Betfair Pty Limited & Anor v State of WA
[2007] HCATrans 660
•9 November 2007
[2007] HCATrans 660
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
No C2 of 2007
B e t w e e n -
BETFAIR PTY LIMITED
First Plaintiff
MATTHEW EDWARD ERCEG
Second Plaintiff
and
STATE OF WESTERN AUSTRALIA
Defendant
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON FRIDAY, 9 NOVEMBER 2007, AT 10.03 AM
(Continued from 8/11/07)
Copyright in the High Court of Australia
GLEESON CJ: Yes, Mr Solicitor.
MR MEADOWS: May it please the Court. If I could now turn to our argument that there is no discrimination in substantive effect and start by pointing out that people in Western Australia are not prohibited from using the services of wagering operators who conduct their business by means other than a betting exchange and that, far from discriminating against interstate operators, the legislation – that is the Betting Control Act – in fact permits interstate operators to conduct their business in Western Australia and Western Australians to undertake wagering arrangements with those operators outside the State. This is to be found in section 27A(1) of the Betting Control Act, which specifically excludes from the definition of “authorised person”:
a person authorised under the law of another State or Territory to engage in or conduct betting on races or sporting events‑
from the prohibition against offshore betting. There are also provisions for the licensing of bookmakers which allow for the conduct of the business through the agency of a licensed manager or employee and this allows for persons from other States to become licensed bookmakers in Western Australia. I refer to sections 11A to 11C of the Betting Control Act. There is as a particular example section 11A(5) of that Act. The plaintiff in its submissions contends that RWWA:
is a State statutory monopoly which exists as the sole wagering service provider in Western Australia save for licensed bookies and save for a few on course racing totalisators –
This is to be found in the transcript at page 7, line 270. Now, this is not a correct description of the market if the market is to be classified or characterised as a market in which internet and telephone wagering by persons in Western Australia on racing and sporting events because, as I have already observed, section 27A does allow interstate operators to enter into wagering arrangements with people in Western Australia.
So at the time of the enactment of the impugned provisions a person in Western Australia could lawfully bet with an authorised totalisator of another jurisdiction or a licensed bookmaker of another jurisdiction.
That is in fact what occurred. The domestic wagering operators, that is, the Western Australian wagering operators, are identified in the special case in paragraph 35 which is at page 158 and schedule 5 which lists the oncourse race club totalisator. Interstate wagering operators are identified in the special case book at paragraph 35 which is at pages 150 to 159. In addition, RWWA itself participates in the SuperTAB, the combined totalisator pool scheme operating throughout the country.
GLEESON CJ: I suppose if you are on a racecourse in Western Australia there will be bookmakers there betting on the Sydney and Brisbane and Melbourne races.
MR MEADOWS: Quite so, your Honour.
GLEESON CJ: And if you are at home listening to the radio or watching the television you could, if you want to, telephone a Sydney bookmaker and bet on the Perth races.
MR MEADOWS: Without any difficulty. In addition to that, as I say, the SuperTAB combined totalisator pool scheme is available and that appears at the special case paragraphs 50 and 51, pages 168 to 169 and, of course, the Best Bookies website which was demonstrated to the Court allows back bets to be placed with SuperTAB, TAB Limited and the UNiTAB totalisator pools.
Internet betting, whether through bookmakers or totalisators, is not something which is foreign to the Western Australian punter or, for that matter, to the regulators which have permitted this kind of activity to take place.
HAYNE J: What are you saying is the relevant market? Firstly, as to product, are you identifying the relevant market as internet betting on sports, races and other forms of sporting events? Are you identifying the market with some geographic element? What is the proposition that is underpinning this branch of the submission?
MR MEADOWS: This branch of the submission is to show that there is still considerable competition in the wagering market in terms of betting with both bookmakers and totalisators, admittedly in the back‑bet market. Now, our primary contention is that the market that we are looking at is the market for providing the facility to lay a contestant.
GLEESON CJ: But the interstate people, that is, bookmakers and TAB operators, with whom there is this state of competition, all have similar cost structures. They all contribute to the local racing industry and they all have to hand over a substantial amount of government take. According to the Betting Industry Task Force Report of July 2003, which is on pages 1264 and 1265 of these documents in volume 2, the appeal to punters of betting exchanges is the availability of better odds because betting exchanges operate at lower margins and the task force says:
If betting exchanges are allowed to (continue to) operate on Australian racing under circumstances where they are able to operate profitably while charging customers an advertised commission rate ranging from 5% down to 2% (on net winnings per event), betting exchanges will likely prove a popular alternative to betting on Australian racing with TABs or licensed Australian bookmakers. This will likely be a significant expense to these existing operators –and hence to racing industry and State/Territory revenue streams from wagering.
So the competition that is permitted at the moment is what I imagine people in the industry regard as fair competition because all the competitors have similar cost structures, but the form of competition that is being prevented is manifestly regarded by this task force as a form of unfair competition in the sense that it is a lower cost operator.
MR MEADOWS: It certainly was envisaged that it would be a lower cost operator. Of course this task force report pre‑dates the establishment of Betfair’s operation in ‑ ‑ ‑
GLEESON CJ: I am just wondering how that issue relates to section 92.
MR MEADOWS: It depends to some extent how you identify the market, I accept that, but we would say that what this legislation – that is the Western Australian legislation – seeks to prevent or prohibit is the ability to operate a betting exchange which allows lay bets to be made.
GLEESON CJ: It is a bit like the dairy product and margarine problem, is it not, in this sense, that New South Wales dairy producers may say, “We have to wear competition from Victorian dairy producers. They also have to raise cattle and find feed for them and they might have more rain than we have, but it is fair competition, but we want to resist competition from people who make spreads out of oil seeds because they have a lower cost base and a cheap product”.
MR MEADOWS: If New South Wales had enacted a law which precluded the production and sale of margarine in New South Wales and it applied to that product wherever it was made, whether it was made in Victoria or New South Wales, and it had no discriminatory effect on interstate producers and sellers of that product, it would not have been discriminatory in character because it applied to both intrastate and out‑of‑State producers, and so it is with this law.
Coming back to Justice Hayne’s question, the purpose of my demonstrating that there is considerable competition in the wagering market is to emphasise that even if the market is something wider than that for which we contend, there is already considerable competition in that market and that if one then looks at the question of what the impact of this legislation has on competition in that market, then the impact is not as great as the plaintiffs are contending because it is not just the case of RWWA having a statutory monopoly and there being a few operators in Western Australia, it is a much broader, Australia‑wide market with many players in it.
KIRBY J: But is the competition competition in the type of betting that the plaintiff provides, both as to its technology and as to the particular characters of the betting?
MR MEADOWS: I would submit that there is no unique quality about the technology.
KIRBY J: It is a new way of gambling. It is not so new now, but it is not the conventional and traditional way of gambling in Australia because it just did not exist until recent years.
MR MEADOWS: You will see, for example, the Best Bookies facility, which was demonstrated to the Court and said to be basically very similar in its operation pre-dated Betfair’s operation, and internet betting in Australia well and truly pre-dated Betfair’s operation. The only difference is the ability to lay a horse, to back a horse to lose.
HAYNE J: Do you accept that a localised anticompetitive measure falls within the concept of protectionism?
MR MEADOWS: A localised one?
HAYNE J: That is, localised in the sense of localised to a State.
MR MEADOWS: Well, it would clearly have a discriminatory effect.
CRENNAN J: Well, what about your point yesterday that there is no discrimination with this legislation as between intrastate and interstate traders? Could such legislation nevertheless have a protectionist effect?
MR MEADOWS: Well, that is the issue that I am coming to now. In our submission, even though that may be an incidental effect of it, it is not such as to negate the basis upon which the legislators in Western Australia decided to prohibit this particular activity. If I can come to an aspect of that immediately, it would have clearly been open to Western Australia to have gone down the same path as Tasmania. It clearly would have been open to Western Australia to have allowed betting through a betting exchange in a regulated fashion, and if that had occurred RWWA itself could have conducted a betting exchange.
Bookmakers could have been allowed to conduct betting exchanges and other people in the field could have been permitted to engage in that activity, and Betfair itself and other betting exchange operators from other States and other parts of the world could have been licensed and revenue from those operators by way of taxation and contribution to the operations of the racing industry in Western Australia could have been extracted.
It is apparent from the nature of the legislation that revenue was not the main concern because if it had been that would have been the way to go. It is apparent from the legislation that the reason for its provisions is one based in the integrity of the racing and sporting activities conducted in this country.
If you look at the Tasmanian Minister’s second reading speech, and this is at volume 4 of the defendant’s materials, this is at tab 9 of those materials at page 69, it becomes readily apparent from what is said there that Tasmania will generate, or has now generated, significant revenue from having agreed to license betting exchanges, and in particular Betfair.
If I could take your Honours to pages 72 and 73 of that book and to the final paragraph on page 72 and across to the next two paragraphs on page 73 you can see that one of the virtues that were seen from licensing Betfair was the revenue that would be generated. You can see that there is to be a:
tax rate that will apply to a betting exchange operator is 15 per cent of the commission earned on events held in Australia and 10 per cent of the commission on events held outside Australia, irrespective of whether these are sporting or racing events. In addition, a product fee of 20 per cent of the commission earned on all Australian-based racing events is payable . . . An annual Tasmanian gaming licence endorsement fee of $409 500 indexed –
If you go to the third paragraph on page 73 it is said that:
Accordingly, to ensure that funding to the racing industry is not compromised, there will be a requirement that betting exchange operators underwrite the level of funding to the industry at its 2005‑05 level. This requirement will remain in place for five years and will be set out in regulations. In addition, Betfair will be required to pay an upfront contribution of $5 million to the Tasmanian racing industry in the first year of operation . . . It will also be required to guarantee $5 million in taxes and product fees in the second year over and above the guaranteed funding level.
Further on, in the fifth paragraph on that page you can see it set out in more detail. If one goes to the Tasmanian Act, which is to be found in the plaintiffs’ bundle of legislation volume 1 under tab 1, that is the Gaming Control Act 1993 and if you turn to page 177 of that volume you will see that section 147 provides for a gaming operator licence fee and section 148A, an annual gaming licence fee and section 150A provides for taxation of gaming businesses and specifically in relation to betting exchanges if I could point to section 150A(7A) ‑ ‑ ‑
KIRBY J: The problem that you present when you take us to this is that where one State of the Commonwealth allows this type of body to come in, then it becomes very difficult for this Court to say that they are not really suitable to be operating in Australia. They are not the cannabis case because of the legitimate exercise of police powers. They are already here and they have been allowed in by one State of the Commonwealth so that the fight is really about what you can extract from them as their licence fee to operate in your State. That is the inference that I draw when I start to go to this.
MR MEADOWS: But we have chosen not to go down that path.
KIRBY J: I know you have, but we are entitled to ask in the plaintiff’s case, is that really for the police powers or is that because you have not been able to get enough money out of them?
MR MEADOWS: There is no evidence as to that, your Honour, that we have tried to get money out of them or that that is an issue in this case.
KIRBY J: There was a lot of talk about the revenue in the Western Australian papers and in the speeches in Parliament.
MR MEADOWS: In reference to some of the questions which were asked well before this legislation in Tasmania was enacted and Betfair had a licence. There really is no empirical evidence about what the impact of allowing Betfair’s operation to apply in Western Australia would be.
KIEFEL J: Taking up his Honour’s point, the existence of Betfair must impact upon the definition of “market”, must it not? Because the Australian market, the wider market that you have referred to earlier, includes a market in which lay betting is provided for.
MR MEADOWS: That is if you accept that in the section 92 context that a market is similar to that which is envisaged by the Trade Practices Act where ‑ ‑ ‑
KIEFEL J: Why would that not be the case?
MR MEADOWS: Because what section 92 was aimed at was to prevent laws being enacted by one State which protected intrastate operators from external competition from interstate operators.
KIEFEL J: Translated, barriers to entry.
MR MEADOWS: Yes, but the only barrier to entry that exists here is an entry to the lay-betting market and ‑ ‑ ‑
KIEFEL J: You call it a market, but is that correct? You were saying it is a discrete market.
MR MEADOWS: Yes, I am.
KIEFEL J: That is critical to your argument?
MR MEADOWS: Yes, because section 92, and the cases make this clear, was not intended to create a laissez-faire environment. It was simply there to prevent the States from protecting intrastate producers or people in the market from competition from interstate people in the same market.
GLEESON CJ: But what it was intended to create was a laissez-passer arrangement, no borders.
MR MEADOWS: No borders, yes.
GLEESON CJ: Trade borders, I mean. The problem may be – and I do not want to be struck by a bolt of lightning for saying this – that the word “protectionism” is itself not a word of defined meaning.
MR MEADOWS: It is a word which may have various meanings, I will accept, but in the context of section 92 it does have, I would submit, an established meaning. I have been reminded by my junior to say that my definition of the market is not critical to our argument because we say that there is manifestly ample competition in the broader market.
GUMMOW J: Sorry, could you say that again, Mr Solicitor?
MR MEADOWS: That last comment I made?
GUMMOW J: Yes.
MR MEADOWS: My contention that the market is limited to the ability to provide wagering to lay a competitor or a contestant is not critical to our argument because we say that there is already a very extensive competition in the broader wagering market operating in respect of the people of Western Australia.
GUMMOW J: Yes, it is the reference to the people of Western Australia that is a bit tantalising. It is reference to people in Western Australia, is it not?
MR MEADOWS: It is, yes.
GUMMOW J: From time to time.
MR MEADOWS: The legislation is clearly directed to anyone who is in the State at any particular moment.
GUMMOW J: Yes. Now, some of your predecessors would have said that - or some of the Victorian Solicitor’s predecessors I think – would have said that section 92 indicates a constitutionally mandated splitting into six or seven economies. The question then is how does one match that idea if it is a correct view of it with more sophisticated notions of market which do not have that geographical stamp necessarily upon them?
MR MEADOWS: Well, I think – and I may be being unfair to what my learned friend’s predecessor said – but I would suspect that the word “mandated” is the key.
GUMMOW J: Forever.
MR MEADOWS: Mandated forever by section 92 by recognising that the States have their own economic centre. If I could just go to Cole v Whitfield to make my point about the word “protectionism” or “protectionist” in the section 92 sense having a relatively established meaning? If I could go to page 392 of the report, which is in 1987 ‑ ‑ ‑
KIRBY J: I did not take your written submissions to in any way challenge or seek reconsideration of Cole v Whitfield. Is that a correct understanding?
MR MEADOWS: That is a correct understanding.
KIRBY J: Indeed, I did not see in anybody’s submissions before the Court anyone suggesting that the principle in Cole v Whitfield needed reopening and reconsideration, the task being to give meaning to the rather porous language that is used there. Is that your understanding?
MR MEADOWS: I think that is a fair observation, your Honour, and in fact I would say there was not even a teaser in the submissions which might have tempted your Honours to embark on that exercise. But at the foot of page 392 it is said:
The expression “free trade” commonly signified in the nineteenth century, as it does today, an absence of protectionism, i.e., the protection of domestic industries against foreign competition. Such protection may be achieved by a variety of different measures – e.g., tariffs that increase the price of foreign goods, non-tariff barriers such as quotas on imports, differential railway rates, subsidies on goods produced and discriminatory burdens on dealings with imports – which, alone or in combination, make importing and dealings with imports difficult or impossible. Sections 92, 99 and 102 were apt to eliminate these measures and thereby to ensure that the Australian States should be a free trade area in which legislative or executive discrimination against interstate trade and commerce should be prohibited. Section 92 precluded the imposition of protectionist burdens: not only interstate border customs duties but also burdens, whether fiscal or non-fiscal, which discriminated against interstate trade and commerce.
HAYNE J: But such geographical reference as you see in that passage in 392‑393 might perhaps be understood as reference to an economy defined geographically, one would wonder. Why can it not also be sufficiently identified by reference to the geography of the impugned measure, the geography of the impugned measure in its application to competition, in a market which may better be defined without a geographic dimension localised to an individual State?
MR MEADOWS: Except that section 92 directs one to looking at the relationship between States and whether the legislation has the effect of protecting domestic operators from competition from out‑of‑State operators.
HAYNE J: But fastening upon a geographic dimension to a market in internet commerce is intrinsically difficult at least.
MR MEADOWS: And talking about teasers, we did advert in our submissions to the prospect that what Betfair does is something which is in international trade and commerce as opposed to interstate trade and commerce, and indeed some of its activities, as identified in the special case book, are clearly not in interstate trade or commerce, for example, when a telephone bet is taken after hours by a UK operator.
HAYNE J: But a way of understanding the case against you would be that, whether or not the market is defined nationally, internationally, however in geographic terms, the effect of the legislation which is impugned is to preclude an increase in competition in particular transactions having a geographic connection with Western Australia provided by the presence of the demand side in Western Australia at any time. That is a way of understanding the case against you, I think.
MR MEADOWS: We would submit that the question is this. Is the impugned provision made for a reason other than the protection of domestic operators from interstate competition? It is not a question which might arise under the Trade Practices Act as to whether there has been a substantial lessening of competition in a market. The concept of protectionism in the context of section 92, as we have been endeavouring to say, is not precluding competition in any general sense, rather it is protecting domestic operators from interstate competition.
One of the matters that we want to address is this issue which your Honour Justice Kirby has just adverted to of if one State allows a particular activity to occur and that would create competition in a particular market, that no other State can prevent it. That is the effect of ‑ ‑ ‑
KIRBY J: I realise the problem and the quandary that is presented by that to a notion of a Commonwealth with separate States and separate police powers and so on, but if it begins to touch upon the economy, then the Constitution guarantees the one economy, the one place where people can compete in business and commerce of which it is accepted gambling is a major player. That is why I have the puzzle.
MR MEADOWS: But, as I have sought to say, section 92 does not create a laissez-faire economy in Australia.
KIRBY J: You will have to convince me of that.
MR MEADOWS: Perhaps if I could just refer to ‑ ‑ ‑
KIRBY J: I thought that was the theory behind Cole v Whitfield which, in a sense, recognised that if you look at our Constitution, no Bill of Rights, none of the things you normally see in a Constitution, an awful lot of provisions about the economy and the taxing system and the whole object of that was to create a national economy which was a brilliant and highly beneficial achievement of the Constitution a hundred years before Europe.
MR MEADOWS: It is a form of common market, I accept, but it is not a common market in the same sense as that which exists in Europe. On the issue of whether it did create a laissez-fair economy, can I refer to our submissions at paragraph 55 where we refer to Zines in his work The High Court and the Constitution where he says the principle in Cole v Whitfield is not a guarantee of free markets, but is confined to free trade in a non‑protectionist sense.
A State may regulate a market so as to promote certain kinds of trade without infringing s. 92 if the measure does not discriminate against interstate trade in a protectionist sense. For example, the “protection” offered to growers of barley by the marketing scheme challenged in Barley Marketing Board (NSW) v Norman was not a kind of protection that contravened s. 92 of the Constitution. That is the basis of our submission.
I wanted to come to this point about interstate trade should not be placed in a privileged position, which is the effect of what my learned friend puts in relation to what is called their broad discrimination approach to section 92 because, as I said, the effect of it is if one State permits it, no other State can prevent it. So one has to ask, how does section 92 accommodate State laws prohibiting conduct in circumstances where the only persons engaging in a business involving that conduct do so from another State?
That is a situation which may arise because only one State permits the conduct or, alternatively, that circumstance may arise because operators within an enacting State comply with a particular prohibition. In such a case, the law which prohibits the conduct may have a discriminatory effect in one sense. The interstate operator who lawfully operates in its own State adopts a practice which is contrary to the prohibition and will not be able to operate in that manner in the enacting State. Operators in the enacting State will be able to carry on their business in the normal way because it does not involve a contravention of that provision. In that sense, the law prohibiting that conduct may have a discriminatory effect, although it applies equally to interstate and domestic operators.
If that kind of discriminatory effect is sufficient to engage section 92, then the section imposes a significant limitation on the capacity of States to regulate commercial activity in other than a uniform manner. You finish up with what New South Wales in paragraph 2.5 of its submissions refers to as “a lowest common denominator approach”.
KIRBY J: They say “with the most permissive”.
MR MEADOWS: Well, you finish up with a situation where if one State allows it, every other State is prevented from prohibiting.
KIRBY J: But if you start from a premise of a common market, well, so be it. Once they are in the market then that is just a consequence of the economic achievement of the Constitution.
MR MEADOWS: Well, we would submit that section 92 does not have that effect, and that this is one of the evils of the “criterion of operation” approach to the interpretation of section 92. If I could illustrate that by going to Cole v Whitfield itself at 165 CLR at page 402.
KIRBY J: Why is it an evil? The things we have in common are our national political system, the integrated judicature, our common language. We are the only continent in the world that has the one language, and a common market. These are wonderful achievements, they are not evils.
MR MEADOWS: No, I was not talking about any of those things being evils. What I was saying, that one of the evils of the “criterion of operation” approach to the interpretation of section 92 was that it had this effect of providing a privileged position to one State simply because it had allowed a particular manner of trade to be conducted.
KIRBY J: But the problem with your theory is that it is very much an antique theory because the world today is not even of national economies, it is of global and regional economies, and you are trying to sort of hive off the little fortress, Western Australia, and in a world where the economy has become global and regional and where the technology promotes that.
MR MEADOWS: But notwithstanding that all of those things may have happened, your Honour, section 92 sits there in the Constitution for a purpose.
KIRBY J: Well, I may have misunderstood Cole v Whitfield, but I thought it asserted the notion of a national economy and a national common market.
MR MEADOWS: I am not denying that, but section 92 nevertheless only precludes certain laws.
KIRBY J: You see, there are some downsides in it. Of course there are some downsides in the theory that I am putting to you, but there are a lot of upsides. It does promote the evenness of the availability and it promotes a bigger market, and therefore more chance of production and innovation, and as far as I am concerned, it is not an evil consequence of the Constitution, it is a good consequence.
MR MEADOWS: I think you are missing my point, with respect, your Honour. I am not talking about the proper construction of section 92, I am saying that the “criterion of operation” approach to section 92, which was rejected in Cole v Whitfield, results in putting a State such as Tasmania in this instance in a privileged position, and that is not what section 92 was designed to achieve.
KIEFEL J: Would you deny the operation of the concept of market then where section 92 is in question because the market is a construct which might reflect choices made by other States?
MR MEADOWS: We would in this sense, that section 92 itself does not mention the word “market” but what it is directed at is laws that prefer intrastate producers or other people in commercial activities ‑ ‑ ‑
KIEFEL J: But it acknowledges, does it not, and so does your argument and Cole v Whitfield, that competition is to be encouraged between the States. The question, if that is so, you have to define competition by reference to something.
MR MEADOWS: We would have to do that, but if you look at where section 92 bites, it bites when a law is enacted which gives to an intrastate operator an advantage over an out‑of‑state or an interstate operator. It is only when you get into that situation that the issue arises.
If I could come back to the reference at page 402 and it is in the final paragraph on that page, speaking about the “criterion of operation” approach to the interpretation of section 92 and in the middle of that paragraph their Honours said:
First, in some respects the protection which it offers to interstate trade is too wide. Instead of placing interstate trade on an equal footing with intrastate trade, the doctrine keeps interstate trade on a privileged or preferred footing, immune from burdens to which other trade is subject.
This was also adverted to by Justice Deane earlier in the piece in Miller v TCN Channel Nine Proprietary Limited 161 CLR 556 at 618.
KIRBY J: Yes, but on the facts here, could you deny that gambling of the kind that the plaintiff wishes to offer is, of its nature, interstate and indeed international? It is not intrastate. It is not the local poultry farm. It is not the corner shop. This is something that is global and national in its character as trade.
MR MEADOWS: I accept that it has a global character and there is no doubt that, because section 92 would not have any application, Western Australia could enact legislation which prohibited international operators from operating within Western Australia a betting exchange or people within Western Australia from betting with a betting exchange that was from outside Australia. The question is whether section 92 prevents it in the circumstances of this particular scenario. I will not read from the passage in Justice Deane’s judgment but he makes the point clear that the “criterion of operation” approach in fact puts the interstate trader in a privileged position.
KIEFEL J: What page is that, Mr Meadows?
MR MEADOWS: That is at page 618, your Honour, the whole of the paragraph beginning “In these circumstances”. The resolution of the plaintiff’s argument as to broad discrimination turns on the identification of what has been referred to as the real object or true purpose of the impugned law. When I use the phrase “real object”, that is what the reference is in Cole at page 408 and when I use the phrase “true purpose”, that is the phrase that was used in Castlemaine Tooheys at page 472.
The significance given to a discriminatory effect of an impugned law in both of those cases was that it demonstrated that the real object or true purpose of the law was not to establish a norm of commercial conduct, but rather to protect domestic industries against interstate competition and we would refer to Cole v Whitfield at pages 407 and 408 and Castlemaine Tooheys at pages 471 to 472.
Here, of course, what the Betting Control Act does is to prescribe a norm of commercial conduct. That norm of commercial conduct is that wagering operators cannot operate a betting exchange where it is possible to bet to lose and likewise that persons within Western Australia are not able to bet with an operator who engages in that norm of commercial conduct. We would submit that the fact that only one Australian operator, based outside of Western Australia, engages in that conduct at the time the law was enacted is not sufficient to characterise the law as discriminatory against interstate trade in a protectionist sense.
This requires, we would submit, the identification of the object of the impugned law in order to determine what its true purpose or real object might be. My submission is that the identification of the object or purpose is one of statutory construction. That is not to deny that the Court can look at the practical effect of the law, nor does it deny that the factual context in which the law was enacted and the practical effect which the law has might not be important in identifying that object. That is clear from what was said by your Honour Justice Gummow in APLA v Legal Services Commissioner of NSW (2005) 224 CLR 322 at 394 in paragraph 178 and 461 to 464 in paragraphs 422 to 424 by your Honour Justice Hayne.
The plaintiffs submit that the identification of the object of an impugned law is a question of fact. This is to be found in paragraph 9 of their submissions in reply and it was also put in the course of argument by my learned friend. But we would say that, if the object of a law is a question of fact, that must involve looking at the subjective intentions of some person or group of persons. We would say that that is not permissible because in order to do that you would have to provide direct evidence or evidence from which it could be inferred what the subjective intentions of the person or group of persons had.
We would submit that the objects of the Western Australian legislation in the Betting Control Act is not protectionist and, for the reasons which we have outlined, when one looks to the object of the law, so long as it is not protectionist and discriminatory on its face, rather than evaluating policy justification for pursuing that object, one needs to look at the legislation itself to determine its object and to do that against the factual context in which it was enacted.
KIEFEL J: Do you accept that to test the purposes as may be stated, or they are probably not stated here, but to ascertain the true purpose of the legislation, you identify the mischief that it is directed to and then look to see what measures are put against the mischief and then draw an inference about whether the true purpose is intended only to address that mischief or goes beyond it?
MR MEADOWS: I do not think it has to be the only effect of ‑ ‑ ‑
KIEFEL J: Is that a valid approach to identification of the true purpose?
MR MEADOWS: Not if it is limited to trying to identify the only purpose. We would submit that it is clear enough here that the purpose of this legislation was to prohibit betting‑exchange operations.
KIEFEL J: Are you accepting that it has two purposes then?
MR MEADOWS: It may have incidental effects, but the purpose ‑ ‑ ‑
KIEFEL J: That is different from purpose.
MR MEADOWS: I understand that, but here the purpose is clearly to prohibit the operation of betting exchanges.
KIEFEL J: I thought it was directed towards the vice and what might result from an overindulgence in lay betting by the public.
MR MEADOWS: Yes, that is right, but that is the ‑ ‑ ‑
KIEFEL J: Is that not what it is said to be addressed ‑ ‑ ‑
MR MEADOWS: That is what it is setting out to achieve.
KIEFEL J: Is that not its purpose?
MR MEADOWS: Yes, it is.
KIEFEL J: And its method is to ‑ ‑ ‑
MR MEADOWS: ‑ ‑ ‑ to prohibit it.
KIEFEL J: ‑ ‑ ‑ to prohibit betting exchanges. That is where the question lies, does it not?
MR MEADOWS: It does.
KIEFEL J: So the question is whether or not it goes too far.
MR MEADOWS: The question is whether it is a reasonably appropriate and adapted measure to achieve that purpose.
KIEFEL J: That is just another way of putting it. It depends whether you like that method of expression.
MR MEADOWS: Of course, yes. But that is really a matter first of all for the legislature to determine as to how it would choose to deal with this activity and there are various options available to the legislature, as we have seen. Tasmania has chosen to licence. Western Australia could have licensed. There may be other ways of doing it as well, but in our case we have chosen to prohibit it.
KIEFEL J: You say that is the only reasonable method of achieving ‑ ‑ ‑
MR MEADOWS: I do not say it is the only reasonable method of achieving it, but it is one which is within the ambit of reasonableness.
GLEESON CJ: Is the purpose of section 27D to prevent betting exchanges?
MR MEADOWS: Section 27D?
GLEESON CJ: Yes.
MR MEADOWS: No, it is not. The point we want to make is that the legislation in this case has an impact on Betfair because it is the operator of a betting exchange, not because it is an interstate operator, because it would apply to any operator of a betting exchange. If it is necessary to look at the policy justifications for the law in this context, our submission is that it is reasonably appropriate and adapted to the purpose we identify in paragraph 46 of our submissions, that is, to promote the integrity of racing and sporting events which are the subject of betting by preventing persons other than wagering operators licensed or authorised by law from placing bets that participants in those events will not be successful. We would submit that that is a legitimate end and one which is achieved by the prohibition which is contained in the Betting Control Act.
The plaintiffs do not dispute the legitimacy of that object, and this is apparent from paragraph 23 of their submissions in reply and, indeed, from some of the things that my learned friend said in his oral submissions. Their response is to say that the legislation has another protectionist object which is dominant or substantial, and this again is in paragraph 23 of their reply. We deny the existence of such an object for the reasons which we have already explained.
The plaintiff asserts that Western Australia has failed to demonstrate that increased opportunities for corrupt or improper conduct to which betting exchanges gives rise in fact exists or to provide an explanation for the total prohibition of betting exchanges. We would submit that the increased opportunities for corrupt or improper conduct is self-evident. The critical feature is the opportunity which betting exchanges provide to any person as opposed to a licensed bookmaker or a totalisator to place a lay bet that a participant in a race will not be successful.
A person seeking to profit from improperly influencing the outcome of a race need only ensure that a particular participant does not win, and this is obviously easier to achieve in ensuring that a particular participant will win. The existence of this increased opportunity is well demonstrated by the experience in the United Kingdom involving betting exchanges and Betfair in particular.
If I could take your Honours to the book of documents, volume 3, tab 39, where collected there, beginning at page 1653, are a number of reports of decisions of the disciplinary panel of the United Kingdom Jockey Club. What is apparent from those examples is that because of the ability to lay bet, to bet on a horse to lose, there was corruption. So if I could perhaps just illustrate it by taking your Honours to the example at page 1666 and 1667, the Hillside Girl result, where you can see in paragraph 10 that the connections were:
guilty of, or conspiring with Berry and/or O’Sullivan, for the commission of, or conniving at Berry and/or O’Sullivan being guilty of, a corrupt or fraudulent practice in relation to racing, namely ensuring that HILLSIDE GIRL, a filly which was known or suspected of being lame in its left fore and therefore of having little chance of winning or being placed, should run at Carlisle on 15thJune 2003 in the interests of bets layed in the ‘win’ and ‘placed’ betting exchange markets.
I would not go so far as to say there is a litany of examples there, but there are a significant number of examples involving betting to lose through a betting exchange.
KIRBY J: This can happen in any form of gambling. What does this have to do with the plaintiff that cannot be ‑ ‑ ‑
MR MEADOWS: It does involve the plaintiff in that these bets were losing bets, that is, bets to lose, if I could put it that way. They were actually winning bets but they were placed on the basis that the horse would lose where there had been interference or a horse was in a situation where they knew, the connections knew, that it would not win.
KIRBY J: You are seeking to justify a principle that Western Australia is entitled by its law to make itself a safe enclave where you can only bet to win, you cannot bet to lose?
MR MEADOWS: That is right.
KIRBY J: You say betting to lose is of its nature more prone to misconduct and fraud than betting to win?
MR MEADOWS: And we would say self‑evidently so, because even with the best will in the world, you may not be able to get a horse to win but with the best will in the world, it is almost certain you can make it lose.
KIRBY J: How many enclaves of this pure kind are there in the world now?
MR MEADOWS: I do not think I can point to any other enclave, but purity is a virtue, your Honour.
KIRBY J: Anyway, you say you are entitled to, if the Parliament of Western Australia so decides, and that that is not a protectionist purpose, that is a purpose of public policy which you have decided for police powers‑type reasons.
MR MEADOWS: Yes, we have.
KIRBY J: It would be more convincing if you could say, well, Germany has done this or the United States of America or India or some other place had done this.
MR MEADOWS: Someone has to be first in these things, your Honour.
KIRBY J: It is hard to be first in the face of a global betting system. I have no real sympathy whatever for any of this, but you have to look at the realities of the world.
GLEESON CJ: Do they have bookmakers in the United States of America?
MR MEADOWS: In the United States of America?
GLEESON CJ: Yes. Do they have bookmakers as distinct from totes?
KIRBY J: You seem to know as little about this as I do, Mr Solicitor. We are all too busy. This is our thrill.
MR MEADOWS: The United States, I am instructed, does have a general prohibition of this kind against ‑ ‑ ‑
KIRBY J: If you can find any other societies in the world that have formed the same view and regulated ‑ ‑ ‑
MR MEADOWS: Perhaps it would be best if I could ask to put in a note about the ‑ ‑ ‑
HAYNE J: Append to it the relevant parts of Damon Runyan while you are doing it, I think, Mr Solicitor.
GLEESON CJ: I think the position, if you are starting to look internationally, is a lot more complex. I think, for example, that if you go to a race meeting in Europe I am not sure that they have bookmakers operating at those meetings.
MR MEADOWS: In some parts of the world bookmakers are not allowed to operate. I would have preferred the analogy of a Dick Francis book which I notice that Kieren Fallon referred to in the Old Bailey the other day the suggestion that he had not raced to win was if it was out of a Dick Francis novel, but I am not giving evidence from the Bar table.
KIRBY J: It is more relevant were we to look to what happens in Hong Kong, Macau and our region because that is where a lot of gambling interest and money apparently comes from.
MR MEADOWS: I take your Honour’s point that it may have some relevance and we will, if I may, provide some note about it within seven days.
GLEESON CJ: You can let us know whether they have bookmakers in Hong Kong too.
MR MEADOWS: Yes.
HEYDON J: Mr Solicitor, correct me if I am wrong. The Hillside Girl incident you read out was count 10. Was that not so?
MR MEADOWS: I beg your pardon, your Honour?
HEYDON J: The Hillside Girl incident you read out the facts of, that was count 10? What I want to know is was count 10 withdrawn by the Jockey Club. The document records that it was. What is the significance of reading us out a count that has been withdrawn?
MR MEADOWS: Yes, that is the case, your Honour, but there are other incidences there in the collection of materials that make it clear that there was a bet to lose with a betting exchange and, in particular, Betfair, where people with inside knowledge of the state of the competitor in the race backed it to lose. The cases that we have collected there have a common theme, a person who either knows of a problem with a horse of which the general public is unaware, or creates such a problem, places or arranges for the placement of lay bets on a betting exchange that the horse in question will not be successful.
One of the bases upon which the plaintiffs assert that the increased opportunity for corrupt and improper conduct does not exist is the mathematical possibility of the placing of back bets on all participants bar one and still make a profit on the race. We would make a number of points about that submission and we would say that in the case of fixed odds betting with a bookmaker, the possibility, although it may exists in some races, is purely theoretical.
If I could take your Honours to page 291, Schedule 11(b) of the special case book, we would submit that it is manifest from that schedule that it is not a realistic alternative. For example, in the second race on that page it would be necessary to stake around $26,000 in order to gain the prospect of winning $100 if the favourite lost. In the case of the third race it would simply not be possible using the Dutch‑book method, as it is known, to make a profit. In the case of a totalisator, of course, the Dutch‑book method, again we would say that it was impracticable in the absence of fixed odds to calculate the relevant amount, notwithstanding the fact that you might have a live feed from the totalisator as to the odds as they fluctuate leading up to the close before the race.
My learned friend was at some pains to recount the situation with regard to the ability to lay, by use of the Dutch‑book method, the possibility that the West Coast Eagles would not win the 2007 Premiership flag, something which did eventuate, but we are providing to the Court a calculation using the Dutch‑book method of what it would have meant to do that. It would have required an outlay of $6,662 in order to win $100. With respect, it really is unrealistic to think that anyone would be foolish enough to outlay that amount of money on the prospect of winning $100 against the West Coast Eagles.
So we submit that facilitating the ability to place lay bets carries with it a high risk of an increase in corruption and detrimental effect on the integrity of racing and sporting events such that the Western Australia legislature was entitled to prohibit its practice in Western Australia.
KIRBY J: I think you have landed a bit of a blow in that submission and I have to think about it, but unless you can show that there are a few, even a handful, of other societies that have said, “We think this is inherent in this type of betting and we are not going to permit it”, you then begin to think, well, if so many other societies have found ways of securing integrity without banning it, what is the real reason that Western Australia is banning this one?
MR MEADOWS: We would say that they have not secured integrity, notwithstanding the audit trails and all of these things. These examples in the UK are examples notwithstanding the so‑called integrity measures that have been put in place by Betfair that these things are happening.
GLEESON CJ: What does that demonstrate except that all forms of gambling breed some corruption?
MR MEADOWS: They do. I accept that, but the point is that here it is so much more readily achievable and until now lay betting has been precluded and there is a good reason for it apart from the integrity of the industry, because ‑ ‑ ‑
GLEESON CJ: But until relatively recently, short selling of shares was prohibited.
MR MEADOWS: Yes.
GLEESON CJ: Now, it is regarded as a good thing because it evens out the market.
MR MEADOWS: By some people, yes, but there are legitimate concerns about short selling and it would be open to a reasonable regulator to say that it is an undesirable practice, as it was.
HAYNE J: What, if any, significance is there in the fact that the market that you are thus trying to regulate extends much beyond Western Australia?
MR MEADOWS: In my submission, it is of marginal relevance.
HAYNE J: So that if someone is corrupt and wishing to profit from corruption, all they have to do is lay the bet elsewhere.
MR MEADOWS: Except that if you were in Western Australia you could not do it.
HAYNE J: Just so. Whether it is a Western Australian race, the AFL Premiership or whatever, what is the effect, other than the commercial effect, of stopping this being done in Western Australia on the problem that you say the legislation attempts to confront?
MR MEADOWS: It prevents it happening in Western Australia and we would say that so far as the citizens of Western Australia are concerned they are protected from – and I use “protection” in the different sense – this operation by preventing them from engaging in this form of betting.
May I now turn to section 27D and to suggest that it does not impose any facial discrimination because it is a requirement that applies to all wagering operators who must obtain approval to publish or otherwise make available a WA race field. So the obligation is imposed both on wagering operators licensed and operating in Western Australia as well as wagering operators who may be licensed elsewhere.
There is an exemption for RWWA in that it does not have to obtain an approval and I will not go through the provisions which refer to it, but we have dealt with this in our submissions and there are clearly justifications for not requiring RWWA to obtain an approval to publish a race field given its function as the principal racing club for Western Australia and its role in supervising and regulating racing in the State. So we would say that it is not surprising that RWWA is not required to obtain an approval to publish WA race fields because of its specific statutory authority to engage in these activities.
So, in our submission, in form and effect section 27D of the Act imposes a requirement for a wagering operator, other than RWWA, to obtain approval in order to publish a WA race field. That, we would say, does not involve any discrimination against interstate trade because it applies uniformly to both intrastate and interstate operators.
The plaintiffs point in their submissions to the discretion which is conferred on the Minister in order to demonstrate that the provisions are capable of having a discriminatory effect. However, in our submission, the discretion which is conferred is one which could not be exercised inconsistently with section 92.
GLEESON CJ: You said the object of this provision is not to prevent betting exchanges.
MR MEADOWS: No, it is not.
GLEESON CJ: What is the object?
MR MEADOWS: The object is to require operators, be they intrastate or interstate, to enter into a commercial arrangement, as it is expressed, to make a contribution to the industry in Western Australia.
GLEESON CJ: So the object of this is to raise revenue.
MR MEADOWS: Yes, it is.
GLEESON CJ: Because these race fields are available in the local newspapers or, for that matter, on the internet.
MR MEADOWS: They are but, nevertheless, it is open to Western Australia to say that as a wagering operator you cannot use that race field for the purposes of your business without an approval from the regulatory authority in Western Australia.
KIEFEL J: Who has the copyrighting?
MR MEADOWS: It is an interesting question, your Honour. We do refer, in our submissions, to some case law in this area and this is to be found at paragraph 87 of our submissions where we say that while the information as to the names and numbers of participants in a race field may not itself be subject to copyright, copyright may well subsist in the compilation of that information in a race field.
We refer to a number of cases, including judgments of this Court, dealing with that issue. Nothing much turns on that in this particular case, your Honour.
KIEFEL J: You are not saying that the financial contribution is with respect to an intellectual property right?
MR MEADOWS: No, it is not a fee for use of the copyright material.
GLEESON CJ: Sometimes, in fact frequently, the bare information as to the names and numbers of the horses comes with a great deal of value added.
MR MEADOWS: Yes, it includes who the trainer is and what the horse’s colours are even.
GLEESON CJ: And form.
MR MEADOWS: And form and who the jockey might be, so it does have valuable ‑ ‑ ‑
GLEESON CJ: It is also accompanied by helpful predictions from commentators as to the likely outcome.
MR MEADOWS: That is a matter of opinion.
HAYNE J: That is value added, is it?
MR MEADOWS: Having said that the purpose of 27D is not to prohibit betting exchanges, it is also an object of section 27D, however, to stop the use of WA race fields in a manner that may affect the integrity of racing. So there are other forms of gambling which might be undertaken by operators in other parts of the country which may not be regarded as a suitable way of conducting a wagering operation which could result in a refusal to allow a Western Australian race field to be used. So, effectively that is what section 27D does. It says if you want to use a Western Australia race field in your wagering business, you need an approval.
The Minister is given a discretion but we say it is a discretion which must be exercised consistently with section 92 and that is consistent with authority and we would refer to what Justice Brennan said in Miller v TCN Channel Nine Pty Ltd (1986) 161 CLR at 556 and to what his Honour said at page 614 to 615. That is an approach which was endorsed by this Court in AMS v AIF (1999) 199 CLR 160 at page 176 in paragraph 37 by Chief Justice Gleeson, Justices McHugh and Gummow and your Honour Justice Hayne concurred in that view at page 232 to 233, paragraph 221 and your Honour Justice Kirby adopted a similar approach in paragraph 158.
So we would say that there is nothing in the terms of section 27D or its associated provisions which would form the basis for not applying the ordinary rule of construction which was identified by Justice Brennan in Miller, that is, that the discretion would have to be exercised in conformity with section 92.
GUMMOW J: How would that work out in practical terms?
MR MEADOWS: They could not discriminate in the relevant sense, your Honour.
The plaintiffs, in their submissions, point to three aspects of the possible exercise of the discretion which they say has the potential to contravene section 92. The first of those is discrimination against interstate traders generally in the grant of approvals, and as to that we say the discretion to grant or refuse could not be validly exercised by reference to the location of the applicant’s business.
The second point they make is discrimination against operators - there could be discrimination against operators who allow betting to lose. We say there is no reason to think that the policy of the Act against the establishment and use of betting exchanges, assuming that it is valid, could not be taken into account by the Minister in considering whether or not to grant such an approval. Thirdly, discrimination is said to occur in the imposition of conditions requiring the reaching of a commercial arrangement with RWWA for the use of the field.
As to that, we would say that there was clearly an expectation on the part of those who enacted the amendment Act as to which we refer to the Hansard. It is book of documents volume 1, tab 70 at page 754 in the third paragraph. Section 14 of the amendment Act introduces a provision into the RWWA Act which empowers RWWA to enter into such an arrangement, and the Court has already been referred to that.
Now, it is important to note that if a person was dissatisfied with the condition that was imposed, or for that matter with the refusal of the Minister to grant the approval, that there is availability of both judicial review and merits review through the State Administrative Tribunal. It is important to note, we would say, that the State Administrative Tribunal is completely independent of the Minister, it is a body which is established under its own legislation. It has a President who is a Supreme Court judge, and it has two Deputy Presidents who are District Court judges, and it deals with all manner of administrative appeals in Western Australia.
The powers of the Tribunal include a power to “substitute its own decision” on the review, and that is provided for by section 29 of the State Administrative Tribunal Act, which is to be found in volume 2 of the plaintiff’s book of legislation at page 1117. The State Administrative Tribunal is itself required “to give its reasons for a final decision”, and that is to be found in section 77 at page 1145, and the decision of the Tribunal is subject to appeal “on a question of law”, and that is to be found in section 105 which is at page 1160.
So in that manner the reasoning behind any decision to refuse to give approval or impose a condition on an approval would be exposed to merit review and independent scrutiny, so that the ultimate decision would not in fact rest with the Minister but with the Tribunal itself.
If I could now turn to the interrelationship between section 27D and the Tasmanian Act. There is clearly a large degree of common ground between the plaintiffs and the defendants, although not necessarily all of the interveners, in relation to the question raised as to the interaction between section 27D of the Betting Control Act and the Tasmanian Act.
The parties accept that it is implicit in the federal structure of the Constitution that a law applying in one State to prohibit conduct in another State is inoperative to the extent that the law of the State in which the conduct occurs authorises that conduct. The parties also accept that section 27D has extraterritorial effect and that section 27D can be characterised as a law for the peace, order and good government of Western Australia and that there is a connection with Western Australia in that the race to which the race field relates is conducted in that State.
The parties also agree that the Tasmanian Act authorises Betfair to operate a betting exchange and to do all things necessarily incidental to carrying out that activity and accept that the publication of a race field on which punters may place bets is a necessary incident of that activity. What is more, the parties accept that section 27D is inoperative to the extent that it would prohibit the publication in Tasmania of a WA race field by Betfair pursuant to the authority it has under the Tasmanian Act. However, the parties do not agree on the circumstances in which the place of publication is determined for that purpose. Collaterally, the parties also agree that the Tasmanian Act would not authorise the publication of a race field in a manner that would involve an infringement of copyright.
We would submit that there is a converse of the first of these propositions that the Western Australian law is inoperative to the extent that it would prohibit conduct in Tasmania which was authorised by the Tasmanian Act. That converse is that the Tasmanian Act will be inoperative to the extent that it would authorise that conduct in Western Australia when it is prohibited by Western Australian law.
For the purposes of this submission I would like to make a number of points. The first concerns what we do not say. We do not say that the legal consequences of an event must be precisely the same regardless of the court in which those consequences are determined, that is, we do not go so far as to adopt the position of Justice Deane in Breavington and say that section 118 of the Constitution mandates a particular choice of law rule. The second point that we would make is that choice of laws may prevent a conflict from arising. We refer to what was said in Sweedman 226 CLR 362, particularly by your Honours the Chief Justice, Justices Gummow, Kirby and Hayne at pages 398 to 399.
However, and this is the third point we would make, we say that the existence of inconsistent obligations is incompatible with the existence of a single nation. If the law of one State requires conduct which the other prohibits, then the choice with which the citizen is faced becomes a choice of which offence they want to commit. The choice of law rules for criminal law do not avoid that consequence, as each State court will apply the law of their home State. The citizen would be liable to prosecution in the State whose law is infringed. Fourthly, we would not see the position where one State requires what the other prohibits as very different from the situation where one State positively authorises what the other prohibits.
In such a case the rights created by one Parliament are inconsistent with the obligations created by the other. In circumstances where the criminal law is involved, choice of law rules do not provide a satisfactory resolution of that conflict.
Fifthly, we would say that the creation of a single nation in which the legislative power of the States as polities within the Commonwealth is primarily geographical and it is significant for the manner in which conflicts of this kind may be resolved. We say it gives rise to an implication derived from the Federal structure of the Constitution, rather than section 118, that the law of the State in which the relevant conduct occurs will prevail.
If I could seek to explain the manner in which we say that implication works and in the course of doing so explain what we mean by “conduct”. It is convenient to do this by way of an example similar to that considered in the New South Wales Court of Appeal in Brownlie v State Pollution Control Commission (1992) 27 NSWLR 78.
So, suppose then that, unlike the situation in Brownlie, a Queensland law either requires or positively authorises the operation of a factory which is located near the Queensland/New South Wales border. Let us say it is a pulp mill and it has associated emissions. Suppose also that New South Wales creates an offence of causing pollution which is a result offence in the language of the New South Wales court in Brownlie. Suppose also that a second New South Wales law also creates an offence of operating premises from which pollutants have the potential to escape into New South Wales without a licence.
If pollution occurs in New South Wales caused by emissions from the Queensland factory, then the New South Wales law will prevail. The conduct, which is the subject of the offence, is causing pollution and it occurs in New South Wales. Queensland could not authorise the causing of pollution in New South Wales when it is prohibited by New South Wales law. However, in relation to the operation of the factory the Queensland law would prevail. It would prevail over the New South Wales law which would prohibit the conduct of that operation.
The conduct which is the subject of the offence, that is operating a factory, occurs in Queensland. So, New South Wales cannot prohibit an operation in Queensland which is authorised under Queensland law. So, Queensland can authorise the operation of a factory in a manner which prevails over New South Wales law but it cannot authorise that factory to cause effects in New South Wales which are contrary to New South Wales law. So our reference to “conduct” in the points that I made encompass both actions and consequences depending on the construction of the applicable laws.
In relation to section 27D, which speaks of publication, in our submission, publication occurs where the information, the subject of the publication, is communicated to somebody. In other words, section 27D(1) creates “result offences”, as that term was used in Brownlie because, until such time as the information is communicated to a person, in our submission, it has not been published.
That, as has been pointed out, is consistent with the approach in Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 605. I refer in particular to paragraph 40 and the judgment of the Chief Justice, Justices McHugh, Gummow and Hayne. Now, recognising that damage is of the essence in an action for defamation, there may not be a direct parallel between the two circumstances but, in our submission, it is logical that publication occurs once it is communicated to the recipient. In the context of a criminal offence, one would have to say that it is unlikely that an offence of publishing would be committed if no person actually received the information.
If one looks at the telephone communication which is part of the plaintiffs’ activities, the person speaking may be in the United Kingdom and the person receiving the information may be in Western Australia and there is nothing in the fact that the call happens to be routed through a PABX in Tasmania. The information is published when it is actually received by the person to whom it is given.
We have set out in our submissions our position with regard to a situation where a publication might occur in some other State of Australia. In our submission, the Tasmanian Act on its proper construction does not apply to such a publication because even though it says “despite any other law”, that, in our submission, if one looks at the historical context and also the way in which the legislation is intended to operate, it refers only to Tasmanian laws. So, in our submission, the use of the words “despite any other law” does not result in these provisions having extraterritorial operation.
So what that means is, in the long run, that where a publication occurs in a State other than Tasmania, the Western Australian law which prohibits the use of the race field would prevail and that there is nothing in the Tasmanian Act which would allow it to operate so as to negate the effect of the Western Australia law.
If the Court does find it necessary to consider the manner in which an inconsistency of State laws operating outside the territory of either enacting State, if it finds it necessary to resolve that question, the parties and intervenors had offered the Court something of a smorgasbord of options. All of those options involved potentially difficult questions in their application, for example, as to which of the two laws said to conflict in this case have the greater territorial or other connection with the enacting State.
The Court touched on this in Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340 at 374 and returned to it to some extent in Sweedman v Transport Accident Commission (2006) 226 CLR 362 at 398 to 399 and 405 to 407 in the judgment of the Chief Justice, Justices Gummow, Kirby and Hayne and also there is a reference to it in Justice Callinan’s judgment at 428 to 432.
KIRBY J: There is no question of severance in this case, is there?
MR MEADOWS: We would submit that there may be a question, certainly so far as section 24(1aa) is concerned. We would not suggest that there is any question of severance in regard to section 27D, although if there was to be a severance, it could easily be that RWWA – the provision which says that RWWA does not have to obtain approval could be severed and it would still have practical operation and RWWA would have to seek an approval like other wagering operators, but we do not press ‑ ‑ ‑
KIRBY J: I said what I did because you appear to have nailed your flag to a point of principle concerning the undesirability of this form of gambling and that all of these are simply parts of the scheme to address that point of principle.
MR MEADOWS: Yes. We do make one submission about severance which I will come to in just a moment, your Honour. Coming back to this question of inconsistency, we have proposed a test at paragraph 88 of our written submissions, although I would point out that there is a typographical error in that paragraph. In the third line of that paragraph we refer to “which law”, when it should in fact be “which State”. The question is which State has the closer connection with the subject matter of the legislation. We say that reflects the approach taken by the Court in Port MacDonnell.
In our submission it is quite clear that the nexus with Western Australia to the activity of publishing that information is stronger than the Tasmanian nexus, which is merely that part of a publication is initiated in Tasmania by a person located in that State. So we would submit that the Western Australian provision would not give way to the Tasmanian provision.
On the question of severance – and this is with regard to section 24(1aa) and of course assumes that there is a finding that it contravened section 92 – we would submit that it could only be invalid insofar as it would apply to betting undertaken in the course of interstate trade or commerce. We would refer to paragraph 60 of our written submissions in that regard and point out that this is an approach that was often taken in section 92 cases decided prior to Cole v Whitfield and we would cite Nominal Defendant v Dunstan as an example, 109 CLR 143 at 151 to 152. We suggest there is nothing in Cole v Whitfield or subsequent cases which would render this approach inapplicable.
If it were read down in that way, section 24(1aa) would prohibit betting other than in a manner which involved interstate trade and commerce and it would, for example, prohibit a punter in Western Australia from betting with a wagering operator in the United Kingdom or in Western Australia. If it were read down in that manner, it would also apply to the operations of Betfair in the UK, that is, it would apply when internet bets were placed on the Betfair website on events held outside Australia.
The special case book does outline how the activities of Betfair interact with its operations in the United Kingdom. So, for example, if one goes to the special case book at page 147, one sees that a client cannot separately register with Betfair Australia, that they must agree to all terms and conditions governing the operation of the internationally integrated betting exchange which Betfair operates.
As occurred in Mr Erceg’s case, the money paid to Betfair by a client may be paid credit card into a United Kingdom bank account. In all cases, that money is held by a United Kingdom trustee company. The transfer of money between different wallets, as it is described, is simply a bookkeeping entry by Betfair UK and Betfair Australia. This can been at the special case book, 147 to 150.
Parts of the webpages on the Betfair website are sourced from different places around the world, including a web server on a computer at Betfair’s premises, but there are other places where it is sourced. While communications requesting a bet and notifying an acceptance of a bet for Australian events are sent between the computer located in Tasmania and the client’s computer, that is not apparent to the client because when they register, they register on the Betfair website, it is in fact the Betfair UK website which then directs them to the Australian website. When betting occurs by telephone, the client may well be speaking to a person in the United Kingdom. This is apparent from paragraph 19 of the special case book at pages 146 to 147.
GUMMOW J: Reverting to Dunstan for a minute in 109 CLR and severance.
MR MEADOWS: Yes.
GUMMOW J: The questions asked in 194 and 195 of the special case book are in fact rather fact specific. If you look at 194 and 195 of the case book, that is to say an answer in terms of (1)(b) would be enough, would it not?
MR MEADOWS: It probably would, your Honour, but I think the important thing from our perspective is that it would be limited to the interstate trade and commerce operation.
GUMMOW J: A species of that would be (1)(b), would it not?
MR MEADOWS: Yes, it would. Not all of it, your Honour. Yes, it would, your Honour.
GUMMOW J: I think it would.
MR MEADOWS: What I was seeking to demonstrate, but I will not go into it in any greater detail, but it is set out in the special case book between paragraphs 21 and following and it shows that much of this operation is in
fact conducted through international channels and not everything would necessarily be said to be within the purview of interstate trade and commerce. May it please the Court, they are our submissions.
GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for New South Wales.
MR SEXTON: If the Court pleases.
KIRBY J: I thought that I would have seen you edging your way up to the other side of the table during the course of these proceedings.
MR SEXTON: I knew your Honour was going to raise this matter. There is an inquiry being conducted in New South Wales into, amongst other things, betting exchanges.
KIRBY J: In fact, you have legislation of 2006, I think. Does that permit you to, as it were, change course?
MR SEXTON: The legislation at the moment in New South Wales, your Honour, is complicated in terms of the regulation particularly of racing and gambling associated with it. It probably does not at the moment allow a betting exchange, although there could be some argument about that, but realistically if a large commercial operator wanted to establish a betting exchange in New South Wales one imagines that it would need to be done in some sort of licensing system and that the legislation would need to take account of that. The inquiry was set up on Tuesday, I think, your Honour, so it is due to report I think in some month’s time.
KIRBY J: Is that a parliamentary inquiry or an independent inquiry?
MR SEXTON: It is an independent inquiry, your Honour. I do not think the person who is conducting it has been announced, just the fact of the inquiry itself. Your Honours, I did not propose to add to the written submissions that we have made in relation to the section 92 issues in the case. I was going to say something briefly about the question of conflict between the laws of different States.
I wonder if I could start by taking your Honours to volume 1 of the plaintiff’s bundle of legislation, and section 76A of the Tasmanian legislation is found at page 57 of that volume. Our starting point is that we say that there is not a conflict in this particular case because when section 76A begins with the words “Despite any other law, the following activities are lawful” we would say that any other law there is to be read as a law of Tasmania.
The Tasmanian Acts Interpretation Act in section 27 is in familiar terms when it says references to “matters and things” in legislation are to be taken as matters and things of the State of Tasmania, and it is a familiar provision in interpretation acts and in various jurisdictions, and we would say that therefore section 76A is to be read in those terms, and that would prevent a direct conflict arising in this case.
If that were not so there might be some argument as to whether section 76A or section 76VA, which is on page 66 of that volume, specifically authorises the very activity that is prohibited by section 27D of the Western Australian legislation. Your Honours will see that what is said to be lawful are various activities, and in small (d) in 76A:
the doing of anything else required or authorised to be done under this Act.
That follows on from the conduct of the gaming activities.
In section 76VA there is a reference to operating a betting exchange and doing “all things necessarily incidental to carrying on” those activities. There could be some room for argument about that but we say that in fact the direct conflict does not occur because of the opening words of section 76A. If the problem does arise, or were to arise, we say that it would be solved by the application of principles akin to those in the area of extraterritorial legislation.
It is true, as was observed in Union Steamship, that a broad view has been taken of the necessary connection between the legislating jurisdiction and the subject matter of the legislation but there must be some nexus and this is the first question that has to be determined in any case involving the competing statutes.
One way of approaching the problem might be, although we do not propose it, to say that in relation to a particular subject matter only one State or jurisdiction can have the requisite connection and so legislative power but, alternatively, and perhaps more attractively, it might be said that both legislating States can have a sufficient connection with the relevant subject matter but that if this is found to be so, one will ultimately be found to have the stronger connection and that that legislation will prevail.
This is consistent, or at least not inconsistent, with sections 106 and 107 of the Constitution. There might also be arguably an implication in the Constitution from the federal system to the same effect. This question was discussed in those terms by Justice Deane in Thompson v The Queen (1989) 169 CLR 1 at 34 to 35 and also by his Honour in Breavington v Godleman in the same volume at page 41 and then at page 129. It is true that in those passages that Justice Deane referred to section 118 of the Constitution as also being a basis for this approach but he said that it was not necessary for section 118 to be invoked, that sections 106 and 107 would, he thought, lead to the same results.
We have said in our written submissions that in a situation where section 27D of the Western Australian legislation attempted to make it an offence for Betfair to publish a Western Australian racing field in Tasmania and the Tasmanian law specifically authorised such an activity in Tasmania – we say that that would need to be done in a more specific way than it has been here – that the Western Australian law would not operate in those circumstances within Tasmania. This really amounts to saying that the Tasmanian law has the stronger connection because the activity occurs in its own territory.
There may well, of course, be situations that are more difficult to resolve, for example, where there are competing laws of two States and the question is whether one or both operate in a third State, this is, one might think, an unlikely situation. If it be encountered, however, then ultimately a choice will have to be made in any given case as to which jurisdiction has the operative legislative power with respect to the subject matter in question.
The task of assessing whether a sufficient connection exists in different circumstances has on occasions been carried out by this Court. In, for example, The Commissioner of Stamp Duties v Millar (1932) 48 CLR 618 the majority held that a provision of the Stamp Duties Act (NSW) exceeded the legislative powers of the New South Wales Parliament. The provision in question authorised the inclusion in the dutiable estate of a person who died resident and domiciled in another State of shares held by that person in a company incorporated out of and having no share register within New South Wales but which, in this case, carried on mining in New South Wales.
KIRBY J: We looked at this case and other cases in the Mobil Oil litigation.
MR SEXTON: Yes, your Honour. There are a number of other tax cases which I will just refer to, and your Honours do not need to go to them, where the connection was held, however, to be sufficient. Trustees Executors and Agency Company Limited v Federal Commissioner of Taxation (1933) 49 CLR 220, Australasian Scale Company Limited v Commissioner of Taxes (1935) 53 CLR 534 and Broken Hill South Limited v Commissioner of Taxation (1937) 56 CLR 337.
The same exercise was undertaken in a number of cases relating to road charges. In Cox v Tomat (1972) 126 CLR 105 a majority of Court – it was a three-two decision – held that Western Australia could not impose liability for road charges in relation to a vehicle owned by a foreign company, foreign to Western Australia, upon a person simply on the ground that he was a director of the company at the time the vehicle used the roads in Western Australia. That case largely applied the decision in Welker v Hewett (1969) 120 CLR 503.
Finally, your Honours, if I could just make a reference to a sentence. Your Honours do not need to go to the report, I will read it. In Sweedman (2006) 226 CLR 362 at paragraph 22 of the joint judgment contains these sentences:
What has been said so far as to it being not uncommon for one State to legislate with consequences for persons or conduct in another State must be read with a caveat. This is that in a federal system one does not expect to find one government legislating for another. But that is not an absolute proposition –
and then went on to discuss some other matters. That is, of course, not quite this case but it seems to us to be a relevant matter in relation to the question of conflict of laws between different States as it has been raised generally. Those are our submissions, your Honour.
GLEESON CJ: Mr Solicitor for South Australia.
MR KOURAKIS: If the Court pleases. There are five issues that I wish to address. The first is simply a brief submission on bookmaking and just what bookmaking is. The second submission is a slightly longer submission on the question of integrity which involves identifying precisely the increased risk of corruption that betting exchanges present over and above the risk that presently attends the permitted wagering in Western Australia. In the third submission I will suggest a series of questions that, in my respectful submission, can determine the validity of impugned legislation against the prohibition in section 92. I will deal fairly briefly with the question of onus and finally a brief submission on section 118.
Your Honours, on the issue of bookmaking I have provided an extract from the judgment of Justice Zelling in Fingleton v Lowen (1979) 20 SASR 312. His Honour at the foot of page 314 sets out a dictionary definition of being a bookmaker before going to some historical material, but your Honours will see that, in my submission, certainly by the early 20th century and throughout it, the idea of a bookmaker was one who made up a book on the all the horses in a given race, adjusting the odds. Your Honours, that is, in my submission, the question of setting the field and resetting the field as the money comes in in an attempt to get a balance and the relevant field is on all of the horses in the particular race. The extract from the novel at the very bottom of the page has the same idea:
A substantial bookmaker could become the changing‑house for all bets, and by laying first one horse in a race and then another could give his backers a fair price and yet show a profit himself, no matter which of them won.
Then the passage from Lord James of Hereford in the English case there is a similar idea.
MR KOURAKIS: Your Honours, if the word “bookmaker” in the Betting Control Act is read consistently with that definition, then quite apart from the regulation that prohibits a bookmaker from taking lay bets from the public, the statute itself would – that is, no regulation could authorise it because to do so would be inconsistent with the accepted meaning of a bookmaker.
KIRBY J: Do we, by the way, have any reference to the situation of the legislation in South Australia in our materials?
MR KOURAKIS: Yes. Section 63 of the Lottery and Gaming Act 1936 provides that, “No person shall act as a bookmaker”. Section 34 of the Authorised Betting Operations Act 2000 allows the licensing of persons to act as bookmakers, and there are provisions that require the Acts to be read together so that someone licensed under the Betting Operations Act does not commit the offence against section 63 in the Lottery and Gaming Act. There is no provision that expressly and directly deals with betting exchanges, but section 94 of the Lottery and Gaming Act 1936 probably, in my submission, prohibits conduct that is conduct that a betting exchange would necessarily undertake to be able to operate.
That provision, though, was plainly not enacted with betting exchanges in mind and would for that reason, I suppose, pass the subjective test posed by the plaintiff without any difficulty but, as I say, it is not directly expressed to betting exchanges. They do not operate in South Australia as a matter of fact and there has been no litigation to test whether or not section 94 would have the effect that I suggest.
KIRBY J: They do not operate by phone or by the internet? That would be astonishing.
MR KOURAKIS: What I meant to say is that they do not operate by way of any ‑ ‑ ‑
KIRBY J: That would be astonishing.
MR KOURAKIS: I am sorry, your Honour?
KIRBY J: They do not operate, they did not operate or were not available by internet in South Australia, that would be surprising.
MR KOURAKIS: No, your Honour. I am not saying they should be more confined. They have not been established or licensed under ‑ ‑ ‑
KIRBY J: Unless you have set yourself up as a local Singapore with equipment to ban messages coming in.
MR KOURAKIS: No. Certainly not, your Honour. I am here in support of Western Australia. The intentions of the State can be gleaned from that, I suppose.
KIRBY J: Are there casinos in South Australia?
MR KOURAKIS: There is one casino, if your Honour pleases.
KIRBY J: So you are not adhering to the old German principles of purity entirely.
MR KOURAKIS: Indeed, it is above a terrifically austere railway station that your Honour will find it.
GLEESON CJ: They are allowed to do it, but they are not allowed to enjoy it.
MR KOURAKIS: Your Honours, can I say that the definition of “bookmaker” or the understanding of it referred to by his Honour Justice Zelling would also, in my submission, inform the construction of section 50(1)(iii) of the Racing and Wagering Western Australia Act 2003. That is the subparagraph that my learned friend Mr Meadows took your Honours to. It speaks of RWWA’s gambling business being the “setting, accepting and making fixed odds wagers”. That phrase together especially with reference to the word “setting” suggests the traditional bookmaking function and supports, therefore, the submission that RWWA, by operation of the statute and the confining of its gambling operations to those, would not allow it to take lay bets by establishing of betting exchange.
Next, turning to the integrity issue, can I say this. In my submission, the risk posed by betting exchanges is this. A betting exchange allows an unlimited number of persons, Australians and anyone else anywhere in the world, to lay all of the horses, not just the favourites, in Western Australian events and to do so without a licence.
Your Honours, I state the danger in that way because stated in that way it poses the risk over and above that which exists because, by using the Dutch‑book method with a bookmaker, some persons in Western Australia can lay one or two of the favourites. The extra risk is laying all of the horses, not just the favourites, and the ability to lay being with an unlimited number of unlicensed persons.
Your Honours, the risk that that poses arises in this way. First, and it has been said a number of times, it is much easier to corruptly cause a horse to lose then to win. To cause it to lose all you need is access to as few as one of the persons associated with the racing of the horse, or just access to one horse’s stable. To cause a horse to win you need access to at least one person in the connections of all of the other horses or access to all of their stables. That is just as a practical matter and that is why it is said, and we will accept, that it is harder to cause a horse to win than to cause it to lose. Your Honours, that capacity to lay all horses, once you have that capacity, it follows that you increase tenfold or more the persons who may be tempted to profit corruptly by throwing a race.
GLEESON CJ: If you lay a horse, other than the favourite or the second favourite, you are accepting very long odds on, are you not?
MR KOURAKIS: Yes.
GLEESON CJ: Do ordinary people do that?
MR KOURAKIS: Your Honour, plainly some do through Betfair. Why they do is a difficult question. They might be operating as de facto bookmakers behind the scenes but, your Honour, the reason why one would think it unusual is this, that a bookmaker accepts or lays horses at long odds but only because he is able to balance his books.
GLEESON CJ: Exactly.
HAYNE J: A presupposition of Betfair is that there is an equal volume of lay bets.
MR KOURAKIS: Yes, and it may be because there are some particularly skilled punters who would like to match their assessment of the real chance of a horse winning on its merits against the array of people who are doing the traditional punting to back ‑ ‑ ‑
GLEESON CJ: If a horse stands in the market at 10/1 against, then if you lay that horse you have to accept it is odds on at 10/1.
MR KOURAKIS: Yes.
GLEESON CJ: I am just, at the moment, puzzled that that is an attractive form of wagering to an individual as distinct from a bookmaker.
MR KOURAKIS: Your Honour, there appear to be, as I say, some reasons based on, as Mr Gageler explained it, the assessment of punters as to whether the odds offered are a true reflection and they chance their arm on that.
Now, your Honours, if you can lay all the horses though it follows that not only are there, as I say, up to tenfold more groups of people who are possible targets or themselves causes of corrupt activity, but it is also the case that the persons associated with the longer priced horses will have more to gain and less to lose than the associates of the favourites. So being able to lay all the horses not only gives you a greater field of potential targets for corrupt activity, it is a field of people that naturally, as I say, have more to gain and less to lose.
Now, the third factor which goes to make this risk a significant one and a great one is that just Western Australia’s horse‑wagering industry is a one and a half billion dollar industry, the materials tell us. There is more than enough money at stake to undertake illegal wages and corrupt practice in a way that will earn enough money to make the pay-offs that corrupt practice necessarily requires, in itself a kitty there ready for the taking.
Now, your Honours, the fourth factor about the risk is that there are rational reasons not to have confidence that mere regulation will meet that increased risk. Instead of regulating and monitoring a handful of bookmakers the number of potential persons accepting lay bets, as I said earlier, is limitless and possibly worldwide. The people who lay horses will not be people whose antecedents have been checked by a licensing authority but may well be people with convictions themselves or association with organised crime, and there is nothing about Betfair’s registration requirements that would necessarily reveal that.
Now, your Honours, true it is that Betfair says that there is a record trail of the persons who placed the bets that might be followed up after the event, but the thing about organised crime is that it has an endless supply of stooges to put up. They will register one person for one week to lay the horses, next week they will register someone completely different, and on it goes.
It is said against this insufficiency of regulation argument that is put by the defendant and the interveners that it is a matter of blaming the speed camera for the speeding crime. That does not fully state the argument of the defendant or the interveners at all. Rather, the argument is this, there is not much point in putting a billion dollars at the feet of organised crime and saying, “Do not worry about it, we have a camera in place to record it then when they take it”, but the audit trail argument of Betfair amounts to no more than that.
Now, your Honours, given those risks involved in a betting exchange and the particular identification that goes above the betting that is currently allowed, it follows, in my respectful submission, that the plaintiff has not, with respect, met the case put against it as to the increased risk. Mr Gageler referred to the plaintiff’s written submissions, paragraph 75, as being the crunch argument that the plaintiff mounts against the integrity argument.
Your Honours will see that paragraph 75 is simply a reference to the fact that under the current bookmaking methods one or two favourites can be laid by the Dutch‑book method, but that argument simply does not address the increased risk in exposing the entire field to many unlicensed persons in the ways that I have just outlined.
Your Honours, if I could take a brief moment to elaborate on another difference between the Dutch‑book methods and simply laying a horse directly, I have provided as an aid to my submissions a four‑page written document that is headed “Erceg example”. Can I ask your Honours to look at that. Your Honours, the table set out on the first page comes from paragraph 60 of the amended special case. The only further information in it is that, with respect to the horse Homme, the dividend odds, market stakes and payout have been added as a result of information obtained from the Western Australian Turf Club.
Can I just say about that extra information that is has been shown to my learned friends for the plaintiff and they would simply make the submission that, as a matter of fact, Betfair was offering odds of $2 for Homme rather than $1.80. This table is from the Ozbet field and it is as difference ultimately that does not matter, but other than that, no issue is taken with the calculations on this table.
Can I just take your Honours for a moment to the dividend odds column and remind your Honours that Mr Gageler described that as the decimal odds and that, accordingly, looking at Innovation the decimal odd of 3.6 translate to an odd that can be expressed as 2.6/1. Can I remind your Honours that Mr Gageler explained that the percentage charts that such an odds suggests of Innovation winning can be calculated by dividing 3.6 into 100 and the percentage thereby calculated is about 28 per cent. More generally, your Honours will understand that, reading across the table for Innovation again as an example, if the dividend is 3.6 and $30 is staked and Innovation wins, then $108 will be returned.
Your Honours, if Homme was to be laid using the Dutch‑book method, the punter would lay bets in the sum of $30 for Innovation, $5 for Tip the Till and so on, on all of the horses. That punter would have staked therefore $70 and that is simply 126 which is the total of the stake in that column less the $56 that was not staked on Homme because Homme was being laid.
Your Honours will see then that if Homme loses, the possible return by laying Innovation varies from between $123 if the long shot Tummler wins down to $108 if Innovation wins. The return on the $70 investment therefore varies between $53 and about $30. Now, all of that calculation, your Honours, is simply the calculation that then appears on the following page. Then on the page again after that a similar calculation is conducted for the horse, Innovation. If I can just complete the illustration by staying with the ‑ ‑ ‑
KIRBY J: Where is this going, what is the point you are making?
MR KOURAKIS: Your Honour, where it goes is the couple of lines, the bottom lines, at the very bottom of the second page and it is this. By laying the horse, Homme, using the Dutch-book method and investing $70, an amount of between $30 and $53 can be gained as profit. Using a direct laying method through a betting exchange the profit is $87.50. For a smaller investment, to use the example, using the same investment with the Dutch‑book method, a criminal organisation would make a bigger return on the same investment. It is, if corruption is to be engaged in, a way in which enough money can be earned to profit the wrongdoer and make the payoffs that are necessary with a smaller amount of capital. In that sense, this simply goes to a further elaboration of the risk ‑ ‑ ‑
KIRBY J: Yes, but as the Chief Justice pointed out earlier, wherever you have wagering you have risks of corruption and misuse of the system and you therefore simply have to step up the vigilance and the superintendence and looking at horses that do not appear to run on form and that is just part and parcel of the system that the world adjusts to and, it is said, “We’re going to be a little fortress out here in the south seas that will be immune from all this”, but not in Tasmania.
MR KOURAKIS: Your Honour, the way in which Australia has adjusted to betting through bookmakers is regulation of the limited number of people who can lay bets in the way that is generally familiar. If betting exchanges pose the increased risk and it is material, the one that I have described, because all horses can be laid by any unlicensed person, a new and different question arises. The question is do States attempt to apply a similar regulatory model or do they prohibit it and the submissions, ultimately, of the defendant and the interveners, is that either alternative presents as a rational alternative. Testing impugned legislation against section 92 does not require one answer as to the reasonable form of regulation, it necessarily involves acceptance that there may be a range of solutions to a problem. Those which are essentially irrational or outside the open responses will fail the test against section 92.
KIRBY J: Normally, as you would know, I am very sympathetic to that because the federal system is supposed to be a system of diversity within unity but the problem is that there is an exception under the Constitution for the common market and, therefore, the problem is presented that when you get one in that particular game is lost.
MR KOURAKIS: Your Honour, I will come back to that when I suggest a series of questions that, in my submission, are demanded by section 92. But before leaving the integrity issue, can I just deal with a couple of isolated points that come out of it.
Firstly, as to the question of customs and their place in the debate, can I make the submission that ultimately the issue is one of competition between service providers for customers, and it is true though that by prohibiting a particular service some customers, particularly those who like the idea of matching their skills directly against other punters not as skilled without the intervention of a bookmaker, might particularly feel the loss of this further different method of engaging in their activity for profit.
Even accepting that extra dimension to the debate does not answer the question which is essentially one of whether the increased risk posed by this betting service that some punters might find particularly desirable justifies a regulatory response which does involve some, in our submission, not disproportionate, interference with interstate trade.
The next question is one of efficiency. The plaintiffs painted their case as really the bright shining new technology against 20th or even 19th century technology and suggested that the margins, reduced margins, that Betfair can claim are simply a result of that.
Your Honours, as Erceg example on the first page shows, a bookmaker will have what the plaintiffs have described as an over‑round or margin of about 26, the total is about 126 on the first page. Out of that they hope to be left with sufficient funds to pay for their own work but also to guard against any untoward contingency or not balancing their books.
Betfair does not have to worry, is not concerned with balancing its books because the risk of losing out, and the entire balancing is undertaken behind the computer screen. It would be plainly open to a licensed bookmaker, if the current regulatory scheme was changed, to have two large blokes with sunglasses standing next to him in the betting ring and immediately ‑ ‑ ‑
GUMMOW J: Mr Solicitor, I thought you had come here to help us on section 92 ‑ ‑ ‑
MR KOURAKIS: Your Honour, I am about to come to it, but, with respect ‑ ‑ ‑
GUMMOW J: - - - rather than retail us with yet more information about how gambling works.
MR KOURAKIS: If your Honour pleases, this submission about the efficiency and integrity question is, with respect, a brief one.
GUMMOW J: We know that.
GLEESON CJ: Mr Solicitor, we will adjourn now and we will resume at 2.00 pm, but during the adjournment we would like counsel to consult among themselves about the future of the case and to reach an agreement on how long it is likely to require if it does not finish by 4 o’clock this afternoon and we will then make a decision as to the future of the case in the light of that information.
MR KOURAKIS: If your Honour pleases.
GLEESON CJ: We will adjourn till 2 pm.
AT 12.45 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.01 PM:
GLEESON CJ: Yes, Mr Solicitor.
MR KOURAKIS: If the Court pleases. I put the following submissions on the application of section 92 to impugn legislation. The first is that the purpose or object of legislation is little more than its practical legal effect. Its practical legal effect is determined by having regard, on the one hand, to the rights and obligations conferred by the statute and, on the other, such constitutional facts to which the Court can properly have regard and out of that assessment the practical legal effect and, in my submission, the object will appear ‑ ‑ ‑
HAYNE J: That is a wonderfully flexible expression, “such constitutional facts as the Court may properly have regard to”, Mr Solicitor.
MR KOURAKIS: Your Honour, it is, and necessarily so, given the nature of the task and I can only refer your Honours to the discussion of your Honour Justice Heydon in Thomas v Mowbray 81 ALJR and in particular between paragraphs 622 and 639. The main purpose of this submission though, and I was going to make a mention of those paragraphs later, is simply to say that its object or purpose is not to be ascertained by the subjective intentions, a point that your Honours, Justices Gummow and Hayne made in different ways in APLA, let alone by trying to infer the subjective intentions from the array of representations, reports and lobbying that parliamentarians might have been subjected to before they in fact enacted the legislation.
KIRBY J: The problem here is that, as in most human endeavour, there are multiple purposes, and the question is how we sort them out according to a principled approach.
MR KOURAKIS: Well, in my submission, it is by looking at the real world of change affected by the changes in rights and obligations brought about by the statute, and one can only have regard to that by looking at constitutional facts. Something said in Parliament or something said by counsel might quickly draw attention to what those objects might be, but ultimately whether that object objectively judged is there, that is, whether the statute has the practical legal effect, is, in my respectful submission, determined by comparing the legal rights with the real world insofar as the Court can know it.
Your Honours, the other submission I make generally before going to a four‑step approach, which I suggest, the general point is to say that section 92 does not require of the Court that it engage in any general merits review of the legislation. What section 92 requires is that the people of a State pursue their legitimate social objectives ‑ ‑ ‑
GUMMOW J: The people of the State? Now, who are they?
MR KOURAKIS: Through the Parliament, if your Honour pleases.
GUMMOW J: You mean the electors of the State?
MR KOURAKIS: Yes, yes, through their Parliament – pursue their legitimately chosen social objectives by means that cause the least interference, or at least can be reasonably considered to cause the least interference, to interstate trade.
GUMMOW J: Now, what is the significance of this phrase “into colonial free trade” which is used in Cole v Whitfield and several expressions, with this notion of absence of protectionism and discrimination?
MR KOURAKIS: Your Honour, it is not something I can answer now and I am not sure of the precise context in which it was used there or in which your Honour raises it here.
GUMMOW J: Several of my colleagues put questions this morning which indicated some concern about this.
MR KOURAKIS: Your Honour, the economic ‑ ‑ ‑
GUMMOW J: We will not solve these problems just by reading along together passages from Cole v Whitfield.
MR KOURAKIS: No.
KIRBY J: It is the like motive in Cole v Whitfield, is it not? It is repeated about 12 times as the suggested criterion and it is rather opaque, so we need your help because that is what we are going to be applying. We are going to be applying that case. No one contests it. We then go to the phrase and it has to be given content for this case.
MR KOURAKIS: Your Honours, I am merely repeating the statement in Cole v Whitfield was to suggest that section 92 provided that interstate trade was simply free from legislation of a protectionist kind, and it suggested that ‑ ‑ ‑
GUMMOW J: There seem to be two political slogans in competition, do there not?
MR KOURAKIS: Yes, but, your Honour, they are not just slogans ‑ ‑ ‑
GUMMOW J: From 19th century dialogue, I suppose.
MR KOURAKIS: If your Honour pleases, they are not slogans. Section 92 affects a balance between two important competing interests ‑ ‑ ‑
GUMMOW J: No, those phrases.
MR KOURAKIS: Yes, but, in my submission, they reflect the balance that section 92 attempts to strike between two important competing interests.
GLEESON CJ: It was described in Cole v Whitfield as a political rallying cry.
KIRBY J: We should not be too embarrassed. After all, Constitutions, as Chief Justice Dixon said, or Justice Dixon as he was then, about politics, they are about political government and therefore the fact that our Constitution reflects political values of the 19th century is hardly surprising, really.
MR KOURAKIS: No, and political groupings with their slogans will develop about and around different political interests.
GUMMOW J: And develop against an awareness of what is now a national economy.
MR KOURAKIS: Yes. That was a significant economic and political interest at the time that was advanced by certain groupings.
GUMMOW J: There is a national economy now in the sense that there certainly was not in 1900.
MR KOURAKIS: Yes. Your Honours, Cole v Whitfield, looking at section 92 when it did, elaborated on the balance in a particular way – struck it in a particular way. That balance is this, that the mere burdening of interstate trade will not in itself render the impugned legislation invalid. In my submission, the essence of the test is simply this, that the Parliaments of the State are free to pursue legitimate social objectives but they must be pursued by reasonable means, that is, means which ‑ ‑ ‑
GUMMOW J: It may harm the economic interests of other persons who do not have the good fortune to be constituents in Western Australia, but who are constituents elsewhere in Australia.
MR KOURAKIS: Yes, and those economic interests of the national union are not to be interfered with any more than is reasonably necessary and that is essentially the balance. Your Honours, in my submission, the application of 92 can proceed in this stepped way. The first question is, is there any facial discrimination? If there is the legislation will generally be invalid. Quarantine cases, equine flu-type cases might be an exception in certain circumstances but generally facial discrimination will lead to invalidity. If there is no facial discrimination, the second question is, is the practical legal effect of the legislation such as to afford protection of intrastate traders. If it does not, the legislation is valid and there is no need to go any further and the actual basis of the decision ‑ ‑ ‑
GLEESON CJ: Just a minute, did you say “protection of intrastate traders”?
MR KOURAKIS: If your Honour pleases, of intrastate trade and there is an important distinction. Can I say it again? If there is no facial discrimination but the practical legal effect does not afford protection to intrastate trade, then the legislation is valid and there is no need to go any further and that was the actual decision in Cole v Whitfield, perhaps a little surprisingly, given that undersize lobsters could not be brought into Tasmania but, nonetheless, that was the actual decision.
Your Honours, if there is a practical legal effect which protects intrastate trade, the next question to ask is, does the legislation also have the practical, legal effect of advancing a legitimate non‑protectionist goal. If it does not have any such legal effect advancing a legitimate goal then the legislation is invalid and Bath is probably an example of that. If the legislation evinces, if it can be seen that it advances or at least is capable of advancing a legitimate objective, the next question is whether the means employed are reasonably necessary to the attainment of that end. Your Honours, that is where the question of alternatives arises, that is where the question of whether a sledgehammer is being used to crack a nut arises.
GLEESON CJ: What does the word “necessary” mean in that context? Does it mean indispensable?
MR KOURAKIS: No.
GLEESON CJ: What does it mean?
MR KOURAKIS: A measure that might rationally be viewed as a means that will achieve the end.
KIRBY J: Do I hear those words “appropriate and adapted” or the more useful expression “proportional”?
MR KOURAKIS: Your Honour, I am trying desperately to avoid them and the expression “reasonably necessary” is one that was again adopted by your Honours Justice Hayne and Gummow in APLA. His Honour Justice Callinan spoke of ‑ ‑ ‑
GLEESON CJ: Just a minute - excuse me. You said, did you not, that it is good enough if the means could rationally be viewed as a means to the end?
MR KOURAKIS: Yes.
GLEESON CJ: That is a different thing, is it not, from saying if the means adopted are those that have the least possible interference with interstate trade?
MR KOURAKIS: Yes.
GLEESON CJ: Which is it that you contend for?
MR KOURAKIS: Your Honour, allowing for a difference of view as to whether the measure still achieves the legitimate end, and that is of that type which I will elaborate on briefly in a moment, it is the latter. It is my submission that the question of alternatives and the availability of alternatives is critical in determining whether a measure is reasonably necessary or not.
It there is an alternative legislative scheme which will achieve and advance the social objective as much, but with less interference to interstate trade, then the impugned legislation is likely to be invalid. On the other hand, if the alternatives suggested do not advance the social objective in a way that approximates the impugned legislation, the legislation will still be valid even though it requires a greater interference with interstate trade. Essentially, if there is an alternative measure which will advance the social objective with less interference, the impugned legislation is likely to be invalid. If, however, the alternative suggested, although interfering less with interstate trade does not advance the social objective in a similar way, then the legislation will be, in my submission, valid because ‑ ‑ ‑
GLEESON CJ: By the expression “advance the social objective in a similar way” do you mean, in relation to this case, have the same effect on safeguarding the integrity of Western Australian racing?
MR KOURAKIS: Yes, or at least approximately the same effect, yes. Your Honours, as to that, there will be room for a difference of view and no one view will reflect what is reasonably necessary. That is sometimes put in terms of deference to the legislature concerned. In my submission, it is simply a recognition that different views might rationally be taken about what is necessary to meet a social evil, what remedial action is required by the State.
GLEESON CJ: Is this the same test as was applied in Clark King and Uebergang to a marketing scheme where this Court famously asked itself whether there was another reasonably practical method of regulating the wheat industry?
MR KOURAKIS: Your Honour, I cannot say precisely, but it sounds very much like that test.
GLEESON CJ: I only mention that because what happened in Clark King and Uebergang was advanced in Cole v Whitfield as a reason for getting rid of the test that was there applied.
MR KOURAKIS: If your Honour pleases. If it suffers that defect, it does, but, your Honour, I cannot help any more with the extent of the difference between the two and the way in which it is referred to and dealt with in Cole v Whitfield. Your Honours, can I just move to the question of onus, and I adverted to that a little earlier. The plaintiffs say that the onus of establishing validity is on the State that argues for the validity of the legislation impugned by reason of section 92. In my submission, onus arises only on factual questions, or the question of onus is only material where there is a factual dispute. In this case, the amended special case has put facts before your Honours. There has not been a real factual dispute identified as such to which the onus could have any application.
Insofar as the determination of this case depends on a decision about the law, and in particular the constitutional application of section 92, no question of onus arises. As tempting as it might be, it is not a road that is open to this Court to say that the Court is not particularly persuaded by any approach to the law and we will simply not decide the case on that basis.
GLEESON CJ: But is it part of your proposition that we have to ask ourselves at some stage of our reasoning process whether there is another equally effective way of safeguarding the integrity of the Western Australian racing industry short of prohibition?
MR KOURAKIS: Yes.
GLEESON CJ: And upon what facts do we make that decision?
MR KOURAKIS: Your Honour, those facts that are sufficiently not controversial and persuasive in the material that has been provided with the amended special case, material that I acknowledge has been provided without a lot of precision about exactly how it can be used but, in my submission, the matters to which I referred before lunch about the extra risk to the integrity of racing are essentially non-controversial matters to which your Honours could have regard in that respect.
As to any facts that would suggest that regulation is sufficient, essentially there is very little, in my submission, that could persuade your Honours that the State was irrational in not going down that course because the question is not a simple question of fact as to a past event. The issue here is an assessment of future risks based on predictions concerning human conduct from such material as we have about gambling and the inherent probabilities that persons might take one course or another. With respect, because this case involves an assessment about future risk, there is all the more reason for the Court to accept that views might differ about what is reasonably necessary to deal with that increased risk. If the Court pleases.
GLEESON CJ: The Solicitor-General for Victoria.
MS TATE: May it please the Court. We confine our oral submissions to the question of the apparent conflict or inconsistency between on the one hand the Tasmanian provisions, sections 76A, 76VA and 76B of the Gaming Control Act, and on the other hand section 27D of the Betting Control Act (WA), the prohibition on the publication or otherwise making available of a Western Australian race field in Western Australia or elsewhere.
Our submissions seek to demonstrate that no conflict arises between those provisions. There is, thus, no need in this case for the Court to countenance a principle for the resolution of inconsistency between the laws of different States. Might I begin by considering the terms of the prohibition imposed by Western Australia, and might I make a preliminary observation. Section 27D(1), as your Honours have heard, is cast in these terms:
A person to whom this section applies ‑
and those persons are to be found in section 27C(2) – and they include both intrastate and interstate bookmakers and others:
who, in this State or elsewhere, publishes or otherwise makes available a WA race field in the course of business commits an offence unless the person —
(a) is authorised to do so by an approval; and
(b) Complies with any condition to which the approval is subject.
Penalty: $5,000.
It is our submission that it is clear on its terms that the prohibition creates a criminal offence. In its terms it prohibits the carrying out of certain conduct anywhere in Australia. Its intended operation is thus extraterritorial. In our submission, on its face, it seeks to attribute criminal culpability to the proscribed conduct – the publication of a Western Australian race field – anywhere in Australia. It matters not whether that publication takes place when the information relating to a Western Australian race field is uplifted onto a server in Tasmania or when the race field is downloaded by a customer in Western Australia, or indeed downloaded in Victoria, Queensland or any of the other States.
KIRBY J: In that respect the section is a bit different to 24(1aa) in that that, I think it was fair – as the Solicitor for New South Wales said - you would read that as a person in Tasmania.
MS TATE: Yes, indeed.
KIRBY J: Or in this case, in Western Australia.
MS TATE: But, your Honour, our submission here is that, on its terms, it is clear that this prohibition was intended to have an extraterritorial operation. We say that that intention is made manifest and grounded in the language of the statute. Drawing on those observations, we make five submissions as to the character of that criminal offence before addressing the principal question of the law that applies in a criminal prosecution. It is our submission, firstly, that the prohibition can only be understood against the background of the integrity concerns which have been expressed, in particular that the publication of a Western Australian race field by an unauthorised person engaged in the betting industry could lead to an increased and unacceptable risk of inappropriate wagering operations.
GLEESON CJ: The Solicitor for Western Australia denied that the section had as its object the prevention of betting exchanges. He said it was a revenue‑raising section.
MS TATE: Yes. It is my recollection, your Honour. that he made two responses to that question. The first response was to say that the purpose of it was only that of gathering revenue, only ensuring that an economic contribution was made to Western Australia, but at a later occasion the Solicitor‑General for Western Australia said that part of the policy behind 27D was to diminish the risk of what he described as, I believe, inappropriate wagering operations.
HAYNE J: What is the interest of your polity as an intervenor to advocate one rather than the other? What interest is it of Victoria to advance a competing contention to that of Western Australia or to plump between them?
MS TATE: Your Honour, we would say it is not a competing contention. We embrace that expression that has been used by the Solicitor‑General for Western Australia and we would affirm that those integrity concerns are concerns that seem to underpin the prohibition under 27D. Indeed, the Minister who refused the approval to Betfair and the special case addendum page 55 at paragraph 23 spoke of one of the reasons for refusing the approval as lying in the effect that the approval might have on the integrity or perceived integrity of Western Australia races.
We would say that those integrity concerns are also underpinned by the general scheme of the legislation, your Honours, because the prohibition provides a means by which one State has a regulatory oversight over those engaged in the business of betting from other jurisdictions as well as from the State of Western Australia. It does that by facilitating the imposition of regulatory controls for approval which are assessed against the prescribed criteria under regulation 99 to which the Court has already been taken. Those prescribed criteria include whether the operator is a fit and proper person, whether the operator holds the relevant authorisation from another State, whether the requirements have been met in relation to the reporting of suspect transactions and so on.
Our second submission is that it is against the background of those integrity concerns that the offence under 27D should be treated as analogous to a results offence. The Solicitor‑General for Western Australia also used that form of terminology to characterise the nature of the prohibition under 27D. This is the terminology which is used to describe offences created by statute in order to suppress the harmful consequences of acts or omissions. It is used in particular to describe cross‑border offences where conduct occurring in one State is prohibited because it leads to harmful consequences in the home State.
An obvious example is the prohibition on pollution in, for example, the river of one State caused by the emission of chemicals into the same river in another State at an earlier part of the river’s course or, indeed, by the spraying of fertiliser onto land close to a river which is on one side of the border. These were the circumstances considered by your Honour the Chief Justice in the New South Wales Court of Criminal Appeal in a case to which I will not seek to take your Honours but which I can give a reference, namely, the Brownlie ‑ ‑ ‑
KIRBY J: I think we were taken to that.
MS TATE: To which your Honours were taken this morning. Brownlie v State Pollution Control Commission (1992) 27 NSWLR 78. Might I just give three additional references supporting the recognition of this type of offence, namely, Thompson v The Queen (1989) 169 CLR 1 at 23 to 24 in the judgment of Justice Brennan and the earlier English decisions of Director of Public Prosecutions v Stonehouse [1978] AC 55, and R v Treacy [1971] AC 537 at 560. We say that while pollution is an obvious example, one could imagine cross‑border offences analogous to result offences consisting in the prohibition on the transmission of opium or indeed pornography into a State.
KIRBY J: There is, of course, a large market in Australia in erotica and I think it is assumed that it is protected by section 92.
MS TATE: Your Honour, we may wish to draw a distinction between erotica and pornography ‑ ‑ ‑
KIRBY J: I hope we are not going to go into that.
MS TATE: ‑ ‑ ‑ but it is a distinction which is made in the academic literature, I might say. Your Honour, the point we wish to make here is simply that there may be many cross-border offences where what is sought to be prohibited is conduct on one side of the border which will have harmful consequences in the home State.
Now, our third submission is that an order for a statutory provision creating a result offence to achieve the objective of precluding or preventing harm occurring in the home State, it must of necessity extend to or intrude upon the State from which the harm is generated. If a result offence does not operate at the point where the harm originates, it will simply fail in its purpose. It is thus a necessary feature of such cross‑border result offences that they have an extraterritorial operation. Thus, we say in relation to the extraterritorial nature of section 27D that its intrusion into Tasmania and every other State is not a gratuitous, arbitrary, heavy‑handed or even an optional or merely incidental feature of the prohibition; it is in fact an essential quality of the character created.
Thus it is not a matter of creating an offence and deciding to extend its operation to intrude into another State as simply an add‑on. For the offence to achieve its objective, the intrusion into the State from which the harm originates, or without which the harm would not occur, is an essential feature of the offence.
Our fourth submission is that it is significant that with result offences the concern of the legislature is with the damage done in the home State. There is thus no question mark over the sufficiency of connection or nexus between the extraterritorial operation of the law and the home State. The validity of a law creating a result offence, with respect to the extraterritorial legislative capacity of the State, is assured as is the jurisdiction of the court of the home State to try offences in and for the State. It is our submission that given that that nexus is satisfied, it is then a question for the home State as to whether the consequences for the State are sufficiently serious as to warrant ascribing criminal sanctions to a contravention.
Our fifth submission is that, in general, the recognition by the home State of any right or authorisation provided by the State which has licensed a harmful activity would be, in effect, to render nugatory the result offence that the home State has created.
Now, it is our submission that although on this occasion that consequence might be avoided if the Court was to accept that the publication here takes place in Western Australia, we would say that there is a more general concern underlying the capacity of the States to create offences which are cross‑border results offences and that this Court ought not to embrace the submissions made by the Solicitor‑General for Western Australia on the question of inconsistency unless there is no other means of avoiding the conflict, and we submit that here there is a recognised means by which the conflict can be avoided.
So against that background might I consider the nature of the law that would apply in a criminal prosecution of the contravention of 27D. It is our principal position that a criminal prosecution of the contravention of 27D could occur only in a Western Australian court because it is an offence known only to the law of Western Australia and the courts of one State do not try offences against the laws of other States.
More importantly, in such a prosecution only the law of Western Australia, the law of the forum, would apply and the accused would not be entitled to rely upon any defence or authorisation, the origin of which is the law of another State. On this view, any conflict is precluded from arising. There is a single governing law of ‑ ‑ ‑
KIRBY J: Have you checked this submission against what the court said and did in Lipohar v The Queen?
MS TATE: Well, indeed, your Honour, and I was just about to take your Honours to Lipohar in support of the submission but, as I say, it is our position that in a criminal prosecution of 27D there would be a single governing law of the proceeding and that law would be the law of the forum, namely, the forum which asserts the jurisdiction to try the offence. Now, to make good those propositions might indeed I invite your Honours to turn to the case of Lipohar (1999) 200 CLR 485?
GLEESON CJ: Solicitor-General, just a small matter before you go to that case?
MS TATE: Yes, your Honour.
GLEESON CJ: Section 27D applies to persons of the kind described in 27C(2).
MS TATE: Yes, your Honour.
GLEESON CJ: That is, people making bets, for example, bookmakers. It would be practically impossible, would it not, to make bets, if I can use that expression, or make a book on a Western Australian race meeting without publishing or otherwise making available the Western Australian race field?
MS TATE: It would certainly be considerably more difficult, your Honour.
GLEESON CJ: So the practical effect of this section perhaps is to render it impossible to take bets, make a book, on a Western Australian race anywhere in the world without the approval of the Western Australian Minister.
MS TATE: Well, your Honour, it may be only a matter of practicality. I mean, it could be the case that a bookmaker made it apparent even on that bookmaker’s website, for instance sake, that there was a need for any customer to purchase a form guide independently and it may be that that particular licensed bookmaker would recommend one particular form guide over another and say, “I will only take bets from a particular guide”.
GLEESON CJ: The expression “making available a race field” simply means identifying the competitors in a race, does it not?
MS TATE: Yes, your Honour. I think your Honour was told this morning that it may involve a larger amount of information than that.
GLEESON CJ: Yes, they may be value added. But at the moment I am having some difficulty in understanding how a person to whom section 27D applies could – this would be a person anywhere in the world – conduct a betting operation or betting exercise, if I could use that neutral expression, in relation to a Western Australia race meeting without making available a Western Australia race field, that is to say, without the approval required under 27D.
MS TATE: As I say, your Honour, it might only be a matter of a practical problem. No doubt there have been licensed bookmakers in the past who have not themselves provided all of the information that one now would see in relation to a race field.
GLEESON CJ: I just wanted to check on that practical matter before you went to Lipohar.
MS TATE: Yes, your Honour. Your Honour, I had invited the Court to look at the case of Lipohar. In particular, if I could take the Court first to paragraph 60, which is at page 510, which explains what issue was before the South Australian Supreme Court. There it is stated at paragraph 60, the second sentence:
When the accused were arraigned and pleaded not guilty, their pleas were treated as being a denial of jurisdiction.
The charges here were charges in relation to common law conspiracy and I will describe the factual substratum in more detail in a moment, but –
their pleas were treated as being a denial of jurisdiction. Further, each of the accused applied pursuant to r 8 of the Supreme Court Criminal Rules 1992 (SA) (the Rules) for an order quashing the information on the ground that the information was bad because it did not disclose an offence triable in the courts of South Australia. Also pursuant to r 8, each accused sought an order on like grounds permanently staying further proceedings upon the information.
At paragraph 61:
With the consent of the parties, Lander J was presented with a large body of material for the purpose of determining the applications. His Honour held that the charge was “justiciable” in South Australia and dismissed the applications.
Then at the commencement of paragraph 62:
The issue before this Court is whether the Court of Criminal Appeal erred in rejecting the appeals from the decision of Lander J dismissing the applications under r 8 of the Rules.
Now, as I have said, the offence with which the appellants had been convicted in South Australia, charged and convicted, was the common law offence of conspiracy. There was a conspiracy to defraud a South Australian company by inducing it to make a large incentive payment to a sham tenant of a building in Collins Street, Melbourne, through misrepresentations made to the letting agents in Melbourne. It was argued by the appellants that the offence was not justiciable in South Australia because the conspiracy was complete at the time the agreement was made and that agreement was made in Queensland. Moreover, the agreement did not involve carrying out any unlawful act in South Australia.
This Court held that there was a sufficient nexus with South Australia for the South Australian Supreme Court to have jurisdiction and the nexus lay in the fact that the intended victim was incorporated in South Australia where it had its registered office and from which the decision to make the payment necessary for the fraud to be effected would need to be made. Now, in upholding the jurisdiction of the Supreme Court of South Australia this Court explained why it was that the appellants could be tried in that court and, more importantly for our purposes, this Court explained the consequence of that court having jurisdiction to try. That consequence was that there could be no conflict or choice as to the law to be applied to the prosecution.
Might I take your Honours to the last sentence of paragraph 103, which is in the joint judgment of Justices Waldron, Gummow and Hayne at page 526. The last paragraph of 103 states:
However, choice of law considerations do not apply to the operation of the criminal law.
The Court then goes on to explain that, to say at 104:
The common law rules of private international law adopt by analogy the classification developed in the courts of England and Wales in former times between local actions and transitory actions. In the first category, venue, that is to say the place of trial in a particular county or locality, and vicinage, the area from which the jury was drawn, were essential. This was because the facts relied upon as the foundation of the plaintiff’s case had a necessary connection with that county or locality. There was no such requirement of a necessary connection with the second category, transitory actions.
The common law rules of private international law proceed on the footing that most civil causes of action are transitory. Transitory actions (i) may be sued upon in the forum if it has jurisdiction over the person of the defendant; (ii) this is so regardless of the “law area” where the facts creating the cause of action happened to occur; but (iii) one or more issues may be determined by the court of the forum by reference to a “choice” it makes, under its common law rules, of the law of another “law area” as the lex causae.
At paragraph 106 – and we rely on this passage – the Justices state:
Crime stands apart. Jurisdiction is founded by presence to stand trial and the “general presumption at common law is that crime is local” involves rejection of propositions (ii) and (iii) set out above. The result for the administration of the criminal law is that “the question of jurisdiction and that of governing substantive law receive the same answer. The governing law is always that of the forum state, if the forum court has jurisdiction”.
This state of affairs reflects the difference in kind of the criminal law. It is not concerned with the adjudication of disputes as to the respective rights and obligations of parties to a particular transaction or with respect to property in particular subject matter. The body politic by which or on whose behalf the prosecution is instituted and maintained seeks the adjudication of guilt and imposition of punishment by its judicial branch. Professor Brilmayer makes the point:
“In criminal cases, the state is both a party – granted standing to prosecute by statute – and the adjudicatory forum – given jurisdiction to decide criminal cases brought by the state against alleged criminals. Because one state cannot validly involve the other’s interest as a party in redressing an injury, states do not enforce one another’s criminal laws. Once it is determined that the criminal law of another state will be applied, the forum court dismisses the case.
Further, your Honour, if I could refer to paragraph 115 again in the joint judgment, after about a third of the paragraph at 115, the joint judgment states:
At the trial, there was no departure from the traditional common law notion that the governing law, as to substance and procedure, was that in force in the South Australian forum. Three aspects of the matter may be noted: (i) the substantive offences were created by the common law of Australia (in force in the South Australian forum), not by South Australian statute having some specified or necessary nexus with that “law area”; and (ii) the conduct constituting the offences charged would, it may be assumed, have rendered the appellants liable to prosecution in the courts of other States, had they had control over the persons of the appellants, for crimes against the common law or the statute law of the States in question; and (iii) the investigative methods and procedure of police and prosecution authorities, the rules of evidence and the penalties may have differed between States. But none of these three aspects of the matter means that some question of conflict of laws or choice of laws arose. The governing law, both as to substance and procedure, was that in force in South Australia.
From those passages and the rest of the majority judgments we draw the following propositions. First, that the doctrine underpinning the criminal law is that of enabling the body politic to control conduct by repression, by prosecution, adjudication of guilt and punishment. Secondly, the courts of one State do not try offences against the laws of another State even within a Federation. Might I simply give the references to two other authorities which support that proposition, R v Catanzariti (1995) 65 SASR 201 and the matter of Isaac v R (1996) 87 A Crim R 513.
Thirdly, in a criminal prosecution the courts of one State do not apply the law of another. This proposition is also supported ‑ ‑ ‑
GLEESON CJ: The law or the criminal law?
MS TATE: They do not apply the criminal law of another jurisdiction, your Honour.
GLEESON CJ: Because the Tasmanian law in question in this case is not a criminal law.
MS TATE: It is not a criminal law, your Honour, but it is argued to function so as to, in effect, provide a defence to a criminal prosecution. We would say that without that submission the plaintiffs would have to accept that the criminal prosecution could proceed regardless. Their submission is that the licence provided to Betfair under sections 76A and 76VA and 76B serves to provide Betfair with a defence to any criminal prosecution under 27D.
GLEESON CJ: I understand that. I was just questioning whether the Tasmanian law is a law of a kind that falls within the general proposition referred to in Lipohar at paragraph 107 to the effect that “states do not enforce one another’s criminal laws”. There would be no question, would there, of the State of Western Australia enforcing a criminal law of the State of Tasmania if it were to recognise the Tasmanian law as a defence or providing a defence?
MS TATE: Your Honour, we would say to give effect to the licence would be in effect to enforce, if one likes, the authorisation that has been provided by Tasmania. Admittedly, of course, that authorisation is not tantamount to itself a criminal offence and there is no attempt to enforce the criminal law, in that sense, of another jurisdiction. We would say, nevertheless, the jurisdiction of the Supreme Court of Western Australia, when conducting a criminal prosecution of 27D, would apply only the law of Western Australia and there would be no sense in which it is obliged to make a choice. It is simply that a criminal court applies the law of the forum in asserting its jurisdiction to try the accused.
GLEESON CJ: You may be right about that. I was only seeking to question the use that you make of this principle that States do not enforce one another’s criminal laws.
MS TATE: Yes, your Honour. Perhaps the principle that I have sought to make out goes further than that, which is to say that the States – the criminal courts of one jurisdiction also do not give effect to the provisions, whether they be criminal or civil, that would otherwise function so as to provide a defence to the prosecution.
HAYNE J: That is a proposition about Chapter 5 of the Criminal Code (WA), I would have thought. It may be right, it may be wrong, but it is a proposition that if it is right would find its root in Chapter 5 of the Criminal Code, I would think, being the chapter concerning criminal responsibility.
MS TATE: Well, your Honour, we have sought to support that proposition further by observations made by Justice Brennan in the case of Thompson v The Queen (1989) 169 CLR 1 at 22. But the fourth proposition that we seek to draw from the Lipohar passages, to which I have taken your Honours, is that while civil causes of action involve rights and expectations between respective parties which can be enforced in a court applying the law chosen by choice of law rules, we say by contrast choice of law considerations do not apply to the operation of the criminal law.
Now, the fifth proposition we draw from Lipohar is that when a criminal court has jurisdiction to try an offence and asserts that jurisdiction, relying on if necessary the Service and Execution of Process Act (Cth) to summon the presence of the defendant, as occurred in Lipohar, then the prosecution will proceed in accordance with that single governing law, namely, the law of the forum State.
Now, it follows, in our submission, that in the prosecution of criminal offences, conflicts - what might have been thought of as conflicts between laws is avoided by the very doctrines which underpin the criminal law. Now, applying those propositions here we would submit that in a prosecution of a contravention of 27D for the publication of a Western Australian race field in Tasmania, the authorisation conferred on Betfair by the licence, issued in accordance with 76A and 76VA and B of the Tasmanian Act would indeed provide no defence. We would say that the conflict is avoided and there is no occasion here for this Court to resolve
any inconsistency between the laws. May it please the Court, they are the submissions for Victoria.
GLEESON CJ: Thank you, Solicitor-General. Mr Solicitor for Queensland.
MR SOFRONOFF: May it please the Court, we adopt the submissions of the Solicitor‑General for Victoria, which your Honours have just heard, and we also adopt the submissions of the Solicitor‑General for New South Wales and the Solicitor-General for Victoria insofar as they submit that there is no inconsistency between section 27D of the Western Australian Act and the relevant Tasmanian provisions.
Further, your Honours, having regard to the way the argument has gone and the time, by a means that we hope is reasonably appropriately adapted to the end of saving time, may I seek to ‑ ‑ ‑
KIRBY J: Proportionate to the saving of time.
MR SOFRONOFF: ‑ ‑ ‑ and I hope proportionately because of the brevity of them, may I hand up four pages of supplementary outline?
GLEESON CJ: Thank you, Mr Solicitor. We will need to just cast an eye over these before we accept them in place of oral argument.
MR SOFRONOFF: Yes, your Honour.
GLEESON CJ: Paragraph 7:
only one body of criminal law will apply to one set of actions in one State –
Could I raise with you the same question as I raised with the Solicitor‑General for Victoria? That proposition on its face does not exclude Tasmanian law, does it?
MR SOFRONOFF: No, your Honour. It is, having heard the argument, that proposition put in that sentence is too narrow and, in our respectful submission, in determining criminal responsibility, the criminal court of a State will only apply the statute law of that State.
GLEESON CJ: So only one body of law relevant to the application of the criminal law?
MR SOFRONOFF: Yes. If the Court accepts in due course the submission that the provisions are not inconsistent, then of course none of this arises and our primary submission is that the resolution of the issue of conflicting criminal laws of two different States should await a concrete case. But leaving that aside, may I make these brief submissions. Conflict of laws problems can arise in a number of different contexts. Four, for example, are these. The first is a civil dispute in a civil trial of the kind that John Pfeiffer v Rogerson was concerned with. Another may be where one State seeks to bind another by a taxing statute, for example, State Authority Superannuation Board v The Commissioner of Taxation (WA) is an example of that.
Even the concurrent assertion of jurisdiction by two different State courts under their respective statutes gives rise to a conflict of the assertion of governmental power which is resolved by familiar principles and by the cross‑vesting statutes and which if not resolved would be resolved by this Court on an appeal. That is to say, ultimately one court would determine the matter so to that extent the Constitution has a circuit breaker.
Finally, the criminal law and the criminal law presents a peculiar problem, in our submission, but a unique situation. The genesis of the problem may be that at Federation it was not thought that there was any extraterritorial legislative power in the States, with the consequence that no problem could exist of the kind that the Court is considering this afternoon. But that having occurred, in our respectful submission, a number of answers might be furnished to any particular apparent conflict of laws in the criminal sphere. First, construction of the two provisions might result in the conclusion that no true conflict arises. Secondly, despite an apparent conflict on the face of the statutes, there may be no real operative conflict in the way that the statutes have operated in the particular case.
Thirdly, there may be no territorial nexus. The nexus may be too remote or pre‑textual. Next, it may be that, although there is a territorial nexus, the law is not a provision which relates to that territorial nexus. One of the taxing cases – I think Miller – that has been referred to - we footnoted it -was such a case where there was indeed a territorial nexus but the tax impinged upon something that did not relate to that nexus.
Section 92 might invalidate the law, as is contended in this case. Section 117 might invalidate it for different reasons. But, in our respectful submission, if the law is prima facie valid – that is to say, if there is a genuine and observable territorial nexus and if the law is held to be valid for that reason, then it must be also for the reason that the existence of that nexus is an acknowledgement that that legislating State has an interest in passing a law to protect the peace, order and good government of that State – to protect the Queen’s peace, in short.
If that is so, then because all of the States – I will leave aside the Commonwealth – are equal polities, it could never be said that any particular State has a more important interest in preserving its peace than some other State based solely upon where the conduct occurred. In our respectful submission, the origins in England of the jurisdiction of the criminal courts, coupled with the extraterritorial power, limited though it might be, of State legislatures, together with their place within the federation, leads to that conclusion. But as we say, this is not the case to determine that because, on a true construction of the provisions, that kind of conflict does not arise.
None of the answers that are offered in the cases and in the submissions before the Court are satisfactory because it is necessary for there to be a general answer – we submit there cannot be a general answer – but it is necessary, if there be a general answer, that it will answer which law will apply in the event that two States legislate with respect to the criminalising of conduct in a third place and where it is seen that each State has a precisely equal territorial nexus or predominant interest as the case may be.
GLEESON CJ: The way this arises at practice or in a pleading sense in the present case would be this, would it not? Some person, and it may be aiding and abetting if you have an individual involved, but some person would be charged in Western Australia, having come within the jurisdiction in some way, that that person in Tasmania acted in a manner prohibited by section 27D and then that person would, by some pleading process in answer to the charge, raise as a defence, “What I was doing in Tasmania was done pursuant to a licence to do it issued by the Tasmanian Government pursuant to Tasmanian legislation”. Is your argument that the Western Australian court would simply say, “So what?”
MR SOFRONOFF: Yes, assuming otherwise that Western Australian law is valid, assuming its reach is justified.
GUMMOW J: We are a little bit obsessed with criminal law, are we not? These questions can arise with a defence of illegality in a contract or a tort case, can they not?
MR SOFRONOFF: But then we have choice of law rules that would apply in a civil dispute where that question would arise.
GUMMOW J: Yes, but it might pick up the illegality consequent upon the invasion of the law of the other polity, might it not?
MR SOFRONOFF: It might do, your Honour, but then questions would arise as to whether the contract is to be regarded as illegal in the place
where it was made or under the law of some other jurisdiction and conflict of laws rules in that sphere.
GUMMOW J: You get into Huntington v Attrill, do you not?
MR SOFRONOFF: I do not know, your Honour.
GUMMOW J: Yes, you do, about gambling in the United States and gambling in Canada. That is what it was all about, was it not, 1890 or something, you do not enforce these laws of other places through the mechanism of a civil law. That is another dimension to all of this.
MR SOFRONOFF: Yes. So, your Honours, in short it may be, although it has not happened in 100 years, that an irresistible force will meet an immoveable object but when that happens will be the time to resolve that issue if it needs resolution. Those are our submissions, your Honours.
GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for the Commonwealth.
MR BENNETT: May it please the Court. I apologise if my voice is a bit low, I have a voice problem at the moment.
Your Honours, there are three preliminary matters which will all be very short. The first is to indicate that we do not support either side in this litigation as a matter of totality. We do not make any submissions about the issues concerning gambling and the Dutch books and the like.
KIRBY J: You do not support gambling?
MR BENNETT: Your Honour, we neither support nor oppose.
KIRBY J: This is a sensitive time.
MR BENNETT: What we do is we make a number of specific submissions, all general submissions, about section 92 and about the conflict of criminal laws of States in their application to the facts of this case.
The second preliminary matter is that if I could assuage the concerns of your Honour Justice Kirby about the way in which this case has come, if this case had gone to trial there would have been no doubt weeks of evidence, and then a judgment which would no doubt begin with the heading facts, and then set out probably verbatim what appears in the stated case. The documents annexed to the stated case with the exhibits ‑ ‑ ‑
KIRBY J: I do not think so. I do not think so. I think it would be abbreviated and conceptualised and compressed, and the relevant would be sorted out from the chaff, and the judge at trial would explain it in case appellate courts had to look at it and make findings.
MR BENNETT: Yes. Well, your Honour, that is not the criticism I was dealing with.
KIRBY J: Digest it.
MR BENNETT: Your Honour, I was not defending the ‑ ‑ ‑
KIRBY J: Have you seen the books we have? I mean, you must have seen the amount of material we have been supplied with. I have never seen anything like it except in some of the native title cases.
MR BENNETT: Well, your Honour, the other matter is there are many cases which involve highly technical evidence. Patent cases are the obvious example.
KIRBY J: Quantum is what I am talking about.
MR BENNETT: There will be one next week in the Telstra Case. Thirdly, the complexity here ‑ ‑ ‑
KIRBY J: Threats.
MR BENNETT: ‑ ‑ ‑ is not a complexity which in our submission involves any understanding, sophisticated or otherwise, of the methodology of gambling. The facts concerning that are reasonably simple. The complexity in this case arises from the mathematics, and mathematics has always been a matter for the Court, and something which the Court has to take in its stride.
KIRBY J: We could not even agree whether zero was a number.
MR BENNETT: Yes. Well, your Honour, if I can – just before I leave that, just point out to your Honours that there is in fact an error which appears in two places in the stated case, a mathematical error, which I invite the parties to correct, or to seek to correct, seek leave to correct, and I invite your Honours to encourage that. If your Honours see on page 49 is the easiest place to see it, page 49 of the stated case, your Honours see a table ‑ ‑ ‑
GUMMOW J: It is not a stated case.
MR BENNETT: I am sorry, a special case. Your Honour, I am sorry. Your Honours see a table in the middle. In the third column of figures the number adjacent to Homme is minus $71.00. It should be a zero.
HEYDON J: That is a pleading that you are drawing attention to, not the stated case.
MR BENNETT: I am sorry, your Honour, it appears in the stated case as well, I think. Yes, it is on page 176 I think in the stated case, the amended special case.
KIRBY J: So it should read “zero, zero, zero”.
MR BENNETT: No, your Honour, the only zero should be where there is – under the heading “Pay out, single bet” that should be zero because the hypothesis is that no bet has been placed on Homme. The figure in the fourth column is correct, that is the net position Mr Erceg would be in if Homme won the race. Your Honours see how in each case the figure in the fourth column is $71.00 less than the figure in the third column.
KIRBY J: I do not know about you and whether your eyesight is better than your voice, but I cannot read those headings.
MR BENNETT: The heading, your Honour, to the third column ‑ ‑ ‑
KIRBY J: Horse, odds, stakes ‑ ‑ ‑
MR BENNETT: ‑ ‑ ‑ is “Pay out, single bet” and the heading to the fourth column is “Total profit if selection won”.
GUMMOW J: I hope you have got some better points than this, Mr Solicitor.
MR BENNETT: Yes. Your Honour, I am only concerned that if this is reported and the special case is set out, someone may use a clear mathematical error to suggest that the Court misunderstood the facts in some way. It should be corrected.
HAYNE J: It is not the Court who misunderstood these facts. It is the parties who stated the special case.
MR BENNETT: It is, your Honour.
HAYNE J: Take it up with them, Mr Solicitor, not with us. Can we get to your submissions?
MR BENNETT: Yes, certainly, your Honour. I have invited the parties to deal with that, your Honour. In relation to section 92 there are four short submissions of which the third is the major one. The first is one which seems to be common ground, and it appears from the authorities, that is that the intercourse test only applies to intercourse which is not trade and commerce. That can be demonstrated as a matter of Aristotelian logic because the relationship between trade and commerce and intercourse is one of inclusion and where one has a relationship of inclusion, one cannot have a stricter degree of regulation of the larger group than the smaller group. If one does that, it simply means that the regulation of the smaller group is meaningless or that one needs to make it clear that the smaller group is excluded from the larger one.
Clearly, whether our two tests, one portrayed in commerce, one for intercourse, and all trade and commerce involves intercourse, if one permitted the contrary to occur, it would mean that the trade and commerce test would never be applied, and that cannot be the case.
KIRBY J: Has the Court ever said that?
MR BENNETT: It seems to be suggested in paragraph ‑ ‑ ‑
KIRBY J: It seems logical, what you have said.
MR BENNETT: Yes, it was accepted by your Honours Justices Gummow and Hayne in APLA and it is supported by New South Wales Court of Appeal in Cross v Barnes Towing. We have referred to those cases in paragraph 10 of our submissions. In my submission, it is a proposition which flows as a matter of logic. One does not need to derive it in any other way.
Trade and commerce, of course, will always involve intercourse. It may be possible to imagine extreme cases where it does not, where two companies agree that one will do something in one State and the other will do something in another State which will counterbalance it and nothing crosses the border, but that is a very unusual and unlikely situation and one does not need to have a special rule for it.
KIRBY J: Perhaps a plot between corporations to stop interstate trade.
MR BENNETT: I suppose the absence of intercourse might be ‑ ‑ ‑
KIRBY J: That would be intercourse, but not trade and commerce.
MR BENNETT: It would be a restriction on intercourse, and that might be – but, of course, companies are not bound by section 92, only governments are. It would be an example, I suppose, of trade and commerce without intercourse, although it might be said that there is a negative effect on intercourse there. Now, the second matter is that – this is paragraphs 12 and the following – trade and commerce of the same kind include substitutable commodities. In this submission we support the plaintiffs. It is only for the purpose of seeing if there is competition. The test used by the aficionados of trade practices law, namely, cross‑elasticity of demand, or cross-elasticity of supply in appropriate cases, may be a convenient test for it. The question is, do the products compete for the particular consumer dollar and, in this case, they clearly do, however the market is defined.
Of course, when applying trade practices principles, one takes the wider market rather than the narrower one in this type of case. The third matter is the question of when a law is appropriate and adapted to achieving a legitimate object. There are a number of problems here which arise where one has two purposes identified; one protectionist and one not protectionist, protectionist in a discriminatory sense, I should say, or discriminatory in a protectionist sense, and the other not.
GUMMOW J: Does that reference to discrimination add anything?
MR BENNETT: I am sorry, your Honour?
GUMMOW J: Does that reference in the formulation by the court add anything in fact?
MR BENNETT: Yes, your Honour, because one could have protection of a product which is equally manufactured throughout Australia where there is no discriminatory effect on interstate trade as opposed to intrastate trade. What, of course, always occurs in the section 92 cases is that it is either facially discriminatory or discriminatory in effect because the product is not made in the State and is made in other States.
We submit that the appropriate way of dealing with legitimate objects is to see if there is a legitimate object, not to ask if it is the dominant or sole object, but rather to ask if it is one of the objects and the law is an appropriate and adapted method of giving effect to it, or proportionate, if one prefers that wording. There are a number of reasons for that. One is a reason hinted at in a question Justice Kiefel asked yesterday where she referred to parallel purposes.
There is of course a distinction between parallel purposes and purposes which are connected in series, if one likes, where one leads to the other. To give a simple, homely example, a person going to a restaurant may have the parallel purposes of enjoying the food and enjoying the company and it is meaningful to say, “Which was your predominant purpose? Were they equal? Was one your sole purpose? Was it 70/30 or whatever?” They are purposes in parallel.
If one takes a different example, if one takes the person opening the door of his car on the way to the restaurant and says, “Was your purpose in opening that door to get into the car or to go to the restaurant?”, there the purposes are in series. He is getting into the car so as to go to the restaurant. It would be meaningless to say which is the predominant purpose, which is the majority purpose, which is the more important purpose, they are not meaningful questions a court can answer. They are both 100 per cent in their respective universes of the purpose.
KIRBY J: I could imagine judges saying the predominant purpose was to get into the car because you might have stopped on the way to buy the newspaper and to do other things. That is the nature of getting into a car. You have read the same cases on causation as we have.
MR BENNETT: I submit that would be an illogical approach for such a judge to take, your Honour, because the competing purpose in parallel there is to do something on the way. Getting into the car is merely a means to an end of going to work, in the example. The problem here is this, that one could have a case where the discriminatory protectionist purpose is itself merely a means to an end, merely a step on the way.
Let me give an example of a very hypothetical case to illustrate that. Let us suppose there was trade in the Australian States in koala skins and that it was legal and let us suppose that are conservationist government in one State wanted to stamp out that trade for conservationist reasons and suppose it says, “The way we will stamp out this trade is we will promote in our State the manufacture of artificial koala skins which can be made” on the hypothesis “very cheaply, more cheaply than hunting koalas, and are totally substitutable and indistinguishable from the real thing”.
So the government of that State says, “We will encourage this industry, we will subsidise it and we will protect it by protectionist discriminatory legislation and our purpose in doing this is to build up the artificial koala skin industry so as to destroy this evil trade”. That is an example where there is a protectionist purpose, but the purpose is merely a purpose on the way to the real purpose. It is not for the purpose of protecting the local manufacturers by enriching them. It is the purpose of enabling the destruction of the trade one wishes to destroy.
In my respectful submission, where one has that sort of example, it would be meaningless to say which is the predominant purpose and to apply a test of that nature, but the test we propound of saying is there a purpose which is legitimate and is that appropriate and adapted, gets one there. So the law would be valid.
Nor does one say, as is suggested in some of the submissions, that one looks to the protectionist purpose and sees if it exists at all. That is not the answer either. The question simply is, is there a legitimate purpose and is the law appropriate and adapted to achieving that purpose and we have put that in paragraph 17 at 221.
GLEESON CJ: One of the submissions that was put earlier today was that the test is, is the law a means of achieving that purpose that involves the least possible interference with interstate trade.
MR BENNETT: We submit that puts it too high, your Honour. That involves a much more substantial interference with the legislatures. Obviously, it is relevant that there are alternative methods of achieving the object but, in our submission, section 92 does not compel the States to adopt any alternative method, however onerous, to avoid imposing a discriminatory burden. It would obviously be relevant to see, are there reasonably available alternatives and to ask all the questions that the parties ask in this case about how reasonably available they are, how effective they would be, and so on, but that is relevant but not decisive.
GLEESON CJ: In the days when section 92 was seen as applying to compulsory acquisition schemes relating to the marketing of primary products, for example, the test that used to be applied was, was it not, is the marketing scheme the only reasonable method of regulating the trade? That test came out of the decision of the Privy Council in the Bank Case, did it not?
MR BENNETT: Yes, and it was in Uebergang, of course, your Honour.
GLEESON CJ: Absolutely, and it originated in the Privy Council, did it not, in the context of looking for a formula that would reconcile the requirement of absolute freedom in section 92 with the capacity to regulate interstate trade in 51(i)?
MR BENNETT: Yes, that was the reasonable regulation test which was laid down in those cases.
GLEESON CJ: Then you had to demonstrate or try and demonstrate that this was the only way you could do it.
MR BENNETT: Yes, your Honour. We submit that under the current Cole v Whitfield Case, that puts it too highly.
KIEFEL J: But Mr Bennett, unless a reason is given for not adopting the least possible interference with the knowledge and understanding of what section 92 will require, why can it not be inferred that there is another purpose to which the means in fact adopted are truly referable?
MR BENNETT: Yes. Your Honour, as a practical matter in many cases that can be done and the best example of that is Castlemaine Tooheys 169 CLR 436. If I can just show your Honours how it occurred in that case. Your Honours will see from page 449 point 9, at the very bottom of the page, in the special case, these words – it is the last three lines:
A 4 cent deposit is sufficient to ensure a reasonable and adequate rate of return of refillable bottles.
In fact, a 15 cent requirement had been imposed which had a serious effect on interstate competition.
That is picked up in the judgment as in effect being the fact which led to the decision. It is referred to at page 463, point 2. At page 474, point 3 they refer to the discrepancy between 4 cents and 15 cents, and say:
The magnitude of the discrepancy indicates that the object of fixing the 15 cents refund amount went further than –
the conservationist objective. So one can, in some circumstances where it is clear, draw an inference from the fact that something has been done which was not necessary to secure the legitimate objective and we fully accept that. It is a relevant question of fact but it is not an absolute, as it suggested. It is not that if one can find any other way of doing it, one can say to the State, “You cannot do it this way”. It is not as simple as that. The test is more sophisticated. We have dealt with that in paragraphs 22 to 26.
The final matter on section 92 is what the additional material in the special case is directed to, this is the decision of the Minister. We simply make the point that one cannot hold something to be in violation of section 92 because a discretion might be exercised adversely. If the exercise of the discretion does give rise to a breach of section 92, then there are administrative remedies and section 92 can be deployed in the course of those remedies by way of challenging the Minister’s decision. That is not what was done in this case.
There has been no challenge to the Minister’s decision. What has been done is to say, it goes to the Minister’s decision and that shows how protectionist it is, and look what the Minister is likely to do and so on, and that submission, in my respectful submission, is not open to the plaintiffs.
KIRBY J: Could I ask you, I have been puzzled by your paragraphs at 64 and 65 since I read them with the reference to the Interactive Gambling Act 2001 (Cth) and the confinement of that Act to exclude interactive gambling services that are wagering. Was that explained, because there would I assume be quite a lot of federal power to deal with the issue which has brought us all together in this case?
MR BENNETT: There would be, your Honour.
KIRBY J: Did the Minister explain when that legislation was enacted why in this current age such a modest approach to federal power was taken?
MR BENNETT: I do not know the answer to your Honour’s question. I can have the material obtained and put in a short submission about it.
KIRBY J: Yes, I would be interested to know that.
MR BENNETT: If I could have leave to do that I would appreciate it. All we were really doing there was for the sake of completeness showing that the Commonwealth legislation did not affect the legislation involved here because of the wide exclusion.
GLEESON CJ: Can I ask you a question about your third proposition which, as I understand it, comes down to this. If we were to find that there are two objects of these laws, one of which is the protection of local industry and the other of which is the integrity object, then we would have to ask whether the law is a means of pursuing the integrity object which is appropriate and adapted or proportionate or whatever?
MR BENNETT: Yes.
GLEESON CJ: And you reject the proposition that we would ask whether it is the way of pursuing the object that has the least effect on interstate trade?
MR BENNETT: Although that would be a relevant consideration.
GLEESON CJ: But there would be a question of identifying or defining the second object. You could not define it, could you, as preventing exchange betting because that would be a self-defining answer? This is the only way of preventing exchange betting, prohibiting it?
MR BENNETT: Yes. Your Honour, we have answered that in paragraph 21. The purpose, we say, is protecting integrity. One may have to ask the question, is that a significant or real purpose, not a de minimis purpose or pretend purpose, one may have to ask that, but having established that is a purpose and this is an appropriate and adapted method of giving effect to it, that, we submit, is sufficient to satisfy the Cole v Whitfield test.
GLEESON CJ: But if were to conclude that there are two objects of this legislation, one of which is protectionist and the other of which reflects a genuine concern for the integrity of the Western Australian racing industry, then we fasten on the second objective and we make a judgment about, to use a neutral expression, its reasonableness, is that right?
MR BENNETT: Yes, your Honour, to use the neutral expression. There is nothing surprising in that because, bearing in mind that the purpose is ascertained objectively, one will always be able to find a protectionist purpose in that there will always be some benefit to local industry. No doubt parliamentarians are sensitive to their electors and therefore it is always possible to say there is or may be a protectionist purpose but, we submit, that the overall effect of the application of the provision, bearing in mind all of the general considerations that have been put about State sovereignty and about not discriminating in favour of interstate trade as against overseas trade and so on, bearing in mind those considerations, we submit that the test we have put is the best one.
GLEESON CJ: A lot would turn, would it not, on how exactly you defined the second objective? If you defined it, for example, as being preventing such increased risk to the integrity of racing as is involved in exchange betting, the only way of achieving that purpose is to prohibit exchange betting.
MR BENNETT: It may not be, your Honour. It has been said in relation to crime generally by criminologists that a greater risk of being found out operates as more of a deterrent than an increased sentence. Anyone laying a horse with Betfair knows that the person’s name and the amount of the bet is readily searchable by investigators when it turns out that horse suffers an unfortunate accident and the police are investigating who caused it. It is rather like buying shares when one gets a piece of inside information. One knows that one will be the first suspect if one has bought them. So the increased supervision that is offered may well be a significant factor. That is one of the arguments the plaintiffs put.
KIRBY J: I must admit I am a bit surprised by your answer to the Chief Justice because I would have thought, speaking as you do for the Government of the Commonwealth which is the only government here that has the constitutional function of speaking for the whole nation, that you would have laid emphasis upon the high constitutional purpose of section 92 and its contribution to the free market and the free flow of business and trade and commerce within the nation and, therefore, it is not, as it were, completely evenly scaled, this balance. It is a constitutional priority for free trade.
MR BENNETT: Section 92, of course, affects the Commonwealth as well as the States. It limits the Commonwealth as well as the States. There are issues of constitutional policy which determine why I am instructed to argue for particular principles or against particular principles in interpreting the Constitution. Where one has a section which limits State and Commonwealth powers at the expense of State sovereignty or, in other cases, Commonwealth sovereignty, that is something which the Commonwealth frequently would be on the other side of.
GLEESON CJ: Mr Solicitor and Mr Gageler, what I am about to say would not require the further attendance of anybody who did not want to attend on a further occasion. If we do not finish this argument today – and we are not attracted to the idea that people should feel in a hurry to finish this argument today – then we will sit to conclude the hearing of the matter at 2.15 pm on Monday, 10 December.
KIRBY J: I think you are getting very close to the end of your submissions, were you not, Mr Solicitor?
MR BENNETT: I have finished my submissions on section 92. I need to make some submissions on ‑ ‑ ‑
GUMMOW J: How do you see section 92 ever having any inhibitory role on the Parliament of the Commonwealth? I know it is said in Cole v Whitfield, but be frank.
HAYNE J: Be frank.
GUMMOW J: Are you not propping up a straw man who throws a shadow that does not exist?
MR BENNETT: If the Commonwealth were to impose some tax on interstate transactions which did not apply to ‑ ‑ ‑
GUMMOW J: You have a discrimination factor built into the tax power, have you not?
MR BENNETT: Yes, there is section 99, that is true. I was thinking of discriminating against interstate trade generally in favour of intrastate or overseas trade generally. In other words, the Commonwealth, in effect, directing Customs posts at the borders. That type of case would clearly be covered. The discrimination is not against a particular State under section 92. It is against interstate trade generally, unlike section 99.
GLEESON CJ: The Commonwealth might discriminate against interstate trade in favour of what?
KIRBY J: Overseas trade, perhaps.
MR BENNETT: Intra or overseas trade, or both.
GLEESON CJ: How? Could you just give us a practical example of how the problem might ‑ ‑ ‑
MR BENNETT: An extreme example might be the erection of Commonwealth Customs posts at State borders and extracting a toll from goods which cross them. That might be a problem under section 92. Certainly it is true to say that since Cole v Whitfield there are not many cases. It is hard to think of examples where section 92 would limit the Commonwealth to the extent that it used to be under the old tests.
GUMMOW J: These border posts would be levying taxes of some sort, would they not or what do they do?
MR BENNETT: I suppose they are levying an Octroi tax, yes, your Honour.
GUMMOW J: Discriminating between States, I suppose.
MR BENNETT: If the tax is imposed at all State borders equally, it may not discriminate between different States but it may discriminate against interstate trade. Anyhow, it is very hypothetical, your Honour, and I would not want to be quoted as suggesting that it is a real possibility.
GUMMOW J: We are left really with those passages in Cole v Whitfield, not seen to have much on which to bite.
MR BENNETT: Certainly, Cole v Whitfield has very much reduced the effect of section 92 and your Honours know how much it has reduced the work of this Court under that section since it was decided compared with the 140 cases, I think it was, that were overruled in Cole v Whitfield.
The second matter concerns conflict between States. While I do not want to address your Honours in detail about the construction of the Tasmanian Act, it is important to note that in looking at this problem the suggestion of a State statute which permits conduct is really something which is fairly meaningless for this reason. The starting position of the common law in every State and before is that anything that is not prohibited a person may do. Therefore, a law that says, for example, John Smith is entitled to cross the border into the Australian Capital Territory, the law of the Australian Capital Territory, would be a meaningless law.
GUMMOW J: These are all licensing systems, are they not, really? They lift a prohibition on conditions.
MR BENNETT: They lift a prohibition. There are two types of case where such a law may have meaning. One is where it lifts a prohibition – provides an exception to a prohibition by licensing or otherwise – and the other is where it operates in the sense of removing something from being ultra vires. For example, if a State incorporates a body and says this body is empowered to do X. That is part of the process of setting it up. But merely to say a person may do X in the absence of an ultra vires situation or an existing State prohibition is meaningless and it should not be given meaning for the purpose of creating a conflict with a legitimate extraterritorial prohibition in another State’s laws.
GLEESON CJ: It may be a little more complex than that. There are some environmental laws that actually give people, for example, a licence to pollute.
MR BENNETT: Yes, that no doubt being a lifting of what might otherwise be a prohibition. In the absence of a law prohibiting the relevant type of pollution, such a licence would be meaningless. The Tasmanian Act, in my respectful submission, where it says that Betfair is empowered or entitled or permitted or whatever word one wants to use, all it is saying is, notwithstanding any prohibition in Tasmanian law, it may carry on this gambling activity with the public, but that is all it is saying. It is not creating some general universal in a Hohfeldian sense which puts something in a special category of permitted things.
GLEESON CJ: Do you mean all it is saying, all it is doing, is removing any such Tasmanian legal sanction as might otherwise exist in respect of the conduct?
MR BENNETT: Yes, your Honour. One can multiply examples. An ACT law saying that a person has the right to reside in the ACT would not override a New South Wales bail order authorised under New South Wales legislation which forbade a person to reside outside New South Wales. It would not because the only legitimate effect of the ACT law is to remove an ACT prohibition.
GLEESON CJ: So when the defendant in Western Australia said, “I was licensed to do this in Tasmania”, the Western Australian judge would say, “So what? That just shows that you have breached a law of Tasmania”?
MR BENNETT: Yes, your Honour. It might, of course, have an effect on sentence, and I note that every State has the equivalent of section 19B of the Crimes Act, so one would expect it to be a case where the magistrate would say, “I find the offence proved but without proceeding to conviction dismiss it without penalty”, and it affect the decision to prosecute for similar reasons, but it would not bind the Western Australian court as Tasmanian law. It is not that sort of permission.
One can get to the same result in the way that has been submitted by others here by looking at the Acts Interpretation Act (Tas) and saying, well, it says notwithstanding any other law that means a law of Tasmania and that enables one to reach the same result.
GLEESON CJ: You would not have to apply any very strong implication from federalism, I imagine, to construe a Tasmanian law that licenses conduct in Tasmania as aimed only at removing what would otherwise be a sanction existing under Tasmanian law?
MR BENNETT: Yes, that is so, your Honour.
HAYNE J: Especially where the background in each Australian State is formed by a web of legislation disfavouring gambling, ranging from variants on the 1845 Act about enforceability of gaming contracts through to a web of police offences about resorting to places and the like for the purposes of gambling.
MR BENNETT: Yes. For those reasons we submit that there is no relevant conflict in this case and that if principles are to be developed following on Sweedman and the like in relation to conflicts between laws of different States, those principles should be confined to direct conflicts where the one State says, “You must do X” and the other State says, “You are forbidden to do X”. In that type of case one may need to – I will come to what happens there in a moment, but we stress that is not this case. Where one merely has a law of one State saying you are permitted to do something, that just does not mean anything for this purpose. It means only it is permitted, notwithstanding Tasmanian law, and that obviously has no effect on the Western Australian Act.
It is hard to imagine cases where one would otherwise wish to enact a law saying someone is permitted to do something. One sometimes sees that language in statutes dealing with ultra vires but again it is inappropriate to regard that as being any sort of general permission. When the Companies Act says that a company as a matter of ultra vires law can do anything a natural person can do, that does not mean it is authorised to commit offences under State law.
I will not be arguing that in a section 109 case before this court. All it is saying is, as a matter of internal power, it is not ultra vires for a company to do anything that a natural person can do and that is all it is saying. It is not saying the company is authorised to do anything. This statute is one in the other category dealing with making lawful what would otherwise be unlawful under Tasmanian law by way of exception, but that is all it does. So the issue does not arise in this case. Where one does have the issue of direct conflict, I will just say this very briefly, there are a number – it has been described as a smorgasbord – of possible solutions.
There is the territorial solution, which is often difficult to apply. There is the “where the offence occurred”. There is the “which State has the predominant connection solution” which will require all sorts of difficult analyses in different cases. There is the solution which says, let the loss lie where it occurs. In other words, Western Australia can prosecute its criminal offence. In Tasmania there is no offence anyway, so there is no particular – if the Tasmanian Act says you must do it and the Western Australian Act says that you must not, that solution would involve the citizen deciding which State he, she or it will commit an offence in. That is an unfortunate consequence, but it may be the result.
The fourth possible solution is one referred to in an article written by my learned junior which is referred to in Victoria’s submissions and it is a solution of saying that the criminal law simply is not enforced where there is an express command on the person to do it under the law of another State. That is a solution which no case has referred to. It is put in the article as a possible solution. The article is by Mr Hill, “Resolving a True Conflict between State Laws: A Minimalist Approach” (2005) 29 Melbourne University Law Review 39, and it appears in footnote ‑ ‑ ‑
KIRBY J: Just as well we do not want require that people should be dead any more.
MR BENNETT: No, we do not, your Honour. It appears in footnote 48 of Victoria’s submissions. That represents another possible solution. We reject the first two solutions, the pure territorial one and the predominant connection one, so one is left with the third or the fourth. It does not arise in this case for the reasons we have given unless your Honours are against me in relation to the effect of the Tasmanian Act.
We submit that those only arise in the situation where there is a command and a prohibition. That is something very rare. I am not aware of any section 109 cases in this Court involving a command to do something and a prohibition undoing it, although that is often given as the extreme example of a conflict ‑ ‑ ‑
GUMMOW J: There is a case about elections, is there not?
MR BENNETT: I am sorry, your Honour?
GUMMOW J: Commonwealth and State elections? Anyhow, it does not matter.
MR BENNETT: Yes, there may be a reference, your Honour. There is a recent Western Australian case where it could have arisen called Bennett v Higgins but where the court managed to avoid it by construing the legislation in a particular way. It is a very rare type of situation. Your Honours do not need to decide it in this case unless, as I say, your Honours are against me on the construction of the effect of the Tasmanian Act, but we do submit that an Act merely permitting something is not in the context of interstate conflict in conflict with an Act prohibiting it, unlike the situation which would arise under section 109 where one can have “cover the field” inconsistency, one can have alter, impair or detract from inconsistency and so on.
Those things cannot arise, we would submit, in relation to one extraterritorial Act of one State and the Act of another State. We are not dealing with legislatures, one of which is inferior to the other or one of which needs to have its legislation construed in the light of the other. We are dealing with separate and independent sovereign legislatures. For those reasons we submit that your Honours would not adopt either of the first tests.
GUMMOW J: You are the first Commonwealth Solicitor‑General to use the expression “sovereign” in relation to States for quite some time.
MR BENNETT: Relative sovereignty, your Honour, for present purposes.
KIRBY J: Certainly is a different tune than you have been singing in this place in recent times.
MR BENNETT: This is in a different context. This is in a context where ex‑hypothesi Commonwealth legislation does not ‑ ‑ ‑
KIRBY J: It sure is. Anyway, the use of sovereign in the Australian context where we all have to live together in the Federation is completely wrong importation of a English idea. It is completely irrelevant.
MR BENNETT: It is used a metaphorical sense, your Honour, and it is not intended in an absolute sense. I might just say that in relation to what I was saying about permission, a good example is in the area of patent law where it would be quite wrong to say – although people sometimes say it –
that the effect of a patent is to permit the patentee to do certain things. The patentee could do those things if the patent did not exist.
All the patent does is prohibit everyone else from doing it, and that point is made in the discussion in the Grain Pool Case. We refer to it in footnote 76. There is a quotation from the House of Lords decision where very much that point is made expressly, that when one says the patentee has permission to use his or her patent, that is a very metaphorical use of the word “permission”. It is something that could be done without the patent.
We make no submissions then in relation to State inconsistency and, if the Court pleases, those are the Commonwealth’s submissions.
GLEESON CJ: Mr Gageler, how long do you think you will require? I am really trying to find out whether half a day is certainly adequate.
MR GAGELER: Your Honour, I had what I thought was an understanding that would give me 20 minutes at the end and I was going to do it in 20 minutes.
GUMMOW J: We want to torment you for more than 20 minutes.
MR GAGELER: Then your Honours should nominate the time. I am happy enough to – take as long as you like.
GLEESON CJ: We will adjourn until 2.15 pm on Monday, 10 December.
MR GAGELER: Yes. Do I get any notice about what your Honours might want to torment me about?
GLEESON CJ: You have been given notice over the last couple of days.
MR GAGELER: Of course, but I thought something might be fermenting.
GLEESON CJ: The further hearing of this matter will be adjourned until 2.15 pm on Monday, 10 December but counsel are free to come or stay away as they please. The Court will adjourn until 10.15 on Tuesday, 13 November 2007.
AT 3.58 PM THE MATTER WAS ADJOURNED
UNTIL MONDAY, 10 DECEMBER 2007
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