Sportsbet Pty Ltd v State of New South Wales (No 1) [2009] FCA 112 (19 February 2009)

Last Updated: 23 February 2009

FEDERAL COURT OF AUSTRALIA

Sportsbet Pty Ltd v State of New South Wales (No 1) [2009] FCA 112

SPORTSBET PTY LTD v STATE OF NEW SOUTH WALES, RACING NEW SOUTH WALES and HARNESS RACING NEW SOUTH WALES
NSD 1821 of 2008

PERRAM J
19 FEBRUARY 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1821 of 2008

BETWEEN:

SPORTSBET PTY LTD Applicant

AND:	STATE OF NEW SOUTH WALES First Respondent RACING NEW SOUTH WALES Second Respondent HARNESS RACING NEW SOUTH WALES Third Respondent

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

THE COURT ORDERS THAT:

1. The word ‘legislative’ be struck out of paragraph 93 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 1821 of 2008

BETWEEN:

SPORTSBET PTY LTD Applicant

AND:	STATE OF NEW SOUTH WALES First Respondent RACING NEW SOUTH WALES Second Respondent HARNESS RACING NEW SOUTH WALES Third Respondent

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

REASONS FOR JUDGMENT

Introduction

1. The respondents seek further particulars of the applicant’s statement of claim and/or the striking out of various of its paragraphs. The background in which that application is made is set out in Betfair Pty Limited v Racing New South Wales [2009] FCA 111 (“Betfair”) the reasons for which should be read together with these reasons.
2. The applicant (“Sportsbet”) operates a similar kind of business to Betfair Pty Limited (“Betfair”) but is based in the Northern Territory. The effect of s 92 of the Constitution is replicated in that territory by s 49 of the Northern Territory (Self-Government) Act 1978 (Cth). On the hearing of the motion in this matter (which was heard at the same time as the motion in Betfair) there were four issues:

(a) the ambit of the motion;

(b) whether paragraph 90 should be struck out;

(c) whether paragraph 91 should be struck out; and

(d) whether paragraph 93 should be struck out.

Issue one: the ambit of the notice of motion

3. By their written submissions the second and third respondents (“RNSW” and “HRNSW” respectively) limited the relief they sought to the provision of particulars for paragraphs 90, 91 and 93 and, in the alternative, the striking out of those paragraphs. During his oral submissions Mr Gleeson SC, with whom Mr Emmett appeared, sought to argue that paragraphs 68 and 69 should also be struck out. Mr North QC, who appeared with Mr Tokley for Sportsbet, disputed the entitlement of the respondents to attack those paragraphs in the current application. Paragraphs 68 and 69 are as follows (particulars omitted):
   68. TAB Limited is not required to pay a race field publication fee to Racing NSW.
   69. None of the operations of off-course totalizators in States and Territories other than New South Wales are required to pay a race field publication fee to Racing New South Wales.
4. The respondents argued that it was permissible to entertain the striking out of these paragraphs instanter because they were analogous to the position of the bookmaker and totalizator allegations in the Betfair application. Assuming that to be so does not, however, explain why the ordinary requirements of procedural notice should be dispensed with. The respondents also said that their submissions about these paragraphs were straightforward and that Sportsbet should explain how it was that the paragraphs could survive. Again there is no ready connexion between the alleged obviousness of the point and the need to deprive Sportsbet of the opportunity to have some time to respond. I decline, on this application, to strike out paragraphs 68 and 69.

Issue two: whether paragraph 90 should be struck out

5. Paragraph 90 of the statement of claim says:
   90. Further, the Racing NSW Turnover Condition imposed by Racing NSW and the HRNSW Turnover Condition imposed by HRNSW on the race field publication approvals granted to Sportsbet, purportedly pursuant to s.33A of the Racing Admin Act, in each case:

(a) in its legal or practical operation prevents an interstate wagering operator, including Sportsbet, publishing NSW race fields in New South Wales or elsewhere in circumstances where bookmakers licensed in NSW, any racing club that is licensed to operate an on-course totalisator in NSW and Tab Limited, are not prevented from doing so;

(b) in its legal or practical operation imposes a burden or disadvantage on trade, commerce and intercourse between the Northern Territory and New South Wales which is not imposed on, or is disproportionate to that imposed on, intrastate trade, commerce and intercourse of the same kind.

6. Shortly before the hearing Sportsbet provided particulars of paragraph 90 indicating that in relation to the factual operation of the conditions, it relied upon the matters pleaded in paragraphs 67 to 70 and 77 to 78. It also indicated that these were the best particulars it could, at the moment, provide. Paragraphs 77 and 78 canvass the position of HRNSW, and paragraphs 68 and 69 are set out above. Paragraphs 67 and 70 are as follows:
   67. All or most licensed bookmakers in New South Wales are exempt from having to pay a race filed publication fee to Racing NSW as they have a wagering turnover that is less than $5 million per annum.
   70. Further or alternatively, to the extent to which a New South Wales bookmaker accepts bets by telephone, such bookmaker is not required to seek approval from Racing NSW to publish NSW race fields.
7. In the circumstances, the only issue between the parties is whether paragraph 90 should be struck out. The respondents argued that it should be struck out because paragraphs 68 and 69 should be struck out and because paragraphs 67 and 70 were, by themselves, insufficient to sustain paragraph 90.
8. The argument from paragraphs 68 and 69 cannot be accepted when I have refused the application to strike out those paragraphs. In any event, the complaint about paragraph 69 was that it dealt with the position of interstate traders and seemed to suggest that Sportsbet was not only discriminated against in relation to intrastate traders but also in relation to interstate traders as well. It was impossible, so it was argued, that the burden pleaded in paragraph 90 could be protectionist when some interstate traders were alleged to be put in the same position as the protected intrastate traders.
9. This argument may well have merit at trial; however, I do not think that it would be correct to foreclose such a claim at a pleading level. It is arguable that discriminatory protectionism may be present even where some members of the class of interstate traders are not affected by the discriminatory conduct sought to be impugned. There may be protectionist reasons why a single interstate trader is left unaffected by the discrimination, particularly, for example, where the unaffected interstate trader is a statutory monopoly of the same kind as the protected intrastate trader. The paragraph should not be struck out.

Issue three: whether paragraph 91 should be struck out

10. Paragraph 91 provides:

Further or alternatively, Racing NSW set the exempt turnover amount of $5 million knowing and intending that the race field publication fee payable to it would be offset by racing clubs in New South Wales agreeing to waive or reduce fees that would otherwise be payable by licensed bookmakers to those clubs.

11. The respondents make three points. First, they say that a subjective case is not available; secondly, they say that particulars of the knowledge and intention referred to in the paragraph must be provided; and thirdly, they suggest that there is an internal inconsistency in the paragraph because it pursues what appears to be at once a subjective and objective case.
12. As to the first argument, for reasons I have given today in Betfair, I do not think that where what is impugned is executive action – such as the making of approvals by racing authorities pursuant to s 33A of the Racing Administration Act 1998 (NSW) – that the pleading of knowledge and intent in the way that has been done is foreclosed.
13. As to the second question, however, greater difficulties arise. The applicant alleges both knowledge and intention. Order 12 r 3(2) does not require the provision of particulars of knowledge. Rule 5 permits particulars of knowledge to be ordered but, save in special circumstances or in order to enable a respondent to plead, does not authorise such an order prior to the filing of the defence. On the other hand, r 1 requires the delivery of all “necessary” particulars and the breadth of that obligation is expressly not reduced by rr 3 and 5: see r 1(2). It has been held that r 1 may require the delivery of particulars of knowledge even outside rr 3 and 5: cf Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 at [43], [53]-[54] per Einstein J. However, generally where the risk of trial by ambush is not present, I do not think that r 1 requires the provision of particulars about knowledge where the machinery of r 5(3) can operate in an orderly fashion to achieve the same result. This is not to read down r 1 – rather, it is to gauge the content of the necessity posited by that rule. It follows that the respondents are not entitled to particulars of knowledge in relation to paragraph 91 prior to putting on their defences.
14. With respect to the allegation of intention, however, r 5 does not apply and intention continues to be governed by r 3(1). The respondents made a request for particulars in respect of this allegation on 15 December 2008. The applicant provided the following particulars on 23 December 2008:

The material facts matters and circumstances relied upon are as follows:
● Racing NSW is, and was, at all material times, well aware of the wagering turnover of licensed bookmakers in New South Wales;
● The exempt turnover threshold does not appear in either the provisions of the Racing Administration Act 1998 (NSW) or its Regulations;
● The exempt turnover threshold of $5,000,000.00 was set taking into account the following matters:

○ the wagering turnover of licensed bookmakers in NSW; and

○ the fees required to be paid to Racing Clubs in NSW by licensed bookmakers.

15. Although the respondents contested the adequacy of these particulars on 19 January 2009, the deficiencies alleged in the correspondence were not concerned with the factual basis for the allegations of knowledge and intention. The deficiencies alleged related to the applicant’s reference in paragraph 91 to licensed bookmakers and to the relationship between the allegations of knowledge and intention and paragraphs 90, 93 and 94 of the pleading. The applicant provided a response to these concerns on 27 January 2009.
16. In those circumstances, the only question that arises is whether the particulars that have been provided were adequate. The first particular appears to be little more than a restatement of the allegation itself. There is also some doubt about the extent to which intention might be proved by the absence of the threshold figure from the relevant laws. However, the third particular describes certain considerations to which, it is alleged, regard was had by RNSW when it set the exempt turnover threshold. If proved, those considerations may well be capable of supporting an inference that RNSW had the intention alleged.
17. It follows that the applicant has already provided adequate particulars of the intention pleaded in paragraph 91. I decline to strike out that allegation.
18. The third argument advanced by the respondents had the following steps:

(a) assuming paragraph 91 pleaded that those bookmakers with a wagering turnover in excess of $5 million would be effectively exempted by the racing clubs reducing other fees payable by the bookmakers; and

(b) assuming the clubs were not bound by s 92;

(c) then the pleading of (a) made sense only if one was talking of an objective assessment of the approval’s operation; and

(d) the pleading of (a) made no sense as an allegation of what the respondents knew or intended as a subjective matter.

19. I do not accept this argument. Obviously enough, at a pleading level, the allegation that the approval had a particular practical operation by reason of the behaviour of the racing clubs can go forward – indeed, I did not understand the respondents to dispute the correctness of that proposition. On the other hand, if one accepts, as I have held in Betfair, that it is arguable that executive action may be impugned in a s 92 context by the making of the allegation that the decision-maker had a protectionist intention or purpose, then it is difficult, I think, to see why that decision-maker’s knowledge of the practical effects of the impugned measure cannot be relevant.

Issue four: whether paragraph 93 should be struck out

20. Paragraph 93 alleges:
    93. In particular, without limiting the generality of the previous paragraph, the only legislative object, alternatively the dominant legislative object, alternatively a substantial legislative object, of the Racing NSW Turnover Condition and the HRNSW Turnover Condition attached to the race field publication approvals granted to Sportsbet is, in each case, to protect the turnover and income of wagering operators in New South Wales from being diminished through competition from wagering operators in the Northern Territory, and this object is not consistent with s.49 of the Northern Territory (Self Government) Act 1978 (Cth).
21. The particulars provided for paragraph 93 included the attribution of a statement to Mr V’Landys on 11 July 2008 to this effect:

... the purpose of the legislation was to require interstate bookmakers to pay a fee so as not to be “freeriders” on the racing industry in New South Wales and thereby protect the New South Wales industry;

22. Another particular provided was:

The introduction of the $5,000,000.00 turnover threshold was intended to protect licensed bookmakers in New South Wales having a wagering turnover of less than $5,000,000.00 per annum from having to pay additional fees;

23. The respondents submitted that these were subjective matters and the view of Mr V’Landys could not matter. I have rejected that submission in Betfair and I reject the submission here for the same reasons.
24. The respondents repeated in relation to paragraph 93 each of their objections to paragraph 102 of the statement of claim filed by Betfair. For the reasons given in Betfair I reject each argument.
25. Finally, the respondents took issue with the expression “legislative object” in paragraph 93. It was submitted that it was unclear whether those words referred to the object of the legislation or the object of the administrative action. The particulars provided make it tolerably plain that it is the latter rather than the former. It is very difficult to see how those particulars are in any way legislative. In its current form the use of that word is apt to cause confusion and I propose to strike it out.

Disposition

26. I order that the word “legislative” be struck out of paragraph 93. I will list the matter for further directions.
    

I certify that the preceding twenty-six (26) 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 T North SC with Mr A Tokley
Solicitors for the Applicant:	Fitzpatrick Legal
Counsel for the First Respondent:	Ms A Mitchelmore
Solicitor for the First Respondent:	Crown Solicitor for the State of New South Wales
Counsel for the Second and Third Respondents:	Mr J Gleeson SC with Mr J Emmett
Solicitors for the Second and Third Respondents:	Yeldham Price O'Brien Lusk

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