Sportsbet Pty Limited v State of New South Wales

TAB LIMITED (ACN 081 765 308), TABCORP HOLDINGS LIMITED (ABN 063 780 709) AND LUXBET PTY LIMITED (ABN 092 104 786)

TAB LIMITED (ACN 081 765 308), TABCORP HOLDINGS LIMITED (ABN 063 780 709) AND LUXBET PTY LIMITED (ABN 092 104 786)

REASONS FOR JUDGMENT 1 On 13 November 2009 I published reasons for judgment in respect of a notice of motion filed by Sportsbet Pty Limited (Sportsbet) on 1 October 2009 (Sportsbet Pty Limited v State of New South Wales (No 3) [2009] FCA 1283). By the motion Sportsbet sought orders that the respondents produce certain documents for inspection over which claims for privilege had been made. The respondents resisted any order for production. On 11 December 2009 I made orders requiring the respondents to produce a number of the documents in dispute. The outstanding issue is costs.

SPORTSBET'S POSITION 2 Sportsbet seeks the usual order for costs in its favour. As the respondents had resisted producing documents on separate grounds, Sportsbet submitted that Racing New South Wales and Harness Racing New South Wales (together, Racing NSW) should pay its costs of the motion relating to their claim that documents were protected by "without prejudice" privilege. Otherwise Sportsbet contended that the State of New South Wales (the State) should pay Sportsbet's costs of the motion. According to Sportsbet there is no reason for costs not to follow the event in respect of its motion. Racing NSW resisted production on a single ground (without prejudice privilege) which failed. The State resisted production on various grounds (parliamentary privilege, public interest immunity and legal professional privilege). Sportsbet was largely successful and thereby obtained access to a large number of relevant documents to which access had been denied. 3 Sportsbet also emphasised that the respondents continued to resist production despite the rulings in the Betfair proceeding which supported Sportsbet's position. The Betfair proceeding is a reference to the separate proceeding taken by Betfair Pty Limited against Racing NSW on grounds which overlap with those on which Sportsbet relies in its substantive claims. Many of the documents in dispute in the Betfair proceeding form part of the documents in dispute in this proceeding. 4 In the Betfair proceeding Racing NSW resisted production of documents on the same basis of "without prejudice" privilege. On 8 October 2009 I ruled against Racing NSW and ordered that the documents in issue be produced to Betfair (Betfair Pty Limited v Racing New South Wales (No 7) [2009] FCA 1140). In answer to Racing NSW's submissions on costs in respect of the "without prejudice" privilege Sportsbet submitted it was and should have been obvious to Racing NSW that there was no factual distinction between the use which Sportsbet wished to make of the contested documents and their relevance to Sportsbet's substantive claims and the position of Betfair in the Betfair proceeding. 5 The State is not a party to the Betfair proceeding. Nevertheless, the State sought and was granted leave to intervene in that proceeding for the purpose of claiming privilege over documents discovered by Racing NSW. In the Betfair proceeding the State resisted production on the grounds of public interest immunity and legal professional privilege but not parliamentary privilege. On 8 October 2009 I also made orders the effect of which was to reject the State's claim for public interest immunity and some (but not all) of the State's claims for legal professional privilege. On 23 October 2009 my orders were varied by the Full Court following an appeal by the State (State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160). In summary, the Full Court overturned that part of my decision rejecting the State's claim for legal professional privilege over drafting instructions to and responses from parliamentary counsel, including draft legislative instruments.

RACING NSW'S POSITION 6 Racing NSW submitted that it should not be liable for any part of Sportsbet's costs in respect of those claims for privilege raised by the State. Nor did Racing NSW seek any order for costs in respect of those claims. As to its own claim for "without prejudice" privilege, Racing NSW submitted that the costs of Sportsbet's should be costs in the cause. According to Racing NSW, whilst its claims were unsuccessful, they were properly made and maintained. The ruling in the Betfair proceeding depended on the use that Betfair intended to make of the documents (see Betfair Pty Limited v Racing New South Wales (No 7) [2009] FCA 1140 at [70]-[74]). On the day those reasons were delivered (8 October 2009) Racing NSW's solicitor wrote to Sportsbet's solicitor asking that Sportsbet identify its proposed use of the documents and their relevance to the issues arising in the substantive proceeding. Sportsbet did not respond and its written submissions of 9 October 2009 did not assist in clarifying its position. At the hearing of Sportsbet's motion Racing NSW and TAB Limited, Tabcorp Holdings Limited and Luxbet Pty Limited (together, the TAB interests) raised this lack of information. The TAB interests were granted leave to be heard as those parties are the joint holders of any "without prejudice" privilege in the documents the subject of Racing NSW's claim. As a result of the concerns raised, Sportsbet was granted leave to rely on further written submissions to which Racing NSW responded. Accordingly, Racing NSW submitted that its approach to the "without prejudice" privilege claim was reasonable and appropriate.

THE STATE'S POSITION 7 The State accepted the principle that costs usually follow the event. However, according to the State, Sportsbet's motion involved multiple issues and resulted in multiple events involving differing degrees of success and failure. The State also pointed out that it was not entitled to waive public interest immunity. Overall, according to the State, a fair view is that both the State and Sportsbet had material degrees of success. In these circumstances the State submitted that I should not attempt to weigh the relative importance of the "myriad issues" which I had to decide. Accordingly, there should be no order as to costs as between Sportsbet and the State. Alternatively, as discovery and production of documents are an ordinary incident of legal proceedings the costs of the motion should be costs in the cause.

CONCLUSIONS 8 The principles that apply to an exercise of the power to award costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) were not in dispute. See, for example, the summary in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136-48,137. The discretion is wide. Costs are awarded to compensate the successful party and not to punish the unsuccessful party. This compensatory objective means that costs usually follow the event. A successful party may be ordered to pay costs or be deprived of an order for costs in respect of issues on which that party failed. Where, however, issues are not discrete and severable it may be inappropriate to attempt to apportion costs by reference to relative success and failure. 9 The position with respect to Racing NSW may be resolved without difficulty. Racing NSW was wholly unsuccessful in resisting the production of documents on the basis of "without prejudice" privilege. The use to which Sportsbet could put the disputed documents and their relevance to the issues in the substantive proceeding was readily ascertainable from the pleadings and Sportsbet's reliance on the decision in the Betfair proceeding. The Betfair proceeding resolved a claim on the same basis against Racing NSW. The fact that Racing NSW may be said to have acted reasonably and appropriately in resisting production is not to the point. By reason of Racing NSW's claim, Sportsbet was forced to a hearing on the question of privilege. Sportsbet should be compensated for the costs it incurred in vindicating its right to access the disputed documents. The fact that discovery and inspection disputes are routine in litigation also should not deprive Sportsbet of its costs. The motion had to be heard in order to vindicate Sportsbet's position. Hence, the costs in respect of the motion should be dealt with separately from the costs of the cause overall. While the "without prejudice" issue absorbed only a small part of the hearing, that fact can be accommodated by excluding from an order against Racing NSW any costs incurred by Sportsbet in connection with the claims for privilege made by the State. 10 The position with respect to the State is more complex. The State's written submissions conveniently summarise the outcomes with respect to the three bases on which it resisted production (parliamentary privilege, public interest immunity and legal professional privilege). As to parliamentary privilege, Sportsbet was successful but for two documents. As to public interest immunity, Sportsbet had the much greater measure of success. As to legal professional privilege, the State enjoyed somewhat greater success than Sportsbet. It is not appropriate, however, to attempt to separate the costs on an issue by issue basis. Many of the same documents were the subject of overlapping claims for privilege. I thus accept the State's submission that I should not resolve costs by adding up the rulings on which one or other party succeeded. Nor, however, do I consider it just to allow costs to lie where they fall or to remain as costs in the cause. 11 The State discovered a large number of documents over which it claimed privilege. Sportsbet had no choice other than to come to Court to test the State's claims given the potential relevance of the documents to Sportsbet's substantive cause. Sportsbet succeeded in obtaining orders requiring the State to produce a large number of documents to which it had been denied access. The fact that some of Sportsbet's arguments failed in respect of the claims for parliamentary privilege and public interest immunity is neither decisive nor of great weight. Nor is the fact that questions of public interest immunity involve a balancing exercise by the Court. The State took an active role in resisting the production of all of the documents in issue. Sportsbet largely succeeded in vindicating its position with respect to these two classes of documents. The State's relative success in respect of legal professional privilege, however, is material. 12 Questions of success and failure in a case such as the present inevitably involve impressions incapable of precise articulation. This is particularly so in the present case where many of the claims for legal professional privilege related to the same documents the subject of the claims for public interest immunity. With this in mind I conclude that the essence of the motion was a contention that certain discovered documents over which privilege had been claimed should be produced for inspection. Sportsbet obtained orders for production albeit not in respect of all documents the subject of challenge to the privilege claims. Accordingly, Sportsbet should have the benefit of a costs order to compensate it for the fact that its rights could be vindicated only through the filing and service of a motion and associated hearing by reason of which it incurred costs that it could otherwise have avoided. Yet Sportsbet failed in its challenge to many documents the subject of claim for legal professional privilege. Arguments about those issues absorbed a material part of the hearing. In these circumstances I am not satisfied that Sportsbet should have the benefit of an order for all of its costs as against the State. A proportional costs order is appropriate to reflect Sportsbet's overall success whilst giving due recognition to the State's claims for legal professional privilege which were sustained. Mathematical precision in the apportionment is neither necessary nor desirable. Overall I consider that an order that Sportsbet obtain 60% of its costs as against the State is just. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.