Sportsbet Pty Ltd v State of New South Wales & Ors [2011] HCATrans 52 (11 March 2011)

Last Updated: 16 March 2011

[2011] HCATrans 052

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S290 of 2010
No S291 of 2010

B e t w e e n -

SPORTSBET PTY LTD (ACN 088 326 612)

Applicant

and

STATE OF NEW SOUTH WALES

First Respondent

RACING NEW SOUTH WALES (ABN 86 281 604 417)

Second Respondent

HARNESS RACING NEW SOUTH WALES (ABN 16 962 976 373)

Third Respondent

ATTORNEY-GENERAL FOR SOUTH AUSTRALIA

Fourth Respondent

Applications for special leave to appeal

FRENCH CJ
GUMMOW J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 MARCH 2011, AT 9.30 AM

Copyright in the High Court of Australia

_________________

MR N.J. YOUNG, QC: If the Court pleases, I appear with MR R.M. NIALL, SC for the applicant. (instructed by Fitzpatrick Legal)

MR M.G. SEXTON, SC, Solicitor-General for the State of New South Wales: If the Court pleases, I appear with my learned friends, MR J.K. KIRK and MS A.M. MITCHELMORE, for the first and fourth respondents. (instructed by Crown Solicitor (NSW))

MR J.T. GLEESON, SC: May it please the Court, I appear with MR N.J. OWENS and MR J.S. EMMETT for the second and third respondents. (instructed by Yeldham Price O’Brien Lusk Lawyers)

FRENCH CJ: Yes, Mr Young.

MR YOUNG: If the Court pleases, this is a case in which the statutory delegates imposed fees and then took steps to apply the proceeds of those fees so as to effectively insulate local traders from the effect of the new fees. The question whether offsetting arrangements of that kind can infringe section 92 is a point that has arisen - - -

FRENCH CJ: We are talking section 49 of the Northern Territory (Self-Government) Act 1978 (Cth), are we not?

MR YOUNG: Yes, we are.

FRENCH CJ: And the operation of section 109 of the Constitution?

MR YOUNG: Yes.

FRENCH CJ: Does that make any difference to the analysis?

MR YOUNG: No, with respect, we submit not, your Honour. Section 49 is in the same terms as section 92.

KIEFEL J: Is there an assumption of inconsistency then, if there is contravention of section 92?

MR YOUNG: No, there is no assumption of inconsistency. There was effectively a finding of inconsistency in this case because of the terms in which the statutory fees were imposed by delegates who were representatives of the local racing industry. They imposed those fees, they had the power to distribute the proceeds of the fees and they did so to offset the effect of the fees on local traders.

KIEFEL J: Where did the Full Court deal with the inconsistency question?

MR YOUNG: They dealt with the way the proceedings were cast in that respect at the start of their judgment at pages 87 and 88 of the application book in paragraphs 5 to 8.

KIEFEL J: Yes, I see that they noted that Justice Perram had made a finding, but did the Full Court deal with the question of inconsistency itself?

MR YOUNG: Certainly not at any length, your Honour. It is fair to say that they did not question the conclusion arrived at by the primary judge.

GUMMOW J: At the bottom of 87?

MR YOUNG: Bottom of page 87?

GUMMOW J: Yes, that recounts what Justice Perram did.

MR YOUNG: Yes. Effectively, the Full Court did not question that factual finding.

KIEFEL J: I see.

FRENCH CJ: The argument seems to proceed on the basis that 49 is a perfect proxy for 92, but the analysis is really different, is it not, textually speaking?

MR YOUNG: The analysis is different because you have to work through section 109, yes, your Honour. But provided you have a finding that what the State delegates did, imposed a discriminatory burden on interstate trade and operated to protect the local traders, that inconsistency is made out.

FRENCH CJ: As a law of the State?

MR YOUNG: There are two levels in this case. We allege that the law had that effect. We also allege that the decision made under the authority of the law, if it had that effect, it was invalidated.

FRENCH CJ: It is not like an award, is it?

MR YOUNG: No, it is not like an award. The reason that it was found that there was no invalidity of the legislation was that the legislation was read down so as not to authorise the imposition of a fee that had a protectionist effect.

FRENCH CJ: But you challenge that finding?

MR YOUNG: Yes, we do.

GUMMOW J: This continued reference to “protectionist effect” does not seem fully to take into account the emphasis in Betfair on discriminatory burdens. In other words - - -

MR YOUNG: Your Honour, with respect, Justice Perram found quite clearly that there was a discriminatory burden.

GUMMOW J: Yes, quite.

MR YOUNG: Yes, and then the question is - - -

GUMMOW J: The question is why you need the extra wagon on the train.

MR YOUNG: To some extent, we agree with that, your Honour. If there is a discriminatory burden, that will normally lead to the conclusion that it operates to protect the intrastate trader, but that is not quite the way in which either the primary judge or the Full Court approached it.

GUMMOW J: I appreciate that.

MR YOUNG: That would be the normal reading of Cole v Whitfield, your Honour. The establishment of a separate test is really something of a gloss on Cole v Whitfield. That is a separate test to examine protectionist - - -

GUMMOW J: We have moved on from Cole v Whitfield.

MR YOUNG: I beg your pardon, your Honour?

GUMMOW J: We have moved on from Cole v Whitfield. The starting point is Betfair, surely?

MR YOUNG: Yes, we do not dispute that. Betfair was, of course, a case in which the subject of the discrimination was the operation of a betting exchange as one of the major forms of interstate competition, and likewise here.

GUMMOW J: I say we have moved on from Cole v Whitfield because in Betfair there is a deeper appreciation, perhaps, of what one might call the competition aspects of this doctrine, given the fuller appreciation now of life with Part 4 of the Trade Practices Act for many years.

MR YOUNG: Yes. Your Honour, we would add, though, that does not lead to the conclusion that to characterise the law as protectionist you need to go steps further and demonstrate some kind of anti-competitive effect on market share or profitability or the like.

KIEFEL J: No, but the stronger the focus upon a competition model, the more the question may be raised as to the role for protectionism.

MR YOUNG: Possibly, your Honour, but we see no gap, no gulf between - - -

KIEFEL J: I think that is one view of Betfair.

MR YOUNG: Yes, but we see no gap between the characterisation test as to whether it is protectionist and the question whether the burden imposed on interstate trade is likely to adversely affect interstate traders because it puts them at a competitive disadvantage.

KIEFEL J: It may not affect your application for special leave, but it may affect the structure of an argument if leave were granted.

MR YOUNG: Yes, it may. Your Honours, I was going to draw attention at the outset to the decision of the United States Supreme Court in West Lynn Creamery. I will come back to the detail. That case resolved this kind of issue in the way in which the primary judge did in the United States under the commerce clause. It is a case that is in good standing having been cited with approval as recently as February 2011 by the Supreme Court in CSX Transport. While the Court has the copy in front of them, can I point to two pages. The facts are identified in the first few lines at the headnote, together with a passage in paragraph (a) of the headnote, about two-thirds of the way down the page, commencing “Although”. Effectively, there was a tax on the wholesale sale of milk. It affected importations of milk as well as locally produced milk. The tax was offset by a subsidy paid back to the local producers.

KIEFEL J: Was this case referred to in Betfair v Western Australia?

MR YOUNG: I do not think it was referred to in Betfair, so far as my memory goes.

KIEFEL J: Okay.

MR YOUNG: The passages I wanted to refer to in the plurality judgment, or the major judgment, at page 198 identifies the argument. A combination of a tax and a subsidy going the other way was the first argument. The court rejected that at page 199, even assuming that the offsetting payment was a valid and lawful payment because it was funded principally from taxes on the sale of milk under the facially neutral tax.

GUMMOW J: But it goes to page 199. We certainly looked at Bacchus Imports and Guy v Baltimore - - -

MR YOUNG: Yes, we did.

GUMMOW J: - - -which they say establishes the cardinal principle which they are applying here.

MR YOUNG: Yes. The other passage, the decisive passage, is at 201, the first complete paragraph and then the first sentence of the next paragraph. A similar conclusion was reached in the concurring judgment of Justices Scalia and Thomas at page 210. The possible categories of tax are noted. The notion of offsetting payments is canvassed by both categories (2) and (3) at the bottom of 210, and their Honours reject the argument that found favour with the Full Court here, that is, you look at the two separately but not in combination, at page 211, the first complete sentence and then in the paragraph commencing “The issue.” In short, the US Supreme Court approached the same issue by looking at the substance, the integrated operation of the two steps that combine together to produce the protection of the local traders. The Full Court in this case eschewed that approach, whereas the primary judge adopted it.

GUMMOW J: What was their reason for eschewing that approach, the Full Court’s reason?

MR YOUNG: The Full Court’s reason was essentially that if done separately, each step would be valid and beyond reproach, that is to say, the racing bodies were authorised by statute to impose the fee. They were authorised by statute to distribute the proceeds of the fee to players in the local industry. I will take the Court to the passage that I am referring to. It appears in two places in the Full Court’s judgment, page 118 of the application book, the last two sentences of paragraph 96 commencing “Equally immaterial”. The same decisive point appears at paragraph 109 at page 125.

If the Court looks at the first two sentences of 109 and then the last two sentences, that is the opposite of the primary judge’s approach who, at pages 43 and 54, said they were parts of an inseverable package. The Full Court’s approach ignores the explicit finding by the primary judge that the two steps were causally linked. That appears at page 43 in Justice Perram’s judgment, paragraph 102, the last two sentences, “part of a package of measures”:

I do not think that the fee could have gone ahead without these ancillary arrangements and they are, in that circumstance, to be regarded as an inseverable block of measures - - -

FRENCH CJ: Just so I understand, the RDA was an agreement made under statutory authority?

MR YOUNG: Yes, but its content was left fairly at large.

FRENCH CJ: Yes. The deed of release, was that a statutory exercise?

MR YOUNG: No. The deed of release came 17 months after the legislation and the fees were imposed. It characterised the payment that the racing bodies made to the TAB as a payment of compensation, but the amount of the payment was exactly identical to the amount of the fee that was paid. The unusual feature of the regulatory scheme is that the power to impose the fee was given to the local racing bodies. It was a debt due to the racing bodies and the racing bodies had the power to distribute the proceeds of the statutory fee as they saw fit and, effectively, they did that by making payments to the TAB and to local racing clubs to ensure that both the TAB and New South Wales bookmakers were left whole. They were not effectively burdened by the new tax.

The deed of release, in our submission, is of peripheral relevance, if any. There was no dispute but that the payments were made. They offset the amount of the fee to the extent of 100 per cent. They were paid by the racing bodies with the intention of protecting the revenues of the TAB. It can be assumed, of course, that they were paid lawfully and that the deed of release characterised in these compensation payments, and that is how the parties made them.

FRENCH CJ: They are paid under a statutory authority, is that what you mean when you say “lawfully”?

MR YOUNG: Yes, because the racing control bodies had a wide discretion as to the distribution of moneys they received and these moneys, the proceeds of the fees, by section 33A(3) was stated to be a debt due to the racing control bodies. They did not go into consolidated revenue, they went to the racing control bodies. That is on all fours with the West Lynn analysis. The issue is whether requirements to investigate competitive effect or protectionist effect when approached as a matter of substance, not of form, require an integrated analysis of the offsetting steps. That is essentially the first point, the first special leave question.

The Full Court’s approach, in our submission, retreats to formalism. It ignores the causal link between the imposition of the fee, the payments back that had this offsetting effect, and the legislative purpose of the scheme which was revealed by the second reading speech to be “to prevent a revenue leakage away from the TAB and local bookmakers in favour of interstate free riders” was the description. The Full Court approached the matter as if it was simply a question of contemporaneous things occurring without any linkage between the two in that passage that I went to about two things being done at once.

The proposition that there was no authority to authorise an investigation of the combined effect and to declare it invalid under section 92 or section 49 or section 109 because of the combined effect, is really at odds with the substantive approach sanctioned by the cases in this Court. It, moreover, shows that this case is one of those cases alluded to by the High Court in Cole v Whitfield. The ways of imposing protection are legion. You can do it by subsidies, you can do it by tariffs, you can do it by taxes, and the High Court noted in that case that you can do it by a combination of measures.

FRENCH CJ: I notice in the notice of appeal at page 150 of the application book there seem to be quite a number of grounds that would be characterised argumentative in character and I was wondering, whether if special leave were to be granted, you would need anything more than 3, 6, 7, 9 and 12 on that notice.

MR YOUNG: Without parsing the entirety of the notice of appeal, your Honour, can I indicate that the grounds can certainly be cut down and there are a couple of other special leave points which would need to be captured.

FRENCH CJ: Yes, I appreciate that.

MR YOUNG: The next is the state of origin point. Can I identify what it is. The Full Court said that what must be demonstrated is an adverse effect on relative competitive advantage that Sportsbet enjoyed by reason of its location in the Northern Territory. That appears at paragraphs 89, 97 and 101. They start at page 116. Paragraph 89 is as good a point to start as any. That proposition that the advantage that is affected must be one tied to the position of the interstate trader by reason of its location in another State or Territory is novel. It has never been enunciated previously. It forms an important part of the process of reasoning here. It was reiterated in Betfair, the companion case.

It appears to be based on a misreading of Bath v Alston. The only point determined in Bath v Alston at 426 was that if you had a fee imposed on retailers which they paid on an ad valorem rate only because of imports of tobacco from interstate, that was going to have a protectionist effect either way, that is to say, whether they bore it or whether they passed it on. That is all that Bath v Alston dealt with. It does not sanction the erection of a test that the advantage that is affected adversely must be tied to one interstate trader’s peculiar advantages because of an interstate or territory base. If such an additional restriction is going to be imposed, it should be by this Court.

The third and fourth special leave questions relate to administrative decision-makers and intention. I have mentioned some of the features of the scheme in the peculiar way in which these powers were imposed on racing control bodies who had a vital interest in protecting the revenues of the TAB and local bookmakers because the local racing industry depended upon them. Justice Perram made those findings. In addition here, you had each racing control body setting a threshold for the triggering of the fee which, in the case of horseracing, exempted about 95 per cent of bookmakers and in the case of harness racing bookmakers, exempted all local bookmakers from the imposition of the fee. As well, you had the findings by Justice Perram about legislative purpose being protectionist.

When you put those matters together, there is, even on the face of the legislation, compelling argument that the scheme itself is discriminatory and protectionist. Here the actual implementation is conferred upon the racing bodies who have this conflict of interest. In those circumstances, it is our submission that intention does become relevant to the characterisation

of question. That is an important question that should be considered by this Court.

FRENCH CJ: Yes, thank you, Mr Young.

MR YOUNG: If your Honours please.

FRENCH CJ: Mr Gleeson, you are next, are you?

MR GLEESON: Your Honours, I would like to present first a factual matter which is an important one, that the Sportsbet Case has gone through a number of different iterations and even a new one this morning and that there is not a proper basis factually in the record for this to be a special leave matter. Could I deal with that. If your Honours would go to our supplementary materials in Sportsbet so I could show what was actually the pleaded issue.

At tab 1 is the statement of claim and the only paragraph which the trial judge considered remained alive was paragraph 85(b) which commenced at the bottom of page 46. His Honour said at page 46 of the application book that Sportsbet put a large number of cases, and this was the only one that made its way through to final submissions. So that would be the case that his Honour addressed. The Court might go directly on page 48 to subparagraph (v) which was an allegation that the racing bodies made an assumption that:

TAB Limited would be compensated under the terms of the RDA for any fees it had to pay under the race field legislation –

My two observations, that is an allegation of an assumption being made by the decision-maker which it is somehow said infects the decision and, secondly, it is an assumption which has not been found by any of the courts below. There was no assumption the TAB would be compensated under the RDA for fees paid under the race field legislation. That is the elision.

The most that could be contemplated was this assumption. The RDA is a 99-year agreement under which the TAB pays a lot of money for a lot of rights. One of those rights includes a right to use such information. When the new neutral fee comes in, there is a likelihood that a party like the TAB might make a legal claim for compensation and if they do, that claim might be determined by law or settled in accordance with the probable legal outcome. So the only case that is actually raised there, a case of an assumption, is one which is answered in that fashion. I then draw attention to the top of page 49, to an allegation that the racing body took steps –

in consultation with TAB Limited, to ensure that the payment of the race fields fee by TAB Limited was either compensated under the terms of the RDA, or the fees were returned to, or refunded to, or credited –

The Court will not find in the record a finding of fact to that effect. The case that was actually pleaded was not the subject of any findings by his Honour. Could I then show, secondly, what happened at trial. If your Honours go back to the main book at page 29, his Honour in paragraph 64 said the fee on its face was neutral and in 65 gave some summary findings of fact for reasons then to be developed, that by 18 June 2008, the date of the fee, the racing bodies had reached three agreements, arrangements or understanding and they were agreements, arrangements or understanding with TAB and the local bookmakers that the fee would be refunded.

His Honour gave his reasons for coming to that conclusion and one of the critical reasons, at the bottom of page 31, paragraph (f), was that, in fact, that is after the event, he said the TAB was refunded in full. He noted it was a partial refund for the related company and then this is a critical matter, over the page –

In relation to the company which does operate that totalizator – the TAB – the capitulation –

I emphasise the words –

by RNSW was complete and discloses no element of compromise.

A little further down, it is true the deed says the amount is not a refund –

there is no other conceivable explanation for why RNSW, HRNSW and GRNSW might give –

note the word “give” –

the TAB just under $20 million. I regard the statement in that clause as not according with the actual situation.

His Honour then, in paragraph 68, the next page, says that what he is being asked to consider is a grave conclusion that Racing New South Wales – and one might infer the TAB as the counterparty –

engaged in behaviour to generate the appearance of having a commercial dispute when, in truth, one does not really exist.

So his Honour’s findings were, first, agreements to refund, second, a sham deed wrongly created to pretend there was a dispute when there was not.

GUMMOW J: What about paragraph 69?

MR GLEESON: At 69 his Honour comes back to the first finding which is irrespective of 68. There is:

an in principle understanding or arrangement that the TAB will have the race fields fee refunded –

When the case went to the appeal, the first and central point raised by the racing bodies – if I could ask your Honours to go over perhaps to page 88, to paragraph 9, was that the racing bodies contended that:

the primary judge erred in making the findings as to the existence of “agreements, arrangements or understandings” upon which his conclusion of invalidity depended –

and the Full Court noted –

Sportsbet does not seek to support those findings –

but then said it would, in any event, seek to uphold the result. The correct concession by Sportsbet that it could not maintain those findings is found in the supplementary materials behind tab 5. It was page 88 of the transcript of the appeal. At about line 35, Mr Bennett said:

The relevant issue on our case was not that there was some plot to refund the money to the TAB and the bookmakers, nor that there was some sham or conspiracy about it, nor that there was anything wrong with it.

So what happened on the appeal, not only was there the concession, but there was no attempt to defend a finding that there were agreements, arrangements or understandings. If your Honours then return to page 88 of the main book at paragraph 10, in terms of the three principal steps in his Honour’s reasoning, the first step, the agreement, arrangement or understanding, no longer remains on the record and absent that step being removed from the record, we are simply in a situation where a new neutral fee is imposed on all traders, irrespective of origin, and some people who may have pre-existing obligations may assert they have rights in law or equity to have those obligations varied or otherwise respected in the light of the new world. That is what is actually happening, and that is how the Full Court, with respect, correctly conceived the issue. At page 115 at paragraph 86, it accepted for the sake of argument that there might be expectations that the locals:

would not be required to continue to bear the burdens of their previous obligations to support racing in New South Wales, as well as the extra burden of the fee under the new scheme. It was only to be expected that TAB would insist on its rights under the RDA and that NSW on-course bookmakers would seek relief from their current obligations –

That does not mean they were not bearing the new fee. Could I then just draw attention further to paragraph 89 which we submit is amply supported by Bath and Castlemaine Tooheys and consistent with Betfair. Then paragraph 90 is a perfectly apposite analysis of the facts and, ultimately, your Honours might consider on page 125 that paragraph 110 is a fair analysis of the evidentiary record and of the law. If that were not right, the consequence would be that whenever a new tax or fee is imposed in the nation – let us assume a carbon tax – and there are some people who say, “I am already contributing to the problem of carbon reduction through other measures and I seek some adjustment or compensation for those other measures”, section 49 and/or section 92 would be said to prevent the imposition of a new tax.

The way in which the trial judge considered this problem had to be solved, the only permissible way of solving it, your Honours will see at page 56. His Honour having recognised that the free rider problem was a real one, at the foot of the previous page, said there are four conceivable ways you can solve it and he said, in paragraph 149, that only (b) and (d) were lawful, (a) and (c) plainly infringe section 92. If your Honours look at that, he says in paragraph 150 that the present case is (c). I have sought to indicate that the findings his Honour made relevant to (c) were removed on appeal and properly so. How then is one to deal with my carbon tax example - - -

FRENCH CJ: The findings insofar as they would inform the word “ensuring”.

MR GLEESON: Yes. In my carbon tax example, his Honour appears to say your only options are (b) and (d). The first is, you impose a new equal carbon tax on everyone and, implicitly, old burdens cannot be touched. Option (d) is that you have to remove all existing taxes and you have to rewrite the RDA. So a contractual instrument of 99-year validity has to be extinguished before you can impose a new neutral fee for the use of this product. One asks, how is that done? It would appear to involve a problem with the compulsory acquisition if it were done at the federal level. So that in the end, we submit, your Honours would be comfortably satisfied of two things.

One is that the factual record will not be adequate to expose any of the questions Mr Young propounds and, secondly, on this basic legal question there is not much doubt that the Full Court came to the right result. I just need to add on this morning’s further development of the case. In an attempt to draw an analogy with West Lynn, Mr Young this morning has said this is a case where the local bodies took steps to apply the proceeds of the fees to offset the fees payable by the local traders. So it was a proposition of application that the new fee was got in and then was used as a form of subsidy to the local traders. He has to push that argument to subsidy because the proposition in West Lynn, at page 199, is that what you cannot do is combine the neutral pricing order with a subsidy to the local traders.

With respect, your Honours, they cannot have that case because the subsidy case is not pleaded and is not the subject of any findings because to characterise it as a subsidy, for instance, if the TAB is to say, in effect, back to where his Honour was, that deed was not what it appeared to be, you were just giving away money. One thing we are troubled by with the Sportsbet approach is that although they have disavowed the finding of agreement and although they have disavowed any finding that the deed is material, they say now, or that it is a sham, the implicit logic of their case is a subsidy case which could only be true if the deed was a sham. We would submit to your Honours that it would not simply be a case of cutting down the obviously prolix notice of appeal, but that its prolixity demonstrates the inability of Sportsbet to really crystallise for the Court adequately any important question that needs to be resolved.

Finally, we would submit that the argument against the scheme itself, that is, the validity of the scheme, is extremely weak and the Court would entertain it, and the suggestion the Court should treat this as a vehicle to inquire into purpose or intention ought to be clearly rejected. Mr Bennett put the point quite correctly in the Full Court. If you do something that contravenes section 92, it does not matter whether you did not think you were doing so, and vice-versa. At that point, I might allow Mr Sexton to use the balance of our combined time, your Honours.

GUMMOW J: Just a minute. The relief that Justice Perram gave was a declaration that a particular approval was invalid.

MR GLEESON: Yes. So all four judges have found the scheme to be constitutionally valid, that is the legislation and the regulation. The only problem that has been found is at the level of the approval and that has been done only because his Honour considered he could read down the Act and

the regulations so that they did not authorise matters which were offensive to section 49. One of the points we have respectfully raised is that if the whole of this case is eventually getting down to what was this deed of release about, which was a compromise of a commercial dispute, and what are the arrangements for fundings between the bodies and their members, all of that is, one might think, a vast distance removed from the application of section 49. My point on that is your Honours would not consider a grant of leave appropriate in relation to the matter that no judge below has considered had prospects. May it please the Court.

FRENCH CJ: Yes, thank you. Yes, Mr Solicitor.

MR SEXTON: If the Court pleases, I can be quite brief after following my learned friend, your Honours. Your Honours, it seems to us that one important question on the special leave application is whether there is any real prospect of the decision of the Full Federal Court being changed in this Court, in other words, whether a different result would ever be reached, and we say that it would not because this is a case where existing fees or charges that were payable only by local traders have been replaced by fees payable by all traders, both in State and out of State, in this situation.

My learned friend Mr Gleeson has explained to your Honours how the TAB and the on-course bookmakers were paying for this information before this legislative set of arrangements was introduced. The authorities then resolved to apply the turnover condition to all approvals granted under the regime so that interstate and intrastate wagering operators paid the fee equally. Then with the advent of that legislative set of arrangements, the metropolitan race clubs decided to reduce the pre-existing contribution that on-course bookmakers were obliged to pay and the TAB entered into the deed that has been described by my learned friend. This was perhaps summarised in the Full Court’s judgment at paragraph 112. It is in our summary of argument at paragraph 30 on page 174 of the application book where the Full Court said that:

TAB was, in truth, liable to pay the fee and did pay it. The same is true of NSW on-course bookmakers whose businesses were so large as to take them above the fee-free threshold.

So Sportsbet’s real complaint is that it has to pay a fee for a service that is sold where previously it did not have to in circumstances where New South Wales wagering operators have had their previous fees reduced but while still having to pay the new fee and, indeed, they, that is, the New South Wales wagering operators, still pay additional amounts beyond these race field fees, although there may be some question as to what other services are provided in relation to those.

Your Honours, can I say one thing finally about the decision of the United States Supreme Court. Just putting aside for the moment the fact that on the one side there you have local producers and on the other side you had both out of State and in State distributors, in that particular case the legislative arrangements were designed on their face to benefit only local producers. That, we say, is not the situation in this particular case before your Honours and that is another reason why we would say that the result that was reached in the Full Federal Court could never be changed in this Court, even though there is a range of questions at the margin, as in any section 92 case that can be debated, of course, before the Court. If the Court pleases, those are our submissions.

FRENCH CJ: Thank you, Mr Solicitor. Yes, Mr Young.

MR YOUNG: In our submission, the arguments that Mr Gleeson put forward are incorrect. He attempted to suggest that these issues do not arise on the facts. That is wrong for reasons I would like to briefly demonstrate. Firstly, the trial judge did not say that the case was confined to paragraph 85 of the pleading. He said the essential pleading was in paragraph 90(b) that relied upon all of the particulars given in paragraph 85. That is at paragraph 116 at application book 46, about halfway through paragraph 116. Paragraph 90(b) was an allegation that steps were taken to offset the effect of the payments. That was the primary judge’s understanding, as paragraph 117 makes clear.

Mr Gleeson made passing reference to the particulars at the top of page 42. I will not go back to it, but that was the allegation that Racing New South Wales took steps in consultation with the TAB to ensure that the payment was either compensated or offset. The primary judge made a series of findings about those steps. Can I go to paragraph 66 of the primary judge’s reasons. These findings are all based on documents and there was no other evidence. If the Court looks at paragraph 66(a), in the case of the TAB, what was going to be raised was zero and that was because the fees would be offset by compensation required. This was the document on which the board resolved to impose the fees.

Going down further, New South Wales bookmakers, the fee was going to raise nothing from them because of the introduction of the 5 million threshold. When you look at corporate bookmakers and betting exchanges at the top of the next page, they were to pay very substantial fees because there were no offsets or thresholds that applied to them. The primary judge also made findings in paragraphs (e) and (f) and although the refund came much later, it was characterised under the deed of release as compensation. It was an offset that was anticipated to be put in place on 18 June when the fees were imposed. There were clear findings on

incontrovertible evidence that steps were taken, so Mr Gleeson’s pleading point about the facts is unsound.

The next proposition was that the deed of release is somehow relevant. As Justice Gummow noted, in paragraph 69 the trial judge was at pains to make it clear that his observations about the deed of release involving no element of compromise because the whole of the 100 per cent of the fees were paid across was not a critical step in his Honour’s reasoning. He said “Be that as it may.” The Full Court acknowledged – just before I leave that passage, at application book 34, paragraph 74, again on 18 June in relation to racing clubs - - -

FRENCH CJ: Sorry, just before you leave 68, the statement “I do so” at the end of 68, that is a reference to taking into account the gravity of the conclusion, is it not? It is not a statement that he is drawing the relevant inferences.

MR YOUNG: That is right, your Honour, yes. In our submission, these are preliminary factual matters where his Honour is going through the critical documents. Ultimately, he comes to assess the practical effect, and the reliance on those matters and those factual findings were never challenged in the Full Court. The Full Court acknowledged that we relied upon those factual findings, the critical ones at page 43, paragraphs 101 to 104. The deed of release has got nothing to do with the offsetting payments that affected the position of bookmakers. It only concerned the TAB. In the case of the bookmakers, at paragraph 74 at page 34, the Court will see the document upon which the primary judge relied set out at the foot of the page. The fees assume the clubs –

will rebate or eliminate their turnover fee to NSW bookmakers . . . the clubs have indicated that they would agree to such a reduction - - -

FRENCH CJ: I think your time is up, Mr Young.

MR YOUNG: Yes. In effect, what we submit is that none of the findings that critically underpin the judgment are impaired by any of the submissions that have been made.

FRENCH CJ: Thank you. There will be a grant of leave in these two matters. In relation to S290 of 2010, the grant will be confined to grounds 3, 6, 7 and 12. Ground 12 makes a reference to section 92 when it should be referring to section 49. It would be convenient, I think, for the two appeals to be consolidated and one notice of appeal filed. So we will order accordingly.

AT 10.21 AM THE MATTER WAS CONCLUDED