegation (paras 101.1(b), 102.1(a), 103.1(a), 107.2(b), and 108.2(a)) include that: (1) turnover is easier to assess and less susceptible to avoidance or manipulation than other bases such as gross revenue; (2) turnover (unlike other bases such as gross revenue) is not dependent on, or influenced by, the particular business model chosen by a wagering operator; (3) turnover (unlike other bases such as gross revenue) is not influenced by particular business decisions made by a wagering operator that would influence calculation of gross revenue; (4) turnover (unlike other bases such as gross revenue) does not raise questions about whether or not inducements, rebates or benefits given by wagering operators to valuable customers should be taken into account.

THE DISCOVERY ISSUE 10 On 17 April 2009 Racing NSW filed a notice of motion seeking orders that Betfair give discovery of the categories of documents in Annexure A to the motion. 11 Annexure A, as amended during the hearing before the primary judge, referred to 29 categories of documents. Of those 29 categories, Betfair agreed to discover documents in the following categories: Category 8 All documents relied on to calculate the turnover of Betfair referred to in paras 71 and 72 of the [Amended] Statement of Claim [Namely, the 'turnover' of Betfair in relation to wagering on New South Wales thoroughbred racing and New South Wales harness racing in the financial years 2006, 2007 and 2008]. Category 16 All documents recording consideration of or referring to the impact on the profitability or financial profitability of Betfair (including to date and into the future) of fees to be charged to Betfair by Racing NSW or HRNSW [Harness Racing New South Wales] including the RNSW [Racing New South Wales] Turnover Fee Condition or the HRNSW Turnover Fee Condition. Category 21 All documents recording consideration by Betfair (or any person or entity on its behalf) of the impact of the approval by RVL [Racing Victoria Limited] to Betfair on or about 6 July 2006 (or the agreement referred to in para 107 in the judgment in the Betfair/WA Proceedings [referring to Betfair Pty Limited v State of Western Australia (2008) 234 CLR 418; [2008] HCA 11]) on the profitability of Betfair including the profitability of Betfair offering wagering on Victorian thoroughbred racing. Category 22 All documents referring to the impact of the approval by RVL to Betfair on or about 6 July 2006 (or the agreement referred to in para 107 in the judgment in the Betfair/WA Proceedings) on the profitability of Betfair including the profitability of Betfair offering wagering on Victorian thoroughbred racing. Category 24 All documents recording the agreements referred to in para 103(b)(iii)(D) of the [Amended] Statement of Claim. Category 27 All final profit and loss statements, balance sheets and financial accounts of Betfair for the financial years 2006, 2007, 2008 and covering any part of the period 1 July 2008 to the date on which discovery is provided by Betfair in these proceedings. Category 28 All drafts of the: (a) letters from Betfair to RNSW dated 5 August 2008 (Tab 15 of the Book of Particulars) and 25 September 2008 (Tab 17 of the Book of Particulars); (b) letters from Betfair to HRNSW dated 31 July 2008 (Tab 18 of the Book of Particulars) and 30 September 2008 (Tab 22 of the Book of Particulars). Category 29 All documents relied upon by Betfair to form the views expressed in relation to the [Racing Administration Amendment (Publication of Race Fields) Regulation 2008 (NSW)] in the correspondence contained at Tabs 15, 17, 18 and 22 of the Book of Particulars and any drafts discovered pursuant to category 27 [sic] above. 12 The primary judge refused to make orders for discovery of documents in a number of categories, the following of which are in dispute in the appeal: Category 9 All documents, apart from para (b) Nominated Financial Documents, for the period 1 June 2006 to the date of discovery referring to Betfair's turnover. Category 10 All documents, apart from para (b) Nominated Financial Documents, for the period 1 June 2006 to the date of discovery referring to Betfair's gross revenue. Category 11 All documents, apart from para (b) Nominated Financial Documents, for the period 1 June 2006 to the date of discovery referring to Betfair's net revenue. Category 13 All documents, unlimited as to time, referring to consideration by Betfair (or anyone on its behalf) of the amount or basis of the amount of commission to be charged to registered players. Category 14 All documents, apart from para (b) Nominated Financial Documents, for the period 1 June 2006 to the date of discovery referring to Betfair's profitability. Category 15 All documents, apart from Internal Emails, unlimited as to time referring to Betfair's expected future profitability or financial performance. Category 17 All documents, unlimited as to time, referring to the impact on the profitability or financial performance of Betfair to date and into the future of fees charged by other regulators if they were based on gross revenue or gross margin. 13 Paragraph (b) of the definition of Nominated Financial Documents refers to various documents identified in an affidavit of Joshua Paul Blanksby, a solicitor employed by Betfair, sworn 4 May 2009. The documents included not only various monthly and annual reports but also documents described as ad hoc reports, market specific reports and reports prepared for regulators from time to time. As explained below, this definition was narrowed for the purpose of the appeal. 14 The primary judge's reasons in Betfair No 3 for rejecting discovery of the disputed categories of documents are concise and thus are convenient to repeat. They are as follows: [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. … 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.

THE COMPETING SUBMISSIONS 15 Racing NSW, supported by the Attorney-General of NSW (as intervener), acknowledged that the primary judge's decision in Betfair No 3 was one involving the exercise of discretion and dealing with practice and procedure, thus warranting a "tight rein" on appellate interference (Adam P Brown Male Fashions Pty Limited v Philip Morris Inc. (1981) 148 CLR 170 at 177 citing In re the will of F B Gilbert (dec'd) (1946) 46 SR (NSW) 318 at 323). Nevertheless, Racing NSW claimed that the primary judge erred by misconstruing the amended statement of claim, specifically the claims in paras 96 and 97 (identified at [6(10)] above), as well as their relevance to other pleadings. These errors, said Racing NSW, brought the case within the purview of appellate review of a discretionary decision (House v The King (1936) 55 CLR 499 at 504-505). The errors, said Racing NSW, resulted in a substantial injustice in that they would prevent from being tested a critical issue in the proceeding, namely, whether the fee levied at 1.5% of turnover "really is likely so to harm Betfair's profits as to cause Betfair to cease offering its wagering services" in relation to thoroughbred and harness racing in NSW? 16 The submissions of Racing NSW and the Attorney-General of NSW can be reduced to seven major propositions: (1) Whether a legislative provision is taken to impose a discriminatory burden of a protectionist kind in contravention of s 92 of the Constitution may be assessed from the provision's legal operation or practical effect (Cole v Whitfield (1988) 165 CLR 360 at 407-408). (2) The discriminatory and protectionist burden must be imposed "in a way or to an extent which warrants characterisation of the law as protectionist" (Cole v Whitfield at 408). (3) The factual allegations in paras 96 and 97 of the amended statement of claim (the total amount of taxes, fees and levies required to be paid by Betfair in relation to offering wagering services on NSW thoroughbred and harness racing "would be such as to mean Betfair could not profitably offer those services") are not, as the primary judge found, "minor" in the context of the pleadings as framed. To the contrary, those claims create the factual foundation for the subsequent allegations that the burden on interstate trade and commerce is not proportionate or reasonably necessary to achieve a non-protectionist object. This is said to arise for various reasons including that the standard turnover fee condition in dispute is "likely to hinder or prevent Betfair from continuing to offer wagering in relation to" NSW thoroughbred and harness racing and thereby reduce the amount of wagering on NSW thoroughbred and harness racing" (paras 103(a)(ii) and 109(a)(ii)). (4) The position of Betfair is relevant and central to the proceeding because the amended statement of claim, properly construed, claims that the burden imposed on Betfair - and only Betfair - constitutes the relevant burdening of interstate trade and commerce to establish a breach of s 92 of the Constitution. The proceeding is thus analogous to that in Castlemaine Tooheys Limited v South Australia (1990) 169 CLR 436, in which there was detailed evidence about the nature of the market, the operations of participants in the market, and the effects of the new legislative measures on those participants (at 447-449). (5) Contrary to Betfair's submissions on appeal, this proceeding is not analogous to Bath v Alston Holdings Pty Ltd (1988) 165 CLR 411. Nor is it comparable to Betfair Pty Limited v State of Western Australia (2008) 234 CLR 418; [2008] HCA 11. Bath v Alston Holdings involved a discriminatory burden of a protectionist kind in contravention of s 92 of the Constitution by reason of the legal operation of the impugned laws, not their practical effect. Betfair v Western Australia, similarly, involved a law prohibiting betting through a betting exchange in circumstances where Betfair was the only entity seeking to do so. In other words, these cases concerned the legal operation of impugned laws which were discriminatory on their face. The present case involves the practical effect of a standard turnover fee condition pursuant to a law where both the law and condition are neutral on their face. (6) Betfair's operations across Australia (as pleaded in para 12 of the amended statement of claim) are relevant: (a) Betfair's profitability (referred to in paras 96 and 97 of the amended statement of claim) depends on an allocation of expenses from its Australia-wide operations to its horse racing services in NSW. Further, Betfair's revenue from offering those services in NSW is not necessarily confined to the commission on offering those services and nor is the commission necessarily fixed or unable to be passed on; and (b) Betfair's claim, that the central pleadings are in paras 67 and 71 of the amended statement of claim and that it can prove its case simply by proving and comparing the matters asserted in those paragraphs (namely, the standard turnover fee condition results in TAB Limited paying a fee representing 9.375% of its gross revenue to Racing NSW and Betfair between 55.86% and 60.73% of its gross revenue to Racing NSW, as well as, for Betfair, payment of the product levy and tax totalling 35% of its commissions throughout Australia to the Tasmanian Treasurer), is no answer. To prove the figures in para 71 of the amended statement of claim still involves Betfair allocating expenses from its Australia-wide operations to its horse racing services in NSW and the questions about revenue raised in (a) above. (7) Once these propositions are accepted, it is apparent that to deprive Racing NSW of access to the documents in dispute would work a substantial injustice. Hence, leave to appeal should be granted and the appeal allowed. 17 Betfair, in response, submitted that the primary judge's discretion did not miscarry. Betfair's case is to be proved simply by comparing the effect of the standard turnover fee condition on TAB Limited (that is, a fee equivalent to 9.375% of its gross revenue) with the effect on Betfair (that is, between 55.86% and 60.73% of its gross revenue). According to Betfair, its amended statement of claim, when construed properly, did not go so far as to allege that the fees to be paid pursuant to the standard turnover fee condition, when combined with all other fees, meant that Betfair could not profitably offer horse racing services in NSW. Betfair submitted that, to the contrary, the claims in paras 96 and 97 are merely part of the pleading dealing with Betfair's overall payments to the racing industry. They do not feature as part of the claims for breach of s 92 of the Constitution. The claims in paras 103(a)(ii) and 109(a)(ii) on which Racing NSW relied to support its arguments on appeal are mere particulars of the burden or disadvantage identified in paragraph 101. The proceeding is analogous to Bath v Alston. From that decision it is clear that, at least since Fox v Robbins (1908) 8 CLR 115, the effect of the business decisions of the interstate trader are simply irrelevant. A fair reading of the reasons as a whole indicate that the primary judge considered the width of the categories disproportionate to any permissible forensic purpose, which was a determination within his Honour's discretion. The primary judge was correct to characterise the discovered documents as playing only a "minor" role. 18 Betfair also submitted that the orders of the primary judge could not result in any substantial injustice to Racing NSW or the Attorney-General of NSW because: - (i) Betfair would discover nine categories of documents by agreement, including categories 8 and 16, (ii) the categories are not final, (iii) the categories in dispute on the appeal are too broad and ill-defined, and (iv) the discovery would be onerous as identified in the affidavits of Mr Blanksby sworn 4 and 11 May 2009.

REASONS FOR GRANTING LEAVE AND ALLOWING THE APPEAL 19 It is true that the making of an order for discovery is discretionary. Further, and as apparent from Order 15 r 2(3) of the Federal Court Rules, discovery ordinarily should be limited to the documents on which the party relies and the documents that adversely affect or support that party's case or the case of another party. Moreover, Order 15 rr 3(1) and (2) indicate that, if anything, discovery by order should be restricted rather than expanded. 20 The discretion, nevertheless, is to be exercised judicially and not so as to cause substantial injustice to a respondent by depriving it of the capacity to obtain documents directly relevant to answering a claim made against it. 21 The principal difficulty for Betfair is that its submissions conflict with its pleading. Although Betfair said it did not need to and did not allege in its amended statement of claim that it could not profitably offer horse racing services in NSW, the inescapable fact is that it has so alleged. This is apparent from both the structure and the text of the amended statement of claim. 22 Paragraphs 67 and 71, which contain the allegations of the equivalent percentages of gross revenue of TAB Limited and Betfair represented by the standard turnover fee condition (that is, a fee equal to 1.5% of turnover), are in that part of the amended statement of claim entitled "Relationship between wagering turnover and gross revenue". 23 Paragraphs 96 and 97, containing the allegation that the total amounts of fees, taxes and levies required to be paid by Betfair mean that Betfair could not profitably offer wagering services on horse racing in NSW, are in that part of the amended statement of claim entitled "Betfair's payments to the racing industry". Paragraphs 96 and 97 are the culmination of the allegations in the preceding paras 91-95. 24 Paragraphs 96 and 97 also immediately precede that part of the amended statement of claim entitled "Breach of section 92 of the Constitution…". In that part of the amended statement of claim, Betfair alleges its interstate operations (para 98) and the practical effect of the impugned approvals and standard turnover fee condition as requiring Betfair to pay a fee in a sum that exceeds, in terms of the proportion of its gross revenue, the amount of the fee imposed on TAB Limited for the same approval (para 99). Paragraph 99 is particularised by cross-reference to, amongst other things, paras 76 and 71. 25 The amended statement of claim, however, does not stop with the allegations in paras 98 and 99. In the same section, entitled "Breach of section 92 of the Constitution…", the amended statement of claim continues. In paragraph 100 it alleges that by reason of the matters in paras 98 and 99 there is a burden the legal and practical effect of which is to protect TAB Limited from competition from Betfair. This burden is said to be not reasonably appropriate and adapted to any object consistent with s 92 of the Constitution. The amended statement of claim continues by particularising this latter claim in paras 103 and 109. These paragraphs include the reference to the approval and standard turnover condition being likely to hinder or prevent Betfair from offering its wagering in relation to thoroughbred and harness horse racing in NSW. 26 In other words, although it may well be the case that Betfair need not go so far as to prove that the burden about which it complains, as Racing NSW put it, "is likely…to harm Betfair's profits as to cause Betfair to cease offering its wagering services" in relation to thoroughbred and harness racing in NSW, the fact is Betfair has elected to go so far. The pleading clearly alleges that the approvals and standard turnover fee condition in dispute, by their practical effect, will be likely to cause Betfair to cease offering its horse racing services in NSW. This, moreover, forms part of the basis for Betfair's claim that the legislative provisions are not reasonably appropriate or adapted to a legitimate object or, putting it another way, that the impugned approvals and standard turnover fee condition operate "in a way or to an extent which warrants [their] characterisation …as protectionist" (Cole v Whitfield at 408). 27 Betfair's reasons for so pleading its case are not a matter for speculation. It is open to Betfair to make its case in this way and it has done so. Having done so, this part of Betfair's case cannot be dismissed as minor or irrelevant. As Betfair acknowledged, this claim (if sustained) would be sufficient for Betfair to succeed in the proceeding, albeit the claim is not necessary for that purpose. By this acknowledgment Betfair means that it could succeed on its more limited case that it is required to pay a fee which in terms of the proportion of its gross revenue exceeds that to be paid by TAB Limited (paras 99 and 100 of the amended statement of claim). But there is no principle that a party should be denied discovery of documents relevant only to a claim which is sufficient but not necessary for the other party to succeed. 28 Another difficulty is that paras 71, 96 and 97 of the amended statement of claim, irrespective of the part of the pleading in which they appear, are not admitted by Racing NSW. Hence, they must be proved. As Racing NSW submitted, Betfair will thus have to prove (at the least) the allocation of part of its Australia-wide expenses to its horse racing services in NSW. It can only do so, presumably, by reference to its financial documents. Betfair should not be able to rely on part of its financial documents for that purpose whilst depriving Racing NSW of any opportunity to test its claim by reference to Betfair's primary financial information. To the same effect, paras 103(ii)(a) and 109(ii)(a) are denied by Racing NSW and thus must be proved by Betfair. Those paragraphs particularise the breaches of s 92 of the Constitution. When asked for further particulars, it became apparent (if not apparent already) that Betfair relies on the assertions of fact in paras 96 and 97 of the amended statement of claim to make good these propositions said to found breach. 29 In these circumstances Betfair, by its own pleading, has chosen to place its financial position in issue. It follows that we must disagree with the primary judge's characterisation of this aspect of Betfair's claims as perhaps relevant to standing but otherwise irrelevant (at [6] and [8] of Betfair No 3). Racing NSW conceded the issue of standing. Given the way in which Betfair has pleaded its case, the disputed documents are directly relevant to a fact in issue and cannot be characterised as playing only a minor role in the allegations in the pleading as framed and in the constitutional issues engaged. As noted, Betfair could have pleaded its case on the more limited basis (either initially or by subsequent amendment) but has not done so. 30 For these reasons we accept the submissions of Racing NSW and the Attorney-General of NSW that the primary judge erred in the exercise of his Honour's discretion by misconstruing the amended statement of claim on which the exercise was based. This involves an error within the principles established by House v The King at 505. We are also satisfied that this error, if left uncorrected, would result in a substantial injustice to Racing NSW. The error, if left uncorrected, means that Racing NSW could not defend the impugned approvals and the standard turnover fee condition from allegations of fact that Betfair makes in its amended statement of claim other than by reference to the documents which Betfair elects to disclose in its own evidence. Contrary to Betfair's submissions, this would be manifestly unfair; the error thus requires appellate intervention despite the strength of the usual requirement for restraint in a case about practice and procedure. 31 Betfair's answers to such unfairness are unpersuasive. 32 First, the categories of documents agreed to be produced are far narrower than those sought. For example, category 8 relates to the calculation of turnover and would not disclose the allocation of expenses. Category 16 requires discovery of documents that, in terms, record the matter described. The disputed categories, in contrast, would provide Racing NSW with the primary financial documents from which it can mount an important part of its defence to Betfair's allegations. 33 Second, the fact that the categories may not be final is beside the point. The categories are final in the sense that Racing NSW seeks an order for discovery in the terms set out in annexure A as modified only to the extent necessary to address Betfair's complaint about oppression. In this regard, on 25 June 2009, Foster J ordered that the parties confer about any amendments to the categories of discovery and required Betfair to outline the evidence from the application below on which Betfair relied on the question of the burden of discovery. His Honour's purpose was to ensure the real issues in dispute became apparent. Betfair cannot use the effect of these orders, and Racing NSW's willingness to ameliorate any such burden, as a reason for denying discovery in principle. 34 Third, the same considerations undermine Betfair's claims that the categories as sought before the primary judge were too vague and ill-defined to warrant the making of an order for discovery. We do not agree with this contention. The categories relate to documents on which Betfair itself presumably will have to rely (at least in part) if it wishes to make good the allegations in paras 96, 97, 103(a)(ii) and 109(a)(ii) of its amended statement of claim as pleaded. 35 Fourth, we do not accept Betfair's claims that the disputed categories are onerous and unjustified. We have considered Mr Blanksby's affidavits. Those affidavits related to broader categories of discovery and thus must be inferred to include any hardship which the amended, and narrower categories, would involve. It is apparent from reading those affidavits that Mr Blanksby's primary concerns are the multitude of ad hoc reports, market specific reports and reports requested by regulators from time to time, as well as the internal emails to which such reports are attached. In explaining the problems with the discovery of these documents, Mr Blanksby (by way of contrast with these multitudinous documents) referred to the existence of monthly journals, monthly reports, monthly management reports, board reports and annual reports. 36 Pursuant to the orders of Foster J of 25 June 2009 and, we infer, having regard to the content of Mr Blanksby's affidavits, Racing NSW amended the definition of Nominated Financial Documents to refer to one copy only of each of the relevant monthly journals, monthly reports, monthly management reports, board reports and annual reports and a set of reports not more than 100 in number typically representative of the ad hoc reports, market specific reports and reports requested by regulators from time to time and which cover the period from 1 July 2008 to the date of discovery. Betfair filed nothing in response to indicate that this amendment failed to address the issues of concern Mr Blanksby raised. 37 In these circumstances, we are satisfied that an order reflecting the amendments Racing NSW proposed would not be oppressive of Betfair. Further, although Racing NSW's proposal involves an element of selection in respect of the typically representative ad hoc reports, market specific reports and reports requested by regulators from time to time, and may lead to a further request for discovery in the future prompted by the documents discovered pursuant to our proposed order, the working out of any further discovery issue will be a matter for the primary judge. 38 Finally, we do not accept Betfair's submission that the issue of discovery of the documents within the proposed amended categories should be remitted to the primary judge. We had the benefit of detailed submissions on the categories in dispute, including the proposed amendment by Racing NSW to further ameliorate any hardship to Betfair by reason of the number of documents required to be discovered. In these circumstances we are satisfied that we should exercise our discretion to order discovery of the disputed categories of documents as amended as part of this appeal. 39 For these reasons we are satisfied that leave to appeal should be granted and the appeal allowed. 40 Our orders made on 18 August 2009 included the costs of the appeal but not the costs before the primary judge. Racing NSW submitted that it should have the benefit of an order that Betfair pay 50% of the costs below, recognising that Racing NSW did not contest the correctness of the primary judge's refusal to make orders for discovery of documents in categories 2-5, 6, 7, 18, 19, 25 and 26. As matters presently stand, we consider that Racing NSW's submission reasonably and fairly reflects the differing success of the parties and, accordingly, also propose to order that Betfair pay 50% of Racing NSW's costs below. Betfair may make a brief submission in writing within 14 days if it wishes to dispute this proposed order, failing which an order will be made in chambers as proposed. If Betfair does make such a submission, Racing NSW may make a brief submission in reply within a further seven days. 41 It is also appropriate that we note that, before the publication of these reasons, the issue of discovery was again referred to a Full Court on 25 August 2009 (constituted by Jacobson, Jagot and Foster JJ) by reason of Betfair's application to the primary judge for an extension of the period of 14 days for the discovery to be completed in Order 4 and Racing NSW's submission to the primary judge that only the Full Court had power to vary its own order. The Full Court varied the orders made on 18 August 2009, granting the extension sought by Betfair. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Buchanan, Jagot and Foster.

Associate: Dated: 8 September 2009 Counsel for the First and Second Appellants: Mr J Gleeson SC, Mr S Kerr and Mr J Emmett

Counsel for the Respondent: Mr A Robertson SC and Ms K Morgan

Counsel for the Attorney-General (New South Wales): Mr J Kirk SC and Ms A Mitchelmore

Solicitor for the First and Second Appellants: Yeldham Price O'Brien Lusk

Solicitor for the Respondent: Gilbert + Tobin

Solicitor for the Attorney-General (New South Wales): Crown Solicitor for the State of New South Wales