Racing New South Wales v Racing Victoria Limited

Background

1. Thoroughbred horse racing in Australia is regulated by Racing Australia Limited (Racing Australia), which was established in 2015 following a merger between Australian Racing Board Limited and Racing Information Services Australia Pty Ltd. The only members of Racing Australia are its directors. Under the Constitution of Racing Australia, each of Racing NSW, Racing Victoria, RQB, RSA and RWWA has the right to nominate one director. Canberra Racing Club Incorporated (CRC), Thoroughbred Racing NT Incorporated (TRNT) and TR are entitled to nominate jointly one director. Each of Racing NSW, Racing Victoria, RQB, RSA, RWWA, TR, CRC and TRNT is the principal racing authority (PRA) in its respective jurisdiction, and each is responsible for the administration of thoroughbred horse racing in that jurisdiction.
2. Under Art 4.2 of the Racing Australia Constitution, Racing Australia has 200 ordinary shares each fully paid to $1. Of those, 70 shares are held by the Racing NSW director, 70 shares are held by the Racing Victoria director, 36 shares are held by the RQ director, 9 shares are held by the RWWA director, 9 shares are held by the RSA director and 6 shares are held by the director appointed jointly by CRC, TRNT and TR (the CDT director). Each director has a corresponding number of votes at board meetings: Art 11.6(a). A quorum consists of at least 4 directors holding at least 75 percent of the total votes that may be cast at the meeting: Art 11.4(a). A resolution may only be passed by an affirmative vote of at least 75 percent of the votes cast by directors present and entitled to vote on the resolution: Art 11.7. As a consequence, each of Racing NSW and Racing Victoria has an effective veto over the decisions of Racing Australia in general meeting and decisions of the Board.
3. The primary object of Racing Australia is to encourage and promote horse races in Australia by, among other things, adopting, administering and altering the Australian Rules of Racing and the Rules of the Australian Stud Book: Art 2.1. The Australian Rules of Racing govern how horse races in Australia are to be conducted. They are binding on each PRA and each participant in the racing industry as a contract as a result of Rule (AR) 3.
4. AR 162 provides: Nature of Group and Listed races (1) Group Races, Listed Races, and Restricted Listed Races are those identified by Racing Australia to represent the highest standard of racing. (2) The only Group Races, Listed Races, and Restricted Listed Races which will be officially recognised for races run under these Australian Rules are those approved and adopted by Racing Australia. Those races will be published by Racing Australia.
5. Classification of races is determined by the Board of Racing Australia. The most prestigious category of race (known as "black-type" races which consist of Group and Listed Races with "Group 1" being the highest rating) attract the highest quality horses and the greatest level of betting, which is the industry's principal source of income. The PRAs obtain a share of that income by charging fees to all wagering operators for field information calculated by reference to the income they earn on wagers on horse races conducted by that PRA.
6. The rating of a race depends on the rating given to horses which participate in that race. The rating given to a horse is determined by the Australian Classification Committee (ACC), which is a committee of Racing Australia. Those ratings are then considered by two international committees: the Asian Racing Federation Handicappers Committee (the ARF Committee) and the IFHA Longines World's Best Racehorse Rankings Committee (the IFHA Committee). Racing Australia has a representative on each of those committees. Until his resignation as an employee of Racing Victoria on 16 September 2022, that was Mr Carpenter.
7. Another matter regulated by Racing Australia is the program of thoroughbred horse races in Australia which has a group or listed status, known as the "Australian Pattern" (the Pattern). It will be necessary to say more about the Pattern shortly.
8. Starting in about 2017, Racing NSW sought to revitalise its Spring Carnival by introducing The Everest, which has become the richest horse race in Australia, and a number of other races.
9. On 1 March 2018, Racing NSW applied to Racing Australia to have The Everest classified as a Group 1 race. That application was rejected by the Board on 6 April 2018. A further application made on 7 June 2018 was also rejected by the Board at a meeting on 8 June 2018. The only director to vote against the proposal was the director appointed by Racing Victoria.
10. At a meeting on 17 August 2017, the Board established a Pattern & Development Committee, which was responsible to the Board for, among other things, assisting in the development of the Pattern. On 14 September 2017, the Board adopted interim guidelines for the Pattern which were to expire after 90 days. Several extensions were agreed, but the Board could not agree to a further extension past 13 September 2018. It was Racing NSW's position that it would not agree to any proposals in relation to the Pattern until The Everest was granted Group 1 status. It was the position of Racing Victoria that it would support the elevation of The Everest to Group 1 status "subject to it being scheduled on a date that does not disrupt the existing national race pattern", to quote from a letter dated 19 February 2019 from Mr Kruger to Mr Balding.
11. More generally, it is Racing NSW's position that historical versions of the Pattern were put in place at a time when most wagers were made with a local TAB or local bookmakers and the fees earned by each PRA were calculated by reference to the fees earned by the local TAB and bookmakers irrespective of where the race was run. The result according to Racing NSW was that there was little competition between the PRAs concerning when races were run. That changed following the rise of interstate corporate bookmakers (principally based in the Northern Territory) and the change in the system of remuneration so that fees are paid to a PRA by reference to the gaming income generated by races conducted by that PRA. According to Racing NSW, there is now substantial competition between different horse races and that fact ought to be recognised by the Pattern.
12. On 12 February 2020, the Board of Racing Australia resolved to approve the formation of a working party to commence a strategic review of the Pattern (the Working Party). Representatives of Racing NSW attended the first meeting of the Working Party in June 2020 but have not attended subsequent meetings. No meeting of the Board of Racing Australia occurred between 11 November 2020 and the meeting of 29 November 2021 because the director appointed by Racing NSW refused to attend. In February 2021, Racing NSW wrote to Racing Victoria stating that it appeared to Racing NSW that Racing Victoria was, as a consequence of the application of AR 9(3), no longer a PRA because, contrary to the provisions of AR 9, Racing Victoria had made new rules (regarding the use of the whip) whereas under AR 9 the right to make new rules was reserved to Racing Australia. Following correspondence on that issue, in which Racing NSW served a draft Commercial List Summons and Commercial List Statement, agreement was reached between Racing NSW and Racing Victoria to appoint Mr John Messara as an independent Chairman (who had no vote at board meetings). That agreement was recorded in a circular resolution dated 31 May 2021. Mr Messara attempted unsuccessfully to resolve the dispute between Racing NSW and Racing Victoria.
13. On 9 November 2021, Mr Kruger took part in an interview on the RSN radio program "Racing Pulse" during which the interviewer asked Mr Kruger whether the point might be reached where Racing NSW could be kicked out of Racing Australia "and the rest of Australia continue to work towards what they want to do from a pattern rule and just leave them as an individual state". Mr Kruger replied: Look, I think that's a sub-optimal outcome, Michael, if we get to that point. It is why Racing Victoria and John and others are working as hard as we possibly can to bring everybody together. I think if we can do that, come together in the right way, that is absolutely the best outcome for racing in this country. And I think, personally, I think it would be the best outcome for racing across all of the states if we can do that. So that's still our focus. But as you say, if that doesn't happen, we've got to look at other options, and the option that you've raised is potentially one of the ones that gets looked at. Because I know for a fact every other state is extremely frustrated that we have not been able to come together as a national body, and do the things that we need to be doing for the interest of the sport.
14. At about the same time, there was speculation in the racing press about the possibility that Racing NSW would be excluded from Racing Australia.
15. On 22 March 2022, YPOL Lawyers, who act for Racing NSW, wrote to Racing Victoria referring to the draft Commercial List Statement and Commercial List Summons that had been provided to Racing Victoria in May 2021. The letter stated that the issues raised by the draft proceedings had not been resolved and that they had been instructed "by Racing NSW to assist it in further investigations with a view to amending those pleadings" to include a number of other claims including claims that Racing Victoria and others had entered into contracts or arrangements that had the effect of substantially lessening competition. The conduct was said to include "the position adopted by Racing Victoria in relation to the application of Group status to NSW thoroughbred races and the conduct of Racing Victoria employees on international rating committees which has been detrimental to NSW thoroughbred races".
16. On 24 March 2022, the Board of Racing Australia met and considered a paper which included draft Pattern guidelines prepared by the Working Party. The proposed guidelines included the following: (3) No race shall be eligible for upgrading to Group 1, if such an upgrade would involve a clash liable to have an adverse effect on an existing Group 1 event within the same distance category or the distance category immediately preceding or following. (4) No race with prizemoney of or more than the prescribed minimum prize money level of a Group 1 event, shall be eligible for inclusion in the Australian Pattern or an upgrade in black-type designation, if such inclusion and/or upgrade would involve a clash liable to have an adverse effect upon an existing Group 1 or Group 2 event, within the same distance category or the distance category immediately preceding or following.
17. The proposed guidelines also contained restrictions on changes in the date and prizemoney for Group 1 races.
18. That draft was not acceptable to Racing NSW and the adoption of the Pattern remains unresolved.
19. The evidence suggests that, following the Board meeting, or perhaps some time earlier, Racing Victoria started to work on a plan to resolve the impasse. That plan involved setting up a new organisation, or at least threatening to set up a new organisation, that would take over some of the functions of Racing Australia, including making decisions in relation to the Pattern. Neither Racing Victoria, nor Racing NSW if it joined, would have a right of veto on the new organisation. To assist it to formulate and promote the plan, Racing Victoria, on or about 13 April 2022, engaged Cato & Clive Partners Pty Limited (Cato & Clive), a firm of public relations consultants. At some stage, it seems that RQB, RSA, RWWA and TR also became involved. A draft confidentiality deed was prepared which named each of Racing Victoria, RQB, RSA, RWWA and TR as parties and by which each of the parties would agree to keep confidential discussions between them "regarding the possible establishment of a joint venture for the provision of services relating to thoroughbred racing in Australia". It is unclear whether that Confidentiality Deed was ever signed.
20. The plan, at least as it stood by about August 2022, appears to have involved progressing the establishment of a new organisation in which no member (or director) would have a veto to the point where it was possible to invite Racing NSW to join that organisation or to agree to a restructure of Racing Australia to remove the effective vetos enjoyed by it and Racing Victoria (referred to as Plan A). If that did not work, Racing NSW would be excluded from the new organisation (Plan B).
21. In about August 2022, Racing NSW obtained copies of four documents, including a copy of the draft confidentiality deed, which disclosed the plan outlined in the previous paragraph. The other three documents were a document entitled "Current situation - considerations", a document entitled "Tactical Communications Plan" and a draft of an open letter to Racing Australia. Racing NSW has not revealed who gave it copies of the four documents.
22. On 25 November 2022, the solicitors for Racing NSW wrote to each of the other PRAs referring to the interview given by Mr Kruger and to the fact that Racing NSW had become aware of "evidence which also suggested that discussions may have occurred between [Racing Victoria] and others (from which Racing NSW was excluded) in relation to the establishment of a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia designed to seek to justify excluding NSW from the Australian thoroughbred racing industry". The letters asserted that, arising out of that conduct, Racing NSW may have a claim for damages for contravention of s 45 of the Competition and Consumer Act 2010 (Cth) (CCA) (which prohibits contracts or arrangements or the engaging in a concerted practice which has the purpose or effect of substantially lessening competition) or a claim for compensation for a contravention of s 21 of the Australian Consumer Law (ACL) (which prohibits unconscionable conduct in the supply or acquisition, or possible supply or acquisition, of goods or services). Relevantly, the letters sought a range of documents including documents concerning the exclusion of Racing NSW from the Australian thoroughbred racing industry or the establishment of a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia. A similar letter was also sent to Cato & Clive.
23. Each of the defendants refused to produce the documents sought. TRNT and CRC denied that they had any such documents.
24. Racing NSW commenced these proceedings on 22 December 2022. The documents it seeks are set out in Annexure A (118723, pdf) to this judgment.
25. On 25 January 2023, Racing NSW issued a subpoena to Cato & Clive in the proceedings seeking the documents it had requested from them. By a notice of motion filed on 14 February 2023, Cato & Clive sought to have that subpoena set aside. That notice of motion was dismissed by Stevenson J on 29 March 2023: see Racing New South Wales v Racing Victoria Limited [2023] NSWSC 296. It is apparent that the defendants were on notice of that application and that in support of the application Racing NSW tendered copies of the four documents that it had obtained from the anonymous source.
26. The documents produced by Cato & Clive were tendered in evidence on this application. They provide some additional detail of the plan that was being formulated by Racing Victoria, RQB, RSA, RWWA and TR. They also indicate that steps have been taken to interview candidates for the position of Chief Executive Officer of the new organisation that those PRAs were considering establishing. However, it remains unclear how far the plans have been developed or, indeed, whether they are still on foot.

Relevant legal principles

1. Rule 5.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides: (1) If it appears to the court that - (a) the applicant may be entitled to make a claim for relief from the court against a person (the prospective defendant) but, having made reasonable inquiries, is unable to obtain sufficient information to decide whether or not to commence proceedings against the prospective defendant, and (b) the prospective defendant may have or have had possession of a document or thing that can assist in determining whether or not the applicant is entitled to make such a claim for relief, and (c) inspection of such a document would assist the applicant to make the decision concerned, the court may order that the prospective defendant must give discovery to the applicant of all documents that are or have been in the person's possession and that relate to the question of whether or not the applicant is entitled to make a claim for relief. …
2. As Simpson AJA explained in O'Connor v O'Connor [2018] NSWCA 214, the threshold requirements set out in rule 5.3 are low: [23] As was explicitly accepted on behalf of the respondents, the threshold set by the Rule is low: it must appear to the court that an applicant may be entitled to make a claim for relief, and that a prospective defendant may have or have had possession of relevant documents or things, and that inspection would assist the applicant to decide whether to commence proceedings. … [30] It may be emphasised that there is no requirement that an applicant for preliminary discovery establish even a prima facie case for relief; nor is it necessary that an applicant specify with precision the cause of action proposed, although it will be necessary, in order to make it "appear to the court" the applicant "may be entitled to make a claim for relief" that the applicant provide some particularisation of the nature of the relief in contemplation. That is so, not only to enable the court to form a view about whether the applicant may be entitled to make a claim for relief, but also to enable the prospective defendant, if an order is made, to determine which, if any, documents in possession are to be discovered.
3. Similarly, in Hatfield v TCN Channel 9 Pty Ltd (2010) 77 NSWLR 506; [2010] NSWCA 69 at [47]-[52], McColl JA said (citations removed): First, "[i]n order for it to 'appear' to the Court that the applicant 'may be entitled' to make a claim for relief, it is not necessary for the applicant to show a prima facie or pleadable case". Secondly, while "the mere assertion of a case is insufficient … [i]t will be sufficient if there is reasonable cause to believe that the applicant may have a right of action against the respondent resting on some recognised legal ground". … … the use of the word 'may' indicates the Court does not have to reach 'a firm view that there is a right to relief'. Fifthly, "the question posed by [r 5.3(1)(a)] … is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent [but] … whether the applicant has sufficient information to make a decision whether to commence proceedings in the court. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences". Thus application of the rule will not be precluded by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief, as there might be matters of defence which could defeat a prima facie case. Sixthly, … "the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the court, exercised in the particular circumstances of each case".
4. What amounts to "reasonable enquiries" is a question of fact to be determined having regard to all the relevant circumstances. As McDougall J said in Steffen v ANZ Banking Group Ltd [2009] NSWSC 666 at [15]: What are "reasonable inquiries" is a question of fact, to be considered in all the circumstances of the particular case. Clearly, the court is entitled to take into account whether there are other means of obtaining the information; and, equally clearly, the cost and delay of resorting to those alternative means is also relevant. As I said in Sinopharm at [32], "[w]hat is reasonable cannot be determined in some a priori fashion. The determination must take into account the facts of the particular case including, so far as those facts demonstrate it, the relationship (if any) between the applicant and the prospective defendant". It would also be relevant to take into account the utility (or, to put it another way, uncertainty) of obtaining the necessary information by other means.
5. Having made those enquiries, the question is what information the applicant has and what additional information it reasonably needs to make a decision. As White J explained in Morton v Nylex Ltd [2007] NSWSC 562 at [33] (citations omitted): …The third requirement of r 5.3(1)(a) requires an objective assessment of the information already possessed by the plaintiffs to determine whether that information is sufficient for such a decision to be made. The question is whether the applicant has insufficient information to be able to decide whether to institute proceedings; not merely to establish a cause of action. Hence, an applicant may be entitled to preliminary discovery of documents relevant to available defences, or the extent of apprehended breaches, or the likely quantum of damages, as well as of documents which may establish whether there is a cause of action. However, unless the applicant is lacking something reasonably necessary to make a decision whether to institute proceedings, he or she is not entitled to preliminary discovery. An applicant must disclose what information he or she already has relevant to making such a decision, and identify what information is lacking. Preliminary discovery cannot be used to build up a case which an applicant has already decided, or could decide, to bring.
6. In Tabcorp Holdings Ltd v Evtain Group Pty Ltd [2023] NSWSC 220 at [43]ff (Tabcorp), Stevenson J suggested that it follows from this passage that, if the Court is satisfied that the plaintiff has sufficient information to plead one cause of action, it is not entitled to information in relation to another: As Dr Higgins accepted, the question is whether Tabcorp already has sufficient information to decide "whether to commence, not what to commence" such that if Tabcorp has sufficient information to commence proceedings for misleading or deceptive conduct, it does not matter whether it also has sufficient information to commence proceedings for unlawful conspiracy.
7. Two points should be made about these last two decisions. First, I do not read White J's judgment in Morton v Nylex Ltd as saying that the test imposed by UCPR r 5.3(1)(a) is a purely objective test. It is the plaintiff who makes the decision whether to commence proceedings and it is for the plaintiff to identify the claim for relief it is considering bringing and the additional information it says it needs to decide whether to bring those proceedings. The question for the Court is whether there is a reasonable basis for thinking that the plaintiff may be entitled to make a claim for relief of that type and, if so, whether the information the plaintiff says it lacks is reasonably necessary to make a decision on whether to bring such a claim.
8. Second, the question is whether objectively the plaintiff has sufficient information to bring proceedings, not whether it has sufficient information to plead a particular cause of action. Often, the answer to the first question will follow from the answer to the second. But it need not. To the extent that the plaintiffs made a concession in Tabcorp to the contrary, in my opinion that concession was wrongly made. I return to this point below.
9. One matter relevant to the exercise of the Court's discretion is the apparent strength or weakness of the applicant's case. As Sackville AJA explained in Hatfield at [165]: That the appellant's chances of obtaining an interlocutory injunction are extremely low or remote is, in my opinion, a powerful consideration militating against exercise in her favour of the discretion conferred by r 5.3. There would be little point in ordering the respondents to give preliminary discovery of the material sought by the appellant if she stands little or no chance, in any event, of obtaining injunctive relief.

Racing NSW's case

1. The plaintiffs identify a substantial number of bases on which they may want to claim relief against the defendants. They include a claim under s 45 of the CCA, a claim that the defendants have breached the Rules of Racing, a claim that the directors of Racing Australia have breached their duties as directors and that the defendant PRAs have accessorial liability for that breach, a claim that the PRA defendants have engaged in an unlawful means or lawful means conspiracy and a claim that the PRA defendants have breached s 21 of the ACL. Some of the defendants point to difficulties with some of the causes of action identified by the plaintiffs. However, it is not necessary to analyse the various elements of the causes of action and the difficulties said to exist with at least some of them. Although in submissions the matter is put in various ways and at a greater level of generality, in substance what is alleged is that there is evidence to suggest that the defendant PRAs have reached or are proposing to reach an arrangement or an agreement to exclude Racing NSW from all or part of the national framework for regulating thoroughbred horse racing in Australia because Racing NSW will not agree to a Pattern which places what it regards as unacceptable (and anti-competitive) restrictions on its ability to conduct races as part of its Spring Carnaval. If Racing NSW could make out that case at a factual level, it seems plausible that it would be able to formulate one or more arguable causes of action against those involved giving rise to a claim for damages or an injunction.
2. As finally put, Racing NSW submitted that there were three types of information which it needed in order to decide whether to commence proceedings. The first concerns how far the proposal has advanced and whether the defendants are planning to continue with it. The second concerns the nature and scope of the proposal. Do the defendants really intend to exclude Racing NSW and, if so, exclude it from what exactly? The third concerns the defendants' purpose. Are they merely seeking to resolve an impasse or are they, for example, seeking to reduce competition? It will be necessary to say more about the specific categories of document sought by the plaintiffs. But, in essence, the documents sought are intended to elicit information on those matters to enable the plaintiffs to make an informed decision on whether to commence proceedings.

A preliminary issue

1. A preliminary issue raised by TR alone is whether the plaintiffs are entitled to rely on the four documents that Racing NSW obtained anonymously and the documents produced in response to the subpoena served on Cato & Clive. It submits that those documents should be excluded under s 138 of the Evidence Act 1995 (NSW). Section 138(1) relevantly provides that evidence that was obtained "in consequence of an impropriety … is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained". Section 138(3) provides: Without limiting the matters that the court may take into account under subsection (1), it is to take into account - (a) the probative value of the evidence, and (b) the importance of the evidence in the proceeding, and (c) the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding, and (d) the gravity of the impropriety or contravention, and (e) whether the impropriety or contravention was deliberate or reckless, and (f) whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil and Political Rights, and (g) whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention, and (h) the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law.
2. TR submits that it can be inferred that the four documents obtained by Racing NSW were given to it in breach of a duty of confidence. It does not identify to whom the duty of confidence was owed, but presumably it was owed to at least one or more of the defendant PRAs. Consequently, it is said that the four documents were obtained in consequence of an impropriety (the breach of confidence) and so should not be admitted into evidence in these proceedings. TR also submits that the documents obtained in response to the subpoena (which included versions of the four documents Racing NSW already had) were obtained "in consequence of" the earlier breach of confidence, so that they too should not be admitted into evidence.
3. In my opinion, there are three difficulties with this argument. First, I do not think it could be said that the documents obtained on subpoena were obtained in consequence of an impropriety. The documents were ultimately obtained as a consequence of a refusal by Stevenson J to set aside the subpoena served by Racing NSW. The four documents were tendered on the application to set aside the subpoena, and Stevenson J understood and recorded in his judgment at [28] that the documents (or at least one of them) were obtained from an anonymous source. It is also reasonable to infer from what his Honour said in relation to the document titled "Technical Communications Plan" that he understood that on its face the document appeared to be a confidential document prepared by or with the assistance of a corporate communication or public relations consultancy: at [29]. Nonetheless, his Honour relied on the document in concluding that the subpoena should not be set aside. It seems to me difficult to say that in those circumstances Racing NSW obtained the documents in consequence of an impropriety. Racing NSW obtained the documents because Stevenson J, knowing the relevant facts, refused to set aside the subpoena.
4. Second, related to the first point, the four documents obtained by Racing NSW have been tendered in these proceedings in connection with the application to set aside the subpoena. No objection was taken to their tender at that time. In my opinion, it is too late to take an objection now.
5. Third, even if the previous two points are wrong, I would not be prepared to exercise the discretion conferred by s 138 to exclude the four documents or the material obtained in response to the subpoena. In my opinion, the desirability of admitting the evidence outweighs the undesirability of admitting it because of the way in which it was obtained. Although it is not clear how the original four documents were obtained, it may be inferred that copies of the documents were given to Racing NSW, and that the documents were intended to be confidential. However, the documents are critical to the application for preliminary discovery. They at least arguably raise a question whether the PRA defendants are seeking to exclude Racing NSW and, in doing so, engaging in improper conduct themselves. There is no means by which Racing NSW could obtain the information contained in the documents except as a consequence of someone providing the information to it. Necessarily, on TR's case that would involve a breach of confidence. If TR's submission is correct, a party would never be entitled to rely on evidence obtained in consequence of a breach of confidence. That cannot be right.

The defendants' arguments

1. The defendants advanced a number of arguments against the application for preliminary discovery. It is convenient to deal with them by issue, rather than by defendant.

No evidence of exclusion

1. The first argument, advanced principally by Racing Victoria, is that Racing NSW does not have a case because there is no evidence that the PRA defendants intended or intend to exclude Racing NSW from any arrangements that they put in place. Rather, the evidence suggests that Racing NSW will be invited to join whatever new entity is established.
2. I cannot accept that submission. I accept that that was the object of Plan A, and the preferred position of the defendants. However, it appears on the available evidence that it may be arguable that, if necessary, the defendant PRAs were prepared at least in about April 2022 to adopt Plan B - that is, to exclude Racing NSW if agreement with it could not be reached. The best evidence in support of that proposition is the document apparently created in about April 2022 by Cato & Clive headed "Current situation - considerations", which states under the heading "What would be needed to make Plan A work" the following: 1 The threat of a breakaway body, leaving NSW isolated, is the shock-and-awe component of the campaign. That will get attention. But the non-NSW states must be prepared to follow through (has this been modelled and war-gamed?) It must be portrayed as the only viable option (more in sorrow than in anger) and it must be portrayed as in the best interests of racing.
3. What is unclear from the material is whether the defendant PRAs have abandoned any plan to implement Plan B or whether, having made no progress with Racing NSW in relation to Plan A, they propose to pursue Plan B. The fact that interviews have been conducted for the CEO of the new proposed organisation without involving Racing NSW provides some evidence that Plan B has not been abandoned altogether.
4. Plainly, it would be relevant to Racing NSW's decision whether to commence proceedings against each of the defendant PRAs to know whether it has made any decision to abandon or to implement Plan B.
5. In a related submission, Racing Victoria submits that the purpose of the plan was to reform the governance of thoroughbred racing in Australia so that each of Racing NSW and Racing Victoria gives up its veto for the benefit of the industry as a whole. However, that submission raises two issues relevant to the way in which Racing NSW puts its case. The first is what is the position of the PRA defendants if Racing NSW refuses to give up its veto? That raises the question whether each of the other PRAs has decided or proposes to follow through with Plan B. The second is whether the purpose of the plan to eliminate the veto is to force on Racing NSW a Pattern which Racing NSW submits is anti-competitive and which may therefore involve an agreement, arrangement or concerted practice that contravenes s 45 of the CCA.
6. So far as the second issue is concerned, Racing Victoria submits that that forms no part of the plaintiffs' case. It was not raised in the letters written to the other PRAs before these proceedings were commenced. Nor it is said was it raised in the plaintiffs' written submissions.
7. The issue may not have been raised expressly before oral submissions. However, in my opinion, it was implicit in Racing NSW's case. It is not simply the fact of possible exclusion that may give rise to a contravention, or threatened contravention, of s 45 of the CCA, and possibly to other causes of action. It is also the purpose of any agreement, arrangement or concerted practice which has exclusion as a possible outcome that is relevant. It is Racing Victoria's position that the purpose of the plan was or is to bring about a reform of the administration of racing to Australia for the benefit of the industry as a whole. It cannot come as a surprise to the PRA defendants in the context that Racing NSW may seek to argue that the purpose of the plan was to get Racing NSW to agree to a Pattern that was anti-competitive and the plan is anti-competitive for that reason.
8. Nothing turns on the fact that Racing NSW did not specifically refer to that way of putting the case in its letters designed to establish that it had made reasonable enquiries so as to satisfy one of the requirements set out in UCPR r 5.3(1)(a). Given the nature of the claim that Racing NSW says it is considering bringing and the history of the matter, it is doubtful that letters to the other PRAs could ever reasonably be expected to produce any useful information. In any event, the material actually sought by Racing NSW may have shed light on the purpose of the plan. However, the defendant PRAs refused to produce it. It was not suggested that there were other steps that Racing NSW could take to obtain information on that issue. Consequently, it seems to me that Racing NSW did satisfy the reasonable enquiries requirement in relation to this aspect of its case. It was not suggested that there was some other reason Racing NSW should not be permitted now to put its case in the way in question in support of its application for preliminary discovery.

Racing NSW has sufficient information in relation to at least one cause of action

1. RQB, relying on the passage quoted from Tabcorp at par [34] above, submits that Racing NSW already has sufficient information to determine whether it should bring one of the causes of action it has identified, which means that it is not entitled to obtain preliminary discovery in relation to the other causes of action it has identified, since the test is whether the plaintiff has sufficient information to commence proceedings, not whether the plaintiff has sufficient information to pursue a particular cause of action.
2. The cause of action which it is said the plaintiffs have sufficient information to commence is a claim foreshadowed in their written submissions that the defendant PRAs were knowingly involved in a breach by their appointees to the Board of Racing Australia of their duties as directors. The relevant breach was the involvement of those directors in the conduct of their respective appointors in seeking to establish a breakaway body to the detriment of Racing Australia. As the case is put, the breach that is alleged is the failure to disclose what they knew of that proposal during board meetings of Racing Australia, and the remedy that may be sought is an injunction under s 1324(1) of the Corporations Act 2001 (Cth) to prohibit such persons from acting as directors of Racing Australia. In their written submissions, the plaintiffs identify the additional information they say they need. RQB seeks, by a careful analysis of the submissions and evidence, to establish that, as a result of the production of documents by Cato & Clive, Racing NSW now has all the information it says it needed to consider whether to bring a claim of the type foreshadowed. In particular, the documents establish that certain directors of Racing Australia did participate in discussions concerning the formation of a breakaway body. Consequently, Racing NSW has sufficient information to decide whether to bring that claim and therefore to decide whether to commence proceedings.
3. In my opinion, this argument overlooks the distinction on which it is said to depend. The question is not whether it appears to the Court that the plaintiffs have sufficient information to plead an arguable cause of action. The question relevantly is whether it appears to the Court that the plaintiffs, who may be entitled to make a claim for relief, have sufficient information to decide whether to commence proceedings. The answer to that question depends on what types of claim the plaintiffs may be able to bring and what additional information the plaintiffs need to decide whether to bring proceedings in which those claims are made. Of course, if it appears on the evidence that a plaintiff has already decided to bring proceedings, the plaintiff will not be entitled to preliminary discovery in order to plead an additional claim. But it does not follow that a plaintiff who has sufficient information to plead a claim has sufficient information to bring proceedings if the decision whether to bring proceedings or not reasonably depends on whether other claims can be made.
4. To put the point slightly differently, it may be that the plaintiffs have sufficient information now to plead a claim based on breach of directors duties. It may even be the case that, on the basis of the information they have, if they bring proceedings the plaintiffs intend to include a claim for breach of directors duties. But it does not follow that the plaintiffs have sufficient information, or have decided, to bring proceedings. There is nothing in the evidence to suggest that the plaintiffs have made any such decision; and it does not seem to me to be unreasonable in the circumstances of this case for the plaintiffs to investigate the various causes of action they might be able to plead before making a decision whether to commence proceedings.

Racing NSW has the information it says that it needs

1. This submission is a variant on the previous one. I accept the submission made by some of the defendants that Racing NSW has shifted ground on the information it says it needs, and that much of the information it originally said it needed can be obtained from the documents produced by Cato & Clive. But none of the defendants went so far as to suggest that they were prejudiced by the change in the plaintiffs' case, and the change could not be regarded as such a departure from the plaintiffs' original case that it should not be permitted or that it indicates that the application itself is not a genuine one. As I have explained, as finally put, it seems to me that the plaintiffs seek three types of information. First, they seek information about the precise nature of what is planned by the defendant PRAs. Second, they seek information concerning how far those plans have advanced. Third, they seek information concerning the object that is sought to be achieved by whatever plans exist - that is, the purpose of the plans. It seems to me that each of those matters are relevant to the types of claim that the plaintiffs have stated that they may wish to bring. They are not matters on which the plaintiffs have sufficient information to decide whether to bring those claims.

Racing NSW may have other information

1. RWWA submits correctly that Racing NSW bears the onus of proving that it needs preliminary discovery and as part of discharging that onus must provide evidence of the enquiries it has made and the information it has discovered. It submits that Racing NSW has failed to do that because it has failed to provide evidence of the results of investigations its solicitors said in their letter dated 22 March 2022 that they had been instructed to undertake in connection with threatened proceedings against Racing Victoria and has failed to provide the name of the person from whom it obtained the four documents which led to the commencement of these proceedings.
2. I do not accept that submission. It is difficult to see how the name of the source is a matter relevant to whether proceedings should be commenced or not. Mr Price, the solicitor for Racing NSW who swore a number of affidavits in support of the application for preliminary discovery and who was the author of the letter dated 22 March 2022, said in an affidavit sworn on 8 March 2023 that "[a]s at the date of this affidavit, I am not aware of any other information relevant to whether the plaintiffs should commence proceedings against the prospective defendants". He was not cross-examined on that evidence. That evidence should, therefore, be accepted.

The claims are weak

1. A number of reasons are advanced by the defendants for why the Court should refuse relief on discretionary grounds. One is that the claims are weak. The arguments advanced in support of that contention have already largely been addressed. It may be that there are substantial difficulties with some of the causes of action advanced by the plaintiffs. However, that does not alter the fact that the core factual case that Racing NSW seeks to investigate may provide a reasonably arguable basis for a claim for relief.

The application is not a proper one

1. This ground is advanced principally by Racing Victoria. Essentially Racing Victoria submits that the application is a tactical manoeuvre as part of the long running dispute between it and Racing NSW in which Racing NSW has threatened proceedings, sought itself to exclude Racing Victoria from Racing Australia and sought to undermine the operation of Racing Australia by, for example, instructing its representative to refuse to attend board meetings.
2. The fact that Racing NSW has made what appear to be hollow threats in the past to commence court proceedings against Racing Victoria is not a reason for thinking that Racing NSW is not genuinely contemplating bringing proceedings of the type it has indicated depending on what information it obtains as a consequence of an order for preliminary discovery. The proceedings previously threatened against Racing Victoria and the proceedings that Racing NSW now says it is currently considering bringing are quite different and arise out of different facts. The fact that Racing NSW has made an application for preliminary discovery counts against the suggestion that Racing NSW is not genuinely considering whether to bring court proceedings of the type it has indicated. Moreover, in order to put a submission that Racing NSW was not genuinely contemplating court proceedings, it would have been necessary to put that to Mr Price. That was not done.
3. Similarly, the fact that the application is made in the context of a wider dispute between Racing NSW and Racing Victoria is not a reason for refusing the application. The application must be judged on its own merits. Plainly, the application should be refused if the true position is that Racing NSW is not genuinely seeking the documents in order to consider whether to commence court proceedings. However, Racing Victoria's submission did not go so far; and again, any such assertion would need to have been put to Mr Price. Racing NSW's conduct may be relevant to the exercise of the Court's discretion whether to order preliminary discovery. But the conduct must go to the application itself, not simply to the broader dispute between the parties.

Delay

1. Some defendants submit that the Court should refuse the application because Racing NSW has delayed in bringing it. That submission rests on the contention that the interview given by Mr Kruger on 9 November 2021 provided a sufficient basis for making the application.
2. I do not accept that contention. There was nothing in what Mr Kruger said that suggested that there was any proposal in existence at that time to establish a body to take over some of the functions of Racing NSW or that such an arrangement was contemplated. The tenor of Mr Kruger's interview was that Racing Victoria was working very hard to resolve the dispute, that if that failed it may be necessary to look at other options, one of which would be to exclude Racing NSW from the Pattern. In my opinion, that information would not have formed a proper basis for an application for preliminary discovery. At most, Mr Kruger made statements about what might happen in the future. Any potential claim based on those statements would have been speculative.

The application has been brought in the wrong forum

1. This submission is advanced by TR. It submits that the principal claim identified by Racing NSW is a claim for breach of s 45 of the CCA. That claim is a "special federal matter" and would, if commenced in this Court, have to be transferred to the Federal Court unless this Court was satisfied that there were "special reasons" for it to hear the matter: Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), s 6. Accordingly, this is not an appropriate court to hear the application for preliminary discovery.
2. I do not accept that submission. The question raised by UCPR r 5.3 is whether "the applicant may be entitled to make a claim for relief from the court". "Claim for relief" is defined in s 3 of the Civil Procedure Act 2005 (NSW) to include "any other claim (whether legal, equitable or otherwise) that is justiciable in the court". A claim under s 45 of the CCA is clearly justiciable in this Court. Consequently, this Court clearly has jurisdiction to hear the application. It was open to TR to make an application to have the current proceeding transferred to the Federal Court. It did not do so. I can see no reason in those circumstances why this Court should not deal with the application.

The individual defendants

1. Preliminary discovery is sought against three individuals, all connected with Racing Victoria. They are Mr Nichols, who is a director of Racing Victoria and currently its appointee on the Board of Racing Australia, Mr Kruger, the Chairman of Racing Victoria, and Mr Carpenter, a former employee of Racing Victoria who was previously Racing Australia's representative on the ARF Committee and the IFHA Committee. The plaintiffs' submissions are largely silent on why preliminary discovery should be ordered against those persons. The inclusion of Mr Nichols and Mr Kruger can be explained by their positions. Both are likely to be knowingly involved in the conduct of Racing Victoria and consequently to the extent that a claim for accessorial liability can be brought, the claim might be brought against them. In addition, to the extent that Racing NSW may want to advance a claim that the directors of Racing Australia have breached their duties as directors, that claim could be advanced against Mr Nichols. Accordingly, for the same reasons that apply to the defendant PRAs it is appropriate that orders for preliminary discovery be made against them.
2. Mr Carpenter falls into a different category. It appears that he has been named as a defendant because of his position on the ARF Committee and the IFHA Committee. There is some suggestion that while sitting on those committees he preferred the interests of Racing Victoria over those of Racing NSW. However, there is inadequate material before the Court from which it could be concluded that there is any basis for that claim. The clearest evidence is given by Mr Price who says that he is instructed by Mr Sweeney, Racing NSW's General Legal Counsel, that at a meeting of the ARF Committee in July 2020 "there was a disproportionate downgrading of ratings relevant to NSW as compared to Victoria". It is also said that Mr Carpenter failed to object to a proposed rating given to Classique Legend, which won The Everest on 17 October 2020. However, no evidence is given that suggests that Mr Carpenter was in some way responsible for the disproportionate downgrading or that that downgrading should not have occurred. No evidence is given of what proper basis may have been available to Mr Carpenter to object to the rating given to Classique Legend. And no explanation is given of what claim Racing NSW is considering bringing against Mr Carpenter and what information it is lacking in order to make a decision on whether to bring such a claim.
3. For those reasons, the application for preliminary discovery against Mr Carpenter should be dismissed.

The categories sought by Racing NSW

1. At the hearing of this matter, I indicated that I would give the parties an opportunity to make further submissions on the scope of preliminary discovery if I concluded that an order for it should be made. However, some submissions were made by the parties on the categories sought by the plaintiffs and the plaintiffs made some concessions in relation to those categories. It is appropriate that I express my views on some of those issues now. That may assist the parties in reaching agreement on any outstanding issues.
2. The plaintiffs' original categories sought documents from 1 July 2021 to the date the order is made. In submissions, the plaintiffs indicated that they only sought documents from February 2022 - a short time before Cato & Clive was engaged. The defendants submitted that the plaintiffs should only have documents from August or September 2022. In their submission, the earlier period is already covered by the documents produced by Cato & Clive.
3. In my opinion, it is appropriate that the plaintiffs should have documents created between 1 February 2022 and the date the order is made. Cato & Clive were engaged in April 2022. It may be that the plan that was discussed and developed with their assistance was conceived shortly before they were approached. In my opinion, the plaintiffs are entitled to documents during that period. A starting date of 1 February 2022 seems reasonable in those circumstances. It is true that the plaintiffs have access to documents produced by Cato & Clive and that those documents cover the period between April and August 2022. Those documents give a reasonable indication of what happened during that period. However, internal documents of the defendants (other than Mr Carpenter) may shed light on the purpose of the defendants, which as I have explained is a relevant matter. Accordingly, the defendants should produce documents in relation to that period.
4. Category 2 requires production of documents recording meetings between Racing Victoria and "any other person" in relation to the subject-matters identified. Similarly, category 3 seeks documents recording communications between Racing Victoria and "any other person" in relation to those matters. In my opinion, these categories are too broad. It should be possible to identify a limited number of entities with whom relevant meetings or communications are likely to have occurred. Production of documents recording those meetings and communications should be sufficient.
5. It is not clear to me why categories 5, 6 and 7 are necessary. To a substantial degree they appear to be duplicative of categories 1, 2 and 3.
6. For the reasons I have given, I would not permit category 8.2. Nor would I permit category 8.1. The case sought to be advanced by Racing NSW relates to its proposed exclusion, not to the exercise of a right of veto by Racing Victoria. The exercise of that right of veto occurred on 8 June 2018. If Racing NSW wished to consider bringing proceedings in respect of that conduct but maintained that it required additional information to do so, it should have sought preliminary discovery well before now in relation to that matter.

Orders

1. I propose to stand the matter over to 9.15 am on 27 June 2023 or such other date as is arranged with my Associate to hear further submissions on the form of orders that should be made and on costs.
2. If the parties are able to reach agreement on those matters in the light of this judgment, they may provide my Associate with agreed short minutes of order and I will make those orders in chambers.

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