Sportsbet Pty Ltd v State of New South Wales (No 11) [2010] FCA 59 (9 February 2010)

Last Updated: 15 February 2010

FEDERAL COURT OF AUSTRALIA

Sportsbet Pty Ltd v State of New South Wales (No 11) [2010] FCA 59

Citation:		Sportsbet Pty Ltd v State of New South Wales (No 11) [2010] FCA 59
Parties:		SPORTSBET PTY LTD v STATE OF NEW SOUTH WALES, RACING NEW SOUTH WALES and HARNESS RACING NEW SOUTH WALES
File number:		NSD 1821 of 2008
Judge:		PERRAM J
Date of judgment:		9 February 2010
Catchwords:		PRACTICE AND PROCEDURE – Pleadings – Amendment CONSTITUTIONAL LAW – Inconsistency – Intersection with covering clause 5
Legislation:		Commonwealth of Australia Constitution Act (63 & 64 Vic) (Imp) covering cl 5 Interpretation Act 1987 (NSW) s 31 Northern Territory (Self-Government) Act 1978 (Cth) s 49 Racing Administration Act 1998 (NSW) ss 33, 33A
Cases cited:		Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 referred to Austin v Commonwealth of Australia (2003) 215 CLR 185 cited Melbourne Corporation v The Commonwealth [1947] HCA 26; (1947) 74 CLR 31 referred to New South Wales v The Commonwealth [2006] HCA 52; (2006) 229 CLR 1 cited Victoria v The Commonwealth [1957] HCA 54; (1957) 99 CLR 575 cited Wenn v Attorney-General (Vic) (1948) 77 CLR 84 cited
Date of hearing:	8 February 2010
Date of last submissions:	8 February 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	27
Counsel for the Applicant:	Mr D M J Bennett QC with Mr T North SC, Mr A Tokley, Mr A Paterson and Mr P Nugent
Solicitor for the Applicant:	Fitzpatrick Legal
Counsel for the First Respondent:	Mr S B Lloyd SC with Ms A M Mitchelmore
Solicitor for the First Respondent:	New South Wales Crown Solicitor's Office
Counsel for the Second and Third Respondents:	Mr J T Gleeson SC with Mr S A Kerr SC and Mr S Robertson
Solicitor for the Second and Third Respondents:	Yeldham Price O'Brien Lusk

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	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:	9 FEBRUARY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Sportsbet be granted leave to file and serve by 4.00pm today a third further amended statement of claim containing paragraph 95 as set out in the notice of motion filed on 8 February 2010 save that the reference to covering cl 5 of the Constitution is to be altered to be a reference to covering cl 5 of the Commonwealth of Australia Constitution Act 1900 (63 & 64 Vic) (Imp).
2. Sportsbet be granted leave to file and serve a second further amended application containing prayer 6A in the form set out in the notice of motion filed on 8 February 2010 save that it shall contain no reference to prayer 6.
3. Sportsbet file and serve a further s 78B notice by 4.00pm today.
4. Sportsbet file and serve an affidavit proving service of such notice by 10.15am on Wednesday 10 February 2010.
5. The respondents pay Sportsbet’s costs of the motion.
   

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 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:	9 FEBRUARY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. By a notice of motion filed in Court yesterday, the applicant seeks to amend both the second further amended statement of claim and the further amended application. Those amendments are resisted by all of the respondents. I heard extensive argument on the issue yesterday afternoon.
2. To understand the proposed amendments it is necessary to understand the manner in which the second further amended statement of claim operates. Paragraphs 84 – 88 make a series of claims designed to make good an allegation of discriminatory protectionism. Paragraph 89 then alleges:

By reason of the matters referred to in paragraphs 84 to 88 above, ss 33 and 33A and regulations 16 and 17 of the RA Regulations are inconsistent with s 49 of the Northern Territory (Self-Government) Act 1978 (Cth) and are thereby invalid pursuant to s 109 of the Constitution.

3. Section 49 of the Northern Territory (Self-Government) Act 1978 (Cth) (“the Self-Government Act”) provides:

Trade, commerce and intercourse between the Territory and the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.

4. The text of s 49 is relevantly identical to the text of the first paragraph of s 92 of the Constitution save that that provision is concerned with the trade, commerce and intercourse amongst the States and does not touch directly upon trade, commerce and intercourse between a State and the Northern Territory.
5. By alleging inconsistency with s 49 of the Self Government Act the second further amended statement of claim invokes s 109 of the Constitution which provides:

When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

6. Thus, the effect of paragraph 89 of the second further amended statement of claim, if it be correct, is to render invalid ss 33 and 33A Racing Administration Act 1998 (NSW) and associated regs 16 and 17 through s 109 acting upon s 49. That process of reasoning is orthodox.
7. The second further amended statement of claim puts the issue another way, however. Paragraphs 90-93 make a series of allegations that the imposition of the turnover condition by RNSW and HRNSW was discriminatory and discriminatory in a protectionist sense. Broadly speaking – these are not the only allegations – it is said that the turnover thresholds at which the fee is imposed, that is, $5 million for thoroughbred horse racing and $2.5 million for harness racing, discriminate against interstate traders because, effectively, the thresholds exempt all intrastate traders. It is also said that the New South Wales TAB, an intrastate trader, is effectively discharged from any obligation to pay the product fee.
8. These allegations are not, however, directed at ss 33, 33A or regs 16 or 17. Instead, they are about the condition imposed on Sportsbet’s approval that it pay the 1.5% fee. Paragraph 94 of the second further amended statement of claim then alleges:

By reason of the matters referred to in paragraphs 90 to 93 above, the Racing NSW Turnover Condition and the HRNSW Turnover Condition attached to the race field publication approvals granted by Racing NSW and HRNSW to Sportsbet is, in each case, inconsistent with s 49 of the Northern Territory (Self Government) Act 1978 (Cth) and is thereby invalid pursuant to s 109 of the Constitution.

9. Correspondingly, the further amended application seeks declarations that the conditions imposing the fees are invalid by reason of s 109. Prayers 3 and 4 of the further amended application are as follows:
   3. A declaration that the condition of the approval by the second respondent to the applicant dated 15 August 2008 to publish New South Wales thoroughbred race fields (Racing NSW Approval) that the applicant pay a fee equal to 1.5% of the Applicant’s net assessable turnover (RNSW Turnover Condition) is invalid by virtue of s.49 of the Northern Territory (Self-Government) Act 1978 (Cth) and s.109 of the Constitution.
      
   4. A declaration that the condition of the approval by the third respondent to the applicant dated 1 September 2008 to publish New South Wales harness race fields (HRNSW Approval) that the applicant pay a fee equal to 1.5% of its NSW Harness turnover (HRNSW Turnover Condition) is invalid by virtue of s.49 of the Northern Territory (Self-Government) Act 1978 (Cth) and s.109 of the Constitution.
      
10. On 2 February 2010 – last Tuesday – the second and third respondents delivered a written submission paragraphs 6-10 of which were as follows:
    6. In terms, section 109 only operates to invalidate “law[s] of a State”. It does not have any direct effect on things that are not “law[s]” such as industrial awards: see, eg, Ex Parte McLean [1930] HCA 12; (1930) 43 CLR 472 at 484ff per Dixon J.
       
    7. Despite this, paragraphs 3 and 4 of the Further Amended Application claim declarations that certain conditions of approvals granted by the Second and Third Respondents are “invalid by virtue of s.49 of the Northern Territory (Self-Government) Act 1978 (Cth) and s.109 of the Constitution”.
       
    8. The impugned conditions of approval are not, on any view, “law[s] of a State” and therefore cannot be invalid “by virtue of” section 109 of the Constitution. For this reason alone, the Applicant’s direct constitutional attack on the fee conditions must fail and paragraphs 3 and 4 of the Further Amended Application must be dismissed.
       
    9. Of course, the above does not mean that section 49 of the Self Government Act has no role to play in the considering whether or not decisions made pursuant to (or purportedly pursuant to) state laws are operative. If a state law which discriminates against trade, commerce and intercourse between the Territory and the States in a protectionist sense is inconsistent with the Self Government Act and therefore inoperative, it follows that a state law purporting to authorise such discrimination by executive or administrative action must similarly be inoperative.
       
    10. However, in such an event, the decision purportedly authorised by state law is not inoperative “by virtue of” section 109 of the Constitution. Rather, it is inoperative because the decision is ultra vires the state law (with the state law being, if necessary, read down “to the extent of the inconsistency” with the Self-Government Act).
        
11. The gravemen of this is that the Racing Administration Act 1998 and the regulations thereunder are required to be read down, if possible, to avoid inconsistency with Commonwealth law. That argument requires expansion. Section 31 of the Interpretation Act 1987 (NSW) provides:
    31. Acts and instruments to be construed so as not to exceed the legislative power of Parliament
        

(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.

12. Paragraphs 8-10 of the submissions, therefore, put an argument that s 109 cannot operate to invalidate the fee condition.
13. The notice of motion first seeks to add a new paragraph 95 to the second further amended statement of claim in the following terms:

Wherever this statement of claim refers to section 49 of the Northern Territory (Self-Government) Act 1978 (Cth), the applicant relies on the effect of that provision by virtue of:

(a) Section 109 of the Constitution; and

(b) Covering clause 5 of the Constitution.

14. I think the reference to covering cl 5 of the Constitution should be a reference to covering cl 5 of the Commonwealth of Australia Constitution Act (63 & 64 Vic) (Imp). Covering cl 5 provides:

This Act, and all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on the courts, judges and people of every State and of every part of the Commonwealth, notwithstanding anything in the laws of any State; and the laws of the Commonwealth shall be enforced on all British ships, the Queen’s ships of war excepted, whose first port of clearance and whose port of destination are in the Commonwealth.

15. The effect of the amendment, if the argument be sound, will be to render the fee condition ineffective by reason of the paramount effect of covering cl 5 because, unlike s 109 (if the respondents be right), it is not limited in its operation to State laws.
16. Covering cl 5 is an interesting provision but this judgment is not the place to drag out its mysteries. RNSW and HRNSW objected to the proposed paragraph 95. The principal point was that the amendment would give paragraph 94 (which is set out above and which impugns the fee condition) a potentially very serious effect.
17. The first step in the argument was to note that the fee condition either was or was not ultra vires the New South Wales legislation, ie, ss 33, 33A and regs 16 and 17.
18. The second step was to observe that where the fee condition was not ultra vires those statutory and regulatory provisions, then the effect of Sportsbet’s covering cl 5 argument was that executive actions authorised by valid State laws were nevertheless invalid. This was said to involve the potential for at least two constitutional problems. The first was that it might involve an infringement of the doctrine in Melbourne Corporation v The Commonwealth [1947] HCA 26; (1947) 74 CLR 31; Austin v Commonwealth of Australia (2003) 215 CLR 185; the second that s 49 of the Self Government Act might take on the appearance of a Commonwealth law operating as a bare attempt to oust the operation of State laws: cf. Wenn v Attorney-General (Vic) (1948) 77 CLR 84 at 119-120; Victoria v The Commonwealth [1957] HCA 54; (1957) 99 CLR 575 at 613-621, 624-626, 660-661; and New South Wales v The Commonwealth [2006] HCA 52; (2006) 229 CLR 1 at 166-169.
19. These difficulties were not said to be a reason for opposing leave. Rather, they highlighted the need for Sportsbet to identify precisely what was intended by para 95 which presently it did not do. Until that was clarified leave should not be granted.
20. I reject this argument for two reasons.
21. First, the suggested problem does not exist. The first step in the argument – that the fee is, or is not, ultra vires the legislation – may be accepted. The second step – which I have set out above – may not. The assumption on which it rests is logically unsound. If the fee condition is contrary to s 49 of the Self-Government Act then it necessarily interferes with freedom of trade, commerce and intercourse between the Territory and a State. If it so interferes then it cannot be authorised by ss 33, 33A, regs 6 and 17: s 31 Interpretation Act 1987. The supposed problems are summoned into existence only because the argument itself assumes a contradiction – viz that a measure which contravenes s 49 can be authorised by laws which do not authorise a contravention of s 49.
22. Secondly, independently of that logical deficiency, this seems to me to be a matter for the respondents to address if they wish. I do not read paragraph 95 as seeking impermissibly to intrude into State legislative competence. If RNSW and HRNSW wish to argue that:

(a) the legislation is valid because it does not authorise a breach of s 49 of the Self Government Act;

(b) the fee condition is authorised by the legislation;

(c) if the fee condition contravenes s 49 then covering cl 5 cannot, for constitutional reasons, operate to strike the condition down;

they are perfectly free to put that argument contradictory though it is.

23. The respondents stressed the need for the case to get on. Responsibly, they did not really point to what might be called Aon deficiencies (Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175). This was unsurprising since the argument that s 109 could not operate to invalidate the conditions was only articulated by the second and third respondents last Tuesday.
24. Mr Gleeson SC who appeared with Mr Kerr SC and Mr Robertson for the second and third respondents submitted that there was no evidence explaining why the amendment was only raised yesterday. However, I draw the inference – readily with respect – that the covering cl 5 argument was brought forward only in response to the raising of the argument that s 109 could not operate to invalidate the conditions.
25. Accordingly, leave should be granted to amend the pleading to add the proposed paragraph 95. The motion also sought to amend the application to add a new prayer 6A which was in the following terms:

A declaration that the conditions referred to in declarations 3 and 4 above are invalid for the reasons given in the statement of claim herein (as amended).

26. During argument it was made clear that the reference in prayer 6A to 6 was erroneous. No different issues arise on the application to include prayer 6A.
27. I make the following orders:
    1. I grant leave to Sportsbet to file and serve by 4.00pm today a third further amended statement of claim containing paragraph 95 as set out in the notice of motion filed on 8 February 2010 save that the reference to covering cl 5 of the Constitution is to be altered to be a reference to covering cl 5 of the Commonwealth of Australia Constitution Act (63 & 64 Vic) (Imp).
    2. I grant leave to Sportsbet to file and serve a second further amended application containing prayer 6A in the form set out in the notice of motion filed on 8 February 2010 save that it shall contain no reference to prayer 6.
    3. I direct Sportsbet to file and serve a further s 78B notice by 4.00pm today.
    4. I direct Sportsbet to file and serve an affidavit proving service of such notice by 10.15am on Wednesday 10 February 2010.

5. I order the respondents to pay Sportsbet’s costs of the motion.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 12 February 2010