Baiada Poultry Pty Limited v The Queen

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HIGH COURT OF AUSTRALIA

FRENCH CJ,
GUMMOW, HAYNE, HEYDON, CRENNAN, KIEFEL AND BELL JJ

SPORTSBET PTY LTD  APPELLANT

AND

STATE OF NEW SOUTH WALES & ORS  RESPONDENTS

Sportsbet Pty Ltd v New South Wales [2012] HCA 13
30 March 2012
S118/2011

ORDER

Appeal dismissed with costs.

On appeal from the Federal Court of Australia

Representation

N J Young QC with T J North SC, R M Niall SC and A L Tokley for the appellant (instructed by Fitzpatrick Legal)

M G Sexton SC, Solicitor-General for the State of New South Wales and J K Kirk with A M Mitchelmore for the first respondent (instructed by Crown Solicitor (NSW))

B W Walker SC with N J Owens, J S Emmett and G E S Ng for the second and third respondents (instructed by Yeldham Price O'Brien Lusk)

M G Hinton QC, Solicitor-General for the State of South Australia with L K Byers for the fourth respondent (instructed by Crown Solicitor (SA))

Interveners

S J Gageler SC, Solicitor-General of the Commonwealth with G A Hill intervening on behalf of the Attorney-General of the Commonwealth (instructed by Australian Government Solicitor)

S G E McLeish SC, Solicitor-General for the State of Victoria with S P Donaghue and P D Herzfeld intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor)

R M Mitchell SC, Acting Solicitor-General for the State of Western Australia with E M Heenan intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor (WA))

G J D del Villar intervening on behalf of the Attorney-General of the State of Queensland (instructed by Crown Law (Qld))

J C Sheahan SC with R C A Higgins intervening on behalf of TAB Limited and Tabcorp Holdings Limited (instructed by Freehills)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

  1. FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ.   This appeal by Sportsbet Pty Ltd ("Sportsbet") from the Full Court of the Federal Court (Keane CJ, Lander and Buchanan JJ)[1] was heard concurrently with that in Betfair Pty Ltd v Racing New South Wales[2] ("Betfair").  The reasons in the two appeals should be read together.

  2. In the Sportsbet litigation, the Full Court had before it two appeals against the decision of the primary judge (Perram J)[3]. The first was an appeal by Racing New South Wales ("RNSW") and Harness Racing New South Wales ("HRNSW") against declarations of invalidity respecting approvals under s 33A of the Racing Administration Act 1998 (NSW) ("the Act") which were given to Sportsbet by RNSW and HRNSW respectively on 15 August 2008 and 1 September 2008. These approvals permitted "use of NSW race field information" otherwise forbidden by s 33 of the Act, but were on condition of payment of a fee on "wagering…

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Details
Case
[2012] HCA 13
Decision Date

CaseChat Overview and Summary

Baiada Poultry Pty Limited appealed to the High Court of Australia concerning the constitutional validity of a New South Wales law that imposed a fee on wagering turnover. The dispute arose from the imposition of this fee, which the appellant argued prejudiced interstate trade and commerce, contrary to section 92 of the Australian Constitution. The appellant, a wagering operator based in the Northern Territory, contended that the fee, as applied to its operations involving New South Wales race fields, constituted an impermissible restraint on interstate commerce.

The High Court was required to determine whether the approval granted under section 33A of the *Racing Administration Act 1998* (NSW), which allowed the use of NSW race field information for a fee on wagering turnover, was confined by the constitutional guarantee of freedom of interstate trade and commerce. Specifically, the Court had to consider whether the legislation, in its practical operation, imposed discriminatory restraints of a protectionist kind on interstate trade. A further issue involved the potential inconsistency between the NSW legislation and section 49 of the *Northern Territory (Self-Government) Act 1978* (Cth), and whether this inconsistency would render the NSW law invalid under section 109 of the Constitution.

The Court reasoned that the focus on the location of wagering operators was misleading, as transactions frequently crossed state and territory borders. It found that the New South Wales law was facially neutral and did not, in its legal effect, discriminate in a protectionist sense. Examining the practical operation, the Court concluded that the Act did not alter, impair, or detract from the freedom of interstate trade guaranteed by section 92 of the Constitution, nor did it engage section 109 of the Constitution. The Court noted that the scheme was designed to ensure that the wagering industry contributed to the racing industry, which incurred substantial costs in organising and maintaining races.

The appeal was dismissed with costs.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ HEYDON J
RNSW and HRNSW accept, as they must, that the combination of otherwise apparently innocuous elements in a legislative scheme may disclose a protectionist measure which engages s 92. But, correctly, they submit that the operation upon TAB of the Release with respect to the period 1 September 2008 to 30 June 2009 cannot be said to have produced discrimination against interstate trade, let alone discrimination of a protectionist nature.Conclusion and orders The practical operation of the Act with respect to the fees payable by Sportsbet was not to alter, impair or detract from the "positive rule" mandated by s 49 of the Self‑Government Act, and s 109 of the Constitution was not engaged. The appeal should be dismissed with costs. The background to this appeal is set out in Betfair Pty Ltd v Racing New South Wales[49]. To that might be added the following eloquent statement by the Solicitor-General for the State of New South Wales (the first respondent): "In Australia a large and sophisticated wagering industry has developed, the main object of which is racing. The wagering industry obtains a substantial benefit from the racing industry – an object of wagering – without any corresponding obligation to pay for that benefit. The organisation and hosting of races costs substantial sums of money, including amounts associated with the maintenance of racetracks, the organisation of meetings, the provision of safe facilities for the benefit of participants in the industry and spectators, and prize money, so as to give appropriate incentives to owners, breeders and trainers to provide employment to jockeys and all of the others employed to look after horses. It is in the interests of both the wagering and racing industries that the former be required to make some payments to the latter, so as [to] ensure the continued ready availability of racing."Like Betfair Pty Ltd v Racing New South Wales[50], this case concerns the legality of one technique for securing those payments.[49][2012] HCA 12 at [2], [4]-[5], [8]-[13], [15] and [22]-[23].[50][2012] HCA 12. The appellant, Sportsbet Pty Ltd, is a bookmaker based in the Northern Territory. Its complaint centres on the following matters. On 18 June 2008, the Board of Racing New South Wales determined that a fee of 1.5% of wagering turnover should be imposed on wagering operators subject to a threshold of $5 million. On 15 August 2008, Racing New South Wales granted the appellant an approval to publish New South Wales thoroughbred race fields subject to a fee condition of 1.5% of wagering turnover. It also granted TAB Ltd, an intrastate competitor of the appellant, a similar approval to publish New South Wales thoroughbred race fields in the same terms. On 23 September 2008, the Board of Harness Racing New South Wales determined that a fee of 1.5% of wagering turnover should be imposed on wagering operators subject to a threshold of $2.5 million. Both the appellant and TAB Ltd were granted harness racing approvals. Before these events, on-course bookmakers in New South Wales paid a fee of 1% of wagering turnover to the metropolitan racing clubs on the premises of which they operated. After these events, the metropolitan racing clubs lowered their fee from 1% to 0.33% on the first $5 million and zero thereafter. Hence as a result of the Racing New South Wales threshold, at least 95% of the registered bookmakers in New South Wales were not required to pay any fee. Taking into account the reduction in fees from the metropolitan racing clubs, no bookmaker was worse off unless that bookmaker's turnover was more than $11.7 million per year. Further, as a result of the Harness Racing New South Wales threshold, no New South Wales registered bookmaker was required to pay any fee to Harness Racing New South Wales. The appellant, like other interstate bookmakers, was required to pay the fee without regard to the fees that it paid as a condition of its licence in the Northern Territory. In about November 2009, TAB Ltd was paid $13,882,935 and $2,587,724. These payments were made pursuant to a Deed of Release dated 25 November 2009. According to the appellant, each sum paid was equal to the amounts TAB Ltd paid by way of fee to Racing New South Wales and Harness Racing New South Wales respectively for the period 1 September 2008 to 30 June 2009. The appellant alleged that in effect, therefore, TAB Ltd did not bear the economic burden of the new fee.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH CJ, GUMMOW, HAYNE, CRENNAN, KIEFEL AND BELL JJ, HEYDON J

The focus of the pleading upon the situs of wagering operators in a particular political and geographic subdivision in Australia tends to mislead where, as is the case here, wagering operators and their customers conduct transactions across the borders of those subdivisions, as well as wholly within them. It misleads by distracting attention from the impact of the New South Wales law, as a legal and practical matter, upon trade and commerce represented by wagering operations conducted between the Territory and the State. Further, the New South Wales law, as emphasised in the reasons in the Betfair appeal, is facially neutral. Its legal effect is not discriminatory in a protectionist sense. The question then becomes whether, as a matter of its practical operation or effect, the Act does have that character.Practical operation or effect In the period before the adoption of the prevailing doctrine in the Court, when s 92 was to be interpreted with regard to the "criterion of operation" of the impugned law[24], nevertheless there were decisions which appeared to rest upon the substance of a law as a protectionist measure rather than upon its form. For example, in Vacuum Oil Co Pty Ltd v Queensland[25], the terms of the Queensland law which was held to be invalid required the licensing of persons who sold motor spirit for delivery in that State and required licensees to buy an amount of power alcohol manufactured in Australia proportionate to the quantity of motor spirit sold by the licensee. The plaintiff had no use for power alcohol in its business, except in negligible quantities. In fact, power alcohol was produced only in Queensland, from sugar cane. No petrol motor fuel was produced in that State; the plaintiff imported petrol from New South Wales for sale in Queensland.[24]Zines, The High Court and the Constitution, 2nd ed (1986) at 106‑107.[25](1934) 51 CLR 108; [1934] HCA 5. Thereafter, the concept of "circuitous device" was put forward as an addendum to the "criterion of operation". This, as Mason J explained in Miller v TCN Channel Nine Pty Ltd[26], was done:"because that doctrine, with its focus on the legal, rather than on the practical, operation of a law, was vulnerable to circumvention".His Honour added[27]:"But the concept was not developed in such a way that it became a doctrine in its own right, grounded in the practical operation of a law, identifying practical or economic consequences as impediments to interstate trade. As I shall show by reference to the decided cases, the concept seems to have been virtually devoid of content. No law has ever been struck down on the expressed ground that it burdened interstate trade by means of a circuitous device, though it has been suggested that Vacuum Oil Co Pty Ltd v Queensland[28]; Fish Board v Paradiso[29], and Wilcox Mofflin Ltd v New South Wales[30], may be capable of explanation on this footing."[26](1986) 161 CLR 556 at 575.[27](1986) 161 CLR 556 at 575‑576.[28](1934) 51 CLR 108.[29](1956) 95 CLR 443; [1956] HCA 60.[30](1952) 85 CLR 488; [1952] HCA 17.