Sportsbet Pty Ltd v The State of Victoria

APPLICATION AND RELEVANT PRINCIPLES 15 As noted earlier, Tabcorp seeks to be joined to the proceeding as a Respondent pursuant to O 6 r 8(1) of the Rules on the bases that it ought to have been joined as a party and, further or alternatively, it is a person whose joinder is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. If that application is unsuccessful, Tabcorp seeks leave to intervene in the proceeding pursuant to O 6 r 17(1) of the Rules subject to such terms and conditions as the Court considers appropriate.

Applicable Principles 16 The applicable principles were not in dispute and were relevantly summarised by Mansfield J in Sportsbet Pty Ltd v Harness Racing Victoria (No 2) [2010] FCA 952 (HRV) in the following terms: 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. Order 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]. (Emphasis added.)

Contentions 17 Tabcorp placed considerable reliance on the fact that the wagering licence conferred on it as licensee (and on Tabcorp Manager Pty Ltd as the wagering operator) an "exclusive legal right to conduct off-course betting in Victoria". As a result, so Tabcorp submitted, any order in favour of the Applicants would, or was likely to have, a corresponding detrimental effect on Tabcorp: News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 at 524-525 and John Alexander's Clubs Ltd v White City Tennis Club Ltd (2010) 266 ALR 462 at [132]. The corresponding detrimental effect on Tabcorp was said to arise from the fact that Tabcorp's exclusive wagering right was inconsistent with Sportsbet's contentions. Inconsistent because if Sportsbet's contentions were accepted, Tabcorp's legal right to exclusivity would of necessity be destroyed, separate and distinct from the commercial consequence that its business would be exposed to competition constituted by Sportsbet's betboxes. Put another way, Tabcorp submitted that the sections of the GR Act which Sportsbet asserts are constitutionally invalid (ss 2.5.2 and 2.6.1) are the very sections which prohibit activities inconsistent with the conferral upon Tabcorp of the exclusive right to conduct wagering. If the sections are invalid, so Tabcorp submitted, the statutory exclusivity which is the essence of Tabcorp's licence would be destroyed. 18 In an affidavit sworn by Tabcorp's solicitor, the "direct effects" on Tabcorp of the relief sought by Sportsbet were described as follows: … the Applicants will be able to install and operate 'betbox' devices in Victoria and thereby establish a physical retail wagering presence within that jurisdiction. This outcome would materially interfere with Tabcorp's position as the sole off-course betting provider in Victoria. In addition, if the Applicants succeed in a contention that there is no justification for the VCGR to seek to enforce offence provisions against interstate licensed bookmakers, in circumstances in which Tabcorp's "retail exclusivity" arising from its wagering licence comprehends only totalisator wagering …, the Applicants and others may be able to take further steps to establish a physical retail wagering presence in Victoria at Tabcorp's expense. … 19 In addition to the direct effect on its exclusive legal right, Tabcorp referred to submissions by the Applicants' Counsel at an earlier directions hearing that even if Tabcorp has an exclusive legal right, that exclusivity is limited to totalisator activities, and does not extend to Tabcorp's other off-course wagering activities, such as its fixed odds betting. Tabcorp rejected that construction of the regulatory regime and its licence terms and submitted that if that submission was maintained, then Tabcorp ought to have been joined as a party on that basis alone because its legal rights were directly affected. 20 Next, Tabcorp submitted that it was a proper and necessary contradictor of many of the factual allegations raised in paragraphs [19]-[29], [35]-[36], [38], [43]-[46] and [51] of the Amended Statement of Claim. Finally, in relation to the first limb of O 6 r 8(1) of the Rules, Tabcorp submitted that despite the form of declaratory relief sought by the Applicants, it was important to recognise that the substance of the Applicants' claim was to seek to have a Court declare that Sportsbet may lawfully compete with Tabcorp. 21 Dealing with the second limb of O 6 r 8(1) of the Rules, Tabcorp submitted that if, contrary to its principal submission, its legal rights were not directly affected, then the same issues were clearly subjacent issues of law and fact sufficient to justify its joinder as a Respondent to the proceeding: see paragraph [19] of HRV cited in paragraph [16] above. 22 Alternatively, Tabcorp sought leave to intervene. It submitted that it has activities, responsibilities, knowledge and experience which the Respondents do not have and which are "outside the boundaries of the State of Victoria". Although Tabcorp properly conceded that there would be a body of information that could and would be passed from Tabcorp to the Respondents, it submitted that it was the party best able to handle that information, particularly where there were confidentiality issues and, by being a party to the proceeding, the process would be far more efficient. 23 The Applicants opposed the orders sought by Tabcorp. First, the Applicants submitted that the existence of the licence in fact granted to Tabcorp under s 4.3.3 of the GR Act (or its predecessor) is not challenged. Secondly, the Applicants submitted that, whatever the limitations of Tabcorp's licence, those matters would be best put by the entity that granted the licence - the VCGR.

ANALYSIS AND CONCLUSION 24 I am not persuaded that Tabcorp ought to be joined as a party to the proceeding. The test to be satisfied under paragraph (a) of O 6 r 8(1) of the Rules is well established - 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 at 523-525; Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2) [2008] FCA 24 at [35]. 25 As in the HRV litigation, Sportsbet's challenge is to the validity of a law of general application. If ss 2.5.2 and 2.6.1 of the GR Act are declared invalid, Sportsbet would be a lawful competitor and would not be prohibited from conducting its wagering activities in the Northern Territory through a betbox located in Victoria. 26 As Mansfield J noted at paragraph [40] - [41] of HRV: 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] HCA 38; (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. The State of Victoria is as well placed as any person or entity to respond to the challenge to the validity of the GR Act. … 27 In the present case, Sportsbet's Amended Statement of Claim raises two principal arguments - whether ss 2.5.2 and 2.6.1 of the GR Act are constitutionally valid and, alternatively, an argument about the proper construction of ss 2.5.2 and 2.6.1 of the GR Act. The addition of Tabcorp would not alter the nature of these questions or make it any more likely that these questions would be resolved one way or the other. 28 Further, and in any event, if Sportsbet succeeds in obtaining the relief it seeks, it is not demonstrated that any effect on Tabcorp will arise directly from any order as to invalidity. The most that is shown is that there would be an indirect and consequential effect. For example, Tabcorp's licence would not be affected by the grant of any of the relief that is sought. That licence would continue to exist. Tabcorp would remain the exclusive holder of the wagering licence in the State of Victoria. The "practical realities" of the grant of relief would be that the rights and liabilities of Tabcorp under the licence are not directly affected: News Limited at 525; Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56. 29 Seen in this light, Tabcorp's application for joinder is an attempt to support the State of Victoria and the VCGR in resisting Sportsbet's claim for relief. That it makes such an application is not surprising. If Sportsbet succeeds, Tabcorp may end up with a competitor. Indeed, if Sportsbet's contentions are upheld, the value of its licence may be affected. However, those effects are an indirect commercial consequence or effect of the relief sought. The legal rights and liabilities of Tabcorp (the existence of its licence and the conditions of that licence) are not directly affected. 30 In Tabcorp's written submissions, it referred to the unreported decision in Telstra Corporation Ltd v Australian Telecommunications Authority, Supreme Court of Victoria, 7 October 1993 (No 2113 of 1993) (Hayne J) as support for the proposition that if Sportsbet's contentions were upheld, then the interference with its off-course business which Tabcorp would suffer was not a "mere commercial interest" and nor was it "divorced from the subject matter". In particular, Tabcorp submitted that its "commercial prejudice [was] the reflection of the direct interference with its legal, statutory right to exclusivity" under Ch 4 of the GR Act - not an indirect consequence divorced from the resolution of subject matters in which it has no stake. 31 A number of things should be noted about this submission. First, the decision in Telstra does not propound any different or lesser test than the test described earlier in these reasons. Hayne J accepts that the question spoken of in r 9.06(b)(ii) of the Rules of the Supreme Court (the equivalent of O 6 r 8(1)) is a legal question rather than a commercial question: page 5. Secondly, Telstra sued the Australian Telecommunications Authority (Austel) for a declaration that it was not dominant within the meaning of the Telecommunications Act 1991 (Cth) (the TA Act)in the market for the supply to the public of public mobile telecommunications services. If Telstra was successful, then certain statutory provisions of the TA Act (ss 183 and 197) did not apply to Telstra's conduct in connection with the supply of those services, practically limiting the ways in which Austel could act under the TA Act when dealing with Telstra. 32 Optus related entities applied to be added as defendants. Hayne J concluded that the outcome of the proceeding was a decision that not only may have affected Optus in its pocket but was a decision that affected Optus' rights under the TA Act. His Honour described it as a "commercial interest … not divorced from the subject matter of the action". Significantly, however, His Honour went on to conclude that the question of Telstra's dominance was a live question between the players in the relevant market and would be decided in a way which did not bind Optus in the action as it was presently constituted. His Honour stated further that he considered that it was just and convenient that the question should be determined in the present action. Those conclusions stemmed, so His Honour said, from the nature of the issues raised in the present action and the nature of the interest Optus had in those issues. 33 As I have said, in the present proceeding, the Applicants raise two principal issues - the constitutional validity and, alternatively, the proper statutory construction of ss 2.5.2 and 2.6.1 of the GR Act - issues of a distinct nature in which Tabcorp has a very different kind of interest. 34 The different nature of Tabcorp's interest in those legal questions is reinforced having regard to the various references to Tabcorp in the Amended Statement of Claim. As Tabcorp emphasised in its written and oral submissions, the Amended Statement of Claim contains extensive references to Tabcorp. Tabcorp did not assert that fact alone justifies its joinder as a party to the litigation. Instead, Tabcorp submitted that those references or allegations could only be made against, and contradicted by, Tabcorp. In my view, it is unnecessary to address each reference. At the outset, the Respondents have not yet pleaded to the allegations. That of itself may not be conclusive. But that is important because it is by no means certain that many, if not most, of the allegations will be disputed by the Respondents. I say that because at the directions hearing on 8 October 2010, Counsel for the Respondents expressed the view that "it … looks like a case in which, potentially, facts could be agreed rather than going through formal categories of discovery and affidavits …". 35 The possibility of there being little dispute about the extensive factual matters also provides some answer to Tabcorp's contention that following the decision of the High Court in Betfair Pty Limited v Western Australia (2008) 234 CLR 418, Tabcorp (as the party alleged to be a beneficiary, if not the sole beneficiary, of legislative protectionism) is in a "unique position" in determining whether ss 2.5.2 and 2.6.1 of the GR Act impose a discriminatory burden on interstate trade that has a protectionist effect on intra-state trade of the same kind and whether that burden cannot be justified on the basis that it is reasonably necessary to deal with legitimate objectives. The fact that Tabcorp is in a "unique position" does not justify its joinder as a Respondent to the proceedings. Its joinder as a party is not necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon. 36 Although I have refused Tabcorp's application to be joined as a party, I have not done so on the basis that there was any delay in making the application. I do consider that its joinder would tend to delay the proceeding - it would be an additional party, seeking to lead evidence and make submissions. There would necessarily be duplication. 37 As noted earlier, pursuant to O 6 r 17(1) of the Rules, I would grant Tabcorp leave to intervene in the proceedings. Subject to such further or other order as may be made, that leave will be limited to making submissions, orally or in writing, on issues not addressed by the First and Second Respondents or otherwise by leave of the Court. These were the same terms on which Mansfield J granted Tabcorp leave to intervene in HRV. 38 A number of additional points should be noted in connection with the intervention aspect of the application. First, after the hearing, Tabcorp formulated draft intervention orders which were extensive and included the right to "make non-duplicative written and oral submissions" and "that Tabcorp be permitted to lead non-duplicative evidence" relating to nine or ten listed matters which included, by way of example, "(iii) the scope and operation of the NT Licence" and "(iv) the scope and operation of the current and historical statutory and regulatory regime governing wagering and betting in Victoria". I accept I have only selected two of the listed matters but they are sufficient to demonstrate the difficulties with Tabcorp's proposal. On its face, Tabcorp has no direct interest or involvement in the scope and operation of the NT Licence - it is a matter of construction of the relevant Act and the Licence. In relation to the second topic, it is by no means apparent how or why the parties to the ligation are not in a position to address that topic. In my view, the effect of the draft intervention orders was to put Tabcorp in a position as if it were a party to the proceeding - a course which I have rejected. 39 Finally, as the proposed order makes clear, the grant of leave to intervene is "in relation to issues not addressed by the Respondents or otherwise by leave of the Court", and is expressly made subject to further or other order. In my view, those terms provide sufficient protection for Tabcorp to address any issue not covered by the Respondents and, if appropriate, to seek the leave of the Court to expand the scope of the intervention in relation to a particular issue of fact or law on proper material. Such a proposal not only protects Tabcorp but will place the Court in a more informed position to assess any application for leave to intervene on a particular issue. To facilitate that outcome, I will direct that Tabcorp is served with a copy of any document that the parties file and serve in the proceedings. Of course, it remains open to any entity, including Tabcorp, to access the Commonwealth Courts Portal which contains a public record of all past and future events in the proceedings, including a copy of any Orders made. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.