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Category: Principal judgment

Parties: Australian Turf Club Ltd (Plaintiff)
Racing NSW (First Defendant)
Morgan Kelly (Second Defendant)

Representation: Counsel: S Robertson SC/P Afshar/M Pulsford (Plaintiff)
M Henry SC/O Jones SC/K Woodforde (First Defendant)
Solicitors: Johnson Winter Slattery (Plaintiff)
Yeldham Price O'Brien Lusk (First Defendant)
Minter Ellison (Second Defendant)

File Number(s): 2025/486733

JUDGMENT

Summary

1. This case is about whether Racing NSW (RNSW) has validly used its power under the Thoroughbred Racing Act 1996 (NSW) to appoint Mr Morgan Kelly as the administrator of the Australian Turf Club Limited (the ATC).

2. The ATC is the plaintiff. It says Mr Kelly's appointment by RNSW, the first defendant, is invalid so that it is nothing more than a blank piece of paper with no effect. Mr Kelly, the second defendant, has entered a submitting appearance, which means he has played no part in this case and will comply with whatever the Court decides.

3. It is important to understand from the outset that this case is what lawyers call an administrative law challenge. The issues for the Court concern whether RNSW validly appointed Mr Kelly: did it have the legal power and, if so, did it make the appointment in the way the law says that kind of power must be exercised?

4. This case is not about whether RNSW should have appointed Mr Kelly. That would require to Court to consider the merits of RNSW's decision: were RNSW's reasons for appointing Mr Kelly right or wrong? The Court expresses no view on that question and leaves it to be debated among the many people in this state who are interested in horse racing.

5. For the reasons which follow, the Court has decided that Mr Kelly's appointment is invalid. Those reasons may be summarised as:

6. Under s 14(1) of the Act, the appointment of an administrator must be done for or in connection with the exercise of one of the functions of RNSW.

7. The functions of RNSW are specified by s 13(1) of the Act.

8. In exercising the functions of RNSW specified by s 13(1) of the Act, the constituent members of RNSW must act in accordance with the duty imposed on them by s 11 of the Act “to act in the public interest and in the interests of the horse racing industry as a whole in New South Wales”.

9. The duty in s 11 of the Act is not a function of RNSW separate from or additional to its functions specified by s 13(1) of the Act.

10. RNSW’s function under s 13(1)(b) of the Act is to control, supervise and regulate in New South Wales the racing of galloping horses as referred to in the Australian Rules of Racing (ARR).

11. RNSW’s reasons for the appointment were limited to concerns about the financial condition and corporate governance of the ATC, which are not matters concerning the racing of galloping horses as referred to in the ARR.

12. Therefore, the appointment was not authorised by the Act and is invalid and of no effect.

13. Even if the appointment could have been authorised by the Act, it would also have been invalid because it was made based upon a material misreading by RNSW of accounting information provided to RNSW by the ATC sufficient to constitute a jurisdictional error.

14. Mr S Robertson of Senior Counsel appeared with Mr P Afshar of Counsel and Mr M Pulsford of Counsel for the ATC. Mr M Henry of Senior Counsel appeared with Mr O Jones of Senior Counsel and Ms K Woodforde of Counsel for RNSW.

Structure of this judgment

7. To reflect the various arguments advanced by the ATC, the structure of this judgment is:

8. Facts – [8] to [21]

9. The Act – [22]

10. Principles of interpretation – [23] to [24]

11. The proper construction of the Act generally and s 11 in particular – [25] to [45]

12. Section 13(1)(b) of the Act – [46] to [68]

13. Section 13(1)(b) of the Act and the facts of this case – [69] to [76]

14. An error in reasoning about “discretionary support”? – [77] to [94]

15. Three alleged inconsistencies – Introduction – [95] to [99]

16. Does s 14(2)(g) apply to companies? – [100] to [103]

17. Constitutional inconsistency? – [104] to [108]

18. Implied repeal? – [109] to [116]

19. Some final observations – [117] to [121]

20. Orders – [122]

Facts

8. The case was conducted by reference to the applicable legislation and a series of documents. It is clear from those documents – and RNSW accepted at the hearing before me - that RNSW’s actions were the result of concerns it held about what it considered to be the ATC’s poor financial position and ineffective corporate governance. That characterisation is essential to the Court’s conclusions.

9. On 19 September 2025, the chief executive of RNSW sent an email to the chairman of the ATC which included:

“Requirement to Show Cause as to why Racing NSW should not appoint an administrator to Australian Turf Club Ltd (the ATC**)**

Racing NSW is the statutory body responsible for the control, supervision and regulation of thoroughbred horse racing in NSW (s 13(1)(b) of the Thoroughbred Racing Act 1996 (NSW) (the TRA).

Racing NSW's broad powers under the TRA include, without limitation, the power to "supervise the activities of race clubs, persons licensed by Racing NSW and all other persons engaged in or associated with racing" (s 14(2)(c)), "direct and supervise the dissolution of a race club that ceases to be registered by Racing NSW” (s 14(2)(f)) and "appoint an administrator to conduct the affairs of a race club”(s 14(2)(g)). The members of Racing NSW have a statutory duty to act in the public interest and the interest of the horse racing industry as a whole in NSW (s 11).

Requirement to Show Cause

Racing NSW has repeatedly raised concerns about the ATC's financial position and corporate governance. These include Racing NSW's letters to the ATC dated 31 July 2025, 4 August 2025, 6 August 2025, 12 August 2025 and 29 August 2025. The responses received have not satisfactorily addressed these concerns and, in many cases, raised further alarming new issues.

Set out in the attached Show Cause Notice are the facts and circumstances that could reasonably give rise to the conclusion that, despite unprecedented support from Racing NSW, the ATC is financially unstable, strategically directionless and plagued by governance failures.”

10. The email attached the show cause notice which included:

The ATC is required to show cause as to why Racing NSW should not appoint an administrator to conduct the affairs of the ATC by reason of any one or more of the following matters:

1. the ATC is, or is likely to be, insolvent but for discretionary bail-out funding from Racing NSW;

2. the ATC Board has ceased to be effective as a governing body;

3. the ATC Board has fallen short of the standard that a competent board would be expected to meet;

4. the directors of the ATC have breached their directors duties;

5. the directors of the ATC have failed to comply with the ATC Code of Conduct;

6. the directors of the ATC have acted contrary to accepted standards of corporate behaviour;

7. the ATC Board is in a state of deadlock or disfunction;

8. the relationship of trust and confidence between Racing NSW and the ATC Board has broken down; and/or

9. there is a lack of fairness, confidence or commercial morality in the ATC's company affairs.

Set out below are the facts and circumstances that could reasonably give rise to the conclusion that, despite unprecedented support from Racing NSW, the ATC is financially unstable, strategically directionless and plagued by governance failures.”

11. The notice was 15 pages long and divided into three sections. The first section set out what was described as the background and the “unprecedented platform for commercial success provided to the ATC” by RNSW. The second section set out “concerns in respect of the financial status of the ATC, and the inaction and lack of strategy in respect of the platform for commercial success that it was provided and other financial matters”. The third section set out “the concerns in respect of the breakdown in Corporate Governance”.

12. By letter dated 24 October 2025, the ATC submitted its response to the notice. In relation to the issue of the ATC’s solvency, the response included:

“16. JWS [the ATC’s solicitors] retained KordaMentha to opine on ATC's solvency. KordaMentha prepared a report in response to JWS's instructions. That report is appended to this Response and marked A. The report answers the Allegation in the notice concerning ATC's solvency and deals with the related concerns set out in section B of the Notice. Given the detailed analysis undertaken by KordaMentha and the opinions they express, there cannot be any reasonable contention that ATC is, or is likely in the future to become, insolvent.

17. In particular, KordaMentha have opined that:

a. ATC was solvent as at 31 August 2015 and will likely remain solvent not only until 31 July 2026 but also in the financial years ending 31 July 2027 and 31 July 2028.

b. Based on the cashflow test, ATC will be able to meet its debts as and when they fall due.

c. An assessment of the standard indicators of insolvency supports a conclusion that ATC is not insolvent.

d. ATC has no difficulties in paying its trade debts as they fall due.

18. Importantly, KordaMentha have reviewed and have opined that the Board's approach to the refinancing of the CBA loan in October 2026 is sound and gives them no concern.

…

21. One further point should be mentioned: Allegation 1 as framed alleges that that ATC is likely to be insolvent but for what it described as "discretionary bail-out funding from Racing NSW".

22. The Notice does not explain what it means by "discretionary bail-out funding", but it seems to be intended to refer to funds that may be paid by or procured with the assistance of Racing NSW to ATC in circumstances where ATC has no express contractual entitlement to such funding.

23. ATC does not consider that funds of that kind are fairly characterised as merely "discretionary" payments, much less as "bail-out funding". While it is true that substantial funds have historically been paid by Racing NSW to ATC for example for prize money or by way of what the KordaMentha Report calls the "TAB Distribution Top Up" without an express contractual obligation to do so, as ATC sees it, those payments are made in the discharge of Racing NSW's duty under s 11 of the TR Act to act, through its members, in the interests of the horse racing industry as a whole in New South Wales.

24. It would be unquestionably against the interests of the horse racing industry as a whole for Racing NSW to withhold the funding to ATC or its predecessors that it has historically provided. Nor would it be consistent with what the KordaMentha report describes as the "mutuality of interest" between ATC and Racing NSW.”

13. The response concluded:

“48. For these reasons, Racing NSW should not purport to appoint an administrator to conduct the affairs of ATC. To do so, would not be a fair and reasonable course, particularly in light of the serious professional, commercial and financial impact that purporting to appoint an administrator could have: see, in this respect, Racing New South Wales v Sydney Turf Club [2005] NSWSC 426 at [95].

49. ATC has received public and private assurances from Racing NSW that it would give careful consideration to this Response and will meet with the Board of ATC before making any decision concerning ATC, including to appoint an administrator.

50. The ATC Board looks forward to discussing any of these matters with you at the promised meeting with the Board of Racing NSW.”

14. It will be necessary to set out some extracts from the KordaMentha report (KM report) later in these reasons.

15. On 12 December 2025, there was a meeting of what was described in the relevant minutes as a meeting of the “Board of Racing NSW”. Because issues of corporate and natural personality are relevant to the construction of the Act, I observe, with respect, that the reference to a “board” of RNSW is technically a misnomer. The Act does not provide for a board. Strictly speaking, what occurred was a meeting of RNSW, being the chief executive and seven other appointed members (see s 6(1) of the Act set out in [22] below).

16. The meeting on 12 December 2025 began with a meeting between representatives of the ATC and the members of RNSW. After the ATC representatives had left, the minutes of that meeting record:

“The Board discussed the Show Cause process and based on all of the evidence before it, the Board resolved to:

● Appoint Morgan Kelly of Ernst & Young as administrator of the Australian Turf Club Limited.

● Appoint a Sub-Committee of the Racing NSW Board to provide oversight as prescribed by the Racing NSW Board to the administrator and to report back and make recommendations to the Racing NSW Board, with the members of the Sub-Committee to be determined at a later date.”

17. RNSW met again on 14 December 2025. The minutes of that meeting include:

“Chief Executives Report

3.1.1 THE ATC Show Cause

The Board discussed the draft letter to the ATC setting out the detailed reasons for the appointment of an administrator to conduct the affairs of the ATC.

It was resolved to send the letter formally appointing Morgan Kelly of Ernst & Young as administrator of the ATC as early as possible on Monday 15 December 2025.”

18. In a letter dated 15 December 2025 to the chairman of ATC from the chairman of RNSW, RNSW set out its reasons for the appointment. The Court infers this letter is the letter referred to as a draft in the minutes reproduced in the preceding paragraph. Because of the arguments raised by the parties, it is necessary to set out these substantial extracts from the reasons:

“I refer to the Show Cause Notice issued to the ATC on 19 September 2025, Racing NSW's multiple correspondence to the ATC from 31 July 2025 in respect of the concerns in the Show Cause Notice and the joint meetings of the Boards of Racing NSW and the ATC on 27 November 2025 (27 November 2025 Joint Meeting) and 12 December 2025 (12 December 2025 Joint Meeting).

After exhaustive consideration of the ATC's submissions, supporting materials, and the evidence put forward by the ATC Board and management, Racing NSW has determined that the ATC has comprehensively and fundamentally failed to show cause as to why an administrator should not be appointed. Accordingly, and with immediate effect, Racing NSW has resolved, pursuant to section 14(2)(g) of the Thoroughbred Racing Act 1996 (NSW), to appoint an administrator to conduct the affairs of the ATC.

Racing NSW considers that this determination is both necessary and unavoidable to ensure the proper discharge of its statutory functions and duties. It is not a decision taken lightly, nor is it one arrived at precipitously. Rather, it is the culmination of months of escalating concern regarding the ATC's financial viability, governance issues, and the apparent incapacity of the ATC Board to discharge its duties to a standard commensurate with the scale, importance, and public trust inherent in its role. Especially considering the length of time that the ATC Board members have been on the ATC Board, ranging from 10 months to almost 5 years, with an average tenure of 3 years.

Racing NSW commenced the show cause process because of serious and growing concerns regarding the ATC's deteriorating financial position. Those concerns did not abate during the process. Instead, they intensified.

The ATC Board was unable to articulate or provide a credible, coherent, or disciplined strategy to stabilise or improve the ATC's financial performance. The material advanced was overwhelmingly reactive, superficial, and devoid of rigorous commercial analysis. Far from demonstrating leadership, the ATC Board's focus appeared to be limited to short-term, distressed asset disposals, pursued without adequate strategic planning and in circumstances where there is a significant risk that assets will be sold grossly undervalue and thus impair the ATC's balance sheet. The ATC did not demonstrate, at the appropriate level of detail, how it would increase revenues and decrease costs in the future. Its responses were often superficial and in the nature of motherhood statements.

The ATC Board also failed to adequately address the corporate governance issues raised by Racing NSW. The information provided by the ATC did not provide Racing NSW confidence that they would be able to implement and adhere to best practice corporate governance going forward.

The particular conclusions that have contributed to Racing NSW determining to appoint an administrator to conduct the affairs of the ATC include, but are not limited to, the following conclusions:

1. ATC's reliance on Racing NSW guarantees and discretionary financial support to maintain solvency. The ATC's current financial position presents a real and unacceptable risk that Racing NSW would be called upon to honour guarantees exceeding $30 million. Such an outcome would directly imperil industry funds and undermine Racing NSW's statutory obligation to act in the best interests of the thoroughbred racing industry as a whole.

…

3. In responding to the Show Cause Notice, the ATC Board relied heavily upon advice from KordaMentha. Racing NSW has concluded that reliance was misplaced.

The KordaMentha analysis proceeded on a critical and erroneous assumption, namely, that Racing NSW would extend its guarantee of the ATC's debt facilities. That assumption was neither authorised nor discussed with Racing NSW. It involved the consultant presuming a regulatory decision that it was not delegated or competent to make.

Absent that assumption, the ultimate conclusions expressed in the report cannot be sustained.

Further, KordaMentha's revenue projections were materially inflated. In particular, increases totalling $2.8 million in stable rents, track fees, and barrier trial fees were included notwithstanding advice that the implementation of these measures had been delayed. Subsequent information provided by the ATC confirmed that those increases were reduced to approximately $200,000. The effect was a $2.6 million overstatement of revenue.

The ATC Board nevertheless continued to rely on the report without qualification.

Further, Racing NSW raised concerns with the ATC in the 27 November 2025 Joint Meeting, that the KordaMentha engagement appeared to be a very narrow scope, focused on the question of solvency as opposed to addressing Racing NSW concerns about the ATC's financial performance generally. At this meeting, the ATC advised that they were not sure what the scope was, but would check. This lack of knowledge about what was the fundamental report accompanying the ATC's show cause response illustrated a concerning lack of understanding and care. At the 12 December 2025 Joint Meeting, the ATC were asked to confirm the answer to the above and advised that the KordaMentha scope was limited only to the solvency assessment and they had not been engaged to do any further work for the ATC.

4. Further, the ATC provided capital expenditure forecasts of approximately $5 million per annum for the next three financial years. Racing NSW does not have confidence that such forecasts are adequate. Indeed, the figures has [sic] been described by the ATC itself as "grossly inadequate."

…

5. The ATC Board also has no cogent or structured plans in place on cost reduction, revenue growth, property sales and development. To the extent that any plans were presented to Racing NSW, they did not contain detailed analysis but were in the nature of general statements or aspirations. This is despite the ATC informing Racing NSW on 26 September 2025 that it had already commenced "a root-and-branch review of the ATC's entire operations to identify new revenue opportunities and cost efficiencies, ensuring a sustainable financial future" and that the "process will be rigorous, transparent, and aligned with best practice governance".

…

7 The following concerns and questions were raised during the Show Cause process and not answered satisfactorily:

a. That the ATC has failed to take advantage of the unprecedented platform for commercial success that has been provided by Racing NSW and has no cogent strategy going forward to do so. This unprecedented platform for commercial success includes procurement by Racing NSW of $42 million per year of new and recurring revenues for the ATC over and above their existing entitlements under the Racing Distribution Agreement (RDA) with Tabcorp, $260 million of infrastructure funding for revenue generating assets and significant ongoing discretionary financial support from Racing NSW. These considerable benefits to the ATC are set out below:

…

iii. Discretionary financial support from Racing NSW for the ATC:

1. $36 million of top-up payments to offset the decline in the TAB distribution since 2019, ensuring that the ATC was not exposed to any fall in their revenues from Tabcorp.

2. $7 million payment for grandstand cladding works at Royal Randwick.

3. $5 million payment to Westpac from ATC's loan, when ATC was unable to meet this repayment.

4. $4 million for COVID cost relief reductions.

5. $1.5 million payment for ATC redundancies.

6. Cash flow support of the ATC's payments from Tabcorp under the RDA, providing interest savings to the ATC of over $1 million per year.

…

b Notwithstanding the above, the ATC's financial performance and position has continued to decline. In particular:

i. The ATC Board has not adequately identified and implemented costs savings in the business.

…

v. The ATC had no cogent or structured plans in place if Racing NSW no longer provides the cash flow funding of the TAB distribution. It is noted that this support to the ATC comes at an opportunity cost to Racing NSW of over $1 million per annum in terms of lost interest which came at the expense of the NSW Thoroughbred Racing Industry.

…

xi. A substantial part of the ATC's business operations is hospitality. However, when the ATC Board was asked at the 27 November 2025 Joint Meeting what were the vital ratios of cost of goods sold to revenue or percentage of labour cost to revenue the ATC Board members did not have any awareness of those ratios. As a result, they could not answer any questions in respect of possible inefficiencies. Racing NSW considers that this is something that a competent board should be able to address.

…

In light of the conclusions above, Racing NSW has formed the following views:

1. the ATC Board has ceased to be effective as a governing body;

2. the ATC Board has fallen short of the standard that a competent board would be expected to meet;

3. one or more of the directors of the ATC has breached their directors duties;

4. one or more of the directors of the ATC has failed to comply with the ATC Code of Conduct;

5. one or more of the directors of the ATC has acted contrary to accepted standards of corporate behaviour;

6. the ATC Board is in a state of disfunction;

7. the relationship of trust and confidence between Racing NSW and the ATC Board has broken down; and

8. there is a lack of fairness, confidence and commercial morality in the ATC's company affairs.

While Racing NSW has formed each of the views identified above, it considers that any one, or combination of more than one, of these conclusions justify the appointment of an administrator.

Next steps

Mr Morgan Kelly of Ernst & Young has been appointed as administrator to conduct the affairs of the ATC. The powers and functions of the ATC Board cease for the duration of the administrator's appointment. You should provide all appropriate assistance of the administrator to facilitate the administrator's conduct of the affairs of the ATC.

However, Racing NSW intends to appoint a Sub-Committee to assist and guide the administrator. In this respect, Racing NSW anticipates appointing member(s) of the current ATC Board to that Sub-Committee and invites each of you to express an interest if you wish to join that Sub-Committee.” (emphases added)

19. The ATC commenced these proceedings by a summons filed on 15 December 2025. Mr Kelly’s purported appointment was stayed on 16 December 2025 by Justice Slattery. On 19 December 2025, I extended that stay until the final determination of these proceedings: Australian Turf Club Ltd v Racing NSW [2025] NSWSC 1604.

20. By an amended summons dated 12 February 2026, the ATC seeks this final substantive relief:

“Administrator issue

3. A declaration that the purported appointment on of the Second Defendant by the First Defendant on or about 15 December 2025 to conduct the affairs of the Plaintiff pursuant to s 14(1)(g) [this should be 14(2)(g)] of the Thoroughbred Racing Act 1996 (NSW) ("TR Act") is invalid and of no effect.

4. An injunction restraining the Second Defendant from purporting to conduct the affairs of the First Defendant or any of those affairs.

Catering shrinkage issue

5. An order restraining the First Defendant until further order from purporting to give the Plaintiff a direction pursuant to s 298 of the TGR Act requiring the ATC to provide the Regulator with information concerning the internal control processes the ATC has in place in relation to its hospitality section.

6. A declaration that the "Metropolitan Minimum Standards" dated April 2022 published by the First Defendant are not valid "minimum standards" for the purposes of Division 1 of Part 2A of the TR Act insofar as they purport to apply to catering or non-racing event management.”

21. By an order which I made on 12 February 2026, the ATC’s entitlement to the relief sought in prayers 5 and 6 is to be determined separately from and after the determination of all other issues in the proceedings. The ATC will be given an opportunity to consider whether it still presses for that relief in the light of these reasons.

The Act

22. The parts of the Act relevant to these proceedings are:

“An Act to make provision for the establishment, management and functions of Racing New South Wales as the representative body to control thoroughbred horse racing in the State and for other purposes.

…

3 Definitions

(1) In this Act—

appointed member means a member of Racing NSW other than the Chief Executive.

Australian Rules of Racing means the Australian Rules of Racing as adopted by the Australian Conference of Principal Racing Clubs….

exercise a function includes perform a duty.

function includes power, authority or duty.

horse racing means the racing of galloping horses as referred to in the Australian Rules of Racing. …

race club includes any body or other association of persons, whether incorporated or unincorporated, that promotes, conducts or controls, or that is formed for promoting, conducting or controlling, a horse racing meeting or meetings. …

Racing NSW means Racing New South Wales….

Part 2 Racing NSW

4 Establishment of Racing NSW

(1) There is established by this Act a body corporate with the corporate name of Racing New South Wales.

(2) Racing New South Wales may, in the exercise of its functions, use the name “Racing NSW”.

5 Racing NSW independent of Government

Racing NSW does not represent the Crown and is not subject to direction or control by or on behalf of the Government.

6 Membership

(1) Racing NSW is to consist of the Chief Executive and 7 other members appointed by the Minister from time to time….

11 Duty of members to act in interests of public and industry

It is the duty of each appointed member of Racing NSW to act in the public interest and in the interests of the horse racing industry as a whole in New South Wales….

12 Personal liability

(1) A matter or thing done or omitted to be done by Racing NSW, the Chief Executive, or a member of Racing NSW or the Selection Panel or any person acting under the direction of Racing NSW does not, if the matter or thing was done or omitted to be done in good faith for the purpose of executing this Act, subject the Chief Executive, the member or a person so acting personally to any action, liability, claim or demand.

(2) If this section prevents liability attaching to a person, the liability attaches instead to Racing NSW.

13 Functions of Racing NSW

(1) Racing NSW has the following functions—

(a) all the functions of the principal club for New South Wales and committee of the principal club for New South Wales under the Australian Rules of Racing,

(b) to control, supervise and regulate horse racing in the State,

(b1) such functions in relation to the business, economic development and strategic development of the horse racing industry in the State as are conferred or imposed by this Act,

(c) to initiate, develop and implement policies considered conducive to the promotion, strategic development and welfare of the horse racing industry in the State and the protection of the public interest as it relates to the horse racing industry,

(d) functions with respect to the insuring of participants in the horse racing industry, being functions of the kind exercised by the AJC on the commencement of this section, and such other functions with respect to insurance in the horse racing industry as may be prescribed by the regulations,

(e) such functions as may be conferred or imposed on Racing NSW by or under the Australian Rules of Racing or any other Act,

(f) such functions with respect to horse racing in New South Wales as may be prescribed by the regulations.

(2) The functions of Racing NSW are not limited by the Australian Rules of Racing and are to be exercised independently of Racing Australia Limited. …

14 Powers of Racing NSW

(1) Racing NSW has power to do all things that may be necessary or convenient to be done for or in connection with the exercise of its functions.

(2) Without limiting subsection (1), Racing NSW has power to do the following—…

(a) investigate and report on proposals for the construction of new racecourses, and inspect new racecourses or alterations or renovations to existing racecourses,

(b) register or licence, or refuse to register or licence, or cancel or suspend the registration or licence of, a race club, or an owner, trainer, jockey, stablehand, bookmaker, bookmaker’s clerk or another person associated with racing, or disqualify or suspend any of those persons permanently or for a specified period,

(c) supervise the activities of race clubs, persons licensed by Racing NSW and all other persons engaged in or associated with racing,

d) inquire into and deal with any matter relating to racing and to refer any such matter to stewards or others for investigation and report and, without limiting the generality of this power, to inquire at any time into the running of any horse on any course or courses, whether or not a report concerning the matter has been made or decision arrived at by any stewards,

(e) allocate to registered race clubs the dates on which they may conduct race meetings,

(f) direct and supervise the dissolution of a race club that ceases to be registered by Racing NSW,

(g) appoint an administrator to conduct the affairs of a race club,

(h) register and identify galloping horses,

(i) disqualify a horse from participating in a race,

(j) exclude from participating in a race a horse not registered under the Rules of Racing,

(k) prohibit a person from attending at or taking part in a race meeting,

(l) impose a penalty on a person licensed by it or on an owner of a horse for a contravention of the Rules of Racing,

(m) impose fees for registration of a person or horse,

(n) require registered race clubs to pay to it such fees and charges (including fees for registration of a race club) as are required for the proper performance of its functions, calculated on the basis of criteria notified to race clubs by Racing NSW,

(o) consult, join, affiliate and maintain liaison with other associations or bodies, whether in the State or elsewhere, concerned with the breeding or racing of galloping horses,

(p) enter into contracts,

(q) acquire, hold, take or lease and dispose of real and personal property whether in its own right or as trustee,

(r) borrow money,

(s) order an audit of the books and accounts of a race club by an auditor who is a registered company auditor nominated by Racing NSW,

(t) scrutinise the constitutions of race clubs to ensure they conform to any applicable Act and the Rules of Racing and that they clearly and concisely express the needs and desires of the clubs concerned and of racing generally,

(u) publish material, including periodical publications, to inform and keep informed the public concerning matters relating to racing, whether in the State or elsewhere,

(v) undertake research and investigation into all aspects of the breeding of horses and of racing generally,

(w) take such steps and do such acts and things as are incidental or conducive to the exercise of its powers and the performance of its functions.”

(emphases added)

Principles of interpretation

23. The principles which the Court must apply in construing the Act were not in dispute. A convenient summary, which I respectfully adopt, appears in the judgment of the plurality in Palmanova Pty Ltd v Commonwealth of Australia [2025] HCA 35; (2025) 99 ALJR 1362 (footnotes omitted):

Text and context

[4] Statutory construction is the process of attributing meaning to statutory text. The construction of a statutory provision begins and ends with the statutory text understood in context and in light of the statutory purpose — being what the provision is designed to achieve in fact— insofar as that purpose is discernible from the statutory text and context. In the construction of a provision of a Commonwealth statute, the meaning that would best achieve the statutory purpose so discerned is to be preferred to each alternative meaning.

[5] That being the nature of the task to which the process is directed, the “modern approach“ to statutory construction, as was explained nearly 30 years ago in CIC Insurance Ltd v Bankstown Football Club Ltd in a statement repeated and endorsed many times since: “(a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context‘ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means … , one may discern the statute was intended to remedy”. Use of extrinsic material in the construction of a provision of a Commonwealth statute is guided but not governed by a non-exhaustive list of categories of material statutorily recognised to have potential to illuminate the statutory context.

[6] Though the construction of s 14(1) of the Act adopted by the majority of the Full Court was correct, the majority saw the statutory text as so “clear” as to make material extrinsic to the Act “unnecessary to consider “. Understanding context, including so much of the context as might be revealed by extrinsic material, “has utility if, and in so far as, it assists in fixing the meaning of the statutory text”. Focus on the statutory text is not to the exclusion of extrinsic material that has the potential to assist in fixing its meaning.

24. These provisions of the Interpretation Act 1987 (NSW) (IA) are also relevant:

33 Regard to be had to purposes or objects of Acts and statutory rules

In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.

34 Use of extrinsic material in the interpretation of Acts and statutory rules

(1) In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material—

(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), or

(b) to determine the meaning of the provision—

(i) if the provision is ambiguous or obscure, or

(ii) if the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made) leads to a result that is manifestly absurd or is unreasonable.

(2) Without limiting the effect of subsection (1), the material that may be considered in the interpretation of a provision of an Act, or a statutory rule made under the Act, includes—

(a) all matters not forming part of the Act that are set out in the document containing the text of the Act as published on the NSW legislation website,

(b) any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of Parliament before the provision was enacted or made,

(c) any relevant report of a committee of Parliament or of either House of Parliament before the provision was enacted or made, …

(e) any explanatory note or memorandum relating to the Bill for the Act, or any other relevant document, that was laid before, or furnished to the members of, either House of Parliament by a Minister or other member of Parliament introducing the Bill before the provision was enacted or made,

(f) the speech made to a House of Parliament by a Minister or other member of Parliament on the occasion of the moving by that Minister or member of a motion that the Bill for the Act be read a second time in that House, …

(h) any relevant material in the Minutes of Proceedings or the Votes and Proceedings of either House of Parliament or in any official record of debates in Parliament or either House of Parliament.

(3) In determining whether consideration should be given to any material, or in considering the weight to be given to any material, regard shall be had, in addition to any other relevant matters, to—

(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), and

(b) the need to avoid prolonging legal or other proceedings without compensating advantage.

The construction of the Act generally and s 11 in particular

25. The parties were agreed that for any act of RNSW to be legally valid, it had to be done in the exercise of one its statutory functions. RNSW submitted it had made the appointment in the exercise of two of its statutory functions. The first was that conferred by s 13(1)(b) of the Act, “to control, supervise and regulate horse racing in the State”. The second was submitted to be s 11 of the Act, which provides that it “it is the duty of each appointed member of Racing NSW to act in the public interest and in the interests of the horse racing industry as a whole in New South Wales”. It will therefore be necessary to construe both of these provisions.

26. Before embarking on the task of construction, it is convenient to refer to the only other decision to which the Court was referred in which the Act was considered. That is the decision of Bergin J (as her Honour then was) in Racing New South Wales v Sydney Turf Club & Ors [2005] NSWSC 426, which concerned the ability of RNSW to regulate race clubs entering into agreements for the broadcasting of races. Her Honour’s decision led to amendments to the Act which are not presently relevant.

27. ATC drew attention to these parts of her Honour’s decision:

“92 In addition to the control, supervision and regulation of the galloping of horses, the plaintiff has what might be described as an overarching function as a policy maker. That function is no doubt an extremely important one which requires the plaintiff to “initiate, develop and implement policies” that are “considered conducive to the promotion, strategic development and welfare of the horse racing industry in the State and the protection of the public interest as it relates to the horse racing industry” (s 13(1)(c)). The term “horse racing industry” is not defined within the Act, however the content and context of the Act and the Rules together with commercial common sense dictate that the term includes the commercial and other operations integral to and dependent upon the galloping of horses under the Rules. That includes persons, both individual and corporate, who work within the industry such as the racing clubs, the breeders and trainers, the jockeys and apprentices and other riders. It includes the commercial operations of on-course and off-course betting from which the plaintiff and the Clubs obtain much of their revenue.

…

95 The plaintiff’s powers to be used in carrying out its functions under the Act are quite broad. It is able to “do all things that may be necessary or convenient to be done for or in connection with the exercise of its functions” (s 14(1)). It has the power to “supervise the activities of race clubs, persons licensed by [it] and all other persons engaged in or associated with racing” (s 14(2)(c)). This is a very broad range of persons and it is therefore very important to ensure that the plaintiff only exercises that supervisory power “for or in connection with the exercise of its functions”. It is able to: “appoint an administrator to conduct the affairs of a race club” (s 14(2)(g); disqualify a horse from participating in a race (s 14(2)(i); prohibit a person from attending at or taking part in a race meeting (s 14(2)(k); and impose a penalty on a person licensed by it or an owner of a horse for a contravention of the Rules of Racing (s14(2)(l)). The exercise of the plaintiff’s powers may have serious professional, commercial and financial impact upon those in respect of whom the power is exercised. These are public powers and should therefore be exercised impartially, fairly and reasonably.

…

101 The term “policy” is not defined in the Act but its plain meaning suggests that it is a “plan” for action in respect of aspects of the racing industry. The policy development function of the plaintiff is not limited to “horse racing” and is specifically extended to the “horse racing industry”, in contrast to its function to control, supervise and regulate “horse racing”. That is an important distinction. The plaintiff has not initiated or developed a “policy” within the meaning of that term in section 13 of the Act in relation to the broadcasting of races. Its actions in giving directions could therefore not have been in pursuit of its function of implementing such a policy.” (emphases added)

28. It was not suggested that I am bound by her Honour’s decision. Nevertheless, I accept the ATC’s submission that, as might be expected of a judge of her Honour’s skill and experience, the decision demonstrates that care must be taken to attend to the precise terms of the Act. Particular emphasis was laid on her Honour’s observation (at [101]) that there was “an important distinction” between “horse racing” and “horse racing industry” in the Act. As will be apparent from what follows, in my respectful opinion a similarly important distinction to that drawn by her Honour is to be made because section 13(1)(b) specifies RNSW’s function as being “to control, supervise and regulate horse racing in the State” and not being “to control, supervise and regulate race clubs in the State” (emphases added).

29. Returning to s 11 of the Act, RNSW’s argument depended upon the extended definitions of “exercise” and “function”. Section 3 of the Act provides two extended definitions: that “exercise a function includes perform a duty” and “function includes power, authority or duty”. It was submitted that s 11 imposed a duty on the members of RNSW and therefore upon RNSW. That duty was, by reason of the extended definitions, one that fell within s 14(1) of the Act, which should be read “Racing NSW has power to do all things that may be necessary or convenient to be done for or in connection with the exercise [including performing a duty] of its functions [including powers, authorities or duties]”. RNSW submitted that the appointment (which RNSW had decided was in the public interest and in the interests of the horse racing industry as a whole in New South Wales) was in performance of the duty under s 11 such that the appointment under s 14(2)(g) was authorised by s 14(1) as one of RNSW’s functions.

30. The Court accepts the ATC’s submission that, for the following reasons, upon the proper construction of the Act, the appointment could not be characterised as being in the exercise of a function derived from the duty imposed by s 11.

31. The Court does not accept RNSW’s construction of ss 11 and 14 because it fails to take account of the fact that RNSW is a distinct legal person from the appointed members who are the subject of the duty in s 11. The duty in s 11 is conferred on “each appointed member”. It is a discrete and several duty on each constituent member of RNSW which cannot be conflated to then become the duty of the separate legal person RNSW.

32. The Court’s conclusion is supported not only by the clear language of s 11, but also by the context in which s 11 appears in the scheme of the Act and its legislative history.

33. While it may be accepted that ss 11, 13 and 14 all fall within that part of the Act described as “Part 2 Racing NSW”, there is a logical sequence in the early sections of that part. Section 4 establishes RNSW as “a body corporate with the corporate name of Racing New South Wales”. It is a separate legal person.

34. Section 6 goes on to specify the membership of RNSW providing that it is “to consist of the chief executive and seven other members appointed by the Minister from time to time”. The chief executive and those other seven members are separate legal persons from RNSW, but when they meet as such they are RNSW. So much is apparent, for example, from s 19(2) of the Act, which provides that “the quorum for a meeting of Racing NSW is a majority of the appointed members of Racing NSW as constituted for the time being”. I have already observed (see [15] above) there is no statutory provision for a “board” of Racing NSW because when its constituent members meet together as the members they are, in fact and law, RNSW.

35. Sections 6 to 12 of the Act are all concerned with the members of RNSW, such as their terms of office, remuneration and personal liability, and including to vest liability for acts done by them “done in good faith for the purpose of executing this Act” in RNSW. That provision is premised upon the separate legal personality of the members and RNSW.

36. Sections 13 identifies the functions of RNSW and ss 14, 14AA, 14A and 14B are all concerned with the exercise of those functions by RNSW, before the part returns to a number of provisions concerned with the members of RNSW in related matters. In short, ss 13 and 14 relate expressly to RNSW, whereas s 11 imposes an individual duty upon each appointed member of RNSW. The clear terms of s 11 do not permit the collectivisation of the constituent members of RNSW so that a duty imposed upon each of them is to be understood as a duty imposed upon the separate legal person RNSW.

37. The legislative history of s 11 also supports this conclusion.

38. It is necessary at this point to introduce the October 1995 “Final Report of the Review of Thoroughbred Racing in New South Wales” undertaken by Mr Ian Temby QC (Temby Report). There was no dispute that the Temby Report is an extrinsic material to which the Court may have regard under s 34 of the IA.

39. Mr Temby QC was commissioned to undertake these tasks:

“Review the Rules governing the conduct of thoroughbred racing in New South Wales and the current mechanisms for ensuring compliance with these Rules;

Gather any relevant information available from the Australian Jockey Club, the Sydney Turf Club, the NSW Crime Commission and such other bodies as deemed appropriate; and

Report findings and conclusions together with recommendations for changes considered necessary to the General Law of the State and the Rules and administrative arrangements governing thoroughbred racing to:

● prevent unfair competition in the conduct of thoroughbred racing;

● prevent fraud and corruption in thoroughbred racing and associated betting activities; and

● maintain public trust and confidence in the conduct of thoroughbred racing.”

40. At the time the Temby Report was commissioned, racing in Australia was governed by the ARR. The ARR, taking as their model the original Jockey Club set up in England in about 1750 at Newmarket, set up what was known as the principal club system. The Australian Jockey Club (AJC) was the principal club under the ARR for both New South Wales and the Australian Capital Territory. As the principal club, the AJC, putting it broadly, regulated and managed racing as well as itself being a race club. Therefore, the AJC was both the regulator and an entity which it regulated. This was said to create a “conflict, or the potential for conflict, between the AJC’s interests as a race club and its duty to control and manage thoroughbred racing in the best interests of the industry as a whole” (Temby Report p 18).

41. Mr Temby QC posed the issue before him as:

“If it is accepted that racing should not be controlled by either a private race club, or a government appointed organisation, then another body must be set up for the purpose. What are its essential characteristics, and how should it be created, that is to say by statute of otherwise?” (Temby Report p 22).

42. He ultimately recommended (Temby Report p 23) that a “new governing body take over all principal club functions from the AJC and have responsibility for integrity assurance and strategic development of racing throughout New South Wales”. He suggested that body be called the “New South Wales Thoroughbred Racing Council” (TRC). It ultimately came into existence as the AJC Principal Club (AJCPC). The AJCPC is the predecessor of RNSW.

43. Mr Temby QC wrote (Temby Report p 24) of the new governing body that it “will not be a mere club or committee and should not be described as such. It is to have prime responsibility for thoroughbred racing throughout the state”. He then wrote in a section headed “Representatives or nominees?”:

“As the industry has a range of interests within it, and a wide geographic spread, it seems that the individuals who will serve on the new governing body must be chosen by appropriate constituent parts of the industry. Should those who are chosen act as representatives in the strict sense, such that they can be instructed how to vote, replaced if thought appropriate by the body or group they represent, and looked upon as essentially there to care for its sectional interests? The answer is surely in the negative. What is needed is a group that can and will look after the interests of industry as a whole, and take a broad and long view while doing so. Those chosen should nominees, required to act in the public interest and especially in the interests of thoroughbred racing, and with security of tenure.

It is recommended that the TRC comprise nominees obliged by statute to act in the interests of the general public and the NSW thoroughbred racing industry as a whole.”

44. The AJCPC was brought into existence by the AJC Principal Club Act 1996 (NSW). The AJCPC was to consist of 11 members, being four nominated by the AJC, two nominated by the Sydney Turf Club (the predecessor of the present STC) and other members nominated by other entities, together with the chief executive. Sections 11, 12, 13 and 14 of the Principal Club Act are substantially in the same form as the same provisions in the Act as it stands today. However, s 11 of the Principal Club Act provided that it was “the duty of each nominated member of the AJCPC to act in the public interest and in the interests of the horse racing industry as a whole (rather than in the interests of the body that nominated the member)”. When read with the Temby Report’s recommendation, the construction that the duty under s 11 is imposed on each nominated member (which reflects the plain language) is confirmed. It was enacted to ensure that nominated members would set aside the interests of those who nominated them and act in the public interest and in the interests of the horse racing industry as a whole.

45. The Principal Club Act is now known as the Act. The Thoroughbred Racing Amendment Act 2008 (NSW) brought the system of members nominated by the AJC and others to an end and replaced them with members nominated for appointment by an appointments panel and appointed by the relevant minister. Section 11 was amended by that legislation to take account of that change in the appointment of members to its present form of “it is the duty of each appointed member of Racing NSW to act in the public interest and in the interests of the horse racing industry as a whole in New South Wales”. That change is consistent with, and does not derogate from, the history of the provision as being directed to the natural persons who constitute RNSW as opposed to RNSW itself as a separate legal person.

Section 13(1)(b) of the Act

46. The horse racing industry and some of its participants are, from time to time, described in the media and elsewhere as “colourful”. That may explain why the Temby Report includes some colourful turns of phrase. One of these (Temby Report p 19) became a convenient shorthand way in the course of argument to illustrate the issue that lies at the heart of this case. That issue is how far the powers of RNSW extend into the operations and affairs of a race club. Mr Temby QC, when referring to the framing of race programmes as being an activity undertaken by race clubs, considered that the possibility of that role being taken away from race clubs would have this effect: “A cynic would say that that leaves the clubs with little to do but staff the turnstiles and keep the pies hot and the beer cold”.

47. References to pies and beer in the ATC’s case were, as I understood them, intended to describe in a colourful way those areas beyond the statutory purview of RNSW. The ATC’s fundamental submission was that, along with the pies and beer, the matters set out in the reasons (the ATC’s financial position and corporate governance) did not fall within section 13(1)(b) of the Act as properly construed. That submission invited close consideration of the definition of “horse racing” under the Act.

48. For its part, RNSW pointed to the objects of the ATC under its constitution:

“4 Objects

4.1 The Company has been established for encouragement of horse racing, and other incidental related purposes and to carry on any other activity which is calculated directly or indirectly to enhance or further the interests of registered horse racing.

4.2 The Company may undertake such other activities not inconsistent with the objectives set out in paragraph 4.1 to enhance, promote or protect the interests of the Company.”

49. RNSW therefore submitted that because the entire raison d'être of the ATC was horse racing, almost every aspect of the affairs and management of the ATC fell within RNSW’s function to “control, supervise and regulate horse racing in the State”. In the course of argument, I came to refer to this as the “maximalist position”. Mr Henry SC submitted that “everything that the ATC does has to do with racing, in the sense that it is in connection with it”, while accepting that there may be some limits on RNSW’s power such as, for example, dictating prices for food and drink (Tcpt, 23 February 2026, p 160(39)).

50. For the reasons which follow, the Court rejects RNSW’s submission as not reflecting either the text or context of s 13(1)(b) of the Act.

51. Both “horse racing" and "race club” are defined terms in the Act. A legislative choice was made. That choice was to give RNSW the function of controlling, supervising and regulating “horse racing” and not “race clubs”. In my respectful opinion, as a matter of construction that choice must be respected and given effect. The construction advanced by RNSW would render that choice irrelevant.

52. Section 3(1) of the Act defines “horse racing” to mean: “The racing of galloping horses as referred to in the Australian Rules of Racing”. The same sub-section defines “Rules of Racing” to mean “The rules for the time being governing and relating to horse racing under the control of Racing NSW (being an amalgamation of the Australian Rules of Racing and the local rules of racing of Racing NSW, together with regulations made under those Rules)”.

53. It follows from those definitions that RNSW’s function under s 13(1)(b) is “to control, supervise and regulate [the racing of galloping horses as referred to in the Australian Rules of Racing] in the State”. This draws attention to the fact that the legislature has made a particular activity the subject of RNSW’s function under s 13(1)(b). It has not used a relational term. For example, it has not given RNSW the function “to control, supervise and regulate any matter relating to or connected with horse racing in the State”. If it had, then Mr Henry SC’s submission recorded in [49] above may have had more force. Section 13(1)(b) does not require the relationship between two or more things to be considered. The universe of what RNSW can “control, supervise and regulate” in NSW is “the racing of galloping horses as referred to in the” ARR (emphasis added).

54. I readily accept that it would be neither commercially sensible nor consistent with the purpose of an act establishing a body “to control thoroughbred horse racing” in New South Wales to read “referred to” in the definition of “horse racing” in a narrow fashion. The Court had before it the ARR as at 1 August 1996 and at 1 February 2023. It would not be a purposive approach to construction to confine the “racing of galloping horses” to what happens on the track from the moment the starter starts the race until the last horse crosses the finishing line.

55. In my respectful opinion, the effect of “as referred to” is to identify the universe of what is to be considered “the racing of galloping horses” as any matter or thing referred to in the ARR. “Horse racing” is not defined in the ARR. “Race” is defined to include “each division of a divided race”. However, there can be no doubt that the ARR are intended to govern the competitive racing of galloping horses.

56. When the contents of the 1996 ARR are considered, what I have called the “universe” is a large one. So much is apparent from the subject headings in them, which include:

57. Powers of the committee of a principal club

58. Stewards

59. Registration of clubs and meetings

60. Registration of horses

61. Leases (of horses)

62. Race meetings

63. Nominations and entries

64. Syndicates, stakes and forfeits

65. Trainers

66. Jockeys and riders

67. Stable hands and apprentices

68. Retainers

69. Amateurs

70. Weights, penalties and allowances

71. Scratching

72. Weighing out

73. Starting

74. Running

75. Racing plates and tips

76. Weighing in

77. Dead heats

78. Judges’ decision

79. Course telecasts

80. Prohibited substances

81. Punishments

82. The 2023 ARR cover substantially similar topics, expanded in some areas presumably to deal with more modern problems and developments.

83. It follows that, in my respectful opinion, any activity, subject matter or role referred to in the ARR falls within “the racing of galloping horses as referred to in the Australian Rules of Racing” and therefore within the meaning of “horse racing” which RNSW has the function under s 13(1)(b) of the Act to “control, supervise and regulate” in NSW.

84. Before applying the Court’s conclusion as to the construction of s 13(1)(b) to the facts of the present case, there are four additional observations to be made in relation to the issue of construction.

85. First, Mr Henry SC admitted of the possibility that on his client’s case, by analogy with the obligation of directors to consider the interests of creditors when a company is nearing insolvency, a club not otherwise within the scope of s 13(1)(b) could come within the section if it was at risk of insolvency because of the effect the insolvency of a club might have on “horse racing”. I reject that construction because it is an invitation to uncertainty. The Court should avoid a construction that could lead to such uncertainty and it is, in any event, not supported by the language of the definition of “horse racing”. By anchoring the definition in the ARR, the legislature has laid down an objective criterion, even allowing for grey on the outer edges, for identifying what I have referred to as the “universe”. This provides a much more certain way of answering what is or is not “horse racing” under the Act.

86. Second, RNSW sought to meet the observation that section 13(1)(b) referred to “horse racing” and not “race clubs” by drawing attention to the various references to race clubs in subsections 14(2(b),(c), (e), (f), (g), (n), (s) and (t). That is, with respect, an impermissible backwards way of reasoning. It would not be in accordance with the words and structure of ss 13 and 14 of the Act to seek to expand or define RNSW’s functions by reference to the powers in section 14(2). In other words, it is not a proper approach to construction to argue that because RNSW has a specific power under s 14(2), that power must fall within a particular function under s 13(1) through the medium of s 14(1).

87. It follows that s 14 cannot be called in aid to construe the functions in s 13(1). In my respectful opinion, on the proper construction of ss 13 and 14, the correct approach for present purposes is to ask two questions:

88. Does RNSW’s conduct (in this case, the appointment) fall within a function identified in s 13(1)?

89. If the answer to the first question is “yes”, does RNSW’s conduct answer the description of being “necessary or convenient to be done for or in connection with the exercise of” that particular function, which could then include any of the matters specifically identified in s 14(2)?

90. Third, in reaching my conclusion as to the construction of s 13(1)(b), I have not overlooked s 13(2) of the Act, which includes that “the functions of Racing NSW are not limited by the Australian Rules of Racing”. I make two observations:

91. Section 13(2) has work to do because other functions of RNSW concern the “horse racing industry”. That is something which, as Bergin J acknowledged (see [27] above) is a wider concept than “horse racing” and logically ought not be limited by the ARR.

92. The definition of “horse racing” in section 3(1) of the Act is precise and clear. There is no licence to read it is as referring to “the racing of galloping horses as referred to in, but not limited by, the Australian Rules of Racing”. That would render a specific definition of “horse racing” otiose because it would amount to a definition that said “horse racing” means “horse racing”.

93. Fourth, it is necessary to return to the pies and beer. In its submissions, especially in relation to s 13(1)(b), the ATC placed heavy emphasis on a distinction drawn by Mr Temby QC in support of the proposition that the Parliament did not intend to remove “pure race club functions” (pies and beer but, relevantly for present purposes, financial matters and corporate governance of the race club) from race clubs. This is what Mr Temby QC wrote (Temby Report p 19):

“A distinction must be drawn here between integrity assurance functions and industry functions. The former relate to matters such as superintendence of stewards, drug testing, the Rules, handicapping and so on. It seems obvious that those primarily responsible in that area should not have interests which could be seen to conflict with the performance of the duty of ensuring on behalf of all punters and all racegoers that the game is as straight as it can be. Perhaps hobby owners, having only one or two horses in work at any time, should not be precluded because the frequency with which awkward situations could arise is very low.

Different considerations apply when it comes to pure race club functions on the one hand, and general industry responsibilities on the other. While the framing of race programs is important to all participants, and might' conceivably need to be taken out of the hands, of the club administrators if they could not do the job well in a co-operative fashion, the point has not been reached where this power should be stripped away. That is said while noting that in Queensland it is the QPC, not clubs, which frames program for particular race meetings. A cynic would say that leaves the clubs with little to do but staff the turnstiles and keep the pies hot and the beer cold: So long as there are various clubs putting on race meetings it is reasonable to assume that between them the needs of the industry, owners, breeders, trainers, jockeys, and others, will generally be met. To the extent there are unmet needs at any time, one or more clubs will surely fill the gap because it serves their interest to do so.” (emphases added)

65. It will be noted that Mr Temby QC, in the passage which I have just set out, draws two distinctions. The first is between “integrity assurance functions” and “industry functions”. The second distinction (in the second paragraph quoted) is further to divide “industry functions” into “pure race club functions” and “general industry responsibilities”. These quoted paragraphs assist in understanding the Temby Report’s recommendation concerning the new regulatory body to be established (Temby Report p 23 (emphasis in original)):

“As to functions, and putting the matter simply, the new governing body should do all of them that the AJC as a principal club does. That includes participating in the Conference of Principal Clubs, thereby helping make the Australian Rules of Racing, making local rules of racing as necessary, ensuring the integrity of racing through employed stewards, dealing with government, preparing strategic or business plans for racing throughout the State, fixing race dates, dispensing funds, and other national and international responsibilities......,see further 9.3 below. Questions as to the AJC Laboratory, the Australian Stud Book and the Registrar of Racehorses are left for later consideration.

It is recommended that the new governing body take over all principal club functions from the AJC, and have responsibility for integrity assurance and strategic development of racing throughout New South Wales.”

66. It may be accepted that, applying the taxonomy in his report, Mr Temby QC intended that the new governing body should have all the principal club functions of the then AJC, together with integrity assurance functions and general industry responsibilities, in distinction to “pure race club functions”.

67. While the ATC’s reliance on the Temby Report is understandable, it is not as helpful to the ATC’s case as the ATC sought to make out. That is because it takes the Court away from the basic task of interpreting the words of s 13(1)(b) by inviting an attempt to define “integrity assurance functions”, “general industry responsibilities” and “pure race club functions”. At various times during the hearing, the argument ran both ways. It was put that the matters relied upon for the appointment in the reasons, being the ATC’s finances and corporate governance, were “pure race club functions” and therefore fell outside s 13(1)(b). Alternatively, it seemed to be suggested that because those matters were not “integrity assurance functions” or “general industry responsibilities” they had to be “pure race club functions” and therefore outside the relevant function of RNSW.

68. In approaching my task, I have sought to bear firmly in mind that the role of the Court is to interpret the words in s 13(1)(b) by applying the definition of “horse racing” in s 3(1) of the Act. That has led the Court to the conclusion set out in [58] above.

Section 13(1)(b) of the Act and the facts of this case

69. There was no dispute between the parties that having given the reasons, the validity of the appointment was to be considered by reference to the reasons. Furthermore, Mr Henry SC accepted that, with the exception of a reference to safety regulations which had an “indirect connection” to horse racing, the reasons made no reference to the racing of galloping horses, but concerned issues about the finances and corporate governance of the ATC (Tcpt, 23 February 2026, pp 165(29) and 182(16)).

70. Applying the construction of ss 11 and 13(1)(b) which the Court has determined [see [30] and [58] above], the reasons demonstrate that RNSW did not make the appointment in exercise of its function under section 13(1)(b) of the Act. That is because the finances and corporate governance of the ATC do not fall within the definition of the “racing of galloping horses as referred to in the Australian Rules of Racing” which RNSW controls, supervises and regulates in NSW.

71. In reaching this conclusion, I have not overlooked that rule 13 of the ARR confers on RNSW:

“the following powers in respect of licencing and registration:

…

(b) to register Clubs … on terms and conditions as it thinks fit; and

(c) at any time to suspend, vary or revoke any …. registration …. (or the terms of any … registration) without giving any reason.”

72. Nothing in the reasons supports the conclusion that there was a connection between the appointment and the exercise of the power in ARR rule 13.

73. In summary, the result of the Court’s conclusion is that the appointment is invalid and of no effect because it is not referable to any of its functions under the Act relied upon by RNSW in support of the appointment.

74. The ATC submitted that if the Court came to the conclusion which it has, the Court would be satisfied that the appointment was made for an improper purpose, involved a misunderstanding of the applicable law or was legally unreasonable. For present purposes it is sufficient, and the Court finds, that the decision to make the appointment “is infected by jurisdictional error, being a misunderstanding of the applicable law”: LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs & Anor [2024] HCA 12; (2024) 280 CLR 321 at [3].

75. It follows from this conclusion that the ATC is entitled to the relief sought by prayer 3 of the amended summons. If it is still pressed by the ATC, the Court will hear the parties as to whether the injunction sought in prayer 4 of the amended summons is required.

76. This outcome is sufficient to dispose of the proceedings. However, in deference to the parties’ arguments and against the possibility of the matter going further, I will next set out, as briefly as is appropriately possible, the Court’s conclusions on the other arguments raised by the ATC.

An error in reasoning about “discretionary support”?

77. The ATC submitted that the reasons disclosed two errors which were material and legally unreasonable in the sense required by the authorities.

78. The first these concerned what was described in the reasons as “discretionary financial support”. For ease of reference, I will set out the relevant parts of the reasons again

“The particular conclusions that have contributed to Racing NSW determining to appoint an administrator to conduct the affairs of the ATC include, but are not limited to, the following conclusions:

1. ATC's reliance on Racing NSW guarantees and discretionary financial support to maintain solvency. The ATC's current financial position presents a real and unacceptable risk that Racing NSW would be called upon to honour guarantees exceeding $30 million. Such an outcome would directly imperil industry funds and undermine Racing NSW's statutory obligation to act in the best interests of the thoroughbred racing industry as a whole.

…

The following concerns and questions were raised during the Show Cause process and not answered satisfactorily:

a. That the ATC has failed to take advantage of the unprecedented platform for commercial success that has been provided by Racing NSW and has no cogent strategy going forward to do so. This unprecedented platform for commercial success includes procurement by Racing NSW of $42 million per year of new and recurring revenues for the ATC over and above their existing entitlements under the Racing Distribution Agreement (RDA) with Tabcorp, $260 million of infrastructure funding for revenue generating assets and significant ongoing discretionary financial support from Racing NSW. These considerable benefits to the ATC are set out below:

…

iii. Discretionary financial support from Racing NSW for the ATC:

1. $36 million of top-up payments to offset the decline in the TAB distribution since 2019, ensuring that the ATC was not exposed to any fall in their revenues from Tabcorp.

2. $7 million payment for grandstand cladding works at Royal Randwick.

3. $5 million payment to Westpac from ATC's loan, when ATC was unable to meet this repayment.

4. $4 million for COVID cost relief reductions.

5. $1.5 million payment for ATC redundancies.

6. Cash flow support of the ATC's payments from Tabcorp under the RDA, providing interest savings to the ATC of over $1 million per year.

(emphases added)

79. In relation to the so called discretionary funds, the ATC accepted that RNSW was not under a private law duty to pay those amounts of money (Tcpt, 23 February 2026, p 216 (1)).

80. However it was submitted that those funds had previously been provided consistent with the duty imposed on the constituent members of RNSW “to act in the public interest and in the interests of the horse racing industry as a whole in New South Wales”. The ATC submitted that, if that was correct, it would be unlawful for RNSW to withdraw its discretionary support without the members of RNSW concluding that it was in the interests of the racing industry as a whole to do so. The essential submission was that RNSW had wrongly assumed that there was no relevant legal limitation on its withdrawal of support and wrongly thought that the support it identified in its reasons was wholly discretionary.

81. The Court accepts RNSW’s submission that the reasons do not disclose any assumption or thinking of the kind alleged by the ATC on this point. The relevant conclusion disclosed by the reasons was that the ATC relied “on racing RNSW guarantees and discretionary financial support to maintain solvency”. Furthermore, RNSW had concluded that insofar as “discretionary financial support” was part of the “unprecedented platform for commercial success that has been provided by” RNSW, the suggestion that ATC had failed to take advantage of it had not been answered satisfactorily. The correctness or otherwise of those conclusions is a matter for the merits and beyond these proceedings. However, critically for present purposes, and contrary to the ATC’s submissions, the reasons do not disclose that any such assumption had been made. This contention by the ATC fails.

82. The second error relates to how the reasons disclose RNSW treated the KM report. Again, for convenience, I will reproduce the relevant parts of the reasons:

3. In responding to the Show Cause Notice, the ATC Board relied heavily upon advice from KordaMentha. Racing NSW has concluded that reliance was misplaced.

The KordaMentha analysis proceeded on a critical and erroneous assumption, namely, that Racing NSW would extend its guarantee of the ATC's debt facilities. That assumption was neither authorised nor discussed with Racing NSW. It involved the consultant presuming a regulatory decision that it was not delegated or competent to make.

Absent that assumption, the ultimate conclusions expressed in the report cannot be sustained. (emphasis added)

83. The ATC submitted that this was an error which went to the heart of the reasons. The ATC referred to these parts of the KM report:

“1.1.7 The maturity of tile CBA facility on 10 October 2026 is not a material risk to the forecast, as in my view, ATC's proposed strategy to extend the facility (with or without a RNSW guarantee) or a refinance with a new lender is an executable strategy. Whilst ATC agreed that it would not dispose of, encumber or joint venture any of its freehold assets without first obtaining RNSW's consent in writing, which consent could be withheld or conditioned in RNSW's absolute discretion, in my opinion, it is reasonable for the Board to expect:

a. RNSW to continue to provide a guarantee to CBA to allow the CBA facility to be extended, or

b. The debt facilities to remain with CBA (without the RNSW guarantee) with RNSW providing consent to offering property assets as security, or

c. RNSW to permit ATC obtaining new finance to repay the CBA facility, with RNSW providing consent to offering property assets as security.

I say this because, at the time of agreeing this arrangement in the letter elated 28 September 2023, countersigned by ATC on 3 October 2023, in my opinion, RNSW is unlikely to have expected the CBA debt facility to be fully repaid within circa 3 years based on its business-as-usual financial projections. Therefore, RNSW would have reasonably expected to be required to extend the RNSW guarantee, provide an ability to refinance, or allow ATC to realise assets to repay the debt.

…

4.1.5 Whilst the CBA debt facility matures within the three-year forecast period, it is the Board's expectation that RNSW will continue to provide a guarantee and the facility with CBA be extended, or RNSW will allow ATC to encumber assets to either remain with CBA (without the RNSW guarantee) or refinance with an alternative debt provider. Notwithstanding the counter-signed letter of 28 September 2023, which restricts ATC from encumbering any freehold assets without RNSW's consent, in my opinion, ATC's proposed strategy to extend or refinance the CBA facility (as outlined at Section 4.5.4) is achievable and the maturity on 10 October 2026 does not pose a solvency risk to ATC.

4.1.6 In my opinion, it is reasonable for the Board to expect RNSW to continue to provide a guarantee to CBA to allow the CBA facility to be extended, or the debt facilities to remain with CBA (without the RNSW guarantee) or obtain new finance. I say this because, at the time of counter-signing the letter on 28 September 2023, in my opinion, RNSW is unlikely to have expected the CBA debt facility to be fully repaid within circa 3 years based on ATC's business-as-usual financial projections. Therefore, RNSW would have reasonably expected to have to extend the guarantee; provide ATC an ability to refinance, or grant approval for ATC to realise assets to repay the debt.

…

4.5.4 The cashflow forecast assumes that the CBA facility that expires on 10 October 2026 is not repaid at maturity, rather the tenure is extended. The forthcoming maturity of the CBA facility does not in itself result in an insolvency of ATC. Based on information provided by Management and the Board of ATC, there are a number of options available to address the CBA debt maturity. ATC has approximately 12-months to develop and execute a strategy to extend or repay the facility. These options may include:

a. Extend the CBA facility, with a RNSW guarantee: An extension of the existing loan and conditions with the RNSW guarantee appears to be the most commercially sensible option. Given the mutuality of interests between RNSW and ATC, and the duty of the members of RNSW to act in the interests of the horse racing industry as a whole in New South Wales47, ATC's Board has a reasonable expectation that RNSW will continue to provide the guarantee. Further, RNSW should be motivated to continue to provide the guarantee in order for ATC to roll the CBA debt facility. In ordinary business and lending circumstances, a $30m loan against the asset portfolio of ATC would provide a lending LVR of less than 3%. At the date of this report, whilst ATC has not requested, RNSW has not advised that it will not extend the guarantee of the CBA debt facility, either on an extension of the tenure of the CBA debt facility or a refinance of the CBA debt facility.

b. Extend the CBA facility, without a RNSW guarantee: It is ATC's expectation that, absent a guarantee by RNSW of the CBA facility, that CBA will require security from ATC for an extension of the facility. Prior to tile receipt of the Notice, ATC was exploring options with CBA to extend the facility in the absence of a RNSW guarantee, including offering security over ATC's property assets. Since the Notice was issued, CBA has advised ATC that it may continue to extend the existing facility without an RNSW guarantee, !1owever, CBA will require further diligence regarding ATC's serviceability of the loan. At the date of this report, whilst ATC has not requested, RNSW has not advised ATC that it would not consent to CBA taking security over ATC's property assets.

c. Refinance with a new lender: ATC may be able to refinance with another lender. While ATC expects that CBA or an alternative lender may require asset security absent a guarantee from RNSW, it is the Board and Management's expectation that an alternative lender will provide financing to ATC should CBA not provide an extension of the facility. At the date of this report, whilst ATC has not requested, RNSW has not advised ATC that it would not consent to CBA taking security over ATC's property assets. Given the debt maturity is approximately 12-months away, it is my experience that ATC has sufficient time to explore this option and implement a refinance of the CBA loan facility.

4.5.5 A term of RNSW agreeing to provide the guarantee of the CBA facility was that ATC agreed that it would not dispose of, encumber or joint venture any of its freehold assets without first obtaining RNSW's consent in writing, which consent could be withheld or conditioned in RNSW's absolute discretion.

4.5.6 Whilst the CBA debt facility matures within the three-year forecast period, it is the Board's expectation that RNSW will continue to provide a guarantee and the facility with CBA be extended, or RNSW will allow ATC to encumber assets to either extend the tenure of the CBA facility (without the RNSW guarantee) or refinance with an alternative debt provider. Notwithstanding the counter-signed RNSW Bank Guarantee Letter, which restricts ATC from encumbering any freehold assets without RNSW's consent, in my opinion, ATC's proposed strategy to extend or refinance the CBA facility (as outlined at Section 4.5.4) is achievable and the maturity on 10 October 2026 does not pose a solvency risk to ATC.

4.5.7 In my opinion, it is reasonable for the Board to expect RNSW to continue to provide a guarantee to CBA to allow the CBA facility to be extended, or the debt facilities to remain with CBA (without the RNSW guarantee) or obtain new finance. I say this because, at the time of counter-signing the RNSW Bank Guarantee Letter, in my opinion, RNSW is unlikely to have expected the CBA debt facility to be fully repaid within circa 3 years based on ATC's business-as-usual financial projections. Therefore, RNSW would have reasonably expected to be required to extend the RNSW guarantee, provide ATC an ability to refinance or allow ATC to realise assets to repay the debt.

…

7.2.1 My team met KPMG (ATC auditor) on 25 September 2025 to discuss the status of tile audit opinion and FY25 report. KPMG has been tile auditor of ATC through its various iterations for more than 40 years. KPMG advised that in its view, the level of financial hygiene at ATC is high, with quality management accounts, reconciliations and cashflow monitoring. I have also reviewed tile KPMG Report to the Board for the year ended 31 July 2025 dated 17 September 2025. In my experience, there is nothing in the KPMG report that changes my view on ATC's solvency.

7.2.2 The finalisation of the FY25 annual report is pending. ATC is required to finalise the FY25 annual report prior to the annual members' meeting. Absent confirmation of a clear pathway as to refinancing or extending the CBA facility, the auditor has stated that a disclosure of material uncertainty related to going concern will be required. The current draft audit opinion is an unqualified opinion, with a material uncertainty related to going concern that references the following items raised in the draft notes to the FY25 financial statements:

a. ATC will seek to refinance the CBA facility prior to expiry, however at tile date of the annual report, ATC had not received a binding commitment from CBA to extend the facility, or RNSW to provide a guarantee for the facility.

b. If the CBA facility cannot be refinanced, it is the Board's view that asset sales will be required to repay the CBA facility. ATC notes that member approval is required for the sale of core assets, and there is a requirement to make repayments for interminable loans in certain circumstances, including where asset sales exceed $1.0m.

c. ATC assume the continued receipt of the TAB Distribution Top Up, however does not have a formal agreement for this arrangement.

7.2.3 In my opinion, this does not alter my view that ATC is solvent. As noted previously in this correspondence:

a. In my view, ATC's proposed strategy to extend the facility (with or without a RNSW guarantee) or a refinance with a new lender is an executable strategy (see Section 4.5.4).”

(emphases added)

84. In its terms, it is clear that the treatment of the KM report in the reasons set out in [82] above is wrong because the KM report took into account other possibilities which did not involve RNSW extending its guarantee of the ATC’s debt facilities.

85. In response to this argument, RNSW drew attention to the three options set out in paragraph 1.1.7 of the KM report (see [83] above). RNSW accepted that options (b) and (c) did not involve an assumption that RNSW would extend its guarantee of ATC’s debt facilities. However, RNSW submitted that by the time of the decision to make the appointment and produce the reasons, options (b) and (c) had fallen away. RNSW drew attention to various factual matters in support of that proposition.

86. For the purposes of considering RNSW’s argument, I will assume in its favour that as a matter of fact its submission is correct, namely that at the time of the decision to make the appointment, options (b) and (c) (which did not require the RNSW guarantee) had fallen away. However, making that assumption, the Court accepts the ATC’s submission that the Court must assess the decision to make the appointment by reference to the reasons, even if the decisionmaker did not have a duty to give the reasons.

87. In Tauleahi *v Minister for Immigration and Border Protection [*2016] FCAFC 177; (2016) 246 FCR 146, Full Court of the Federal Court of Australia said:

[72] The fact that a statement of reasons for a decision is provided voluntarily, rather than pursuant to an obligation, cannot prevent a Court drawing inferences about what the Minister considered material to his decision and what he did not consider at all: Assistant Treasurer v Cathay Pacific Airways Ltd [2009] FCAFC 105 ; 179 FCR 323 at [51]. The nature of the statement of reasons may, of course, affect the confidence with which an inference can be drawn. In the present case, however, the Minister has provided a document to the affected visa holder that the Minister described as a “statement of reasons for cancellation of visa under s 501(3)(b) of the Migration Act”. Reference to the contents of the document confirms the accuracy of this description. The document gave a fulsome and apparently exhaustive account of the matters that the Minister considered relevant to his cancellation decision. Whether or not the statement of reasons was given voluntarily does not prevent the Court from inferring in Mr Taulahi’s case that the Minister did not advert to the proper operation of s 501C. Plaintiff M64/2015 at [25] does not assist the Minister’s case at this point, because the document at issue in that case did not purport to be a statement of reasons that exhaustively explained the decision that had been made.

88. In CVV 16 v Minister for Home Affairs [2019] FCA 1890, Mortimer J (as her Honour then was) said:

“[30] Of course, even if not legally required to give reasons, a decision-maker such as the Authority faces a choice in relation to explaining why a discretion was or was not exercised: an absence of any explanation may make it easier to establish there was no lawful reason, or may more easily give rise to an inference the matter was not considered at all.

[31] Aside from matters of fair and proper public administration, it is therefore not surprising that, in fact, a decision-maker might elect to give reasons. Having elected to do so, a supervising court on judicial review is entitled to assess the reasons given, in the terms they are given. Subject to taking account of the High Court’s observations in Plaintiff M64/2015 v Minister for Immigration & Border Protection [2015] HCA 50; 258 CLR 173 at [25], the Court is entitled to treat what are expressed to be the reasons for the exercise of the power as the real reasons for the exercise of the power: see generally my observations in Wall v Repatriation Commission [2019] FCA 1838 at [60] and the cases referred to.”

89. The passage to which her Honour refers from the Hight Court’s judgment in Plaintiff M 64/2015 v The Minister for Immigration and Border Protection [2015] HCA 50; 258 CLR 173 is (footnotes omitted):

“[25] It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision. It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision, and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate. Further, “jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power”; but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision. Further, the Delegate’s letter is “not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed”.

90. In my respectful opinion, the reasons are “a fulsome and apparently exhaustive account of the matters that” RNSW considered relevant to its decision to make the appointment. RNSW’s own minutes (see [17] above) described them as “setting out the detailed reasons for the appointment of an administrator”. In reaching this conclusion, I have not overlooked that the chapeau to the list of conclusions in the reasons states that “the particular conclusions that contributed to Racing NSW determining to appoint an administrator to conduct the affairs of the ATC included, but are not limited to, the following conclusions” (emphasis added). The effect of the authorities to which I have referred is not that RNSW is, by reason of having voluntarily proffered the reasons, in effect “bound” by them. The authorities support the conclusion that a voluntary provision of comprehensive reasons enables the Court more confidently to find, as a matter of fact, that those are the reasons for which a particular decision was made.

91. In the context of that fact finding exercise, the qualification expressed in the reasons which I have quoted in the preceding paragraph leaves open the possibility that a decisionmaker such as RNSW could seek to prove by evidence that there were other conclusions which had led to the relevant decision. However, RNSW has not produced any such evidence. Therefore, there is no evidence that RNSW had the state of mind which reflected the explanation or understanding which I have set out in [85] above that options (b) and (c) were no longer available to the ATC. Notwithstanding the qualification to which I have referred, in the absence of any evidence from RNSW, and to the extent it is necessary, the Court finds that the only matters upon which RNSW relied in its decision to make the appointment are the matters set out in the reasons.

92. There can be no doubt that a very significant part of the ATC’s response to the notice was the KM report. The reasons themselves recognize that “the ATC Board relied heavily on advice from KordaMentha”. Reading the reasons as a whole, and mindful that the Court should not be over-zealous to find error, the Court also has no doubt that the statement in the reasons that “absent that assumption, the ultimate conclusions expressed in the report cannot be sustained” is a very important conclusion for the purposes of the decision. RNSW’s conclusion that the ATC’s “reliance [on the KM report] was misplaced” is one of the conclusions expressly identified in the reasons when they state: “in light of the conclusions above, Racing NSW has formed the following views”. It is those views which individually or jointly in any combination RNSW asserted justified the appointment.

93. The Court accepts the ATC’s submission that the error is of sufficient magnitude for the purpose of the decision to make the appointment that it does not enable the decision to satisfy the “qualitative assessment” that the unreasonableness ground of judicial review invites: Martinus Rail Pty Ltd v Cube RE Services (No 2) Pty Ltd [2025] NSWCA 49 at [75] per Payne JA (Gleeson JA and Griffiths AJA agreeing). The error undermines RNSW’s decision to make the appointment.

94. I am also satisfied that it is a jurisdictional error because it was plainly “material to the decision that was made in fact, in the sense that there is a realistic possibility that the decision that was made in fact could have been different if the error had not occurred”: LPDT at [7]. I reach this conclusion bearing in mind that the threshold of materiality is not a demanding or onerous one. I do not consider the possibility of a different outcome to be fanciful or improbable. RNSW’s dismissal of the KM report meant that RNSW dismissed the KM report’s conclusion that the ATC was solvent. The exclusion of the KM report was critical to RNSW’s decision. That criticality is sufficient to meet the not demanding or onerous threshold for materiality: see LPDT at [14].

Three alleged inconsistencies – Introduction

95. The ATC advanced three further alternative bases in support of the proposition that the appointment was not authorised by s 14(2)(g) of the Act:

96. On its proper interpretation and construed consistently with s 5 of the Corporations (New South Wales) Act 1990 (NSW,) s 14(2)(g) of the Act does not (and never did) apply to companies;

97. alternatively, in its application to a company registered under the Corporations Act 2001 (Cth) (CA) such as the ATC, s 14(2)(g) of the Act is inconsistent with the CA and therefore inoperative pursuant to s 109 of the Commonwealth Constitution; and

98. further, and alternatively, s 14(2)(g) of the Act was impliedly repealed by the Australia**n Jockey Club and Sydney Turf Club Merger Act 2010 (NSW) (Merger Act).

99. This aspect of the argument produced one measure of agreement between the parties (Tcpt, 23 February 2026, p 218(8)). This was that, as matter of necessary implication, s 14(2)(g) had to be construed as a power to “appoint an administrator to conduct the affairs of a race club to the exclusion of its directors” (emphasis added).

100. A critical point in the ATC’s argument on the first and second alternative bases was that the corporations legislation contemplated that the affairs of a company would be vested in directors or otherwise in accordance with the company’s constitution or an external administer who owed their duties to the company. It was submitted that if s 14(2)(g) applied to companies, the affairs of the company could be conducted by a person who owed their duties to strangers to the company, being the racing industry as a whole and potentially to RNSW. The Court does not accept that submission.

101. As RNSW submitted in the course of argument, it is inevitable that the administrator, as the person appointed to administer the affairs of a race club incorporated under the CA, would be a person “[acting] in a position of a director” and therefore be a director for the purposes of the CA (see the definition in paragraph (b) of the definition of “director” in s 9 of the CA). As such, the administrator would be required to act in the best interests of the company. In the absence of a statutory provision in the Act otherwise, the administrator would not be the agent, or obliged to act in accordance with the instructions of, RNSW. Given the outcome of these proceedings, it is not necessary for the Court to consider (and it was not addressed upon) the question of whether and, if so, how RNSW had the power to create the sub-committee referred to in the second part of its resolution to make the appointment (see [16] above) and what the authority of such a sub-committee might be in relation to the administrator to provide “oversight” to the administrator.

102. So understood, the affairs of the ATC, assuming the appointment was otherwise valid, would continue to be operated by a director who owed their duties to the ATC. A deflection of corporate duty of the kind identified by the ATC would not arise.

Does s 14(2)(g) apply to companies?

100. The ATC submitted that s 14(2)(g) was, at the time of its original enactment as part of the Principal Club Act, and continues to be required to be interpreted (notwithstanding the demise of the Corporations Law) in accordance with s 5 of the Corporations (New South Wales) Act 1990 (NSW):

5 This Act and applicable provisions of New South Wales not to be affected by later State laws

(1) An Act enacted, or an instrument made under an Act, after the commencement of this section is not to be interpreted as amending or repealing, or otherwise altering the effect or operation of, this Act or the applicable provisions of New South Wales.

(2) Subsection (1) does not affect the interpretation of an Act, or of an instrument made under an Act, so far as that Act provides expressly for that Act or instrument, as the case may be, to have effect despite a specified provision, or despite any provision, of this Act or the applicable provisions of New South Wales.

101. So much may be accepted. However, the ATC submitted, that by reason of the matter referred to in paragraph [97] above, in order not to be interpreted as “amending or repealing, or otherwise altering the effect or operation of” the Corporations Law on its commencement (a provision continuing by reference to the Corporations (Ancillary Provisions) Act 2001 (NSW)), s 14(2)(g) had to be interpreted as not applying to companies. However, because the Court does not accept the premise referred to in [97] above, s 14(2)(g) does not, on its proper construction, “amend or repeal, or otherwise alter the effect or operation of” the Corporations Law or the CA.

102. The ATC also referred to the requirement in s 198A of the CA that “the business of a company is to be managed by or under the direction of the directors”, unless the company was under external administration under the CA. In the latter case, the directors were prohibited from performing or exercising their office (see s 198G of the CA). However, when it is understood that the administrator appointed under s 14(2)(g) must satisfy the definition of a director, there is no derogation from s 198A. Furthermore, company law is well familiar with constitutions whereby there is a governing director in whom all the powers of conducting the affairs of the company are vested, with there being other directors who lack those powers. That is no different from an administrator appointed under the Act, with the other directors of the race club unable to exercise their powers (but not prohibited, for example, from challenging the appointment of the administrator).

103. For the foregoing reasons, the first alternative contention by the ATC fails.

Constitutional inconsistency?

104. The ATC submitted that essentially for the reasons it advanced in relation to the first alternative argument, the Court should conclude that s 14(2)(g) of the Act, if it applies to companies, is inoperative by reason of s 109 of the Constitution. Having rejected the reasons advanced in relation to the first alternative argument, the same result follows in relation to the constitutional inconsistency advanced by the ATC.

105. The test for inconsistency was summarised by the plurality in Work Health Authority v Outback Ballooning Ltd & Anor [2019] HCA 2; (2019) 266 CLR 428 (footnotes omitted):

“[32] The first approach has regard to when a State law would “alter, impair or detract from” the operation of the Commonwealth law. This effect is often referred to as a “direct inconsistency”. Notions of “altering”, “impairing” or “detracting from” the operation of a Commonwealth law have in common the idea that a State law may be said to conflict with a Commonwealth law if the State law in its operation and effect would undermine the Commonwealth law.

[33] The second approach is to consider whether a law of the Commonwealth is to be read as expressing an intention to say “completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed”. This is usually referred to as an “indirect inconsistency”. A Commonwealth law which expresses an intention of this kind is said to “cover the field” or, perhaps more accurately, to “cover the subject matter” with which it deals. A Commonwealth law of this kind leaves no room for the operation of a State or Territory law dealing with the same subject matter. There can be no question of those laws having a concurrent operation with the Commonwealth law.

[34] The question whether a State or Territory law is inconsistent with a Commonwealth law is to be determined as a matter of construction. In a case where it is alleged that a State or Territory law is directly inconsistent with a Commonwealth law it will be necessary to have regard to both laws and their operation. Where an indirect inconsistency is said to arise, the primary focus will be on the Commonwealth law in order to determine whether it is intended to be exhaustive or exclusive with respect to an identified subject matter.”

106. Insofar as the ATC submitted there was a direct inconsistency, for the reasons set out in paragraphs [98] above that submission is rejected.

107. Insofar as it was suggested that there was indirect consistency, the Court accepts the ATC’s submission that the subject matters of the CA and the Act are quite different. The CA governs companies, including setting out when a company can be placed into external administration under the control of an administrator. The Act governs horse racing and, in connection with that, race clubs. The two pieces of legislation deal with quite different subject matters such that there is no indirect inconsistency in relation to how RNSW can appoint an administrator to a race club in the exercise of a function identified in s 13(1) of the Act.

108. That construction is fortified when it is recalled that s 5E(1) of the CA provides that “the Corporations legislation is not intended to exclude or limit the concurrent operation or any law of a State or Territory”. For the reasons already given, there is also no “direct inconsistency” between the CA and the Act that would negate the application of s 5E (see s 5E(4)).

Implied repeal?

109. The ATC relied on s 6 of the Merger Act:

“6 Inclusion of mandatory corporate governance provisions in constitution of proposed merged racing club

(1) The inclusion of the mandatory corporate governance provisions in the constitution of a company that is being (or has been) established for the purpose of becoming the merged racing club is specifically authorised.

(2) The merged racing club is specifically authorised to carry on its affairs in accordance with the mandatory corporate governance provisions included in its constitution.

(3) Nothing in this section limits the power of the merged racing club to conduct its affairs in accordance with other provisions that it has included in its constitution, so long as those other provisions are not inconsistent with the mandatory corporate governance provisions included in its constitution.”

110. It was submitted that the “mandatory corporate governance provisions” included:

“3 Board to manage Company

(1) The management and control of the business and affairs of the Company are vested in the Board.

(2) The Board may exercise all powers of the Company which are not, by the Corporations Act or this Constitution, required to be exercised by the Company in general meeting.”

111. By reference to that mandatory provision of the ATC’s constitution, the ATC submitted that s 14(2)(g) and the Merger Act could not “stand or live together” (Commissioner of Police (NSW) v Eaton (2013) 252 CLR 1 at [48]).

112. RNSW answered these submissions by referring to s 40 of Merger Act:

“40 Relationship of Act with other racing legislation

Nothing in this Act limits the operation of the Betting and Racing Act 1998 or the Thoroughbred Racing Act 1996 in their application to the conduct of racing activities by or on behalf of the merged racing club.”

113. RNSW also drew attention to the second reading speech for the bill which became the Merger Act, in which the Parliamentary Secretary said:

“Cl. 40 of the Bill provides an explicit reminder that the Merger Bill is intended to be subject to the provisions of the Racing Administration Act 1998 [now the Betting and Racing Act 1998 (NSW)] and the Thoroughbred Racing Act 1996. Nothing in the proposal alters the status of the merged club nor its responsibilities to comply with the provisions of the two Acts mentioned.”

114. The ATC submissions particularly relied upon the suggestion advanced by RNSW that the duty in s 11 of the Act upon each member of RNSW “to act in the public interest and the interests of the horse racing industry as a whole in New South Wales” exemplified how the two acts could not live together. This was because, on that construction, it was argued RNSW could appoint an administrator to the ATC whenever RNSW thought it was in the interests of the racing industry as a whole irrespective of what the directors of the ATC thought was in the best interests of the ATC. The Court has rejected that construction of s 11.

115. In my respectful opinion, the two acts can stand or live together when it is understood, as the Court has concluded, that the power to appoint an administrator under s 14(2)(g) can only be exercised in connection with the functions specified in section 13(1) of the Act. As a matter of construction, those functions comprehend “the conduct of racing activities by or on behalf of” the STC, so as to engage s 40 of the Merger Act. That construction is supported by the second reading speech, which makes clear that the Merger Act was not intended to take the STC out of the regulatory regime for the conduct of horse racing created by the Act.

116. For these reasons, the ATC’s third alternative argument fails.

Some final observations

117. Quite apart from these proceedings going further, the evidence suggests that this judgment will not end the disagreements between RNSW and the ATC. Horse racing is a very substantial part of the NSW economy. It directly employs many people and indirectly supports the jobs of those who provide the numerous services on which the industry depends. For even more people in this state, horse racing is a source of much interest, pleasure and recreation.

118. Horse racing is undertaken by the race clubs. They are important institutions in their local communities. However, horse racing must be independently regulated and developed as an industry of statewide significance. That regulation and development is the core business of RNSW.

119. This case has highlighted that RNSW's power to appoint an administrator is a drastic one which can have a very real impact on hundreds, if not thousands, of people. It represents a decisive intrusion into the affairs of a race club, in this case a very substantial one, which is run by a board whose majority is democratically elected by its members, and which otherwise operates in accordance with the well-developed body of law that applies to companies.

120. Section 14(2)(g) of the Act is expressed in the simplest of terms. In some contexts that is desirable in a legislative provision. However, it is not in the interests of RNSW or the race clubs for there to be room for doubt about critical matters such as:

121. when RNSW can appoint an administrator to a race club;

122. the interaction of that provision with the CA;

123. the powers of the administrator (compare, for example, ss 437A, 437B and 437D of the CA);

124. the scope of the administrator’s appointment (for example, what are “the affairs of a race club” referred to in s 14(2)(g)?);

125. to whom, if anyone, other than the race club the administrator may be answerable; and

126. the role of the race club’s directors upon the appointment of an administrator (compare, for example, s 198G of the CA).

127. These issues are not necessarily straightforward. I respectfully suggest that they merit careful attention on the part of all those involved in this important industry and including, if thought necessary, amendment of the Act.

Orders

122. The orders of the Court are:

123. Declare that the purported appointment of the Second Defendant by the First Defendant on or about 15 December 2025 as an administrator to conduct the affairs of the Plaintiff pursuant to s 14(2)(g) of the Thoroughbred Racing Act 1996 (NSW) is invalid and of no effect.

124. Subject to order 3, the First Defendant is to pay the Plaintiff’s costs of the proceedings.

125. List the proceedings in the Expedition List for further directions before Kunc J on 20 March 2026 at 9.30am as to whether:

(a) Prayers 5 and 6 of the amended summons are pressed; and (b) Any party wishes to apply for any additional orders or to vary Order 2.

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