By Andy Young
The High Court has ruled that the Tatts Group will have to repay the Victorian Government over $540 million following a legal battle over poker machine licences.
State reforms by the Victorian Government in 2012 enabled pubs and clubs to take control of pokies outside of Crown Casino, rather than having them run by Tatts or fellow gaming giant Tabcorp.
As a result Tatts took the Victorian Government to court over a termination agreement and in 2014 the government was ordered to pay more than $540 million in compensation. This week the High Court ordered Tatts to pay back the money, with interest.
In delivering its ruling the High Court said: “The High Court held that Tabcorp Holdings Limited was not entitled to payment by the State of Victoria under s 4.3.12(1) of the Gambling Regulation Act 2003 (Vic) because there was no ‘grant of new licences’.
“The High Court unanimously held that the phrase ‘grant of new licences’ in s 4.3.12(1) of the 2003 Act meant the grant of a new wagering licence and a new gaming licence under Pt 3 of Ch 4 of the 2003 Act. As no new wagering licence and gaming licence were issued under Pt 3 of Ch 4 of the 2003 Act, Tabcorp was not entitled to payment under the terminal payment provision.”
Tabcorp also made a claim in 2014 under a similar arrangement to the Tatts case, but their claim for nearly $670m was rejected at the time. The company appealed that decision, which was also rejected by the High Court.
In its response to the ruling Tatts said that the money it received in 2014 had not been recognised in the company’s financial accounts.
In a statement Tatts said: “The High Court of Australia has today upheld the State of Victoria's appeal in relation to the matter of the State of Victoria v Tatts Group Limited, with the result that Tatts must repay the State $540,467,887.92 plus interest from 27 June 2014. The amount of the interest has not yet been determined."
The company added: "As previously advised, the amount which now must be repaid (which was received by Tatts from the State on 27 June 2014, after it was successful at first instance in the court below) has not been recognised as income in Tatts' financial accounts. The funds have been treated as unearned income and a current liability.
"The decision is not expected to affect Tatts' ability to continue its stated dividend policy of maintaining a high annual dividend payout ratio."
Tabcorp said of the ruling: "The High Court of Australia has today dismissed an appeal in relation to Tabcorp Holdings Limited vs State of Victoria.
"The judgment is in respect of Tabcorp’s appeal against the judgment of The Court of Appeal of the Supreme Court of Victoria delivered in December 2014 in favour of the State of Victoria. The initial proceeding related to Tabcorp’s claim for a payment of $686.83 million.
"As a result of the Victorian Government’s decision in 2008 that Tabcorp was not entitled to the payment, Tabcorp incurred charges against its earnings in previous financial years. Tabcorp has therefore dealt with the original announcement in its financial accounts.
"Today’s High Court judgment brings to an end a proceeding which has been running since August 2012."
Victoria’s treasurer, Tim Pallas, was understandably delighted with the ruling, saying: “It’s a great outcome. It means the $540m that had been previously allocated to Tattersalls, will now of course be returned to the State.”