Betfair Pty Limited v Racing New South Wales (No 13) [2010] FCA 14 (27 January 2010)

Last Updated: 27 January 2010

FEDERAL COURT OF AUSTRALIA

Betfair Pty Limited v Racing New South Wales (No 13) [2010] FCA 14

Citation:		Betfair Pty Limited v Racing New South Wales (No 13) [2010] FCA 14
Parties:		BETFAIR PTY LIMITED (ACN 110 084 985) v RACING NEW SOUTH WALES (ACN 86 281 604 417), HARNESS RACING NEW SOUTH WALES (ABN 16 962 976 373)
File number(s):		NSD 1566 of 2008
Judges:		JAGOT J
Date of judgment:		27 January 2010
Catchwords:		COSTS – costs of notice of motion seeking production of certain documents – some but not all documents ordered to be produced – orders at first instance varied on appeal – apportionment of costs
Cases cited:		Betfair Pty Limited v Racing New South Wales (No 7) [2009] FCA 1140 Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 Re Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051 Sportsbet Pty Limited v State of New South Wales (No 8) [2010] FCA 15 State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160
Date of hearing:	1 October 2009
Date of last submissions:	18 December 2009
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	14
Counsel for the Applicant:	Mr R G McHugh SC with Mr P W Flynn
Counsel for the First and Second Respondents:	Mr S A Kerr SC with Mr J S Emmett
Counsel for the State of New South Wales:	Mr P Singleton
Counsel for the Applicant:	Gilbert + Tobin
Solicitor for the First and Second Respondents:	Yeldham Price O'Brien Lusk
Solicitor for the State of New South Wales:	Crown Solicitor for the State of New South Wales

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

BETWEEN:	BETFAIR PTY LIMITED (ACN 110 084 985) Applicant
AND:	RACING NEW SOUTH WALES (ACN 86 281 604 417) First Respondent HARNESS RACING NEW SOUTH WALES (ABN 16 962 976 373) Second Respondent STATE OF NEW SOUTH WALES Intervening

JUDGE:	JAGOT J
DATE OF ORDER:	27 JANUARY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The first and second respondents pay the applicant’s costs of the notice of motion filed on 22 September 2009 as agreed or taxed but only insofar as those costs relate to the first and second respondents’ claim that documents discovered in the proceeding were protected by “without prejudice” privilege.
2. Subject to Order 1 above, the State of New South Wales pay 60% of the applicant’s costs of the notice of motion filed on 1 October 2009 otherwise incurred as agreed or taxed.
   

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 Federal Law Search on the Court’s website.

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

BETWEEN:	BETFAIR PTY LIMITED (ACN 110 084 985) Applicant
AND:	RACING NEW SOUTH WALES (ACN 86 281 604 417) First Respondent HARNESS RACING NEW SOUTH WALES (ABN 16 962 976 373) Second Respondent STATE OF NEW SOUTH WALES Intervening

JUDGE:	JAGOT J
DATE:	27 JANUARY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 8 October 2009 I published reasons for judgment in respect of a notice of motion filed by Betfair Pty Limited (Betfair) on 22 September 2009 (Betfair Pty Limited v Racing New South Wales (No 7) [2009] FCA 1140). By the motion Betfair sought orders that the respondents produce certain documents for inspection over which claims for privilege had been made. The respondents resisted any order for production. The State of New South Wales (the State) also was granted leave to appear for the purpose of resisting the production of documents in which it had an interest. I made orders requiring the respondents to produce a number of the documents in dispute. The State sought and was granted leave to appeal against my orders. On 23 October 2009 the Full Court varied my orders, publishing reasons on 12 November 2009 (State of New South Wales v Betfair Pty Ltd [2009] FCAFC 160). In substance, the Full Court overturned that part of my decision rejecting the State’s claim for legal professional privilege over drafting instructions to and responses from parliamentary counsel, including draft legislative instruments.
2. The outstanding issue is costs.

BETFAIR’S POSITION

3. Betfair seeks the usual order for costs in its favour.
4. The respondents, Racing New South Wales and Harness Racing New South Wales (together, Racing NSW), resisted production of documents on the ground of “without prejudice” privilege. Betfair described this claim as a separate issue which was resolved in its favour. Accordingly, costs should follow the event. Racing NSW thus should be ordered to pay Betfair’s costs of the motion insofar as they relate to the claim for “without prejudice” privilege.
5. The State resisted production of documents on the grounds of public interest immunity and legal professional privilege. I rejected the claim for public interest immunity and ordered all such documents to be produced. The State did not challenge those orders on appeal. With respect to the claims for legal professional privilege, Betfair initially enjoyed greater success than the State if success be measured by the number of claims made and the number of documents ordered to be produced. However, the variation of my orders by the Full Court resulted in greater success for the State if success be assessed on the same basis. According to Betfair the most material consideration is that the State resisted the production of documents on the basis of legal professional privilege. Betfair succeeded in obtaining orders that a number of documents be produced. Whilst Betfair obtained only some of the relief originally sought that “does not detract from the proposition that the event is in the moving party’s favour, albeit it fails on other issues” (Re Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051). Costs in favour of Betfair should follow the event of the making of the orders for production of documents.

RACING NSW’S POSITION

6. Racing NSW submitted that it should not be liable for any part of Betfair’s costs in respect of those claims for privilege raised by the State. Nor did Racing NSW seek any order for costs in respect of those claims. As to its own claim for “without prejudice” privilege, Racing NSW submitted that Betfair’s costs should be costs in the cause. Alternatively, no order as to costs should be made. Although unsuccessful, Racing NSW’s claims were arguable. It was obliged to make those claims given that the entities with whom Racing NSW had been in dispute (namely, TAB Limited, Tabcorp Holdings Limited and Luxbet Pty Limited, to which I refer below as the TAB interests), being joint holders of the privilege asserted, are not parties to the proceeding. The Court recognised the joint interest of these entities in the asserted privilege by foreshadowing a confidentiality order in [75] of the reasons for judgment. Moreover, Betfair succeeded because of the use to which it wished to put the documents and not because the documents were incapable of attracting “without prejudice” privilege. This proposed use only became apparent on receipt of Betfair’s written submissions.

THE STATE’S POSITION

7. The State submitted that it and Betfair should each pay their own costs of the motion.
8. Whilst Betfair succeeded in respect of the State’s claim for public interest immunity: - (i) Betfair’s submissions that the class of documents were incapable of attracting the immunity failed, (ii) the State could not waive the immunity, it being a matter for the Court to determine the immunity’s application and undertake the necessary balancing exercise, and (iii) the State, as a stranger to the litigation, accepted that the balancing exercise was a matter for the Court.
9. As to the State’s claims for legal professional privilege, Betfair initially submitted that it had enjoyed greater success than the State having regard to the number of claims made and the documents ordered to be produced. This, however, was altered after the orders of the Full Court pursuant to which the State enjoyed greater success when so assessed. Contrary to Betfair’s subsequent position, this form of assessment is appropriate. The final result is that 38 of the State’s claims for privilege succeeded and 19 failed. The event thus favoured the State. Alternatively, this case involved multiple events with multiple outcomes. Relative measures of success and failure are not feasible or appropriate. Both Betfair and the State, overall, enjoyed significant success. Hence, each should meet its own costs of the motion.

CONCLUSIONS

10. In my reasons for judgment published today in proceeding NSD 1821 of 2008 (Sportsbet Pty Limited v State of New South Wales (No 8) [2010] FCA 15) I summarised the applicable principles at [8] as follows (relying on the reasons in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136-48,137):

The discretion is wide. Costs are awarded to compensate the successful party and not to punish the unsuccessful party. This compensatory objective means that costs usually follow the event. A successful party may be ordered to pay costs or be deprived of an order for costs in respect of issues on which that party failed. Where, however, issues are not discrete and severable it may be inappropriate to attempt to apportion costs by reference to relative success and failure.

11. In the Sportsbet proceeding I decided that Racing NSW’s submissions against the making of a costs order should not be accepted (see my reasons therein at [9]). I have reached the same conclusion in the present case. Racing NSW refused to produce relevant documents for inspection on the basis of its claim for “without prejudice” privilege. I rejected the claim and ordered that all of the documents be produced. The fact that Racing NSW’s claim might have been arguable and its conduct reasonable is not to the point. As noted, costs are compensatory. Betfair had to come to the Court to vindicate its right to inspect relevant documents and incurred costs in so doing. The use which Betfair could make of the documents and their relevance to the substantive proceeding was apparent from the pleadings. The fact that the TAB interests jointly hold the privilege also does not alter the position. Racing NSW chose to resist production. The fact that Racing NSW ran its defence to the motion with admirable efficiency (which I accept) does not undermine Betfair’s entitlement to an order for costs in its favour. The costs liability will be less due to the efficiency with which the point was run. It is also appropriate to frame the order to exclude any liability on Racing NSW’s part for the costs of the motion which Betfair incurred by reason of the claims for privilege made by the State.
12. Consistent with my conclusions in the Sportsbet proceeding (see my reasons therein at [10]-[12]), I am satisfied that Betfair is entitled to an order for costs against the State. The State intervened for the purpose of ensuring that documents discovered by Racing NSW as potentially relevant to the issues in the substantive proceeding were not produced for inspection. Betfair succeeded in obtaining orders for production albeit not in respect of all documents. The grounds on which privilege was asserted (public interest immunity and legal professional privilege) are separate. Betfair wholly succeeded with respect to the former and partly succeeded with respect to the latter. More specifically, as to the former, the State actively resisted production by reference to all aspects of the claim (including the balancing exercise) by tendering evidence and making submissions. The State did not adopt a neutral stance. It is also immaterial that some of Betfair’s arguments failed. Betfair ultimately obtained an order for access to all of the documents in issue. As to the latter, Betfair had no choice other than to file and serve a motion to obtain an order for production. It obtained an order albeit not in respect of every disputed document. The claims on which it failed absorbed a material part of the hearing. For these reasons Betfair should not obtain an order that the State pay all of its costs. A proportional costs order is appropriate. I am of the same view as I reached in the Sportsbet proceeding at [12] as follows:

A proportional costs order is appropriate to reflect [Betfair’s] overall success whilst giving due recognition to the claims of the State for legal professional privilege which were sustained. Mathematical precision in the apportionment is neither necessary nor desirable.

13. As in the Sportsbet proceeding I consider that Betfair should obtain an order that the State pay 60% of Betfair’s costs of the motion insofar as those costs were incurred with respect to the State’s claims for privilege.
14. I make orders accordingly.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

Associate:

Dated: 27 January 2010