Sportsbet Pty Ltd v Harness Racing Victoria

TABCORP 7 Tabcorp was incorporated in 1994, and is a public company limited by shares. It is, I am told, the largest waging operator in Victoria. 8 Under s 12(1) of the Gaming and Betting Act 1994 (Vic) (GB Act) Tabcorp was granted a wagering licence and a gaming licence on 28 June 1994. Tabcorp continues to hold the wagering licence and gaming licence pursuant to Ch 4, Pt 3 of the GR Act, which repealed the GB Act. In addition, under the GR Act Tabcorp holds an exclusive licence to conduct off-course totalisators in Victoria and a licence to conduct on-course totalisators. 9 Under s 11 of the GB Act, Tabcorp, in order to obtain a wagering licence and gaming licence, was required to enter into an agreement with Vic Racing Pty Ltd (VicRacing) concerning the racing industry and the formation of an unincorporated joint venture. 10 On 25 May 1994 Tabcorp, three related Tabcorp entities, and VicRacing entered into a joint venture agreement (JVA). The joint venture (JV) was established for: (1) the organisation, conduct, promotion and development of wagering, gaming, approved betting competitions, and keno; (2) the collection of money and receivables produced by or derived from the JV; and (3) the distribution of money and receivables produced by or derived from the JV. 11 A condition precedent to the enforceability of the JVA, pursuant to clause 2.1(a)(ii), was that Tabcorp, two related Tabcorp entities, VicRacing and Racing Products Victoria Pty Ltd (RPV) enter into a product supply agreement (PSA). Accordingly, on 25 May 1994, a PSA was entered into. The PSA permits the joint venturers to obtain and use racing information (including race fields information), and provides for the establishment, maintenance, and operation of an annual marketing program in return for a fee.

THE PLEADINGS 12 An amended statement of claim and an amended application in the principal proceedings were filed on 19 March 2010. The amended statement of claim includes (at paragraphs 31 to 41) allegations that: (1) s 2.5.19B of the GR Act, and (2) the condition of HRV's approval that Sportsbet pay to HRV a fee of 1.5% of assessable turnover on Victorian harness racing plus GST, for the period 1 January 2009 to 30 June 2009, to publish and use Victorian harness race field information, imposed pursuant to ss 2.5.19B(1)(b) and 2.5.19D of the GR Act (HRV Turnover condition), are invalid by virtue of their being inconsistent with s 49 of the Northern Territory (Self Government) Act 1978 (Cth) and s 109 of the Constitution, and/or combined with covering clause 5 of the Constitution Act 1900 (Imp). 13 The amended statement of claim also includes various allegations expressly relating to Tabcorp (which is referred to as the "TAB"). In particular: (a) at paragraph 31 Sportsbet alleges that s 2.5.19B of the GR Act is invalid as: 31.1 Section 2.5.19B on its face discriminates between the TAB, in-State licensed bookmakers and out-of-State licensed bookmakers, including Sportsbet; 31.2 Further or alternatively, the practical effect of section 2.5.19B, of the [GR] Act is to discriminate between the TAB, in-State licensed bookmakers and out-of-State licensed bookmakers, including Sportsbet; (b) at paragraph 35 Sportsbet alleges that the only, dominant or substantive object of s 2.5.19B of the GR Act is inconsistent with s 49 of the Northern Territory (Self Government) Act 1978 (Cth) as it is to protect the turnover and income of licensed bookmakers (wagering operators) and the Tab in Victoria from being diminished through competition from licensed bookmakers (wagering operators) including Sportsbet in the Northern Territory. (c) at paragraph 37 Sportsbet alleges that the HRV Turnover Condition in its legal or practical operation prevents: an interstate wagering operator, including Sportsbet, from publishing and using Victorian race fields in Victoria or elsewhere in circumstances where bookmakers licensed in Victoria, any racing club that is licensed to operate an oncourse totalisator in Victoria and TAB, are not prevent from doing so. (d) at paragraph 39 Sportsbet alleges that the only or dominant or substantive object of HRV Turnover Condition is inconsistent with s 49 of the Northern Territory (Self Government) Act 1978 (Cth) as it is to protect the turnover and income of wagering operators and the TAB in Victoria from being diminished through competition from wagering operators in the Northern Territory. 14 Each respondent subsequently filed an amended defence. 15 HRV filed its amended defence on 21 July 2010. In denying paragraph 37 of the amended statement of claim, HRV says at paragraph 37(g) that: it denies that the turnover condition prevents Sportsbet from publishing and using Victorian harness race fields in Victoria or elsewhere in circumstances where TAB is not prevented from doing so, and says that TAB makes an economic contribution to the conduct and regulation of Victorian harness racing that exceeds the contribution required of Sportsbet under the turnover condition, by reasons of the amounts paid by the TAB to the Victorian harness racing industry pursuant to agreements entered into between the TAB, VicRacing Pty Ltd and Racing Products Victoria Pty Ltd.

Joinder 16 O 6 r 8(1) of the FC Rules provides: Where a person who is not a party; (a) ought to have been joined as a party; or (b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectively and completely determined and adjudicated upon; the Court may order that the person be added as a party and make orders for the further conduct of the proceeding. 17 The rule is to be liberally construed: Fina Research SA v Halliburton Energy Services Inc [2002] FCA 1281. 18 In deciding whether a person ought to have been joined, for the purposes of subs (a) the question to consider is whether a judgment of the Court may have a direct effect on the rights and liabilities of that person and not one that is merely indirect or consequential. It is the effect of the orders sought in the proceeding upon the proposed new party that must be determined: News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 523-525. It is not sufficient that the person seeking to be joined merely has an interest in the outcome of the litigation sufficient himself to maintain an action: Australian Tape Manufacturers Association Ltd v Commonwealth of Australia (1990) 94 ALR 641. 19 In deciding whether the joinder is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon, the Court has interpreted the phrase "all matters in dispute" as all matters arising under the pleadings, and issues subjacent to or facts which underlie the pleadings: Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 and Fried v National Australia Bank Ltd [1999] FCA 737. 20 In assessing an application pursuant to O 6 r 8 the Court may also have regard to whether the joinder would delay the proceeding or otherwise prejudice any party: Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd (2004) 188 FLR 278. It may also take into account whether there was any delay in making the application: Review Australia Pty Ltd v Redberry Enterprise Pty Ltd (2003) 58 IPR 366.

Intervention 21 O 6 r 17 of the FC Rules provides that: 1. The Court, at any stage of a proceeding, may give leave to a person (the intervener) to intervene in the proceeding, on the terms and conditions, and with the rights, privileges and liabilities (including liabilities for costs), determined by the Court. 2. In deciding whether to give leave, the Court must have regard to: (a) whether the intervener's contribution will be useful and different from the contribution of the parties to the proceeding; and (b) whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as they wish; and (c) any other matter that the Court considers relevant. 3. The role of the intervener is solely to assist the Court in its task of resolving the issues raised by the parties. 4. For subrule (3), assisting the Court includes suggesting witnesses to be called by the Court, but does not include filing pleadings, leading evidence or examining witnesses. 5. When giving leave, the Court must specify theform of assistance to be given by the intervener and the manner of participation of the intervener, and, in particular, must specify: (a)the matters that the intervener may raise; and (b)whether the intervener's submissions are to be oral, in writing, or both 22 The Court is required to consider each of the matters in O 6 r 17(2) before deciding whether to give leave to a party to intervene but, in doing so, must have regard to the intervener's role: O 6 r 17(3). Order 6 r 17(3) limits the intervener's role solely to one of assisting the Court in its task of resolving the issues raised by the parties. If the criteria are made out then the Court can, in the exercise of its discretion, give leave to a party to intervene subject to whatever terms are appropriate: Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 1663 per Lander J at [104].

TABCORP'S CONTENTIONS 23 Tabcorp contends that it should be joined to the principal proceedings as a respondent pursuant to O 6 r 8(1)(a) as it ought to have been joined as a party. It asserts that an order in favour of Sportsbet in the principal proceedings will, or is likely to, have, to a corresponding extent, a detrimental effect on Tabcorp's rights and liabilities, and therefore it ought to have been joined as a party. 24 In particular, if Sportsbet were to succeed in its contentions, a certain part of s 2.5.19B of the GR Act could be severed and declared invalid, with the consequence that Tabcorp would no longer be exempt from the operation of s 2.5.19B(1). Tabcorp would have a new liability to the State of Victoria, and to the industry bodies charging race field fees, so in effect it may be required to make a double-payment for its right to publish and use Victorian race fields information, which is likely to place Tabcorp at a competitive disadvantage and or require it to invoke alternative commercial arrangements. Alternatively, s 2.5.19B could be held to be invalid in its entirety, with the consequence that many participants in the wagering industry would not be obliged to make any contribution for the publication or use of Victorian race fields information. However Tabcorp would continue to be obliged to pay fees for its right to publish and use Victorian race fields information under its existing commercial arrangements. 25 Additionally, or in the alternative, Tabcorp contends that pursuant to O 6 r 8(1)(b) its joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. Its says this is established by reason of the allegations raised by the amended statement of claim specifically referring to Tabcorp (and its rights, obligations and activities) in various paragraphs, set out above. It says it is also established by the issues of fact which underlie the allegations, including the following: (1) The proceeding will require an examination of Tabcorp's comparative contributions to the Victorian racing industry (including through the payment of fees for race fields information under the PSA and otherwise) and Tabcorp's commercial arrangements with the Victorian racing industry; (2) Tabcorp is best placed to provide evidence referable to its financial contributions and commercial arrangements in a comprehensive and accurate manner, making the proceeding more efficient; (3) Tabcorp does not consider that all relevant facts have currently been pleaded and wishes to file pleadings, lead evidence and make submissions in relation to factual matters which concern Tabcorp and which may ultimately be the subject of findings of fact. 26 The particular matters which Tabcorp would seek to address through pleadings, evidence and submissions were said to relate to: (1) Tabcorp's approval exemption under the GR Act; (2) Whether the effect of the HRV Turnover Condition is to protect Tabcorp from competition from other wagering operators in the Northern Territory; (3) The requirement by the GB Act to enter into the JVA and, by extension the PSA; (4) That under the PSA Tabcorp is obligated to pay RPV a product fee in respect of its Victorian operations generally, in consideration for the supply of racing information, which is in addition to various other substantial financial contributions that Tabcorp makes to the racing industry under its existing commercial arrangements, and is of a similar type and a similar amount to the contribution that Sportsbet is required to make pursuant to the HRV Turnover Condition; (5) Tabcorp's contribution to the Victorian racing industry which significantly exceeds the contribution that Sportsbet is required to make pursuant to the HRV Turnover Condition. (6) Recent developments in the wagering industry which have lead to the emergence of a national wagering market in which totalisator operators and other wagering operators compete, and therefore to a changing competitive landscape. 27 Tabcorp further asserts that its joinder would not delay the proceeding or otherwise prejudice any party, as pleadings have not formally closed and it would comply with any order which required it to file and serve a defence in short course. It also asserts that there was no undue delay in making the application for joinder as, once it became aware of recent amendments to the statement of claim and application which it says brought Tabcorp's position squarely in issue, it acted expeditiously. It says it was first aware of the amendments on 25 May 2010, when the State of Victoria wrote to Tabcorp attaching a copy of the pleadings. 28 Tabcorp makes the application to intervene only in the alternative, in the event that it fails in respect of its primary application for joinder. It says its intervention would not interfere with the proper conduct of the proceedings. Its contribution to the issues would be different from the contribution of the other respondents and, it says, would assist the Court. 29 Tabcorp seeks leave to intervene in order to make oral and written submissions on matters including the following: (1) the proper construction and operation of s 2.5.19B of the GR Act; (2) the proper operation of ss 92 and 109 of the Constitution and s 49 of the Northern Territory (Self Government) Act 1978 (Cth) in the relevant factual matrix; (3) the proper understanding and significance of Tabcorp's existing financial contribution to the Victorian harness racing industry, including under the PSA and the JVA; and (4) whether the effect of the HRV Turnover Condition is to protect Tabcorp from competition from other wagering operators in the Northern Territory. 30 HRV and the State of Victoria support the application for joinder or intervention and made brief oral submissions. They contend that Tabcorp is in a better position to call relevant evidence in relation to its commercial arrangements and to the competitive landscape of the industry generally, which would result in a more efficient proceeding.

SPORTSBET'S CONTENTIONS 31 Sportsbet opposes the application that Tabcorp be joined as it says Tabcorp does not satisfy the criteria for joinder under O 6 r 8. 32 Sportsbet contends that, as the proceeding is a constitutional challenge to the validity of legislation, the effect on third parties is indirect and consequential and therefore does not support joinder. It says it is not sufficient that Tabcorp has a commercial interest in the outcome or that it be desirable or convenient for it to be joined. Sportsbet relied on the decision of Dawson J in Australian Tape Manufacturers Association Lt v Commonwealth of Australia (1990) 94 ALR 641 refusing leave for third parties to be joined as defendants to the application. In that case copyright holders sought to support the validity of the Commonwealth law which provided for the payment of a royalty on blank tapes and distribution to copyright holders, therefore claiming commercial benefits. The applicants for joinder asserted having detailed knowledge of the recording and publishing industries and claimed to be able to provide detailed information as to the proposed manner of distribution of the levy. Dawson J at 645 accepted that the applicants for joinder could demonstrate an interest in the outcome of the litigation but they were not a necessary party to be joined. His Honour concluded that the applicants were not necessary to resolve constitutional questions even thought their commercial interests were likely to be affected, they supported the legislation and were the repository of evidence. Sportsbet contends that these facts are indistinguishable from the present application and the decision should be followed. 33 Sportsbet further contends that the fact that it will be necessary for the Court to examine the comparative position of Sportsbet and the Victorian wagering industry does not make each element of the local industry necessary to be joined. It says Tabcorp is a competitor and comparator but that does not make it a necessary party. The interests of all interstate bookmakers who accept bets on Victorian harness racing, interstate totalisators, Victorian bookmakers and Tabcorp may all be affected by the litigation. It pointed to the fact that on the Victorian Commission for Gambling and Racing's website it is revealed that there are 59 individual/sole trader bookmakers, 5 corporate bookmakers and 29 bookmaker partnerships. Sportsbet says that it cannot be contended that the presence of each or any of them is necessary in order to adjudicate on the questions arising. 34 Sportsbet asserts that the evidence Tabcorp wishes to lead is available to be called by the respondents, and there is no suggestion that that evidence will not be forthcoming. The mere fact that Tabcorp may be in a better position to call the evidence and make submissions in support of the case which an existing party already seeks to make, Sportsbet says, is a insufficient basis for a joinder. 35 In relation to the question of whether Tabcorp should be able to intervene in the proceeding, Sportsbet contends that Tabcorp's contribution will not be useful and different from the contribution of the respondents. It again points to the fact that the evidence is available to the respondents and there is no suggestion that Tabcorp will not cooperate in making evidence available. 36 To the extent that the Court is satisfied that Tabcorp has a sufficient interest to intervene, Sportsbet submits that the intervention should be confined to making submissions on the validity of s 2.5.19B on the basis that it identifies the section, and not the turnover condition, as impacting on its rights.

CONSIDERATION 37 I am of the view that although Tabcorp has a commercial interest in the outcome of the proceeding, this is not enough in itself to satisfy O 6 r 8 of the FC Rules. I am not persuaded that Tabcorp ought to have been joined as a party. 38 As noted above, the authorities show that the test for whether a party ought to be joined that must be satisfied is whether any order made by the Court may have a direct effect on the rights and liabilities of the party seeking to be joined and not an effect that is merely indirect or consequential: News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 523-525. 39 As Sportsbet's challenge is to the validity of a law of general application, the effect on Tabcorp will not arise directly from any order as to its validity but will be an indirect and consequential effect. If s 2.5.19B of the GR Act is declared invalid in part, the consequence would be that Tabcorp and other Victorian wagering operators would no longer be exempt from the operation of s 2.5.19B(1). The fact that Tabcorp (and other Victorian wagering operators) would have a new liability in addition to fees payable under existing commercial arrangements is an indirect effect of the orders. Similarly if s 2.5.19B is held to be invalid in its entirety, the consequence would be that many participants in the wagering industry would not be obliged to make any contribution for the publication or use of Victorian race field information. But Tabcorp would continue to be obliged to pay fees under its existing commercial arrangements. Again this would not be a direct consequence of such orders, but merely consequential on the operation of the GR Act without the invalid provision. The commercial arrangements to which Tabcorp referred in detail are independent of Tabcorp's relationship to the current respondents and are independent of the legislation. They may be re-negotiated or changed. Any impact of the orders on those commercial arrangements is clearly indirect. Importantly, in my view, those commercial arrangements are not relevant to the question of whether the provisions in the GR are valid, and they are not the subject of any of the orders sought. 40 In the context of a proceeding challenging the constitutional validity of a statute, interests of third parties will inevitably be affected. It does not follow however that such a third party ought to have been joined or is necessary to be joined to determine whether the legislation is or is not beyond legislative power. Those questions can be determined with the current parties. The addition of Tabcorp would not alter the nature of the questions arising under the action: see Australian Tape Manufacturers Association Lt v Commonwealth (1990) 94 ALR 641 per Dawson J at 645. Nor would its involvement as a party make it any the more likely that the issues in the proceeding would be resolved one way or the other. 41 The State of Victoria is as well placed as any person or entity to respond to the challenge to the validity of s 2.5.19B of the GR Act. If that provision is found to be invalid in whole or in part, the effect will indirectly affect Tabcorp and other participants in the wagering providing industry in Victoria or in respect of Victorian racing. Whilst the indirect effect on Tabcorp may be somewhat greater than that on other participants in that industry, that is in my view a matter of degree. HRV also is as well placed as any person or entity to respond to the challenge to the validity of the condition it has imposed on Sportsbet to pay the fee in the circumstances referred to above. Clearly, if its decision is found to be invalid, that will have a direct effect on its operations. The effect on Tabcorp and on other wagering service providers in Victoria or in respect of races conducted under the aegis of HRV would be indirect, albeit again perhaps to a somewhat greater indirect degree than to other industry participants. 42 In reality, in my view, Tabcorp's application for joinder is merely to support the State of Victoria and HRV in their resistance to the claims of Sportsbet. 43 The fact that the amended pleadings have made express reference to Tabcorp, as set out above, does not mean that it is directly affected by the outcome of the litigation. Tabcorp is referred to by way of example and in each case other licensed Victorian wagering operators are also referred to. The fact that the Court will need to examine the comparative position of Sportsbet and the Victorian wagering industry (including Tabcorp) does not make each element of the local industry necessary to be joined. The interests of all interstate bookmakers who accept bets on Victorian harness racing, interstate totalisators, Victorian bookmakers and Tabcorp may all be affected by the litigation. The presence of each or any of them is clearly not necessary in order to adjudicate on the questions arising. 44 I accept that there is evidence that Tabcorp may wish to lead in relation to its financial contributions and to harness racing in Victoria and to its commercial arrangements, and more generally about the respective contributions to harness racing in Victoria of Tabcorp and other wagering service providers. Even accepting such evidence may be relevant, any such evidence is available to be called by the existing respondents. There is no suggestion that they will not have access to that evidence. They can decide what evidence they wish to call. There is no basis for thinking their decisions in that regard would be influenced by factors different from those presently motivating Tabcorp to make its joinder application. The mere fact that Tabcorp may be in a better position to assemble such evidence is not enough to make it necessary that it be joined as a party. The word "necessary" requires that it be more than just convenient; it must be essential to determine the questions which arise. Similarly, there is no reason to think that the existing respondents would not put as forcefully or as well as Tabcorp any legal submissions which should be put in opposition to Sportsbet's application. 45 For those reasons, I am not satisfied that Tabcorp's joinder is necessary to ensure that all matters in dispute in the proceeding are effectually and completely determined and adjudicated upon. 46 I note for completeness that, as I do not think Tabcorp ought to be joined, I have not taken into account whether the joinder would delay the proceeding or cause prejudice to a party, or if there was undue delay in making the application. I accept its submissions that it has acted promptly and in a timely manner. However, its joinder would if anything tend to prolong the proceeding simply because there would be an additional party seeking to be heard, to adduce or test evidence, and to make submissions which I think would be likely to somewhat duplicate the steps taken by the existing respondents. As I have indicated, however, it is not on that ground that I propose to reject the joinder application. 47 I am persuaded, however, that Tabcorp has sufficient interest to intervene in the proceeding. That is possibly erring on the side of caution. I have concluded the State of Victoria and HRV are in a satisfactory position to adduce and test all relevant evidence and to make submissions on the issues in the proceedings. I propose to limit Tabcorp's intervention to making submissions, orally or in writing, on issues not addressed by the other parties. If there are issues that cannot or do not get addressed by the parties, Tabcorp may then be able to provide a contribution that is useful and of course different from the contribution of the other parties. Due to this limited role that they may have, I do not think the intervention will interfere with the ability of the parties to conduct the proceeding as they wish. That leave is given really from an abundance of caution. It may not be sought to be exercised. Consistently with that leave, I will also reserve to Tabcorp leave to apply to the Court to make submissions on other topics if the circumstances warrant it doing so. 48 I will make orders accordingly. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.