Type : Focus Paper
Mr MacMillan, a customer of Sportsbet Pty Limited (Sportsbet), made a complaint to the Victorian Civil and Administrative Tribunal (VCAT) that Sportsbet had breached the Australian Consumer Law (ACL) by banning him from placing certain types of bets after he made a series of winning bets.
The VCAT held that it had jurisdiction to hear the complaint but dismissed Mr MacMillan's claims as frivolous, vexatious, misconceived or lacking in substance.
Mr Robert MacMillan had been a Sportsbet customer since 2005. All prospective Sportsbet customers were required to agree to Sportsbet's standard contractual terms and conditions by clicking "I agree" on the online application form. Mr MacMillan agreed to accept Sportsbet's contractual terms and conditions when he signed up as a customer.
Mr MacMillan alleged that, in late 2012 or early 2013, Sportsbet placed a restriction on the type of bets it would accept from him. This restriction prevented him from placing bets on "doubles" and other "racing multiples". Mr MacMillan also alleged that these restrictions were placed only after he had won $22,500 in just over a month.
Mr MacMillan filed a claim in the VCAT in which he sought $35,000 in damages as well as certain orders in the nature of corrective advertising.
The initial hearing focused on the jurisdictional issue.1 Sportsbet argued that the VCAT did not have jurisdiction to hear and determine the claim. Sportsbet's submissions were based on clauses 73 and 74 of its standard terms and conditions, which are set out below:
- "These Rules shall be governed by and construed in accordance with the laws of the NT and each Member irrevocably submits to the non-exclusive jurisdiction of the NT Courts in respect of any dispute or matter arising out of or relating to these Rules." (Clause 73); and
- "If any dispute cannot be resolved between Sportsbet and the Member ("dispute"), the dispute based must be referred to a representative of the NTRC. Any dispute can be referred to the NTRC via e-mail at gambling.disputes@NT.gov.au or post addressed to Gambling Disputes, GPO Box 1154, Darwin, Northern Territory, for final determination, and all bets will be adjusted accordingly. A dispute must be lodged with the NTRC within 14 days of the dispute arising. The decision of the NTRC is final and binding on Sportsbet and the Member. Nothing in this Rule precludes a party from seeking urgent interlocutory relief from a Court if such relief is reasonably required." (Clause 74).
Essentially, clause 73 requires that the Sportsbet customer submit to the non-exclusive jurisdiction of the Northern Territory Court in respect of any dispute or matter arising out of the standard terms and conditions. On the other hand, clause 74 provides that the Northern Territory Racing Commission (NTRC) has the exclusive jurisdiction to determine any disputes which cannot be resolved between Sportsbet and its customer.
The VCAT rejected Sportsbet's argument on the basis of:
- Since the clauses were drafted by Sportsbet and imposed on its customers, the rule of contractual interpretation requires that any ambiguity in the clauses be read against Sportsbet;
- Clause 73 allows any dispute or matter covered by the clause to be litigated in a court of the Northern Territory or any other State or Territory with jurisdiction; and
- Clauses 73 and 74 make a distinction between "matters" and "disputes". The expression "all bets will be adjusted accordingly", as used in the context of disputes, implies that disputes relate to the entitlement to payment.2
Accordingly, the VCAT held that the exclusive jurisdiction conferred by clause 74 only covers disputes and not matters. Mr MacMillan's claims were not a dispute within the meaning of clause 74 as they pertain to his inability to place a bet.
In conclusion, VCAT considered that it had jurisdiction to hear Mr MacMillan's application.
The second hearing focused on the substantive matters of the claim.3 The crux of Mr MacMillan's claim was that Sportsbet had breached its obligations under sections 18, 20, 21, 22, 25, 34 and 35 of Australian Consumer Law (ACL).4 These provisions of the ACL relate to:
- Misleading or deceptive conduct [sections 18 and 34];
- Unconscionable conduct [sections 20-22];
- Unfair terms (in relation to imposing an unilateral term to avoid or limit performance of a contract or to terminate a contract) [section 25]; and
- Bait advertising [section 35].
The VCAT found that Mr MacMillan's claims were frivolous, vexatious, misconceived or lacking in substance within the meaning of section 75 (1) of the Victorian Civil and Administrative Tribunal Act 1998 (VIC).
In its decision, the following points were made:
- Misleading or Deceptive Conduct – The VCAT observed that the Sportsbet website makes accessible easily, and links and displays clearly, its standard Terms and Conditions. These include clauses empowering Sportsbet to "ban" Mr MacMillan from placing certain bets. Since Sportsbet was not attempting to hide its standard Terms and Conditions, the VCAT held that it did not engage in misleading or deceptive conduct;
- Unconscionable Conduct – The VCAT stated that the ACL provisions governing unconscionable conduct apply to transactions which have already occurred. However, Mr Macmillan's allegation related to future transactions. As a result, the VCAT did not consider the ACL unconscionability provisions applied;
- Unfair Terms - The VCAT accepted Sportsbet's submission that a contract is created only when a bet is placed. By declining to accept a bet, Sportsbet was declining to enter into a new contract with Mr MacMillan. Like any other party, Sportsbet was entitled to refrain from entering into a contract. This meant that these provisions did not apply. Accordingly, Sportsbet did not impose unfair terms in consumer contracts; and
- Bait Advertising – Section 35 of the ACL prohibits a person from advertising services at a specified price if there are reasonable grounds for believing that the supplier will not be able to supply the services at that price for a reasonable period. The VCAT found that there was no evidence that Sportsbet had advertised that its services can be offered for a specified price but then had withdrawn its services after raising interest amongst punters.5
As Mr MacMillan had not established his allegations, the proceedings were dismissed.
Although this claim involved an online wagering operator, the determination is applicable generally to all e-commerce businesses. Two significant points arise from these proceedings.
First, consumer-facing businesses wishing to ensure that disputes are determined exclusively by any one jurisdiction should:
- review their current terms and conditions; and
- ensure that all types of disputes are captured under their exclusive jurisdiction clause.
The VCAT has made it clear that any ambiguity will be construed against the person who drafts the terms and conditions. This generally means that companies dealing with consumers will be at risk of having its contract interpreted in a manner adverse to its interests.
Secondly, consumer-facing businesses are entitled to refuse to enter into a new contract with consumers. This means that, if a transaction is structured in a way in which a contract is created only upon the transaction occurring, then each new transaction would be regarded as a new contract. In Sportsbet's case, it is only when a bet is placed that a contract is created. As a result, Sportsbet is entitled to restrict a punter from placing certain types of bets.
Despite the finding of the VCAT in the matter, it is clear that the VCAT is prepared to exercise jurisdiction in connection with contractual claims brought under the ACL. For this reason, it is important that care be taken to ensure that exclusive jurisdictions clauses are effective.
This determination will be of key relevance for Australian licensed online gambling operators. Three key principles emerge, namely:
- exclusive jurisdiction clauses should be drafted in a manner which will minimise the risk of the VCAT and other tribunals claiming jurisdiction to determine contractual disputes;
- terms and conditions should be drafted in a manner which are readily understandable; and
- it is quite appropriate, and not necessarily a breach of the ACL for a bookmaker to refuse to accept bets from a customer.
1The initial hearing took place on 19 April
2McMillan v Sportsbet Pty Ltd (Civil Claims)  VCAT 581 (24 April 2013)
3The second hearing was held on 6 September 2013.
4Schedule 2 of the Consumer and Competition Act 2010 (Cth)
5MacMillan v Sportsbet Pty Ltd (2013) VCAT C208/2013 (9 October 2013)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.