Sportsbet Pty Ltd v State of New South Wales

REASONS FOR JUDGMENT 1 The second and third respondents have issued five notices to produce to Sportsbet, which were called upon on 27 January 2010 during a directions hearing. On 27 January 2010 I heard argument from Sportsbet as to why the notices should be set aside. During that argument the second and third respondents read an affidavit of Mr Price sworn on 27 January 2010 and tendered an exhibit to that affidavit, together with two other exhibits consisting of print-offs from some web pages. There was no evidence tendered by Sportsbet. 2 Sportsbet applied on several bases. In the event it is only necessary to deal with one of the suggested grounds. 3 It has been said in this Court that the standard of relevance to be applied to a notice to produce is that the documents sought are "reasonably likely to add, in the end, in some way or other, to the relevant evidence in the case": see Seven Network Limited v News Limited (No 11) [2006] FCA 174 at [6], per Sackville J. That kind of relevance is often referred to as "apparent relevance". 4 Reasonable likelihood is a different concept to reasonable possibility and, to my mind, connotes a degree of certainty as to the material's potential relevance that travels beyond the merely conjectural. It is to be distinguished from the tests applicable in discovery. It is necessary then to attend to the suggested relevance of the present material. Paragraph 85 of the second further amended statement of claim alleges relevantly as follows: By reason of the matters referred to in paragraphs 52 to 78 and 84 above: … (b) the legal and/or practical effects of ss. 33 and/or 33A is to protect wagering operators in New South Wales from competition from wagering operators in the Northern Territory. (emphasis added) 5 There are then set out extensive particulars which indicate the manner in which Sportsbet claims that allegation will be made good. 6 The second and third respondents have denied this allegation. There is, therefore, an issue in the case as to whether the practical effect of ss 33 and 33A of the Racing Administration Act 1998 (NSW) is as Sportsbet alleges. One possible way of making good that denial would be to show that the fee authorised by those provisions has had no effect on Sportsbet's business or, at least, an insufficient effect to operate in a way which could be said to be protectionist. Support for the arguability of such a proposition is found in Castlemaine Tooheys Limited v The State of South Australia (1990) 169 CLR 436 at 459 where the plurality, on one view, accepted that it was appropriate to consider the benefit flowing from the use of non-refillable bottles in assessing the practical operation of the laws in question. 7 At the level of the current debate I therefore proceed on the basis that the second and third respondents' argument is sufficiently tenable to pass the test of relevance in the present application. That denial by the second and third respondents would make documents tending to show that the fee had had no effect on Sportsbet's business discoverable. My conclusion to the contrary in Betfair Pty Ltd v Racing New South Wales (No 3) [2009] FCA 536 at [4] - [8] was, of course, reversed by the Full Court: Racing New South Wales v Betfair Pty Ltd [2009] FCFCA 119 at [29] per Buchanan, Jagot and Foster JJ. 8 The categories of discovery which were to be provided by Sportsbet were not in evidence before me on this application but I was told from the bar table that they did not, in terms, include a category dealing with the financial position of Sportsbet viewed from the perspective of the fee's practical operation. Were an application for further discovery to be made it would invite consideration of a number of discretionary matters including the extent of any delay in making the application, the nature and extent of any explanation for that delay and the extent of the relevance of the material weighed against the burden that the discovery would involve for the applicant. 9 Those discretionary considerations are, of course, not material to the issues which arise on the notice to produce for there is not the same discretionary ability to set aside a notice to produce. The discretionary differences between discovery, subpoenas and notices to produce constitute one of the reasons why the test of apparent relevance is tighter for subpoenas and notices to produce than the test of relevance for discovery. That difference, of course, underlies the well understood and longstanding proposition that subpoenas - and notices to produce I would add - cannot be used as a substitute for discovery: see The Commissioner for Railways v Small (1938) 38 NSWR 564 at 574-575 per Jordan CJ. 10 I turn then to the notices to produce. The first dated 24 December 2009 required production of: 1. a copy of any documents recording or referring to any agreement or arrangement between the Applicant (Sportsbet) and any other wagering operators in respect of the funding or payment of the legal costs of Sportsbet incurred in conducting these proceedings. 11 It was suggested that any such funding arrangement might reveal the financial position of Sportsbet. This is exiguously possible I suppose; but is not such that it may be said that it is reasonably likely to add, in some way or other, to the relevant evidence. It is, in my opinion, clearly a fishing expedition. 12 The second notice to produce was also dated 24 December 2009 and was in these terms: 1. a copy of a letter from the Applicant (Sportsbet) to Racing Victoria Limited (RVL) dated 4 July 2006; 2. a copy of a letter from Sportsbet to RVL dated 24 July 2006; 3. a copy of any drafts of the letter referred to in paragraph 2 of this Notice; 4. a copy of any emails, notes or memoranda referring to the letter referred to in paragraph 2 of this Notice or any draft of that letter; 5. a copy of any notes taken by any person on behalf of Sportsbet of the meeting between Mr Tyshing and the RVL Race Fields Sub Committee which took place on or about 24 July 2006; 6. a copy of any emails, notes or memoranda referring to the meeting referred to in paragraph 5 of this Notice; 7. a copy of any notes taken by any person on behalf of Sportsbet of the meeting between Messrs Tyshing and Tripp on behalf of Sportsbet and Messrs Ross and Masters which took place on or about 29 January 2007; 8. a copy of any emails, notes or memoranda referring to the meeting referred to in paragraph 7 of this Notice; 9. a copy of any notes taken by any person on behalf of Sportsbet of the meeting between Messrs Tyshing, Tripp and Griffiths on behalf of Sportsbet and Messrs Ross, Masters and Barrile which took place on or about 21 February 2007; 10. a copy of any emails, notes or memoranda referring to the meeting referred to in paragraph 9 of this Notice; 11. a copy of any notes taken by any person on behalf of Sportsbet of the meeting between Messrs Tyshing and Tripp on behalf of Sportsbet and Messrs Ross, Masters and Barrile which took place on or about 27 February 2007; 12. a copy of any emails, notes or memoranda referring to the meeting referred to in paragraph 11 of this Notice. 13 The relevance of this is said to flow from pleadings in separate proceedings. In evidence before me was Sportsbet's statement of claim in this Court in proceedings NTD 16 of 2007, entitled Sportsbet Pty Ltd v Racing Victoria Ltd & Ors, which are proceedings which are presently pending before Mansfield J. Paragraphs 54 and 55 of that statement of claim allege: 54. By letter dated 4 July 2006, Tyshing on behalf of Sportsbet wrote to Cram on behalf of RVL, providing figures to show that a proposed economic contribution of 1% would amount to a tax of 65% on gross profit, before GST, transaction costs and overheads were taken into account. Further it was stated (as was the case) that "any compliance by Sportsbet with RVL's requirements (unreasonable as Sportsbet contends that they are) must not be construed as final acceptance of the validity or enforceability of those requirements." PARTICULARS 54.1. A copy of the letter dated 4 July 2006 is available for inspection at Sportsbet's solicitor's office. 55. On or about 24 July 2006, Tyshing on behalf of Sportsbet met with RVL Race Fields Sub-Committee, to discuss the economic contribution tax rate, and Sportsbet made submissions to RVL which were subsequently repeated in a letter from Tyshing on behalf of Sportsbet to Cram on behalf of RVL, wherein Sportsbet proposed an economic contribution tax of 35% of Gross Profit, less GST, less Bad and Doubtful Debts Expense. However, the letter also stated: "… despite all of this, and given the uncompetitive position which RVL has forced Sportsbet into, where Sportsbet's approval to publish race fields is now being withheld after passing all of RVL's "integrity matters", and is now conditional only on Sportsbet providing a suitable "economic contribution", Sportsbet has no alternative but to accept RVL's proposed 1.00% product fee in principal. It is clear to Sportsbet that failure to agree with RVL's proposed product fee will result in Sportsbet's ability to publish Victorian thoroughbred race fields being withheld post 4th August 2006, the date when the current extension is due to expire. A failure to approve Sportsbet to publish Victorian thoroughbred racefields would remove Sportsbet's ability to legally [sic] trade on Victorian Thoroughbred racing and provide significant damage to the overall business. The damage is two-fold, firstly because Victorian thoroughbred racing is a significant revenue contributor for Sportsbet, and secondly, it disables the capacity for Sportsbet to provide a full service offering on all Australian racing and sports products, a severe disability for Sportsbet to trade competitively and amongst its major competitors." 14 Paragraphs 1 to 5 of the notice to produce seek documents which are relevant in the necessary sense. Paragraph 6, however, does not. I do not see why documents "referring to the meeting" would be "reasonably likely" to add, in some way or other, to the evidence. 15 Paragraph 69 of the statement of claim alleges: On 29 January 2007, a meeting was held at RVL's premises between Messrs Jamie Ross ("Ross") and Darrell Masters ("Masters") both of RVL, and Tripp and Tyshing of Sportsbet. At that meeting: 69.1. Tyshing stated words to the effect that "Sportsbet had information that the process had not been uniform and consistent as promised, across all wagering service providers, nor had an economic contribution of 1% of turnover been consistently applied."; 69.2. Ross stated in response words to the effect that "you did enter into a contract"; 69.3. it was agreed to hold a further meeting on 21 February 2007. 16 Paragraph 7 of the notice to produce is relevant. Paragraph 8 does not pass the test due to the words "referring to." I do not mean to say that such words are generally inappropriate; only to say that in this case the broadening of the paragraph by reason of those words makes it difficult and, indeed, impossible to say that the documents sought have a reasonable likelihood of adding to the evidence in one way or the other. Paragraph 70 of the statement of claim alleges: 70. On 21 February 2007 a further meeting was held in the morning, at RVL's premises, between Ross, Masters and one Mr Simon Barrile ("Barrile") on behalf of RVL, and Tripp, Tyshing and one Mr Grant Griffiths ("Griffiths"), on behalf of Sportsbet. At the meeting: 70.1. Griffiths stated words to the effect that there had been "special deals" done and "fixed price deals" done with Sportsbet's competitors; that accordingly the position had been misrepresented by RVL, and that the current "deal should be renegotiated"; 70.2. Griffiths questioned whether or not alternative arrangements for an economic contribution had been made with Sportsbet's competitors; 70.3. Griffiths stated words to the effect that "Sportsbet has been commercially disadvantaged"; 70.4. Ross of RVL responded with words to the effect that "there is a contract in place"; that there would be a review when there was time for a renewal, and that "as there is a contract in place, Sportsbet is bound by it and there is no room for manoeuvre"; 70.5. Barrile of RVL stated words to the effect that "there were no other deals done and at the end of the current arrangement there will be a reconsideration and review of the whole economic contribution policy."; 70.6. Ross of RVL further stated that there was an ability for the negotiation of other types of deal [sic], and he referred to the fact that the RFI had a clause relating to same; 70.7. Tyshing stated words to the effect that that it was clear to him that "whilst the request for information may have referred to fixed price deals, there was always a requirement for balancing up a year end, to make up any shortfall or overpayment between the 1% target tax and any fixed price deal." and "it doesn't matter how you skin the cat, you're still after 1% as an economic contribution tax."; 70.8. Barrile of RVL interjected with words to the effect of "… no, no, its an economic contribution, it's not a tax."; 70.9. Griffith stated words to the effect that "Sportsbet believes that the position has been misrepresented during the course of negotiations leading up to the 14 September agreement"; 70.10. Griffiths made reference to the possibility of litigation, and that if there were different deals done, discovered documents would show if there had been other deals done, but that Sportsbet "did not want to go down that path"; 70.11. Barrile of RVL then stated words to the effect hat "we don't wish to go down that path either"; 70.12. Griffiths stated words to the effect that Sportsbet would confirm its sources, and then a further meeting could take place. 17 For similar reasons I would allow paragraph 9, but not paragraph 10. Paragraph 71 of the statement of claim alleges: 71. On 26 February 2007 a further meeting was held, at RVL's premises in the Board Room, between Ross, Masters and Barrile on behalf of RVL, and Tripp and Tyshing on behalf of Sportsbet. At the meeting: 71.1 Griffiths stated words to the effect of, "There have been at least two special fixed price deals done with our competitors. I want an answer "yes" or "no" as to whether there have been any other deals." 71.2. Barrile of RVL stated words to the effect that the deals were subject to privacy arrangements, but "there have been no fixed price deals" (emphasising the words "fixed"); 71.3. Griffiths then stated words to the effect of, "Well let's cut out the semantics and bullshit, were there any other types of deals done with any of our competitors that would have put us under a distinct commercial disadvantage in developing our business?" 71.4. Ross of RVL then lent forward and relied, "Read my lips, there have been no fixed price deals done." 71.5. Griffiths then stated words to the effect of, "No semantics, have there been any other deals done?" 71.6. Ross of RVL then said, "No." 71.7. Griffiths then stated, "Well we will have to see, you are forcing Sportsbet down a litigation path." 71.8. It was agreed that Sportsbet would pay the amounts of turnover tax on Victorian thoroughbred horseracing however derived and including the telephone betting (which had been withheld) under protest. The meeting was then concluded. 18 Again, for the same reasons, paragraph 11 should be permitted and paragraph 12 denied. 19 I turn, then, to the third notice to produce. It requires production of the following: 1. a copy of any documents recording communications between: 1.1 the Applicant (Sportsbet) or any person or entity on behalf of Sportsbet (including but not limited to Matthew Tripp, Nicholas Tyshing or Fitzpatrick Legal); and 1.2 any media person or entity (including but not limited to the Australian newspaper, the Australian Financial Review newspaper, the Sydney Morning Herald newspaper, the Age newspaper, the Sun Herald newspaper, the Virtual Form Guide and/or Bill Saunders), referring to these proceedings or the race fields fees charged by the second or third respondents to Sportsbet or any corporate bookmaker; 2. a copy of any documents referring to: 2.1 the communications referred to in paragraph 1 of this Notice; 2.2 any articles published in the media which refer to these proceedings or the race fields fees charged by the second or third respondents to Sportsbet or any corporate bookmaker; 2.3 an article published in the Sun Herald on 5 July 2009 (a copy of which is Annexure A to this Notice); 2.4 an article published in the Australian Financial Review on 2 November 2009 (a copy of which is Annexure B to this Notice); 2.5 an article published on the Virtual Form guide website on 28 November 2009 (a copy of which is Annexure C to this Notice). 20 It was said that because Mr Tripp, Mr Tyshing, or Fitzpatrick Legal may have spoken to the press that they might have, at the same time, provided financial information about Sportsbet. That was material, so it was said, which would go to the practical operation case. The evidence before me did establish that Mr Tripp had spoken to the press but failed to indicate such correspondence by either Mr Tyshing or Fitzpatrick Legal. However, the fact that Mr Tripp spoke to the press provides no basis for thinking that there is a reasonable likelihood that he provided the journalists in question with financial information. That proposition seems to be wholly speculative. This notice to produce is entirely a fishing expedition and must be set aside. 21 The fourth notice to produce required production of the following: 1. copies of all Documents recording agreements between the Applicant (Sportsbet) (or any party on its behalf) and the owners or operators (or any parties on their behalf) of any of the websites listed in Annexure A to this Notice; 2. copies of all Documents created or received by Sportsbet since 1 August 2008 referring to any of the websites listed in Annexure A to this Notice. 3. copies of all Documents recording communications between Sportsbet (or any party on its behalf) and the owners or operators (or any parties on their behalf) of any of the websites listed in Annexure A to this Notice; 4. copies of all Document [sic] recording any payments made by Sportsbet (or any party on its behalf) to the owners or operators (or any parties on their behalf) of any of the websites listed in Annexure A to this Notice; 5. copies of all Documents created or received by Sportsbet recording details of persons accessing a website operated by or on behalf of Sportsbet via a link from any of the websites listed in Annexure A to this Notice. 22 The suggestion, as I understood it, was that: (a) the Sportsbet banner was present on these websites; (b) there were, therefore, likely to be commercial arrangements underpinning the presence of the Sportsbet banner on those sites; and (c) those commercial arrangements could or would be relevant to the practical operation case. 23 I do not quite understand how the race fields information is said to be used on these websites. Unless it is said to be used, I cannot understand why the commercial arrangements are relevant to the practical operation case. There is nothing to distinguish the use of a banner ad on these websites in that circumstance from the use, for example, of a Sportsbet poster in a public hotel. It seems to me in those circumstances the notice is a fishing expedition and must be set aside. 24 The final notice to produce was in the following terms: 1. copies of all Documents recording communications between the Applicant (Sportsbet) or IASbet and any other person in respect of the cancellation or variation of the RVL 9/10 Sportsbet Approval or the RVL 09/10 IASbet Approval; and 2. copies of all Documents created by Sportsbet or IASbet in respect of the cancellation or variation of the RVL 09/10 Sportsbet Approval or the RVL 09/10 IASbet Approval.