Betfair Pty Limited v Racing New South Wales (No 1) [2009] FCA 111 (19 February 2009)

Last Updated: 23 February 2009

FEDERAL COURT OF AUSTRALIA

Betfair Pty Limited v Racing New South Wales (No 1) [2009] FCA 111

BETFAIR PTY LIMITED v RACING NEW SOUTH WALES, HARNESS RACING NEW SOUTH WALES and ATTORNEY GENERAL FOR THE STATE OF NEW SOUTH WALES
NSD 1566 of 2008

PERRAM J
19 FEBRUARY 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1566 of 2008

BETWEEN:

BETFAIR PTY LIMITED Applicant

AND:	RACING NEW SOUTH WALES First Respondent HARNESS RACING NEW SOUTH WALES Second Respondent ATTORNEY GENERAL FOR NEW SOUTH WALES Intervener

JUDGE:	PERRAM J
DATE OF ORDER:	19 FEBRUARY 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The words ‘purports to’ be struck out of paragraph 64 of the statement of claim.
2. The balance of the motion be dismissed.
3. The proceeding be listed for further directions at 9.30 am on 24 February 2009.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1566 of 2008

BETWEEN:

BETFAIR PTY LIMITED Applicant

AND:	RACING NEW SOUTH WALES First Respondent HARNESS RACING NEW SOUTH WALES Second Respondent ATTORNEY GENERAL FOR NEW SOUTH WALES Intervener

JUDGE:	PERRAM J
DATE:	19 FEBRUARY 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. By an amended notice of motion the respondents, Racing New South Wales (“RNSW”) and Harness Racing New South Wales (“HRNSW”), seek to have the applicant (“Betfair”) provide further particulars of its statement of claim (“the pleading”). Alternatively, they seek to have portions of the pleading struck out.
2. To understand the issues which arise it is necessary to say something by way of background. Betfair conducts a “betting exchange” from Tasmania under the terms of a licence issued pursuant to the Gaming Control Act 1993 (Tas). The operator of a betting exchange does not take bets or have a stake in the outcome of a future and uncertain event. Instead, such an operator provides a medium whereby gamblers may bet against each other. The operator of such an exchange derives profit not from the betting (in which it is not directly involved) but rather from commission charged on the winnings of successful punters.
3. Betting exchanges are not limited in their operation to the racing of horses. It is, however, only in the context of horse racing that the present issue arises.
4. As a matter of practicality those who wish to offer betting services in relation to horse races need to know which horses are running and in which race. This information is known as race field information. In order for Betfair to operate its betting exchange on horse races run in New South Wales it needs to obtain and publish that information.
5. In New South Wales, however, it is apparently a criminal offence for a “wagering operator” to “use NSW race field information” unless that operator holds an approval to do so or is otherwise authorised by the regulations to do so: s 33 of the Racing Administration Act 1998 (NSW) (“the Act”). Betfair is a “wagering operator”. There are a number of unusual features of this law which should not pass without mention.
6. First, the expression “use NSW race field information” is defined in s 32A to include the publication or communication of such information by a person “whether in Australia or elsewhere”. Thus the Parliament of New South Wales has created a criminal offence of extra-territorial operation. Its power to do so is undoubted provided there is some nexus with New South Wales which, in this case, is clearly provided both by the racing and the horses themselves: s 2(1) of the Australia Act 1986 (Cth); Union Steamship Co of Australia Pty Ltd v King [1988] HCA 55; (1988) 166 CLR 1 at 14. Secondly, the offence is not trivial. For an individual the maximum penalty is 12 months imprisonment or a fine of 50 penalty units ($5,500) for a first offence. Thirdly, an approval issued pursuant to s 33 is granted by a “relevant racing control body” (s 33A), an expression defined in s 27 to mean RNSW, HRNSW or Greyhound Racing New South Wales.
7. RNSW is a body corporate established by s 4 of the Thoroughbred Racing Act 1996 (NSW). Section 5 of that Act provides:

Racing NSW does not represent the Crown and is not subject to direction or control by or on behalf of the Government.

Equivalent provisions under the Harness Racing Act 2002 (NSW) establish the same position in relation to HRNSW. The apparent independence of these entities from the State is de jure and need not be de facto. In the case of RNSW, this is so because the Minister appoints both the members and Chief Executive of RNSW from a list of nominees put forward by the “Selection Panel”. The Selection Panel, however, is established by the Minister: s 7. Nevertheless, as a matter of form, the licensing process is put in the hands of an organisation not under Crown control.

8. This is not the first time the operation of betting exchanges has been subject to the criminal law. Previous Western Australian legislation underpinning a ban on the publication of race field information for races held in that State was held by the High Court to infringe s 92 of the Constitution: Betfair Pty Limited v State of Western Australia [2008] HCA 11; (2008) 234 CLR 418. The Western Australian law contained, as the NSW law does, provisions enabling the grant of a licence to operate a betting exchange. However, the long title to the relevant law included the statement that the purpose of the law was “to prohibit betting through, and the establishment and operation of, betting exchanges”. Betfair’s application for a licence was refused by the Minister for reasons including the regulatory policy of the WA Act: 234 CLR 471 [74]. The High Court concluded that the ability to grant a licence did not, in that circumstance, avert a breach of s 92.
9. Section 33A of the Racing Administration Act 1998 (NSW) permits the grant of an approval to use NSW race field information subject to conditions. By reason of s 33A(2)(a) it is permissible to include a condition that the holder of the approval pay a fee. Clause 16 of the Racing Administration Regulation 2005 (NSW) (“the Regulation”) provided at the relevant time:

(1) A relevant racing control body may impose a condition on an approval (in addition to any other condition relating to fees) that the holder of the approval must pay a fee to cover the cost of assessing the application for the approval.
(2) A relevant racing control body may impose a condition on an approval that the holder of the approval must pay the following fees:

(a) in relation to a publication in Australia of a NSW race field made in the course of the wagering operations of a licensed wagering operator – a fee that does not exceed 1.5% of the holder’s wagering turnover that relates to the race (or class or races) covered by the approval,

(b) in relation to any other publication of a NSW race field – a fee determined by the relevant racing control body.

10. In July 2008, RNSW issued standard conditions permitting, as cl 16(2)(a) contemplated, the imposition of a fee calculated by reference to 1.5% of the holder’s wagering turnover. On 15 August 2008 RNSW issued an approval to Betfair to use NSW race field information. By reason of the standard condition just referred to that approval was subject to a condition that Betfair pay 1.5% of its assessable turnover to RNSW. A similar situation obtains in respect of HRNSW.
11. It is to be emphasised that Betfair’s income does not derive from the betting turnover on its exchange but instead on the commission due to it on successful punters’ winnings. In this regard it differs from the position of the off-course totalizator conducted by TAB Ltd (“the TAB”). This is because, in the case of a totalizator, bets are collected from punters and pooled. An amount is then deducted from the pool for the totalizator and the balance is distributed amongst the winning bets. It will be seen that under such an arrangement the profits of the totalizator are a linear function of the total value of all bets placed. On the other hand, the commission earned by a betting exchange is a function of the value of the proceeds of the winning bets.
12. At a very general level this is Betfair’s complaint. It says that the imposition of a fee based on betting turnover has a greater impact on its income than it does on the income of the TAB so that the fee operates to protect the TAB from interstate competition thereby infringing s 92 of the Constitution.
13. There are three issues that arise:

(1) whether the words “purports to” should be struck out of paragraph 64;

(2) whether paragraph 102 should be struck out; and

(3) whether the particulars provided for paragraph 102 are insufficient to support it so that it should be struck out on this separate basis.

First issue: paragraph 64 and the words “purports to”

14. Betfair does not challenge the validity of cl 16(2) of the Regulation or s 33A of the Act. Instead, its application in this Court seeks a declaration in the following terms:

... that the approval by the first respondent to the applicant dated 15 August 2008 to publish New South Wales thoroughbred race fields (Racing NSW Approval) subject to a condition that the applicant pay a fee of 1.5% of the applicant’s Net Assessable Turnover (RNSW Turnover Fee Condition) is invalid in that it is contrary to s 92 of the Constitution;

15. What is attacked therefore is not the statutory rule authorising the executive action of issuing the approval subject to the condition but rather the executive action itself.
16. Paragraph 64 of the statement of claim alleges:

Subclause 16(2) of the RA Regulations purports to permit a relevant racing control body to impose a condition on a race field publication approval granted to a wagering operator that the holder of an approval who publishes a NSW race field in the course of its wagering operations must pay a fee that does not exceed 1.5% of the wagering turnover that relates to the race or class of races covered by the approval.
(Emphasis added.)

17. The respondents submit that the words “purports to” should be struck out because they imply that cl 16(2) of the Regulation is not valid. They emphasise that Betfair’s challenge is to the exercise by RNSW of the statutory power regulated by cl 16(2) and not to the validity of cl 16(2) itself. Betfair, on the other hand, submits that cl 16(2), despite the breadth of paragraph 64, only permits the imposition of a fee which complies with s 92 of the Constitution and that was all that was sought to be captured by the words “purports to”.
18. This issue is more important than may appear at first glance. There is a passage in Cole v Whitfield [1988] HCA 18; (1988) 165 CLR 360 at 408 which suggests that a relevant inquiry in this area includes a determination of the “real object” of the law in question. If Betfair’s challenge were to the validity of cl 16(2) itself this would necessitate an examination of the object of cl 16(2). Where, however, the challenge is made to the exercise of statutory power conferred by s 33A and cl 16(2) then, so it would seem, the inquiry is into the object of RNSW’s approval of 15 August 2008. That approach leads, in this case, to the provision by Betfair of particulars to paragraph 102 (to which it will be necessary to return) which rely upon various statements by officials of RNSW.
19. It may be doubted – I express no view – whether material of that kind could be received in a case which challenged directly cl 16(2). Of course, that problem did not arise in the previous Betfair case. For, as noted above, the objects of the Western Australian law plainly included the extirpation of betting exchanges altogether. By contrast, the title of the Racing Administration Amendment Act 2008 (NSW) (which introduced the regime in its current form) contained no such clear statement of intent and, to the contrary, the explanatory memorandum accompanying its introduction as a bill expressly recited the pursuit of equality between racing operators as an object:

The object of this Bill is to amend the Racing Administration Act 1998 (the Principal Act) as follows in response to the recent court cases of Betfair Pty Limited v Western Australia [2008] HCA 11 (the Betfair Case) and Tom & Bill Waterhouse Pty Ltd v Racing New South Wales [2008] NSWSC 1013 (the Waterhouse Case):
(a) to provide that certain provisions in the Principal Act relating to the publication and advertising of betting information and betting services apply equally to wagering operators licensed in New South Wales and those licensed in other States and Territories,
...

20. That being so, it is easy to understand Betfair’s selection of the RNSW approval rather than cl 16(2) as its target. But what of Betfair’s submission that cl 16(2) should be read subject to s 92? There is a note to cl 16(2) which provides some support for this contention. It is in these terms:

Note. In granting race field information use approvals, and imposing conditions on those approvals, relevant racing control bodies are subject to section 92 of the Commonwealth Constitution (Trade within the Commonwealth to be free etc).

21. However, this suggests not that cl 16(2) is subject to s 92 but that racing control bodies are subject to s 92. In any event, the note is not part of the Regulation: cl 3(2). More useful in this context is s 31 of the Interpretation Act 1987 (NSW) which provides:

(1) An Act or instrument shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament.
(2) If any provision of an Act or instrument, or the application of any such provision to any person, subject-matter or circumstance, would, but for this section, be construed as being in excess of the legislative power of Parliament:

(a) it shall be a valid provision to the extent to which it is not in excess of that power, and

(b) the remainder of the Act or instrument, and the application of the provision to other persons, subject-matters or circumstances, shall not be affected.

(3) This section applies to an Act or instrument in addition to, and without limiting the effect of, any provision of the Act or instrument.

22. This provision requires cl 16(2), if possible, to be read so that it complies with s 92. Thus it is correct to say that cl 16(2) may not operate as broadly as it appears although it is not possible, at this stage, to say that definitively. More importantly, because the objects of cl 16(2) in a s 92 sense may be different to the objects of the approval it is possible that cl 16(2) validly permits an approval in the present form (the object of the clause being consistent with s 92) but that the approval itself is invalid (the purpose of RNSW in granting the approval being inconsistent with s 92). That, I think, highlights that Betfair’s submissions that paragraph 64 should be read, in effect, as saying that cl 16(2) is subject to s 92 may be more apt to confuse than to clarify.
23. In truth, because Betfair’s attack is directed towards RNSW’s approval and not towards cl 16(2), there is no issue between the parties either as to the operation or the validity of cl 16(2). It follows that the words “purports to” in paragraph 64 are not relevant to any part of Betfair’s case. Further, and to my mind more importantly, their presence opens up the potential for a complex interplay between the impact of s 92 on cl 16(2) through s 31 of the Interpretation Act 1987 (NSW) and the direct operation of s 92 on RNSW and HRNSW in making the administrative decision to issue the approval pursuant to s 33A. For those reasons the words should be struck out.

Second issue: paragraph 102

Purpose

24. The respondents seek to strike out paragraphs 34 to 44, 52 to 55 and 68 to 69 of the pleading. The written submissions in support of this issue suggested that these paragraphs contained allegations of fact about the businesses operated by licensed bookmakers and on-course totalizators. However, a reading of the statement of claim suggests that the paragraphs dealing with those two topics are paragraphs 34 to 41 (licensed bookmakers), 42 to 44 (on-course totalizators) and, possibly, 68 to 69 (licensed bookmakers). In any event, the respondents submit that these matters must be irrelevant to Betfair’s case because its attack is focused solely on the position of the TAB. So much flows, they say, from paragraph 100 of the statement of claim which alleges:

By reason of the matter referred to in paragraphs [98] and [99] above:
(a) the Racing NSW Approval and the RNSW Turnover Fee Condition impose on interstate trade, commerce and intercourse a burden or disadvantage which they do not impose on intrastate trade, commerce and intercourse of the same kind; and
(b) the legal and practical effect of the Racing NSW Approval and the RNSW Turnover Fee Condition is to protect a wagering operator in New South Wales (being TAB Limited) from competition from a wagering operator in another State (being Betfair).

25. Subparagraph (b) makes plain, it was submitted, that Betfair’s case is that the approval protects the TAB from interstate competition from Betfair. Subparagraph (a) does not directly identify either the burden imposed by the approval on Betfair or the nature of the interstate trade, commerce and intercourse not subject to that burden. However, particulars provided by Betfair on 19 November 2008 say, in part:

The burden or disadvantage imposed on Betfair in respect of its interstate trade, commerce and intercourse (being the payment of a fee in a sum that exceeds, in terms of a proportion of gross revenue, the amount of the fee imposed on TAB Limited for the same approval) is not imposed on TAB Limited in respect of its intrastate trade, commerce and intercourse.

26. Since the gravamen of the complaints in paragraph 100 is that the effect of the approval is to discriminate in favour of the TAB at the expense of Betfair there is no place, so the argument runs, for any consideration of the position of licensed bookmakers or on-course totalizators. Betfair, on the other hand, makes two points. First, s 92 is concerned with a close consideration of various markets. Here the market in question is the market for betting on horses in New South Wales. It would be, so it was submitted, artificial and potentially dangerous to consider the impact of the approval on the TAB and Betfair without knowing its general impact on other market participants. Secondly, Betfair emphasised that the complexities of s 92 litigation were such that it was important that all possibly relevant facts were pleaded so that whatever the operation of the provision was ultimately held to be, facts were available to support that view of the law.
27. Betfair referred to the judgment of Woodward J in Midland Milk Pty Ltd v Victorian Dairy Industry Authority (1988) ATPR ¶40-898 which dealt with the proper approach to factual pleading in a s 92 case. Woodward J in turn referred to what was said by Brennan J in Davids Holding Pty Ltd v Byrnes (1987) 71 ALR 251 at 252 which was in these terms:

I should also observe that it will be the duty of the parties to raise every issue of fact on which they may seek ultimately to rely. This is no light burden. The notorious difficulties in the application of s 92 of the Constitution appear in the judgements of this court and a party who proposes to cite a judgement in support of his case will need to have a finding of fact on which to found his submission. For this reason it will be desirable for the issues to be defined as precisely as possible and for specific findings to be sought by the party interested to obtain them.

28. Woodward J then said (at [49669]):

Turning to a detailed examination of the paragraphs which have been challenged, counsel explained that they were designed to describe, in an historical perspective:

(a) the nature of the first applicant’s interstate trade;

(b) the orderly marketing provisions which have, over the relevant period, obtained in Victoria and New South Wales;

(c) the actions taken by the respondents in relation to the first applicant’s attempts to trade interstate; and

(d) the economic, political and social context in which the respondents acted – including the actions of third parties such as the New South Wales authorities, interested unions and the Commonwealth Government.

Counsel argued that, had they resorted to more generalised statements about the course of conduct of the respondents or the context in which that conduct occurred, they would inevitably have been asked for further particulars and have then had to cover the same ground as they have done in their amended statement of claim.
I accept the general thrust of these submissions. In a case where the attacks on the pleading, and its justification, are both expressed in general terms related to the purpose of pleadings and the best methods of defining the real issues between the parties, I think that general impressions are important.

29. Statements such as these exhibit caution at pre-emptorily excluding as irrelevant factual material in an area of discourse in which the threshold between the pertinent and the extraneous is indistinct. That caution is, with respect, well-founded. Betfair emphasised that the respondents’ application was one seeking to strike out a pleading and that this brought it within the rubric of O 11 r 16 of the Federal Court Rules. The long course of authority about such applications showed that it was a power to be used only sparingly and only where a case was manifestly hopeless. This may not be an answer to the respondents’ argument which focuses, not on the hopelessness of the allegations, but on their relevance. However, it is appropriate to conclude, I think, that nothing should be struck from a pleading as irrelevant unless it is clearly irrelevant.
30. I do not think at this stage of the proceeding that it can be said with the necessary level of clarity that the position of the licensed bookmakers and on-course totalizators is so obviously devoid of any legal significance that it must be struck out. For example, in a case which alleges that the TAB is singled out for protection, is it not useful to know what the position of other intrastate traders might be? If they are deleteriously affected by the discrimination might that not suggest the absence of a breach of s 92? If they are not so affected might that not show the discriminatory practice is wider than thought? Alternatively, if they are apparently protected from the discriminatory burden is it not useful to know how? Further, the respondents’ submission that such material is irretrievably irrelevant is difficult, at a pleading level, to reconcile with the High Court’s consideration of market evidence in the previous Betfair case: 234 CLR 480 [114]-[116].
31. I accept the respondents’ natural concern that permitting the paragraphs to stand may be to permit a second s 92 case to linger behind the arras. However, that concern does not diminish their relevance. Further, Betfair is in any event confined to its present pleadings; if it wishes to put some other case it will need to amend. Of course, permitting the paragraphs to stand may broaden the respondents’ discovery obligations. Without expressing a concluded view, however, there may be something to be said for the notion that if the paragraphs are only relevant, as Betfair submits, to establish a factual background then discovery on those issues might be correspondingly circumscribed. The paragraphs will not be struck out.

Utility of paragraph 102

32. I have already set out paragraph 100 of the statement of claim above which alleged the existence of a discriminatory burden. It was immediately followed by paragraph 101 which says:

The burden or disadvantage imposed by the Racing NSW Approval and the RNSW Turnover Fee Condition on interstate trade, commerce and intercourse is not reasonably appropriate and adapted to any object which is consistent with s 92 of the Constitution.

33. There is an ambiguity in this paragraph. It is not clear whether it alleges that there may be objects consistent with s 92 which the approval serves but that the approval is not reasonably appropriate and adapted to such objects or whether it alleges that the approval simply does not serve any objects consistent with s 92. That ambiguity reflects, I think, a lack of procedural guidance in s 92 cases about who has to prove what. In this case, there is already agreement that the ultimate questions for this Court will be, first, whether the approval imposes a discriminatory burden upon interstate trade, commerce or intercourse; secondly, whether that burden is of a protectionist character; thirdly, in answering the second question, whether any such burden is appropriate and adapted to securing a legitimate object: Castlemaine Tooheys Ltd v South Australia [1990] HCA 1; (1990) 169 CLR 436 at 471–472 per Mason CJ, Brennan, Deane, Dawson and Toohey JJ. It may be broadly accepted that Betfair bears the onus of proving that the approval is of a protectionist nature. But it is unclear whether it is to allege and prove the absence of any legitimate object, the existence of such an object but the presence of disproportionate measures to achieve it, or both.
34. The course of recent authority in the High Court throws little light on the resolution of this issue because none of the cases heard in the High Court resulted from trials. Cole v Whitfield [1988] HCA 18; (1988) 165 CLR 360 resulted from the dismissal of a complaint by Inspector Cole laid before the Court of Petty Sessions in Hobart. The complaint was tried before the magistrate on an agreed statement of facts. The magistrate dismissed the complaint and the inspector appealed to the Supreme Court. Whilst that was pending it was removed into the High Court. Bath v Alston Holdings Pty Ltd [1988] HCA 27; (1988) 165 CLR 411, decided shortly thereafter, proceeded as questions reserved on agreed facts. Castlemaine Tooheys Ltd v South Australia [1990] HCA 1; (1990) 169 CLR 436 was a special case conducted on agreed facts as were both APLA Ltd v Legal Services Commissioner [2005] HCA 44; (2005) 224 CLR 322 and Betfair Pty Ltd v Western Australia [2008] HCA 11; (2008) 234 CLR 418. I do not think, therefore, that much procedural guidance on pleading questions can be found in these cases.
35. It is against that backdrop of procedural uncertainty that the respondents’ present complaints fall to be considered. Before dealing with those complaints it is useful to observe that the juridical nature of the approval is not that of a law or a regulation. It is, in effect, the consequence of the making of an administrative decision similar in some way to the grant of a licence subject to conditions. Whilst it may be useful to speak of the object or purpose of a law (or a regulation) or of the decision-maker who decides to grant a licence there are difficulties in talking of the object or purpose of the document which constitutes a licence. No doubt the current pleading is a consequence of the jurisprudence on s 92 which has been predicated for the most part on litigation concerning laws or regulations.
36. However, without foreclosing the possibility that it may be possible to speak of the object of a licence as opposed to the object of the issuing authority, it is more likely that what is intended is a reference to the object of the decision-maker. I express no concluded view in that regard. However, as will be apparent, I propose to proceed on the basis that the references in paragraphs 101 and 102 to objects include references to the objects of the decision-maker.
37. Paragraph 102 of the statement of claim is as follows (excluding its particulars):

In particular, without limiting the generality of the previous paragraph:
(a) the only object of the Racing NSW Approval and the RNSW Turnover Fee Condition is to protect the turnover and income of TAB Limited in New South Wales from being diminished through competition from another wagering operator (being Betfair) in another State;
(b) in the alternative, the dominant object of the Racing NSW Approval and the RNSW Turnover Fee Condition is to protect the turnover and income of TAB Limited in New South Wales from being diminished through competition from another wagering operator (being Betfair) in another State;
(c) in the further alternative, a substantial object of the Racing NSW Approval and the RNSW Turnover Fee Condition is to protect the turnover and income of TAB Limited in New South Wales from being diminished through competition from another wagering operator (being Betfair) in another State;
which object is not consistent with s 92 of the Constitution.

38. Returning to the argument at hand, the respondents argue that this allegation can go nowhere and should be struck out. Having made the allegation in paragraph 101 that the approval was not reasonably appropriate and adapted to any object consistent with s 92 there was nothing more to be alleged. If that allegation were accepted then Betfair would win; otherwise it would lose. If it lost then there was no further work which could be done by paragraph 102. There could be no infringement of s 92 merely because a law had a protectionist object for that forbidden purpose also had to be linked to some burden on interstate trade. Since paragraph 101 made no connexion between the impermissible object and any burden imposed it should be struck out.
39. As Betfair correctly submitted, this submission ignores the opening words of paragraph 102: “[i]n particular, without limiting the generality of the previous paragraph ...” which is logically inconsistent with the respondents’ treatment of the paragraph as if it were freestanding. This shows that the allegation in paragraph 102 merely particularises the allegation in paragraph 101. That, however, is not a complete answer to the respondents’ argument for, as an aspect of the same point, they submitted that paragraph 102 properly belonged in a reply and not in the statement of claim. On this view of things, the substantive allegation about the approval’s object was to be found in paragraph 101. The respondents could now plead to that paragraph that there was some legitimate object or objects proportionately achieved by the approval and then, the case having been made, Betfair could take issue with that case in its reply disputing, at its choice, the legitimacy of the suggested objects and/or the proportionate nature of the means adopted to achieve them.
40. There are attractions to this argument. It does away with the apparent need for an applicant to choose between proving an illegitimate object or disproportionate means in advance of knowing what a respondent’s suggested legitimate object might be. It reduces, potentially, the scope of the debate about the legitimacy and proportionality of the means adopted to achieve the object nominated by the respondent.
41. Despite its attractions the argument should be rejected for at least two reasons. First, the argument assumes that the procedural rules about proof in s 92 cases sufficiently establish that a pleading of illegitimate objects in chief is so untenable that it must be struck out. However, I was referred to no authority which would suggest the existence of such a procedural rule and, as I have endeavoured to show, the High Court’s decisions in this area represent lean pickings for connoisseurs of the procedural. Secondly, in any event there are statements which would suggest that debate in s 92 cases may not necessarily take place, at least insofar as the legitimacy of a measure’s object is concerned, entirely upon grounds of a respondent’s choosing. Betfair pointed to a statement in Castlemaine Tooheys Ltd v South Australia [1990] HCA 1; (1990) 169 CLR 436 at 472 which is in these terms:

The fact that a law imposes a burden upon interstate trade and commerce that is not incidental or that is disproportionate to the attainment of the legitimate object of the law may show that the true purpose of the law is not to attain that object but to impose the impermissible burden.

42. This is not the place to gauge what the relationship between the purpose and the object of a law might be, still less the difference between a real object and a true purpose. For present purposes, it is sufficient to observe that the quoted passage suggests that discourse about objects other than the object nominated by the party defending a law may be permissible. Once that is accepted as an arguable proposition – I do not say a correct one – it become difficult to be dogmatic about whether it should be located in the principal pleading or in a pleading in reply. Accordingly, I do not accept that paragraph 102 must appear in a reply or that an applicant is confined to the object or purpose identified by the defendant. For those reasons, the present argument does not provide a basis for striking out paragraph 102.

Alternative objects

43. The respondents had other objections to paragraph 102. Subparagraphs (b) and (c) suggested the existence of a “dominant” or “substantial” object. The respondents submit that the inquiry required by s 92 was strictly into the legal or practical effect of the approval. There was no place for a further inquiry into the dominant or substantial object of the measure. I would reject this argument for a number of reasons.
44. First, the respondents pointed to a passage in Cole v Whitfield [1988] HCA 18; (1988) 165 CLR 360 at 399–400 which was said to indicate that it was the legal or practical effect of the law which needed to be examined to determine whether the law infringed s 92. The passage in question, however, is concerned only with the first limb of the s 92 test, being the issue of whether a law discriminates or not. The second limb involves an inquiry into whether any such discrimination is reasonably appropriate and adapted to a legitimate end: Castlemaine Tooheys Ltd v South Australia [1990] HCA 1; (1990) 169 CLR 436 at 472. It follows that some inquiry into the end that is sought to be achieved by the law (or by the executive action) is a necessary step in determining whether s 92 has been infringed. Where there are multiple ends it may well be necessary to make some comparison of those ends and of their relative dominance.
45. Secondly, as Betfair pointed out, the respondents’ view appears to be inconsistent with what was said by Hayne J in APLA Ltd v Legal Services Commissioner [2005] HCA 44; (2005) 224 CLR 322 at 462 [423] which was in these terms:

Identifying the purpose of a law is an exercise in construction. That task must begin with the words in which the law is expressed but, as has been repeatedly noticed, that is a task that requires more than sitting with the words of the Act in one hand and a dictionary in the other. Determination of the meaning to be given to a law requires consideration of various sources. Although the inquiry must begin and end with the words that are used, account must be taken of the whole of the context in which those words were and are used and, in appropriate cases, account must be taken of the various extrinsic sources to which relevant interpretation legislation permits, and in some cases requires, recourse.

46. Accordingly, an argument that a test of substantiality is precluded by a focus on legal or practical effect must be rejected. No other reason for eschewing the substantial or dominant object of the approval was advanced.
47. I would decline to strike out paragraph 102(b) and (c) on this basis. It should be noted that an argument of the kind referred to in paragraphs 102(b) and (c) was put in Betfair itself (see [2008] HCA 11; 234 CLR 418 at 424) but not determined by the Court: [2008] HCA 11; 234 CLR 418 at 480 [113]. Finally, as discussed below, it is less then obvious that tests concerned with laws are necessarily applicable to administrative action.

Subjectivity

48. For a period the respondents took issue with paragraph 102 on the basis that there might be concealed within it a case alleging that the object of the approval for s 92 purposes was to be determined subjectively. Mr Robertson SC who appeared with Ms Morgan for Betfair eschewed this allegation submitting that the correct approach was for the Court to determine “the object objectively”. There is no formal occasion, at this stage, to resolve this issue. However, it is an area in which care should be exercised.
49. Where s 92 is applied to a law made by a legislature it is natural to pursue an analysis of the purpose or intent of that law by reference to principles of statutory construction. In that field it is accepted that intention is a relevant part of the interpretative context: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ. However, that role is attenuated in statutory interpretation because it is established that intention, in the context of a law made by a legislature, is limited to “the intention expressed by the words used”: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 304 per Gibbs CJ; CTM v R [2008] HCA 25; (2008) 247 ALR 1 at 48 [203] per Heydon J. Of course, in the context of s 92 the purpose, intent or object of a law goes from being a relatively minor interpretative tool to being a decisive constitutional consideration. But it may be a mistake to assume that statements about purpose in s 92 cases which are concerned with laws have any necessary connexion with the operation of s 92 in cases concerned with administrative action.
50. This is because administrative law has a different approach to purpose or intention. Unlike the rules of statutory interpretation where intention, though extant as an interpretative device, is a relatively minor consideration, in administrative law there is an entire discourse devoted to an examination of improper purposes. And, it is plain that that discourse can include an examination of the very kinds of things which the respondents in this case say should be eschewed viz the actual motives of the decision maker albeit discerned by objective means. In such an inquiry the focus is by no means limited, as the respondents would contend here, to the face of the instrument produced: cf The Queen v Toohey; ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 at 193 per Gibbs CJ, 202-203 per Stephen J, 217 per Mason J, 264 per Aickin J.
51. If that were accepted the question would become whether the approach to purpose exhibited in s 92 cases concerned with the validity of laws has any necessary application to a s 92 case concerned with administrative action. It seems to me that Mr Gleeson’s contention amounts to the argument that the approach to purpose under s 92 where administrative action is concerned must be the same as the approach to purpose where a law is involved. On this application, the respondents must take that argument one step further and say that that proposition is beyond argument. I think it is simply impossible to embrace such a view. In that regard, it is useful to note the dictum of Latham CJ in Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee [1945] HCA 48; (1945) 72 CLR 37 at 68:

But the purpose of legislation is to be ascertained by considering the true nature and operation of the law and the facts with which it deals, and ... not by examining the motives of the legislative authority ... No such limitation applies in the case of administrative acts.

I do not think that an inquiry analogous to administrative law notions of purpose is precluded by s 92 at a pleading level.

Third issue: adequacy of particulars

52. Paragraph 102 was accompanied by particulars. They were as follows:

The object of the Racing NSW Approval and clause 2.1(a) of the RNSW Standard Conditions is evidenced by the following material:
(i) Racing NSW, “Strategic Plan for the NSW Thoroughbred Racing Industry”, dated 27 July 2004;
(ii) interview with P V’Landys (CEO of Racing NSW) on Sports Today, 2UE radio, 27 July 2004;
(iii) media release by the Australian Racing Board (of which Racing NSW is and was a member), “United, Unanimous and Determined: Betting Exchanges to be shown the Door by Australian Racing” dated 17 August 2004;
(iv) comments by P V’Landys reported in the Sydney Morning Herald, “Racing chief predicts death by Betfair” dated 6 April 2005;
(v) comments by P V’Landys reported in The Daily Telegraph, “NSW won’t soften Betfair stance” dated 14 July 2005;
(vi) comments by P V’Landys reported in The Daily Telegraph, “Betfair prize fears” dated 18 July 2005;
(vii) interview with P V’Landys on Racing Central, Melbourne Sport 927 radio, 22 November 2005;
(viii) interview with P V’Landys on Raceday, Sydney 2KY radio, 19 January 2006;
(ix) comments by P V’Landys reported in media release issued by the Hon Graham West MP, NSW Minister for Gaming and Racing, dated 25 June 2008;
(x) Racing NSW, “Participants’ Bulletin – Race Fields Legislation” dated 11 July 2008, published on http://www.racingnsw.com.au/newsitem.asp?parm=6228 (viewed 14 September 2008)
(xi) Letter from Racing NSW to Betfair dated 6 August 2008.
Copies of these documents are set out at pages 559-643 of the book of particulars, behind Tab 27. Further particulars will be provided after discovery.

53. The respondents submitted that these particulars were incapable of supporting paragraph 102 and that further particulars should be provided, and if not provided, that the paragraph should be struck out. There was also a complaint that the individual pages relied upon in the book of particulars had not been, despite request, identified. In its written submissions, Betfair pointed to pages 562, 565-7, 573-4, 613, 625, 627, 636, 640 and 641 as showing what it claimed was the obvious link between the TAB and RNSW, to pages 571-4, 594, 598, 612-5, 621-2, 623, 625, 631 and 635 as showing “the explicit and often inaccurate characterisation of betting exchanges ... as a threat to the industry” and to pages 625 and 627 as showing “unambiguous protectionist language employed by the first respondent’s CEO”. During the hearing Mr Robertson also pointed to pages 650 and 651. In that circumstance, I do not propose to deal with the suggestion that further particularisation by reference to particular pages should be provided since this has already occurred. In taking that course, it should not be assumed such a degree of particularisation would have been necessary.
54. Turning to the substance of the matter the respondents submit that the first eight documents were so old that they were ‘stale’ and could throw no light on the object of the approval in August 2008. The public statements particularised in (i) to (viii) occurred between 2004 and 2006. The respondents submitted that the statements (except for (viii)) occurred before 10 January 2006 when Betfair obtained its Tasmanian licence, more than two years before the High Court’s decision in the previous Betfair case (on 27 March 2008) and more than two and a half years before the amendments which introduced the provisions enabling the approval. Thus, it was said, these documents could not found an allegation about the real object of the approval in 2008.
55. Betfair, on the other hand, stressed the difference between the question of whether an inference can be drawn from material and the question of whether it should be. It suggested that the inferences were open and that, at a pleading level, this sufficed. No doubt the effluxion of time may provide a basis for suggesting that the materials do not establish the real object of the approval in 2008 but that observation itself provides no support for the notion that it must do so. The respondents submitted that the particularised matters provided no support for the object identified in paragraph 102 viz the purpose of protecting the TAB from competition with Betfair. The particularised matters include a statement from the Daily Telegraph for 18 July 2005 attributed to the Chief Executive of RNSW as follows:

V’Landys maintained Racing NSW would do “everything in its powers” to protect the industry from Betfair, who will not return anything to the NSW industry.

56. I would regard that as material from which an inference could be drawn that in making the approval in 2008 Racing NSW was seeking to protect the racing industry from Betfair. It also suggests that Betfair’s licensing on 10 January 2006 may be of little significance.
57. Of course, what is alleged in paragraph 102 is the object of protecting the TAB from Betfair which is different to Mr V’Landys’ expressed desire to protect the racing industry from Betfair. However, the particularised materials include a number of documents which suggest that the TAB’s commercial fortunes are intimately linked to those of the racing industry. Thus on 14 July 2005 the Daily Telegraph attributed to Mr V’Landys the following words:

“Whatever Tasmania do we will take any necessary action to protect our revenue. [If Tasmania grants a licence] an overseas organisation will be betting on Australian racing and not paying anything towards the running of those races and that is totally not fair.”
...
V’Landys has previously stated that for every $100 wagered on Betfair the racing industry would receive 30c, as opposed to the $4.50 it earns from TAB.

58. So too, in a bulletin issued by Racing NSW on 11 July 2008 – the month before the approval was issued – it was said:

Between 65% and 70% of the total income of the NSW racing industry comes from fees paid by the NSW TAB. NSW TAB pays the NSW racing industry over $220 million a year – of which the NSW thoroughbred industry receives about $160 million and the balance goes to the other codes.
On average, the NSW racing industry receives about 5% of turnover with the NSW TAB.

59. Betfair submits that it should be inferred that when Mr V’Landys spoke of protecting the industry from Betfair what was connoted was protection of the TAB from Betfair. It seems to me that such an inference is open because of the apparent dependence by the racing industry on the TAB. Indeed, if it were not for the protection of the revenues of the racing industry via the TAB, it is (at least at this early stage) difficult to discern what it was about Betfair from which the industry needed to be protected.
60. Thus whilst it is true that no single document which has been particularised says, in terms, that it was RNSW’s intention to protect the TAB from Betfair, the material is capable of sustaining such an inference. The respondents emphasised that Mr V’Landys was not RNSW which, of course, is true. But again the question is whether his statements are capable of supporting an inference about the position of the organisation of which he was Chief Executive. The answer to that question is, I think, yes. Indeed, on one view of things Mr V’Landys’ purpose may be sufficient to affect the position of RNSW even if his was a minority position: cf IW v City of Perth [1997] HCA 30; (1997) 191 CLR 1 at 51 per Gummow J.
61. The respondents also submitted that these particulars showed the vice of embracing an approach to s 92 involving subjective intention. For reasons already given, that is not an issue. But I would again draw attention to the distinction between subjective purpose or object – proved by the relevant officials giving evidence of what they thought the object of the approval was – and the object or purpose proved by an examination of objective circumstances. Statements by persons at the time such as Mr V’Landys are materials available on an objective approach.
62. In those circumstances, I decline to strike the paragraph out.

HARNESS RACING NEW SOUTH WALES

63. Each of those points was also made in relation to allegations concerning HRNSW. They fall to be decided the same way. The particulars provided to paragraph 108 are different to those provided to paragraph 102 because the approval granted by HRNSW on 1 September 2008 is a different approval. The particulars include an extract from a submission made to the Independent Review of Wagering in New South Wales in the following terms:

... HRNSW would openly state that for as long as harness racing continues to receive the majority of its funding through its commercial arrangements with TAB Ltd, it would not be in the best interests of harness racing if any regulatory change adversely affected the TAB Ltd wagering business.

64. The respondents submit that in context this does not support an allegation that the real object of the approval was to protect the TAB from competition with Betfair. However, it is capable of supporting an inference to that effect. Whether that inference should be drawn is a different question. For present purposes that particular provides a proper basis for paragraph 108 to remain in the pleadings.

DISPOSITION

65. The words ‘purports to’ will be struck out of paragraph 64 and the balance of the motion dismissed. I will list the matter for further directions.
    

I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 19 February 2009

Counsel for the Applicant:	Mr A Robertson SC with Ms K Morgan
Solicitor for the Applicant:	Gilbert + Tobin
Counsel for the Respondents:	Mr J Gleeson SC with Mr J Emmett
Solicitor for the Respondents:	Yeldham Price O'Brien Lusk
Counsel for the Intervener:	Ms A Mitchelmore
Solicitor for the Intervener:	Crown Solicitor for the State of New South Wales

Date of Hearing:	29 January 2009
Date of Judgment:	19 February 2009