Tabcorp Holdings Ltd v Entain Group Pty Ltd

JUDGMENT

1. The plaintiffs, Tabcorp Holdings Ltd and TAB Ltd (together, "Tabcorp"), seek an order for preliminary discovery under Uniform Civil Procedure Rules 2005 (NSW), r 5.3(1), against the defendants, Entain Group Pty Ltd ("Entain") and Australian Hotels Association (NSW) Holdings Pty Ltd and Australian Hotels Association NSW (together, "AHA").
2. There is no dispute about the relevant background. It is described in the submissions of Dr Higgins SC and Mr Lim, who appeared for Tabcorp. What follows, as to that background, is drawn with gratitude from those submissions.
3. Tabcorp conducts a wagering business in New South Wales within a regulatory and licensing context that confers on them, in return for substantial payments to the State, exclusivity in pubs and hotels throughout New South Wales. The second plaintiff ("TAB") is the only entity licensed in New South Wales to provide wagering off-course. Its exclusivity is underpinned by a broad legislative prohibition on the supply of unlicensed gambling and wagering products, including prohibitions on the establishment and operation of "gambling premises". Tabcorp has contractual arrangements with pubs and hotels concerning the distribution of wagering products.
4. Entain is an online bookmaker, not licensed in New South Wales. AHA are related industry bodies which represent some 1,800 pubs and hotels in New South Wales.
5. On 6 October 2022 Entain and AHA announced the signing of a "Groundbreaking New Agreement" in which they were "joining forces to bring digital wagering competition to New South Wales for the first time".
6. The announcement continued: "The long-term agreement will provide an opportunity for Entain Australia to promote its digital wagering brands - Ladbrokes and Neds - in the [S]tate's pubs through a new advertising and sponsorship arrangement."
7. Tabcorp apprehends that the arrangement may constitute more than mere advertising and may operate in a manner that breaches what it sees as being its valuable retail exclusivity.
8. Tabcorp is contemplating commencing proceedings against Entain and/or AHA and contends that whether or not it will do so will depend upon the precise nature of the arrangements the subject of Entain and AHA's 6 October 2022 announcement.
9. Tabcorp contends that despite having made reasonable inquiries, it has insufficient information about the arrangements to decide whether to commence proceedings.
10. For that reason, it seeks preliminary discovery from Entain of the following categories of documents: 1. A copy of any documents constituting, recording or evidencing: a) the agreement the subject of the first defendant's media release entitled "Entain and NSW Hotel Industry Sign Groundbreaking New Agreement" dated 6 October 2022 ("the Entain partnership"); and b) any agreement between the first defendant and any AHA NSW members or other NSW hotel or club in connection with the Entain partnership. 1. All documents constituting, recording or evidencing legal advice that Entain received with respect to the lawfulness of the Entain partnership or the arrangements with NSW venues contemplated by it. 2. All communications that any Entain representative has made or received about the detail of the Entain partnership or its lawfulness, including speaking notes, presentation slides, meeting notes, electronic communications, letters or otherwise, to or from any third party including but not limited to representatives of any of the following (where applicable): a) AHA NSW; b) AHA NSW members or any other NSW hotel or club; c) Liquor & Gaming NSW; d) NSW Government including the Minister for Hospitality & Racing, Members of Parliament, and their advisers; e) NSW racing industry including Racing NSW, Harness Racing NSW and Greyhounds Racing NSW; f) other NSW industry associations including Clubs NSW; or g) other government regulators including the Australian Competition and Consumer Commission. 1. All documents or other materials setting out the details as to how the "Ladbrokes Lounges", "VIP Ladbrokes Activation Zones" or "Neds Club Lounges" or any other Entain location or area will or may be configured and operate in connection with the arrangements contemplated by the Entain partnership, including: a) details of proposed (or options for) physical layout, infrastructure and features, including presence and/or use of any devices; b) incentives or benefits proposed to be offered, through the QR code "pathways to our offers, markets and other customer activations" or otherwise, to customers or venues; and c) the proposed features that will or may be available through "Mates Zones", "Quaddie Quarter" or "VIP Ladbrokes Activation Zones" or any other Entain location or area, including those already mentioned. 1. All documents recording details of the proposed financial arrangements, benefits or incentives (however described) for venues related to the Entain partnership. 2. All documents recording or evidencing: a) any implementation or construction in NSW of a "Ladbrokes Lounge", "VIP Ladbrokes Activation Zones", "Neds Club Lounges" or any other Entain location or area, however described or named; and b) any aspect or provision of the Entain partnership having been acted on, whether with a venue or otherwise (including if any venue with a contractual relationship with the plaintiffs has entered into a contractual relationship with Entain). 1. All documents and information on which Entain relied as providing reasonable grounds for the following statements in the 6 October 2022 media release: a) "Entain Australia CEO Dean Shannon said the new partnership would offer licen[s]ed venues in NSW an exciting new way to promote a choice of Entain digital wagering offerings to their patrons, while at the same time not offending the current NSW retail wagering exclusivity arrangements." b) "NSW pubs which enter into sponsorship arrangements with Entain will not: … do anything else which may offend Tabcorp's retail exclusivity in NSW". 1. All documents that constitute or relate to: a) commercial or financial assessments of the Entain partnership including any business plan documents; b) Entain's commercial or financial modelling and/or projections in respect of the Entain partnership, including for NSW venues; or c) "competition and choice" for NSW venues, including in relation to any aspect of the plaintiffs' retail business in NSW.
11. Tabcorp seeks preliminary discovery from AHA of substantially the same documents, save that the formulation of category (7) is directed to specific statements attributed to AHA.

Decision

1. Entain and AHA should give preliminary discovery of the documents in categories (2), (4) and (7) above, save that in relation to category (4) the word "being" should be substituted for the word "including" at the end of the chapeau.
2. Otherwise, Tabcorp's application should be dismissed.

Tabcorp's retail exclusivity and existing arrangement with venues

1. Under the Unlawful Gambling Act 1998 (NSW) it is illegal to place a bet on horse, harness or greyhound races in New South Wales other than with a licensed bookmaker. [1]
2. Online wagering businesses that conduct business outside New South Wales assert avoidance with this prohibition, arguing that a bet is placed, not in New South Wales where the punter is located, but in a place outside New South Wales where the bookmaker accepts the bet. Thus, punters can and do bet with online bookmakers not licensed in New South Wales using apps on their personal mobile devices.
3. The Unlawful Gambling Act has a range of other prohibitions. It is unlawful for an owner, occupier or operator of premises knowingly to allow the premises to be used as "gambling premises"; [2] or for a person to organise or conduct or assist in organising or conducting any gambling premises. [3]
4. "Gambling premises" includes premises "used for or in connection with" bookmaking not licensed in New South Wales. [4] "Premises" has a very wide meaning including a "part" of a building, "such as a room". [5]
5. A person must not make a "remote access betting facility" available, [6] and must not possess, or permit the use or operation of a "prohibited gaming device". [7]
6. Tabcorp is excepted from these prohibitions by licences under the Totalizator Act 1997 (NSW) for a 99-year period expiring in 2097.
7. During the "exclusivity period", [8] TAB is the sole holder of an Off-Course-Totalizator licence in New South Wales. That exclusivity period has been extended to June 2033 in exchange for a fee of $75 million, [9] of which $50 million was paid upfront.
8. In their submissions Dr Higgins and Mr Lim described Tabcorp's operations as follows: "Tabcorp operates in venues such as pubs and clubs, which provide TAB facilities as part of their entertainment offering, alongside food and beverages. Tabcorp pays commissions to venues and makes capital investments, including in fit out to create a place of betting within a venue. Tabcorp's operations in venues account for a substantial proportion of Tabcorp's revenue. The operations can, but do not necessarily, involve human operators. Some Tabcorp venues rely solely on electronic betting terminals, or customers using their personal mobile devices in 'Venue Mode' - a digital retail setup which links a customer's physical location in a venue with their personal mobile device / TAB account. Tabcorp has distribution agreements with venues which mostly prohibit the venue from engaging in other wagering business." (Footnotes omitted.)

The Entain partnership with AHA

1. I have referred to Entain and AHA's announcement made on 6 October 2022.
2. The media release also stated: (a) "Today's partnership with a world leader in Entain will finally give NSW hotels competition and choice"; (b) "Entain Australia CEO Dean Shannon said the new partnership would offer licen[s]ed venues in NSW an exciting new way to promote a choice of Entain digital wagering offerings to their patrons, while at the same time not offending the current NSW retail wagering exclusivity arrangements"; (c) "This partnership recognises that evolution and is about offering choice for the benefit of AHA NSW members and their patrons. There is no reason why traditional cash wagering can't co-exist in a hotel, alongside an advertising sponsorship arrangement with Entain that promotes the digital offering of one of our leading brands"; (d) "NSW pubs which decide to enter into sponsorship arrangements with Entain will display in-venue advertising for Ladbrokes or Neds promoting their digital wagering platforms"; (e) "NSW hotels will continue to operate Tabcorp's retail wagering in their venues"; (f) "NSW pubs which enter into sponsorship arrangements with Entain will not: • install or operate any physical Entain wagering facilities • receive any commission from Entain for any bets placed • have staff operating Entain wagering terminals eg portable iPads or phones • have staff accepting bets from hotel patrons on behalf of Entain • advertise to the general public on the exterior of their hotel • do anything else which may offend Tabcorp's retail exclusivity in NSW." (Underlined emphasis in original; italicised emphasis added.)
3. Dr Higgins and Mr Lim summarised the Entain partnership with AHA as follows: "The Entain Partnership with AHA NSW was announced on 6 October 2022 as a 'long term agreement' which 'will provide an opportunity for Entain Australia to promote its digital wagering brands … in the [S]tate's pubs'. Entain has asserted that the arrangement will 'not offend the current NSW retail wagering exclusivity arrangements'. Entain asserts that it is merely publishing betting information and advertisements relating to its gambling operations or services in NSW. It has informed venues that they are 'likely' to need to amend or terminate their contractual relationship with Tabcorp before they can deal with Entain, and AHA NSW will assist venues to do so. When this proceeding was commenced, Entain was ready to start taking expressions of interest, and venues had contacted Tabcorp about possible agreements with Entain. One venue has recently confirmed such an agreement. Entain has published a video about the proposed arrangements, which gives some indication of the extent of Entain's proposed intervention into pubs and hotel premises in NSW. It appears that Entain seeks to establish, inside those premises, dedicated 'lounges' or 'zones' where patrons will bet with Entain. Entain has separately described its intention to 'create dedicated experience zones for customers of Entain's brands', as well as 'exclusive offers for coming into venue'." (Emphasis added; footnotes omitted.)
4. Again, there is no dispute about this.
5. A fundamental distinction Entain and AHA are evidently seeking to draw between their proposal and Tabcorp's current operations is that the Entain/AHA proposal is for digital wagering only, that is wagering using personal devices such as iPhones or iPads and placing bets with Entain entities outside New South Wales (such as Ladbrokes and Neds); whereas Tabcorp's exclusive entitlements concern cash wagering.

The proposed causes of action

1. Tabcorp contends that it may have two causes of action against Entain and AHA.
2. The first is that Entain and AHA may have engaged in misleading or deceptive conduct for the purposes of s 18 of the Australian Consumer Law, [10] by representing to venues that the effect of the proposed arrangements is not to offend Tabcorp's retail exclusivity and is legal.
3. These representations are said to be potentially untrue by reason of the proposed arrangements being in contravention of the Unlawful Gambling Act.
4. The second is that Entain and AHA may have engaged in the tort of conspiracy to injure by unlawful means.
5. In that regard, there is no dispute that: 1. the tort is committed by parties who agree to commit an unlawful act, with the intention of causing the plaintiff harm; [11] 2. the unlawful act need not itself be tortious; [12] 3. the requisite intention to harm the plaintiff need not be the primary or predominant purpose of the agreement; [13] 4. it is sufficient if one of the purposes of the agreement is to injure the plaintiff; and 5. an intention to injure the plaintiff can be established by inference if the actions are directed to the plaintiff and will necessarily occasion harm, [14] or where harm is reasonably foreseeable to a confined class of plaintiffs at whom the actions were directed. [15]
6. The "unlawful" act here is said to be a contravention of the Unlawful Gambling Act.
7. As Mr Herzfeld SC and Mr Jones, who appeared for Entain, submitted, both mooted causes of action essentially raise the same central question; whether the proposal, if implemented at a venue, would contravene the Unlawful Gambling Act.

Principles and issues

1. Uniform Civil Procedure Rules r 5.3(1) provides: "(1) If it appears to the court that - (a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief." (Emphasis in original.)
2. To order preliminary discovery against a prospective defendant, all five of the circumstances set out in UCPR r 5.3(1) must exist: 1. the applicant may be entitled to make a claim for relief against the prospective defendant; 2. the applicant has made reasonable inquiries to obtain sufficient information to decide whether or not to commence proceedings; 3. having made those inquiries, the applicant is unable to obtain sufficient information to make that decision; 4. the prospective defendant may have or have had possession of a document or thing that could assist in determining whether the applicant is entitled to make a claim for relief; and 5. inspection of such a document would assist the applicant to make the decision (that is, the decision whether or not to commence proceedings). [16]
3. Before me, there was no dispute about circumstances (ii) and (iv); that is, whether Tabcorp has made reasonable inquiries or whether Entain and AHA may have possession of relevant documents.
4. There was also no significant dispute as to whether Tabcorp may be entitled to the claim for misleading or deceptive conduct to which I have referred, it being well established that it is not necessary that a party in Tabcorp's position establish "even a prima facie case for relief". [17] All that Tabcorp must establish is that it "appears to the Court" that it "may be entitled to make a claim for relief". [18]
5. There is a dispute as to whether Tabcorp may be entitled to make the claim for unlawful conspiracy, it being submitted by both Entain and AHA that it is a matter of speculation as to whether Tabcorp can establish the requisite intention on the part of either Entain or AHA.
6. I also did not understand there to be any serious dispute that documents in Entain's or AHA's possession may be relevant to Tabcorp's decision to commence proceedings or as to the likely success of any such proceedings for the purpose of circumstance (v) at [35] above.
7. The parties' submissions focused on circumstance (iii) at [35] above, namely, whether Tabcorp already has sufficient information to decide whether to bring proceedings against Entain and AHA.
8. The question is whether Tabcorp has sufficient information to decide whether to commence proceedings; not whether Entain and AHA have documents which may assist to build up a case which Tabcorp could now decide to bring. [19]
9. The question of whether Tabcorp has "sufficient" information to make a decision to commence proceedings is not confined to whether or not it has an apparently arguable case to commence proceedings but also permits some consideration of Tabcorp's prospects of success, at least to the extent of exploring potentially available defences. [20]
10. In Morton v Nylex Ltd, [21] White J (as his Honour then was) put the matter this way: "The third requirement of r 5.3(1)(a) requires an objective assessment of the information already possessed by the plaintiffs to determine whether that information is sufficient for such a decision to be made. The question is whether the applicant has insufficient information to be able to decide whether to institute proceedings; not merely to establish a cause of action. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action. However, unless the applicant is lacking something reasonably necessary to make a decision whether to institute proceedings, he or she is not entitled to preliminary discovery". [22] (Emphasis added.)
11. As Dr Higgins accepted, the question is whether Tabcorp already has sufficient information to decide "whether to commence, not what to commence" such that if Tabcorp has sufficient information to commence proceedings for misleading or deceptive conduct, it does not matter whether it also has sufficient information to commence proceedings for unlawful conspiracy.
12. Thus, in substance, the question comes down to whether Tabcorp now has sufficient information to commence proceedings against Entain and AHA alleging that their proposal will, if implemented at a venue, create "gambling premises" and thereby contravene the Unlawful Gambling Act.

What does Tabcorp know?

1. Tabcorp knows a good deal about the proposed arrangements by reason of the public statements made by Entain and AHA.
2. Both Entain and AHA have made statements directed to the question of whether the proposed arrangements are lawful.
3. As I have set out above, in its announcement on 6 October 2022, Entain stated that the proposed arrangements would not do anything to "offend Tabcorp's retail exclusivity" in New South Wales. In effect, this was a statement that the proposal would not involve Entain or the AHA members engaging in any activity contrary to the Unlawful Gambling Act.
4. Tabcorp's Chief Legal and Risk Officer, Mr John Fitzgerald, gave indirect evidence that, at an AHA meeting, an AHA representative, in response to a question as to whether "the Entain proposal was legal", answered: "Yes, we have sought legal advice and it is 100% legal."
5. Mr Fitzgerald gave that evidence on the basis of what Tabcorp's Chief Operating Officer, Mr Paul Carew, had told Mr Fitzgerald that he (that is, Mr Carew) had been informed had been stated at the meeting. The evidence is thus indeed indirect. It is, however, consistent with a statement made by AHA in a formal letter to Tabcorp on 19 October 2022: "Please be assured that it remains our position, as previously stated both to Tabcorp and publicly, that AHA NSW is committed to supporting Tabcorp's exclusive and long-term retail wagering licence in NSW hotels. It also remains our position that none of the arrangements as announced by AHA NSW and Entain do anything to undermine Tabcorp's retail exclusivity, nor are they in contravention of any laws, including the Unlawful Gambling Act." (Emphasis added.)
6. That publicly available information has enabled Mr Fitzgerald to say, on information and belief from Mr Carew, that the proposed arrangements "appear to create the 'look and feel' of a wagering venue or gambling premises and that they are designed to encourage punters to come together at that venue for wagering purposes".
7. The features of the proposed arrangements that evidently led to Mr Carew's opinion included: 1. a statement in a video on the Entain website that "big bet ticker" tapes and television screens will be placed above the bar and positioned such that "sport and racing are visible from every angle"; 2. a statement on an Entain slide presentation entitled "Creating choice for NSW Hotels" that there will be "Big Screen Vision with integrated Advertising Panels" and a "market leading tipping and marketing platform"; 3. a statement on the video referred to at (a) that "Ladbrokes QR codes bring to life the experience for your customers, with pathways to our offers, markets and other customer activations"; 4. statements on the same video that there will be "unique mate zones activated around key events, bringing the best seats in the house to your Ladbrokes or Neds customers" and that "in these "Ladbrokes Lounge Mates Zone and Quaddie Quarter are dedicated theme zones customised for the legends that book them"; 5. a statement on the slide presentation referred to at (b) to "the ability to customise content, offers, etc to the particular venue, including through geolocation and push marketing 'to drive visitation back to venue'"; 6. statements in the Entain and AHA public announcements that the proposed arrangements will give New South Wales hotels "competition and choice" to the TAB for the first time suggesting, in Mr Fitzgerald's opinion, "that the new 'choice' being promoted is the ability to attend an alternative off-course venue within New South Wales with Ladbrokes, with associated customisable offers and incentives"; and 7. statements reportedly made at an AHA NSW meeting to there being "additional $5k for venues that reach $1.2m turnover over a year" which Mr Fitzgerald opined appeared to show a link between payments to be made to New South Wales venues and wagering turnover that may have the character of the commission.
8. In that context, Mr Fitzgerald said: "My concern that the Entain partnership is unlawful arises from the apparent intention to create 'gambling premises' within venues. That appears from the publicly available materials … and the information from Mr Carew to which I have referred. However, I believe that the publicly available materials are unlikely to give a full picture of what the Entain partnership is in fact intended to involve."
9. Dr Higgins and Mr Lim submitted: "There is a sufficient basis to apprehend that the arrangements may contravene the [Unlawful Gambling Act], and thus that the defendants' representations were misleading or deceptive. The breadth of the definition of 'gambling premises' means that the establishment of dedicated zones, branded by an unlicensed bookmaker, and intended to physically attract punters for the purpose of placing bets with the unlicensed bookmaker, may constitute the establishment of premises 'used for or in connection with' bookmaking not licensed in New South Wales. It is not properly to be characterised as mere advertising".

What Tabcorp contends that it does not know

1. Tabcorp's submissions focused on the question of whether the proposed arrangements will result in the creation of "gambling premises" within New South Wales pubs and hotels, contrary to the Unlawful Gambling Act.

The factual detail of what is proposed

1. Mr Fitzgerald deposed that the publicly available information is "unlikely to give a full picture" of what the proposed arrangement will involve. Mr Fitzgerald said that, before deciding whether to commence proceedings, Tabcorp required "a fuller understanding of what facilities, infrastructure or the like, Entain proposes to implement within venues"; including the "look and feel" of the arrangements and details of the devices and related apparatus Entain proposes to provide to support betting services.
2. Mr Fitzgerald deposed matters "relevant to the lawfulness of the proposed arrangements" would include features set out at [52] above and also: 1. "aspects of the Entain offer which involve devices which are to be used primarily or exclusively for betting on any event or contingency or for facilitating betting on any event or contingency, such as mobile phone charging stations, specific Entain wi-fi or wi-fi equipment, interactive form guides, sign-up stations, TVs and other displays, powerpoints or other furnishings"; and 2. "any operation, maintenance or cleaning of the premises or devices mentioned above by Entain".
3. In oral submissions, Dr Higgins said that what Tabcorp lacked was the "factual detail of [the] proposal, what the presence would look like, what functionality would be involved, how the WiFi would be branded" and the "rules of venues".
4. Dr Higgins pointed to the detail adduced by CrownBet Pty Ltd in its unsuccessful application for a declaration that its proposed "Digital Wagering Advertising Solution" would not contravene the Unlawful Gambling Act in CrownBet Pty Ltd v State of New South Wales. [23]
5. As Mr Herzfeld pointed out, the question in that case, that is whether CrownBet should obtain declaratory relief that its proposal would not contravene the Unlawful Gambling Act, is different from the question here, which is whether Tabcorp now has sufficient information to decide whether to commence proceedings against Entain and AHA alleging, in substance, that the proposal will contravene the Unlawful Gambling Act.
6. However, I see substance in Dr Higgins' submission that, at the end of the day, the question of whether the proposed arrangements will result in the establishment of "gambling premises" in contravention of the Unlawful Gambling Act may well depend on matters of fine detail. Accordingly, the lack of knowledge of that fine detail may well be "something reasonably necessary to make a decision" [24] in order for Tabcorp to commence proceedings making the very serious allegation that Entain and AHA are engaging in an illegal activity.
7. As Dr Higgins pointed out, a decision to commence proceedings making such a serious allegation is not only a commercial matter, but one involving careful and responsible professional judgment.

Will Entain be paying hotels a commission?

1. As I have set out above, Entain has stated publicly that hotels and pubs participating in the proposed arrangements will not receive any commission from Entain for bets placed. [25]
2. Entain has announced that a part of the proposed arrangements will be a "Commission Boost" of up to $10,000 per annum. The "Commission Boost" is described as an: "annual payment providing a commission offset where the current cost to provide racing vision, hardware and consumables for your cash wagering service are in excess of the commission paid by TAB."
3. Dr Higgins submitted that: "[A] characterisation of premises as gambling premises may depend on the conduct of the occupier which in turn may be influenced by the incentive for the occupier to grow or enhance Entain's operations."
4. Dr Higgins submitted that "even on the limited materials we possess" the statement concerning the "Commission Boost" show that it "appears" that Entain's statement that it will not be paying any commission is not correct and that "it looks a lot like a commission, but candidly we don't know".
5. Entain's statement about the "Commission Boost" suggests that it is some kind of "top-up" to compensate hotels and pubs for any shortfall between the cost of maintaining "racing vision, hardware and consumables" and the amount of commission received by the pubs and hotels from Tabcorp or TAB.
6. Whether or not any such arrangement would amount to the payment by Entain to the pubs and hotels of a commission is not a matter for me to determine on this application.
7. However, the gist of the proposed arrangements appears to me to be clear enough from Entain's public statements, despite the use of the word "offset" in Entain's description of the arrangements. I do not see what further information Tabcorp would reasonably require at this stage to make a decision about whether to commence proceedings against Entain and AHA on the basis of this aspect of the proposed arrangements.

Will Entain be providing wagering facilities?

1. Entain has announced that it will not "install or operate any physical Entain wagering facilities" nor "have staff operating Entain wagering terminals eg portable iPads or phones". [26]
2. Dr Higgins submitted that it was unclear what this statement meant and pointed to what she described as "market speak" such as the reference in Entain's public announcements to "pathways to our offers, markets and other customer activations".
3. Again, this focuses on the fine detail of what Entain and AHA are proposing.

Likely financial impact on Tabcorp

1. In written and oral submissions, Tabcorp emphasised the potential loss it might suffer were the Entain/AHA proposal to proceed.
2. Thus, under the heading "Urgency", Mr Fitzgerald deposed: "The implementation of the proposed arrangements may have the immediate effect of attracting customers to Entain. Tabcorp has invested significantly by way of the NSW Exclusivity Deed in its exclusivity in NSW and in the capital and operating investment in the equipment it has placed in and resources dedicated to venues … and that investment may be undermined as soon as partnerships with venues are implemented. Many venues and customers will be potentially affected by the implementation of the proposed arrangements under the Entain Partnership. I am informed by Mr Carew and believe that: (a) if Entain is physically present in NSW venues where TAB otherwise operates, it will attract customers away from Tabcorp and divert the revenue that would otherwise have been received by virtue of Tabcorp's exclusivity and once customers are signed up to Entain as a result of the Entain partnership arrangements, they will be less inclined to bet with TAB on an ongoing basis; (b) as a result of its exclusivity under the NSW Exclusivity Deed and TAB's Licences and Approvals and ability to physically operate within NSW venues, Tabcorp attracts customers to its business. Tabcorp's exclusivity is a fundamental aspect of that business. When a patron enters a NSW venue, Tabcorp's physical presence in that venue, and ability to operate in 'Venue Mode', is a way that Tabcorp grows its customer base. Once Tabcorp loses the business based on its exclusivity it may be difficult to recapture it. It is of great concern to Tabcorp that its business may be lost due to Entain's potentially unlawful arrangements and that lost business will manifest as soon as Entain's proposals with NSW venues are implemented; (c) if Entain enters into agreements with licensed venues, this will affect the relationship TAB has with those venues, for example, whether TAB will continue to operate in that venue, and its willingness to invest in that venue. This situation is unclear while the status of the steps to be taken by Entain, and the legality of those steps, is undetermined; and (d) if Entain enters into agreements with licensed venues with which TAB does not have a relationship, this will affect whether TAB seeks to operate in that venue, and its willingness to invest in that venue. Again, this situation is unclear while the status of the steps to be taken by Entain, and the legality of those steps, is undetermined. As far as I am aware, no damages have yet crystallised for Tabcorp. However, upon the implementation of Entain's proposals damages may immediately crystalise. The quantification of those damages would be difficult and costly to calculate."
3. Mr Fitzgerald also gave this evidence concerning Tabcorp's turnover: "Tabcorp's business operations within NSW retail venues is significant. Tabcorp's total retail turnover nationally in the 2022 financial year was around $4 billion across 4,000 venues, with hotels representing 2,500 of these venues, with 43% of hotels being located in NSW. Within NSW, hotels contribute around 56% of Tabcorp's total retail turnover and around 60% of Tabcorp's digital in venue turnover. Tabcorp pays around $25 million annually to NSW hotels by way of commissions. Tabcorp has significantly invested, and continues to invest in these venues through capital contributions and dedicated teams of employees."
4. Tabcorp's public statements make clear that Tabcorp is aware of the potential impact on its business by digital wagering operators such as Entain. Thus, in its 2022 Annual Report, Tabcorp referred to the risk of "disruption or decline of licensed venues, agencies and retail network" by, amongst other things, "changes in consumer behaviour", and described as a "key assumption on which management has based its recoverable amount estimates": "… the Group's exclusive retail wagering licen[c]es held are assumed to be retained. The wagering business competes with bookmakers and other interstate and international wagering operators who accept bets over the phone and the internet. There is a possibility that competition from interstate and international operators may extend further to the Group's retail wagering network in the future."
5. Thus, as Mr Herzfeld submitted: " … we are not in a case of a party who needs preliminary discovery to discover the actual profits made by someone else with a view to bringing an account of profits claim and they want to know whether the amount of potential recovery makes the litigation worthwhile. This is not a case where Tabcorp needs information about quantum to know whether the game is worth the candle. It plainly is."
6. I see substance in that submission, although it does not necessarily follow that Tabcorp has already decided, by reason of the amount potentially at stake, to commence proceedings against Entain and AHA come what may.
7. However, what this material does show is that it is not likely that any documents in Entain's or AHA's possession relevant to the likely financial success of the Entain proposal will make any significant difference to Tabcorp's decision whether to commence proceedings.

Practice Note SC Eq 11

1. A suggestion was made on behalf of Entain and AHA that a factor relevant to whether I should order preliminary discovery are the strictures laid down in Practice Note SC Eq 11 against disclosure before evidence in the absence of exceptional circumstances.
2. In my opinion, those strictures have no role to play in relation to an application for preliminary discovery. As McDougall J said in Pioneer Energy Holdings v Seth, [27] UCPR r 5.3(1) and the Practice Note "look at entirely different situations" and have fields of operation that are "entirely separate". [28] And in Dellara Pty Limited (subject to a deed of company arrangement) (receiver appointed) v Geoffrey Philip Reidy in his capacity as deed administrator of Dellara Pty Limited, [29] Brereton J said that the Practice Note "does not apply" to an application for preliminary discovery. [30]

The categories of documents sought

1. I turn now to the eight categories of documents sought by Tabcorp by way of preliminary discovery.
2. I am persuaded to allow preliminary discovery of documents in categories (2) and (4) (with one alteration to which I will return) and (7) but not in relation to categories (1), (3), (5), (6) or (8).
3. Category (2) seeks documents recording legal advice Entain or AHA have received concerning the lawfulness of the proposed arrangements.
4. As I have set out above, [31] Entain has contended publicly that the proposal will not offend Tabcorp's retail exclusivity and thus, in effect, that it will not contravene the Unlawful Gambling Act and AHA has contended, publicly, and in correspondence with Tabcorp, that the proposed arrangements are "100% legal" and not in contravention of the Unlawful Gambling Act. [32]
5. AHA is also reported to have stated that it has obtained legal advice about that question. [33]
6. Whether or not Entain and AHA have received legal advice to the effect that the proposed arrangements do not contravene the Unlawful Gambling Act is a matter that would be relevant, perhaps decisively so, to the question of whether Entain and AHA had reasonable grounds to assert such a proposition.
7. I am persuaded that Tabcorp cannot reasonably decide whether to commence proceedings alleging that Entain and AHA have engaged in misleading or deceptive conduct by reason of the statements to which I have referred at [85] and [86] above without discovery of the documents in category (2).
8. Of course, documents containing legal advice would, on the face of it, be privileged and whether or not Tabcorp will be able to inspect the documents so discovered will depend on whether the public statements that Entain and AHA have made about these matters constitute a waiver of privilege in relation to any advice so sought. I express no view about that.
9. Argument about such matters can follow discovery.
10. Category (7) seeks documents upon which Entain and AHA relied, that is actually relied, as providing reasonable grounds for making the identified statements. For the same reasons as informed my conclusion concerning category (2), I am persuaded that Tabcorp could not reasonably be able to decide to commence proceedings alleging such misleading or deceptive conduct without disclosure of such documents.
11. As to category (4), the documents sought go to what Dr Higgins described as the "granular detail" of the proposed arrangements, where such detail is, for the reason I have explained, relevant to the question of whether the proposed arrangements do constitute the establishment of "gambling premises" for the purposes of the Unlawful Gambling Act.
12. I am persuaded that Tabcorp has established that it reasonably requires access to such documents in order to decide whether to commence proceedings.
13. I propose to alter the proposed category in one respect, by deleting the word "including" at the end of the chapeau to the clause and substituting the word "being".
14. I am not persuaded that Tabcorp has established an entitlement to preliminary discovery of the other document categories sought.
15. Categories (1) and (6) go to the same general topic as is the subject of category (4). Disclosure of documents in category (4) is, in my opinion, sufficient to enable Tabcorp to decide whether to commence proceedings based on the "granular detail" point.
16. Category (3), in substance, goes to the issue covered by categories (2) and (7). My conclusion is that the disclosure of documents in categories (2) and (7) is sufficient to enable Tabcorp to decide whether to commence proceedings for misleading or deceptive conduct.
17. Category (5), in substance, goes to the "Commission Boost" point that I have dealt with above, and about which I have concluded Tabcorp has sufficient information to make a decision whether or not to commence proceedings. [34]
18. Category (8) goes to the likely financial impact of the Entain and AHA proposal on Tabcorp, being a further matter about which, for the reasons I have explained, [35] Tabcorp presently has sufficient information.

Conclusion

1. The parties should bring in short minutes to give effect to these reasons.
2. If there is to be a dispute about costs, the parties should confer and agree on a timetable for brief written submissions. I will decide that question on the papers.

Endnotes

1. Sections 8 and 9, read with s 4 of the Betting and Racing Act 1998 (NSW).
2. Sections 31 and 32.
3. Section 33.
4. Section 4.
5. Ibid.
6. Section 11A.
7. Section 15.
8. Defined in s 11 of the Totalizator Act.
9. Section 17AA.
10. Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, s 18.
11. Fatimi Pty Ltd v Bryant & 2 Ors (2004) 59 NSWLR 678; [2004] NSWCA 140 at [13]-[17] (Handley JA; McColl JA agreeing).
12. Ibid at [27].
13. Andrianakis v Uber Technologies (Ruling No 1) [2019] VSC 850 at [98] (Macaulay J).
14. Fatimi Pty Ltd v Bryant & 2 Ors (supra) at [13]-[17].
15. Uber Australia Pty Ltd v Andrianakis (2020) 61 VR 580; [2020] VSCA 186 at [31]-[34] (Niall, Hargrave and Emerton JJA).
16. O'Connor v O'Connor [2018] NSWCA 214 at [21] (Simpson AJA, McColl and Macfarlan JJA agreeing).
17. Ibid at [30].
18. Ibid at [28].
19. The Pharmacy Guild of Australia v Ramsay Health Care Ltd [2019] NSWSC 1045 at [251] (Ward CJ in Eq (as her Honour then was)), and the authorities cited therein.
20. Hatfield v TCN Channel Nine Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 at [51] (McColl JA); Papaconstuntinos v Holmes a Court & Anor [2006] NSWSC 945 at [16]-[17] (Simpson J); Pioneer Energy Holdings v Seth [2014] NSWSC 492 at [34]-[36] (McDougall J).
21. [2007] NSWSC 562.
22. Ibid at [33].
23. [2017] NSWSC 1470.
24. See [43] above.
25. See [23(f)] above.
26. See [21(f)] above.
27. [2014] NSWSC 492 (supra).
28. Ibid at [60].
29. [2015] NSWSC 2044.
30. Ibid at [19].
31. See [23(f)], [50].
32. See [49] above.
33. See [49] above.
34. At [63]-[69].
35. At [76]-[79]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 March 2023