Winbet (Aust) Pty Ltd v Racing Victoria Limited
[2012] VSC 152
•24 April 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST D
No. 5857 of 2011
| WINBET (AUST) PTY LTD (ACN 111 699 435) | Plaintiff |
| v | |
| RACING VICTORIA LIMITED (ACN 096 917 930) | Defendant |
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JUDGE: | Davies J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 March 2012 | |
DATE OF JUDGMENT: | 24 April 2012 | |
CASE MAY BE CITED AS: | Winbet (Aust) Pty Ltd v Racing Victoria Limited | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 152 | |
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STATUTES – CONSTRUCTION – Plaintiff bookmaker is liable to pay a levy imposed by the defendant under the Bookmakers’ Licence Levy Rules 2009 – Whether the plaintiff is liable to pay an amount calculated as a percentage of annual revenue or as a percentage of weekly revenue – Proper construction of the rules – Bookmakers’ Licence Levy Rules 2009 – Racing Act 1958 (Vic)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | D Sheales with T Purdey | Lander & Rogers |
| For the Defendant | M Collins SC with M Marcus | Maddocks |
HER HONOUR:
Introduction
The plaintiff (“Winbet”) is a bookmaker and liable to pay a levy imposed by the defendant, Racing Victoria Limited (“RVL”) under the Bookmakers’ Licence Levy Rules 2009 (“the 2009 Rules”). For the period 17 February 2009 to 31 July 2011, RVL calculated and collected levy from Winbet on the incorrect basis of 1% of betting turnover. RVL accepts that this basis should not have been used as, under the
2009 Rules, it applied only in the event that Winbet gave irrevocable notice to RVL for assessment of the levy on that basis, which did not occur.[1] RVL also accepts that Winbet has overpaid the levy chargeable on the correct basis as a percentage of “Revenue” as defined in the 2009 Rules.[2] The parties are in dispute over the amount of refund to which Winbet is entitled.
[1]Rule 3.2(a)(ii) of the Rules
[2]Rule 3.2(a)(i) of the Rules
The determination of the dispute depends on whether, on the proper construction of Rule 3.2(a)(i) of the 2009 Rules, the levy that Winbet is liable to pay is an amount calculated as a percentage of Winbet’s annual “Revenue" derived from betting or as a percentage of Winbet’s weekly “Revenue" derived from betting. The basis of calculation makes a difference to the quantum of levy chargeable because the definition of “Revenue” brings to account the aggregate value of bets taken less winning bets paid to customers plus gains on approved bets-back less losses on approved bets-back.[3] If the levy that Winbet is liable to pay is a percentage of weekly “Revenue”, only the losses incurred in that week can be offset against the value of bets plus gains derived in that week. If the levy is calculated on annual “Revenue”, then the levy payable is calculated by reference to the aggregate value of bets plus gains derived over the twelve month period less the losses incurred during that twelve month period. Winbet argued that the levy imposed by the Rules is a percentage of the “Revenue” that it derives in each twelve month period from
1 August to 31 July. RVL contended that the levy is a percentage of weekly “Revenue” derived.
[3]Rule 2.1 of the Rules
2009 Rules
Section 91B(1) of the Racing Act 1958 (Vic) (“the Racing Act”) provides that RVL (as a “controlling body”) may make rules imposing a periodic levy on a bookmaker,[4] providing for the calculation of the levy,[5] providing for the payment and recovery of the levy, including the imposition of interest on late payment,[6] providing for the application of the proceeds of the levy,[7] imposing record keeping and reporting requirements on bookmakers[8] and imposing sanctions for non-compliance with the rules.[9] The 2009 Rules were made by RVL under s 91B of the Racing Act and came into operation on 17 February 2009. There have been subsequent amendments to the 2009 Rules but no relevant amendment was made to the particular provisions governing the levy payable by Winbet between 17 February 2009 and 31 July 2011.
[4]S 91B(1)(a) of the Racing Act 1958 (Vic)
[5]S 91B(1)(b) of the Racing Act 1958 (Vic)
[6]S 91B(1)(c) of the Racing Act 1958 (Vic)
[7]S 91B(1)(d) of the Racing Act 1958 (Vic)
[8]S 91B(1)(e) of the Racing Act 1958 (Vic)
[9]S 91B(1)(f) of the Racing Act 1958 (Vic)
The 2009 Rules impose differing levies on bookmakers as permitted by s 91(B)(2) of the Racing Act according to the class of bookmaker and class of bets and specifically whether the bookmaker is licensed to conduct “Future Sports Betting”. “Sports Betting” is defined in the 2009 Rules to mean “betting by way of wagering on any approved event pursuant to s 4(1)(b) of the Racing Act”.[10]
[10]Rule 2.1 of the Rules
Rule 3.1(a) applies to Winbet. Under that Rule, Winbet:
… is liable to pay the Levy as calculated in accordance with Rule 3.2(a) in respect of all Betting (except Sports Betting conducted by a Bookmaker licensed to conduct Future Sports Betting).
“Levy” means the levy imposed in accordance with the Rules.[11]
[11]Rule 2.1 of the Rules
Rule 3.2(a)(i) applies to Winbet. The levy calculated in accordance with that rule is:
(i) (A) 10% of Revenue derived from Betting exclusive of GST for the Levy period; and
(B)an additional 5% of Revenue derived from Betting on thoroughbred races conducted in Victoria during the months of October and November exclusive of GST.
“Revenue” and “Levy Period” have defined meanings. “Revenue” means:
the aggregate value of Bets taken less winning Bets paid to customers plus gains on approved bets-back made with Bookmakers or Tabcorp less losses on approved bets-back made with Bookmakers or Tabcorp.[12]
[12]Rule 2.1 of the Rules
“Levy Period” means:
(a)the initial period commencing from the Approval Day and concluding on 31 July 2009; and
(b) any 12 month period commencing on 1 August and concluding on
31 July the following year.[13]
[13]Rule 2.1 of the Rules
If Winbet had provided an irrevocable notice to RVL, Rule 3.2(a)(ii) would have applied and the levy imposed on Winbet would have been calculated as an amount that is equal to 1% of “Betting Turnover” in each “Weekly Period”. “Weekly Period” means each period of seven days beginning with Monday and ending with Sunday, both days inclusive.[14]
[14]Rule 2.1 of the Rules
Rule 3.2(b) applies to “Sports Betting” conducted by bookmakers who hold licences to conduct “Future Sports Betting”. These bookmakers have to pay an upfront minimum fee and an additional fee on a sliding scale dependent on the amount of Betting Turnover as follows:
(i)a minimum non-refundable fee of $15,000 due and payable at the commencement of the Levy Period; and
(ii)an additional:
(A)fee of 0.25% of Betting Turnover for Betting Turnover between $6,000,001 and $20,000,000; and
(B)fee of 0.125% of Betting Turnover for Betting Turnover between $20,000,001 and $40,000,000; and
(C)fee of 0.05% of Betting Turnover for Betting Turnover in excess of $40,000,001.[15]
[15]Rule 3.2(b) of the Rules
Importantly, on whichever basis the levy is calculated under Rule 3.2, the levy imposed on the bookmaker “in respect of a period” cannot exceed 1% of the bookmaker’s Betting Turnover “for that period”. This limitation is contained in
s 91B(3) of the Racing Act. The word “period” is not defined for the purposes of
s 91B but the expression “bookmakers’ betting turnover for a period” is defined ins 84 of the Racing Act to mean:
The gross amount of all bets made with a bookmaker in that period less the gross amount of bets made in that period by the bookmaker in respect of those bets with –
a)other bookmakers who are carrying on their business or vocation under a club bookmakers’ licence in accordance with this Act; and
b)the holder of the wagering licence under Part 3 of Chapter 4 of the Gambling Regulation Act 2003.
Rule 4.2(a) obliges Winbet to pay the levy imposed on it under Rule 3.2(a)(i) “in respect of a “Weekly Period”. Rule 4.2(a) provides:
The Levy payable under Rule 3.2(a)(i) in respect of a Weekly Period must be paid to [RVL] no later than five (5) days after the termination of the Weekly Period and may be adjusted by [RVL] under Rule 8.3 no later than 30 days after the conclusion of the Levy Period with respect to the Revenue derived from Betting (exclusive of GST) during the Levy Period.
Had Winbet been liable to pay the levy under Rule 3.2(a)(ii) or Rule 3.2(b), Rule 4.2(b) would have applied. Rule 4.2(b) provides:
The Levy payable by a Bookmaker under Rules 3.2(a)(ii) or 3.2(b) in respect of a Weekly Period must be paid to [RVL] no later than five (5) days after the termination of the Weekly Period.
Any unpaid levy attracts a liability to pay interest at the penalty rate of interest and unpaid levy and interest is recoverable by RVL in a court of competent jurisdiction as a debt due to RVL.[16] If a levy remains unpaid for more than seven days after it has become due and payable, RVL may suspend the bookmaker’s licence until the levy and accumulated interest has been paid in full.[17]
[16]Rule 4.3 of the Rules
[17]Rule 4.4 of the Rules
Bookmakers must provide certain information to RVL within five days after determination of any “Weekly Period”.[18] The information that must be furnished to RVL includes a “bookmaker’s statement” which provides the figures to calculate “Betting Turnover” in a “Weekly Period”, and the “Revenue of the Bookmaker”, unless the bookmaker has provided notice to RVL in accordance with
Rule 3.2(a)(ii).[19] The Court was told, and it was common ground, that RVL uses the bookmaker’s statement furnished in respect of each “Weekly Period” to calculate the levy of bookmaker by reference to the turnover or revenue of that bookmaker for that period, which is the amount that must then be remitted by the bookmaker by direct debit as required by Rule 4.1. The Court was also told, and it is common ground, that where the relevant percentage revenue for a bookmaker in respect of a Weekly Period exceeds 1% of turnover for that week, RVL caps the levy at 1% of turnover.
[18]Rule 8.2.1 of the Rules
[19]Rule 8.2.1(a) of the Rules
Rule 8.3 is headed “Further information and Levy Adjustments”. By Rule 8.3.1, an authorised officer of RVL may require any bookmaker to furnish further or other information “as the authorised officer considers necessary in order to satisfy himself or herself of the correctness or otherwise of” the bookmaker’s Betting Turnover and revenue information, any bookmaker’s statement and the entries in the betting book of the bookmaker. Rule 8.3.2 provides:
When [RVL] is satisfied, after considering such further or other information or particulars (if any) furnished to it as required by Rule 8.3.1, that in respect of any “Weekly Period” or the Levy Period insufficient Levy has been paid, or Levy has been paid in excess, [RVL] may:
(a)amend or cause to be amended the amount of the Levy payable by the Bookmakers; and
(b)require payment by the Bookmaker (and the Bookmaker must so pay) any further Levy which has become chargeable or may refund to the Bookmaker any Levy which has been paid in excess.
The competing constructions
The ordinary and natural meaning of the language of Rule 3.2(a)(i) is that the levy is 10% of “Revenue” derived on an annual basis: ie “Revenue derived from Betting … for the Levy period”, namely 1 August to 31 July in each year. Winbet argued that the levy that it is liable to pay is a percentage of the “Revenue” derived from betting throughout the whole of the year, albeit that RVL collects payment of the levy on a weekly basis in accordance with Rule 4.2(a). Winbet argued that the 2009 Rules, read as a whole, enable RVL after the conclusion of the “Levy Period” to adjust what has been paid either by requiring a further amount to be paid if insufficient levy was paid on a weekly basis or by refunding to the bookmaker any excess levy that has been paid on a weekly basis. Reliance was placed on Rule 4.2(a) and Rule 8.3.2 read together.
RVL contended that Winbet’s contentions involved an incorrect construction of the expression “Levy Period” in Rule 3.2(a)(i). Further that Winbet’s contentions are inconsistent or irreconcilable with Rules 3.2(a)(i), 4 and 8.3 read as a whole. RVL contended that the legislative history was relevant to the construction of the Rules and in particular Rule 3.2(a)(i) as that legislative history showed that the levy had never been calculated over an annual period. RVL contended that Rule 3.2(a)(i), construed in the context of the 2009 Rules read as a whole and in light of its legislative history, makes it clear that the basis for calculation of the levy on the “Revenue” based formula is on a weekly, not annual basis.
Decision
In my view the expression “Levy Period” as it appears in Rule 3.2(a)(i) is not used in the manner contended for by RVL. Contrary to the submissions of RVL, Winbet’s construction is not inconsistent or irreconcilable with Rule 4 or with Rule 8.3. The function of Rule 4.2 is to impose the obligation on a bookmaker to pay on a weekly basis the amount of the levy that the bookmaker is liable to pay by reason of
Rules 3.1 and 3.2. The amount of the levy payable is the amount determined in accordance with Rule 3.2. By Rule 3.2(a)(i)(A) the levy in respect of all Betting conducted by bookmakers, except Sports Betting, is 10% of “Revenue” derived from Betting “for the Levy Period”. The phrase “for the Levy Period” serves to identify the relevant period for the calculation. That period is the whole twelve months racing year. This construction is entirely consistent with the requirement on bookmakers contained in Rule 3.2(a)(i)(B) to pay “an additional” 5% of Revenue derived from Betting during the months of October and November. In other words, Rule 3.2(a)(i) brings into the calculation of the levy 10% of revenue derived for the twelve month period plus an additional 5% of revenue derived in the months of October and November within that twelve month period. It is that levy which is “payable under Rule 3.2(a)(i)” for the purposes of Rule 4.2(a) and it is that levy calculated on that basis which is made payable “in respect of a Weekly Period”. The fact that it is to be paid on a weekly basis does not make it inconsistent with its calculation on an annual basis. Moreover, Rule 4.2(a) makes this clear by the provision that the levy calculated on an annual basis but paid on a weekly basis “may be adjusted” by RVL “after the conclusion of the Levy Period”: that is, once the actual amount of the levy can be determined taking into account the relevant gains and losses over the whole of the period.
RVL argued that the reference to “Rule 8.3” in Rule 4.2(a) is telling against Winbet’s construction because the power of amendment contained in Rule 8.3 is discretionary, not mandatory. That is to say, that RVL is not required to adjust the levy that has been paid. In my view that argument is without substance. Whilst expressed in the language of a discretion on the part of RVL, that discretion must be exercised lawfully. One basis on which the RVL must exercise the power to adjust the levy that has been paid is s 91(B)(3) of the Racing Act which provides that the levy imposed on a bookmaker cannot exceed more than 1% of Betting Turnover. It therefore makes sense that provision is made in Rule 4.2.(a) for adjustment “after the conclusion of the Levy Period with respect to the Revenue from Betting … during the Levy Period” having regard to s 91B(3). It also explains why there is no similar provision for adjustment in respect of the levy payable by a bookmaker under Rules 3.2(a)(ii) or 3.2(b) as the basis on which the levy is calculated makes that unnecessary.
In my view there is no inconsistency between imposing a liability to pay a levy calculable as a percentage of revenue derived annually but requiring bookmakers to pay a weekly instalment based on revenue derived in the week to which the instalment relates. The fact that the amount paid may be subject to an adjustment at a later period does not mean that there cannot be an enforceable debt for the instalment due in the meantime.
Contrary to the submission of RVL, Rule 8.3.2 is entirely consistent with Winbet’s construction of Rule 3.2(a)(i)(A). There is no warrant for reading the reference to “the Levy Period” in Rule 8.3.2 as a reference solely to the levy in respect of Sports Betting. I reject the submission for RVL that the distinction in the 2009 Rules as to the time for payment of the levy for “Betting” on the one hand, and “Sports Betting” on the other, explains the presence of the words “in respect of any Weekly Period or the Levy Period” in Rule 8.3.2. Meaning must be given to all the words used in
Rule 8.3.2. The word “or” is used disjunctively. There is no textual or contextual reason for confining the phrase “the Levy Period” in Rule 8.3.2 to Sports Betting and RVL’s construction fails to give any meaning to the provision for adjustment contained in Rule 4.2(a).
Next, RVL argued that Rule 4.2(a) could not be read in the way contended for by Winbet as the adjustment provision in Rule 8.3.2 only applied where RVL has sought further information under Rule 8.3.1. It was submitted that the implication of a mandatory annual adjustment mechanism would be inconsistent with the mechanism provided for in Rule 8.3.1. I disagree. In my view, it is a strained construction of Rule 4.2(a) to confine the ability of RVL to adjust a levy paid only in the circumstance where RVL has requested and been supplied with further information under Rule 8.3.1. Whilst the language is not as precise as it should be, a construction of the Rule 8.3.1 as conferring an adjustment power gives the words meaning and effect and is harmonious and consistent with the levy scheme, having regard to the statutory limit on the levy that RVL can collect.[20]
[20]Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
Next RVL placed reliance on the legislative history of the 2009 Rules, commencing with the Stamps (Betting Tax) Act 1932 (Vic) (“the 1932 Act”). Under that Act, bookmakers paid duty twice per month, within seven days of each half monthly period. The 1932 Act was almost entirely replicated in the Stamps Act 1958 (Vic) but stamp duty on bets by bookmakers became payable on the basis of weekly periods running from Monday to Saturday, in lieu of the half-monthly periods in the
1932 Act.[21] These provisions were repealed in 2000 with the enactment of s 91B of the Racing Act and related provisions. RVL first made Bookmakers’ Licence Levy Rules under s 91B of the Racing Act in 2001. Relevantly, by the Bookmakers’ Licence Levy Rules 2001 (“2001 Rules”), bookmakers were liable to pay a levy in respect of Betting, other than Sports Betting, of 1% of their Betting Turnover (as defined) in each “Weekly Period”. It was submitted for RVL that the 2009 Rules, which replaced the 2001 Rules, did not effect any change to the imposition for liability on a weekly basis. I disagree.
[21]Stamps Act 1958 (Vic), ss 119-120
In my view, the legislative history is of little utility in informing the proper construction of Rule 3.2(a)(i) in view of the fact that the Revenue basis for the calculation of the Levy was first introduced by the 2009 Rules. Relevantly, the expression “Levy period” also appeared for the first time in the 2009 Rules. There was no need for a definition of “Levy Period” in the 2001 Rules because of the basis on which Levy was calculated under those Rules.
RVL argued that the definition of “Levy Period” was introduced into the 2009 Rules in conjunction with the introduction of the Revenue basis for calculation of levy payable to distinguish between the ordinary basis of Revenue (10% derived from betting on all races) and the special basis for calculation in respect of Victorian races during October and November (an additional 5%). That submission is not textually and syntactically supported.
RVL also submitted that the definition of “Levy Period” was introduced into the 2009 Rules because the basis for calculation of the levy on Sports Betting was radically changed from a minimum-turnover levy payment of $15,000 plus an additional amount calculated as a percentage of turnover based on a sliding scale to a fee payable on a sliding scale based on previous turnover for a period which became defined as the “previous levy period”. In fact, this new basis for calculation did not become incorporated into the 2009 Rules until 12 July 2010. The 2009 Rules, in their original form effective as from 17 February 2009, maintained the same basis for calculation of the levy for Sports Betting as the basis for calculation contained in the 2001 Rules, save that it fixed the date for payment of the minimum levy amount of $15,000 “at commencement of the Levy Period” whereas no date was prescribed in the 2001 Rules.
For the reasons already stated, Winbet’s construction of Rule 3.2(a)(i) is to be preferred.
Orders
It is common ground that Winbet is entitled to a refund of part of the levy which it has paid and there is no dispute that Winbet is entitled to recover an amount of $413,073.13 from RVL, if its construction of Rule 3.2 is correct. Accordingly, RVL is ordered to pay Winbet that amount.
Winbet also sought declaratory orders about the proper construction of Rule 3.2.
I decline to make those declaratory orders as there would be no utility in the declarations.
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