With betfair if the price in the lay column (pink shaded) is say 3.75 with 50 pound underneath and I can back it here with a bookie for 10.00 and took both bets, if the horse loses then would i win if I staked both bets proportionately? That is have $80 australian on the lay and $22 and it wins i come square and if it loses i make $58?

if i am right then why should i ever study form again?

Keep studying the form Dr. Ron, unfortunately you are incorrect in your assumption. The pink shaded area on the Betfair odds page is the 'asking price' that is the odds someone requires - it is the other side which has the odds currently on offer. It is very unlikely that the variation between what's on offer on Betfair and what's on offer would be that large. Can happen but most unusual and would in all probability occur only when someone has made a mistake.

It did happen recently with Super Elegant when it won at Moonee Valley a couple of starts ago - $4.80 SP but $9.80 on Betfair as they jumped, but as I stated that was exceptional.

Dr Ron, you are correct.
You lay the horse at 3.75, and back it at 10 with the bookie.
To maximise this situation (50 pounds = approx $120), you would then have $45 on with the bookie for a rough profit (commission etc) of $71.

However, La Mer is also correct, these are few & far between & is obviously someone's mistake, and his example of Super Elegant is a beauty. You are more likely to lay at 3.75 & back at $3.9, if you're lucky.

When Betfair first started there were mistakes all over the place, it was just a matter of being johnny on the spot to grab them. Don't feel guilty about taking advantage as you will make mistakes as well, as we all have. I once made a book to 135%, in one go!, but have also laid horses @ 500/1 when I only wanted to 50/1.

The example that I gave was on a Bendigo race today, about 3 minutes before the jump. I might open an account just in case I come across this type of thing again.

Many opportunities arise. I have IAS open and BF.
The only thing I can guarantee you is you must be quick because they don't last long.

Be sure to always back it first with the bookie before the chance disappears. And remember, you pay 5% commission on your profit on BF so if you can back it early at a good price on BF, and can lay it off later, you pay much much less commission.
Commission is paid on profits of the race, not the bet. eg: You manage to back every horse in the race and stand to win $10 no matter what horse wins, you only pay 5% of the $10, or 50 cents.
If you had $100 @ 9-1, you would win $900 on that bet, which equates to $45 commission.
But,
Since you only made $10 for the race, the commission stands at 50 cents.

My point is: the gap between prices that you get with the bookie must take into account the commission you pay if the bet is won through BF.