Racing New South Wales v Racing Victoria Ltd

Supreme Court of NSW|2023-12-06|Before: Rees J

These proceedings

On 25 November 2022, Racing NSW's solicitors wrote to each of the PRAs, seeking 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 such services. As Ball J observed in Racing NSW (No 2) at [24]: "… 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)…"
The defendants refused to produce the documents sought. These proceedings were commenced on 22 December 2022. On 25 January 2023, the plaintiffs caused a subpoena to produce to be issued to Cato & Clive. Racing NSW obtained documents on subpoena from Cato & Clive, which provided additional detail of the plan that was being formulated by the PRAs, and indicated that steps had been taken to interview candidates for the position of chief executive officer of the new organisation. It remained unclear how far the plans had been developed or whether the plans were still on foot: Racing NSW (No 2) at [28].

Construction of discovery categories

The debate in respect of discovery categories focussed on two types of documents: the letter from Mr Kruger to Mr Engelbrecht-Bresges of 25 February 2022 (see [19]) and commercial briefing documents prepared for the Racing Victoria board, being the SWOT analysis and Mr Jones' options paper. Obviously enough, if the defendants' approach to discovery in respect of these documents was wrong, they may need to revisit discovery more broadly: see also [28], [31].

Submissions

The defendants said they only discovered the letter to Mr Engelbrecht-Bresges as it was a communication between Racing Victoria and an Other Person, and so captured by category 3(b). All documents recording that communication were discovered, but not drafts of the letter; drafts were said to only be required if the document fell within category 1(b), which it did not. (This is not correct: the definition of Document includes drafts: see [72]). There was no reference in the letter to a proposed agreement of any kind between the PRAs, let alone a proposed agreement of the kind that would be captured by category 1(b). In any event, changes to the date for the NSW Spring Champion Stakes and its status as a Group 1 race were said to be irrelevant to the categories for discovery, which concerned an alleged agreement or proposed agreement between the PRAs other than Racing NSW to establish a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia.
The plaintiffs submitted that the letter from Mr Kruger to Mr Engelbrecht-Bresges fell within Category 1, not simply Category 3, and further orders should be made to clarify the scope of the discovery orders. The plaintiffs submitted that the letter to Mr Engelbrecht-Bresges evidenced a proposed agreement between the PRAs for the establishment of a new entity for the provision of services relating to thoroughbred racing in Australia. As such, the document was responsive to category 1(b) of the discovery orders. All documents which attached the letter, and any drafts of the letter, should be discovered, together with any communications with Mr Messara in relation to the topic.
As to the commercial documents redacted for relevance, the defendants submitted that the categories called for production of documents concerning their plans with others, rather than Racing Victoria's own plans. The categories were not concerned with what the defendants intended to do alone. Preliminary discovery was granted to enable Racing NSW to have information to decide to bring proceedings as to whether or not there was collusion and a breach of section 45 of the Competition and Consumer Act 2010 (Cth) in respect of an agreement or proposed agreement to establish a new body to exclude Racing NSW, or communications with others about the establishment of a new body or the exclusion of Racing NSW. The defendants submitted that their redacted portions only concerned Racing Victoria's plans to compete with New South Wales.
The plaintiffs submitted that the redacted portions were in fact relevant. The redactions were only valid if the defendants could establish that the redacted information was, in addition to being commercially sensitive, irrelevant to the information required to be produced pursuant to the discovery orders: Drivetime Radio Australia Pty Ltd v Pivotal Creative Solutions Pty Ltd trading as Broadcast GP [2010] NSWSC 763 at [25] (per Brereton J); Westgate Finance Pty Ltd v May [2012] NSWSC 806 at [24]-[25] (per McDougall J). The test for relevance in the context of evidence is, of course, whether a document "could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue" (see s 55(1) of the Evidence Act 1995 (NSW)). In the present context, the question was whether the redacted information could, directly or indirectly, rationally be said to fall within the subject of the discovery orders. The plaintiffs submitted that category 5(c) identified the purpose, which may be a purpose concerning the Australian Pattern or some other competitive purpose. At least part of the object may be advantaging Racing Victoria's competitive position. The test of relevance was a low bar and Racing NSW was entitled to know what the proposed arrangement was, being part of a strategy by Racing Victoria to advance its competitive position.

Conclusion

In construing the categories of discovery, it is appropriate to have regard to Ball J's judgment, in light of the principles described at [5]-[11]. His Honour's judgment records that the causes of action which Racing NSW was considering, and in respect of which preliminary discovery was sought, were not limited to a claim for damages for contravention of section 45 of the Competition and Consumer Act, which prohibits anti-competitive arrangements, but included a claim for compensation for contravention of section 21 of the Australian Consumer Law, prohibiting unconscionable conduct. The latter does not necessarily require any arrangement between the PRAs but may be founded on the actions of a sole actor. Other causes of action were apparently also under consideration.
The focus of Ball J's judgment, however, was on the agreement or proposed arrangement with the PRAs and whether the purpose of that agreement or arrangement was anti-competitive. These were the types of information sought by Racing NSW, "As finally put". The discovery categories were framed accordingly. It appears that Racing Victoria initiated the discussion of a proposed arrangement with other PRAs. As such, Documents evidencing a proposed agreement between the PRAs may have come into existence at Racing Victoria, before the subject was raised outside that organisation. Indeed, such Documents may never have passed to another PRA. But in order to be discoverable, the Documents must concern an agreement or proposed arrangement with other PRAs, and the purpose thereby sought to be achieved. The Relevant Period was apparently selected to capture Documents which may shed light on the purpose of such plans including, presumably, early thoughts.
So far as the letter to Mr Engelbrecht-Bresges is concerned, I agree with the defendants that the Document is discoverable under category 3(b) but not category 1, where Mr Kruger does not suggest in his letter - nor is there any suggestion in the surrounding circumstances - that there was then a proposed agreement, or early thoughts of such an agreement, between the PRAs of the type described in category 1(a) or (b). Whatever the "process" was, there is no suggestion at that time that it involved any PRA other than Racing Victoria. As earlier mentioned, however, the definition of Document does include "drafts" such that any drafts of the letter should also be discovered. Beyond this, I do not consider that the defendants are obliged to discover the further material suggested by the plaintiffs in respect of the letter, where it does not fall within category 1 or category 5.
Turning then to the commercial documents, both were prepared whilst Racing Victoria's approaches to other PRAs to canvas the establishment of a competing body were well underway. Mr Kruger's initial instructions, in April 2022, to Ms Lane to prepare the SWOT analysis were linked with Racing Victoria's efforts in this regard, "how do we compete more effectively with [Racing NSW] [and] how do we ensure [Racing Australia] (or its successor) can deliver what's needed". As events unfolded, the board of Racing Victoria pressed for the provision of a SWOT analysis in May 2022, again, in the midst of discussion about its efforts to lead the PRAs in "the coalition of the willing".
One might think, in these circumstances, that the SWOT analysis may be a repository of material concerning Racing Victoria's purpose. I have read both drafts of the SWOT analysis, which meet Ms Fielding's description as to their contents. I do not consider that any of the redacted portions concern proposed agreements with the PRAs or the objects sought to be achieved by such agreements, as described in more detail in category 5. Nor do the documents touch on purpose.
Mr Price is of the view that the SWOT analysis is relevant and he wishes to seek instructions from his clients in relation to the document. He apprehends that the redacted information is likely to be relevant to investigations concerning the furtherance of "Plan B" and other possible conduct the subject of proceedings under contemplation. Mr Price is of the view that these investigations cannot be effectively advanced with the restrictions imposed by the current confidentiality regime. I do not share his view. More importantly, I do not think the test of relevance in section 55(1) of the Evidence Act is the defining criteria as to whether the defendants are obliged to give preliminary discovery; the question is whether the redacted passage is relevant to the categories of preliminary discovery.
Turning then to the options paper prepared by Mr Jones on his appointment as CEO of Racing Victoria, the document is as described by Ms Fielding. The main discovery category to which it may respond is category 5. Having reviewed the unredacted version of the options paper, I consider that the redactions which have been made are appropriate. These portions concern Mr Jones' perception of competition between Racing NSW and Racing Victoria, and how these challenges should be met. These portions do not concern any proposed agreement between the PRAs to exclude, or threaten to exclude, Racing NSW from the Australian thoroughbred racing industry, nor the object sought to be achieved by, or the purpose of, any such agreement.
In short, I agree with the defendants in respect of the construction of the discovery categories and the approach that they have taken, at least in respect of these three documents.

Providing preliminary discovery

The next issue is whether the provision of preliminary discovery has been adequate, and whether affidavits should be required from the defendants - as opposed to their solicitors - as to the steps which have been taken. To address this issue, it is necessary to set out what has happened since the orders for discovery were made.
In July and August 2023, Mr Zaurrini made enquiries of relevant people at Racing Victoria, including Mr Nichols and Mr Kruger, in relation to the existence of text messages on any relevant messaging platform including WhatsApp, Signal and iMessage, which may fall within the discovery categories. Mr Kruger instructed that he did not have in his possession any text messages, as he did not use text messages for work purposes. Mr Zaurrini was informed by Mr Nichols that he used WhatsApp and his mobile phone's default messaging application. Mr Nichols instructed that he had reviewed his mobile phone and did not have any responsive text messages.
On 29 August 2023, the defendants completed their Lists of Documents. Some 1,588 documents were identified as falling within the discovery categories, 60% were said to be privileged or were redacted as irrelevant. On 27 September 2023, Mr Price raised a number of concerns with Mr Zaurrini, pointing to documents discovered by other defendants, or referred to in documents which had been discovered, but which were not discovered by Racing Victoria. In particular: 1. Racing WA had discovered a series of WhatsApp messages, including with Mr Nichols and Racing Victoria's CEO, Mr Jones, discussing "Plan B". These messages had not been discovered by Racing Victoria. 2. Racing Victoria had not discovered any documents recording the discussion that took place at a meeting on 13 April 2022, from which Racing NSW was excluded. 3. Throughout the relevant period, Mr Nichols had also been a director of Racing Australia, but no documents had been discovered from his Racing Australia email address. 4. Racing Victoria were said to have failed to discover all documents relating to "a process" initiated by Mr Nichols to strip Group 1 status from the Racing NSW Spring Champion Stakes, referred to in the email of 11 February 2022: see [17].
On 6 October 2023, Mr Zaurrini made further inquiries of Mr Nichols as to whether he had any text messages, in particular, in respect of the WhatsApp group chat described in the plaintiffs' letter of 27 September 2023. Mr Nichols informed Mr Zaurrini that he had considered whether he had any such messages in July or August 2023 and had reviewed messages on his phone, including WhatsApp, for that purpose. Mr Nichols then formed the view that he did not have any messages that were responsive to the discovery orders. Mr Nichols did not at that time remember his involvement in the "PlanB" WhatsApp chat group. Mr Nichols now realised that he had inadvertently overlooked several WhatsApp messages. Between 6 and 10 October 2023, Mr Nichols reviewed his WhatsApp chat history and provided screenshots of potentially relevant messages to Ms Fielding to provide to the defendants' solicitors for review. On 10 October 2023, Mr Nichols provided Mr Zaurrini with 16 screenshots of potentially relevant WhatsApp messages for review.
Mr Jones also then recalled that he had been a member of the "PlanB" WhatsApp group, having forgotten when he considered whether he had any text messages in his possession which fell within the discovery categories. On 9 October 2023, Mr Jones sent screen shots of relevant WhatsApp messages to Ms Fielding for the purpose of review and production if responsive to the discovery categories. Ms Fielding forwarded four WhatsApp messages from Mr Jones to the defendants' solicitors for review. On 14 October 2023, Mr Zaurrini asked Ms Fielding to seek confirmation from Mr Jones as to whether he held any other potentially responsive text messages, in addition to the screenshots already sent. On 17 October 2023, Ms Fielding confirmed that there were no further responsive messages. Of the 20 WhatsApp screenshots provided to the defendants' solicitors for review, 13 screenshots were considered responsive, including all of the messages provided by Mr Jones.
As a consequence of the plaintiffs' correspondence, Mr Zaurrini also became aware that Mr Nichols' Racing Australia email account had been closed in June or July 2023, as part of an initiative to close inactive or unnecessary accounts. The email account was reinstated. Mr Zaurrini is informed by Mr Nichols that, when the preliminary discovery orders were made, he did not identify his Racing Australia email account as a document repository containing potentially responsive documents as he had made limited use of the account since March 2021, when his role as Chair of Racing Australia ended, and he did not recall using the account in relation to any matter the subject of the preliminary discovery orders.
On 6 October 2023, Mr Zaurrini also made enquiries of Mr Nichols to understand the meaning of the "process" in the email of 11 February 2022. On 10 October 2023, Mr Nichols confirmed that the "process" was a reference to the letter from Mr Kruger to Mr Engelbrecht-Bresges of 25 February 2022: see [18]. Further, the "process" was limited to telephone conversations with, and the preparation of a letter sent to, Mr Engelbrecht-Bresges, drawing his attention to the (then) recent announcement by Racing NSW that it intended to change the date of the Spring Champion Stakes without obtaining approval from the Asian Pattern Committee.
On 6 and 9 October 2023, Mr Zaurrini made further enquiries of Mr Nichols and Mr Kruger as to whether there were any further internal or external emails regarding the preparation of the letter to Mr Engelbrecht-Bresges, whether the letter was sent to any of the other PRAs, whether the letter (or any similar communication) was ever sent directly to the ARF, and whether Racing Victoria had received any response. On 9 and 10 October 2023, Mr Zaurrini received emails from Mr Kruger and Mr Nichols attaching further documents for review by the defendants' solicitors and confirming responses to his enquiries. Two of these documents were determined to fall within Category 3.
On 23 October 2023, apparently not having heard further from the defendants, the plaintiffs filed the motion presently before the Court seeking the production of further documents from the defendants in response to the categories of discovery ordered by Ball J, such discovery to include particular documents, being those pointed to in Mr Price's earlier correspondence, to the extent that the documents fell within the scope of his Honour's earlier orders. In addition, the plaintiffs sought an order that each of the defendants provide an affidavit sworn by an authorised representative responsible for providing discovery, setting out the searches and steps undertaken by them to comply with His Honour's orders and to confirm that they had discovered all relevant documents. The solicitors for the defendants were asked to provide an affidavit confirming that they had given appropriate advice to their clients in respect of their obligations to provide discovery.
On 24 October 2023, Mr Zaurrini provided further discovery of 25 documents and responded to Mr Price's queries, specifically: 1. The WhatsApp messages were produced, said to have been omitted from the earlier discovery in error. 2. Records in respect of the 13 April 2022 meeting were produced, also said to have been omitted from the earlier discovery in error. 3. Mr Nichols' email address with Racing Australia had been deactivated but now reactivated with effect from 23 October 2023. Ashurst was not then in a position to confirm whether there were any further emails responsive to the discovery orders but would produce such emails, if any, once identified. 4. The "process" referred to in the email was a reference to the letter from Mr Kruger of 25 February 2022 to Mr Winifred Engelbrecht-Bresges.
On 25 October 2023, Mr Zaurrini swore a further affidavit, noting that his letter had been prepared as soon as was reasonably practicable, given the breadth of Mr Price's requests and the contentions canvassed in his letters. Further correspondence ensued. In particular, Mr Price suggested that the letter to Mr Engelbrecht-Bresges had been sent to Mr Messara. On 30 and 31 October 2023, Mr Zaurrini made further enquiries of Mr Kruger and Mr Nichols in relation to whether the letter had ever been sent to anyone at Racing Australia, any other third parties, or anyone internally at Racing Victoria. Confirmation was received from Mr Nichols and Mr Kruger on 31 October 2023 and 1 November 2023 that the letter had not been shared with Mr Messara, nor any of the other parties referred to in Mr Zaurrini's email. Mr Zaurrini believes that there are no outstanding responsive documents to discover.
On 3 November 2023, Mr Price swore a further affidavit attaching recent correspondence and advising that the plaintiffs maintained the view that the defendants had not adequately complied with the preliminary discovery orders. The same day, Mr Zaurrini received the contents of Mr Nichols' email account with Racing Australia, comprising 968 emails, which his firm began to review. On 6 November 2023, the defendants' solicitor provided a substantive response to Mr Price's ongoing concerns. Mr Zaurrini also swore a further affidavit, detailing the steps now underway to review Mr Nichols' reinstated email account with Racing Australia.
Mr Price wrote again on 13 and 15 November 2023 in respect of his ongoing concerns. On 17 November 2023, the defendants provided further discovery, being an additional seven documents, of which four documents came from Mr Nichols' email account with Racing Australia. On 24 November 2023, the defendants' solicitor responded to Mr Price's remaining concerns. On 28 November 2023, Mr Price swore further affidavits, collating his remaining concerns.
On 5 December 2023, Mr Zaurrini made a further affidavit, describing the tasks undertaken to complete the discovery process. In particular, Ashurst has reviewed some 32,000 documents in order to give verified discovery. Some 19 Ashurst employees have been involved. Some 1,130 hours have been spent by these employees on these tasks. Mr Zaurrini went through each of the queries raised by the plaintiffs' solicitors and set out the searches which had been undertaken, the enquiries made, and the results.

Submissions

The plaintiffs submitted that Racing WA had produced WhatsApp messages from the group created by Mr Nichols, entitled "PlanB". These messages had not been discovered by Racing Victoria, Mr Nichols or Mr Kruger. This was said to have been an oversight. The plaintiffs submitted that it was objectively extremely unlikely that Mr Nichols would forget a WhatsApp group that he created, called "PlanB", when the concept of Plan B was central to the issues that had arisen in the preliminary application and the orders that were made. It was even more unlikely where Mr Nichols was said to have reviewed his mobile phone and instructed the defendants' solicitors that he did not have any text messages which responded to the categories ordered by Ball J. The fact that Mr Jones also failed to discover these messages was said to point to a case of "collective and coincidental amnesia", such that direct evidence from Mr Nichols and Mr Jones as to their compliance with the discovery categories ought be required in a sworn affidavit by each of them. Their evidence should be put on as direct evidence and should be tested.
The plaintiffs submitted that the instructions that the "process" comprised M Kruger's letter to Mr Engelbrecht-Bresges did not bear close scrutiny; the "process' was not so confined. Shortly before the email was sent, at 5.49pm, Mr Messara sent an email to Mr Balding, expressing his concerns. The logical inference was said to be that the "process" that Mr Nichols had "initiated" included interactions with Mr Messara leading to his email. By contrast, the letter to Mr Engelbrecht-Bresges was sent on 25 February 2022, two weeks after Mr Kruger's email. Mr Kruger's email stated that the process had been initiated by Mr Nichols before Mr Kruger's email was sent on 11 February 2022. Further, there was no suggestion in Mr Engelbrecht-Bresges' letter, or any of the other discovered documents, that Mr Nichols caused or had interactions with Mr Engelbrecht-Bresges or the ARF before to 25 February 2022. Further, the letter was sent by Mr Kruger, not Mr Nichols.
The plaintiffs pressed for the defendants to put on first-hand evidence of the steps taken to comply with the preliminary discovery orders, rather than evidence by the defendants' solicitors on information and belief. This was said to be particularly appropriate in the case of Mr Nichols, where Mr Nichols' denials of collusion made to Mr Balding in the past were said to be at odds with documents which had since come to light. Where Mr Nichols may not have been entirely straightforward then, it was submitted that the Court should approach the matter with caution now. The plaintiffs further submitted that inadequate discovery in respect of the "process" raised a sufficient concern about the instructions that had been given by Mr Nichols to justify an affidavit being required from him directly.
The defendants submitted that they had sought diligently to comply with the discovery orders, as evidenced by Mr Zaurrini. The omission of WhatsApp messages and Mr Nichols' Racing Australia inbox from the initial tranche of discovery were an oversight. Further affidavits explaining what had been done were unnecessary. Nor were further orders for production warranted, where the defendants had addressed each of the concerns raised by the plaintiffs. The defendants further submitted that the inference sought to be drawn by the plaintiffs that there were further documents in relation to the "process" ought not displace the defendants' unequivocal evidence. Given that Racing NSW issued a press release concerning the scheduling of the Spring Champion Stakes carnival on 9 February 2022, it was unsurprising that Mr Kruger and Mr Messara discussed the issue on 11 February 2022, nor that a letter on behalf of a professional organisation would take two weeks to generate, or that it would be signed by the Chairman of that organisation.

Conclusion

I share the plaintiffs' surprise that Mr Nichols did not recall the WhatsApp group "PlanB" - which he established - when asked by Ashurst, particularly where he had apparently reviewed his mobile phone and said he did not have any responsive text messages. The fact that Mr Jones did not recall this either is perhaps less surprising, where it does not appear that Ashurst specifically sought his instructions on this subject. That said, the last WhatsApp message appears to have been sent eight or nine months before Ashurst's enquiry of Mr Nichols; perhaps he did forget. The point is, however, that Mr Nichols has since reviewed his phone for such messages and provided them to Ashurst, who have given discovery of the relevant messages. If Mr Nichols did not do a thorough job, or give accurate instructions, in the first instance, he appears to have attended to the matter properly since, with the assistance of Ashurst. Other documents appear to have been overlooked but since located. The discovery process has not been perfect, but the evidence indicates that the defendants' solicitors have ensured that errors and oversights have been remedied.
Turning to documents in relation to "a process" initiated by Mr Nichols "to have Spring Champion [Stakes] lose its [Group 1] status", I have assumed for present purposes that Mr Nichols and Mr Messara spoke about Racing NSW's annoucement, and that Mr Messara's email to Racing NSW of 5.49pm and Mr Kruger's email to his CEO of 6.39pm were a product of that conversation. Documents in respect of such a process do not obviously fall within the discovery categories, which are directed to proposed agreements between the PRAs to exclude, or threaten to exclude, Racing NSW from the Australian thoroughbred racing industry. Of perhaps more relevance may be documents associated with Mr Kruger's call to Racing Victoria's CEO for "more of that type of thinking … including the Plan B initiatives".
How Racing Victoria should respond to Racing NSW's actions was presumably the subject of discussion at the board meeting on 15 February 2022: see [18]. The letter to Mr Engelbrecht-Bresges was sent ten days' later. Where the letter was being sent to IFHA, it is unsurprising that the letter was signed by Mr Kruger as Chairman of Racing Victoria, rather than by its director, Mr Nichols. Mr Nichols has given clear instructions to Ashurst on this point, which make sense. Where documents in relation to this "process" seem unlikely to fall within a discovery category in any event, I am not prepared to accede to the plaintiffs' requests for an affidavit from Mr Nichols on this subject.
Ashurst has otherwise explained how it was that Mr Nichols' email account with Racing Australia was not initially examined. This, and other oversights, appear to have been remedied. Whilst I would have been interested to hear from Mr Nichols directly as to his explanation for failing to produce the WhatsApp messages at the outset, I am loathe to expose him to cross-examination on that subject where he may be an important witness in future legal proceedings brought by Racing NSW. I am not prepared to accede to the plaintiffs' request.

Common Interest Privilege

The defendants claim common interest privilege over documents said to be subject to legal professional privilege held by Racing Queensland. The relevant facts are set out at [47]-[49], [52]. Racing Queensland's solicitor, Douglas Bishop, made an affidavit in support of the common interest privilege claim, having spoken to Mr Gosewisch.
Mr Bishop was informed that Mr Gosewisch had been the general counsel at Racing Queensland for two years. In July 2022, when the draft advice was emailed to Ms Lane, Mr Gosewisch had ceased to act as general counsel but was continuing to advise Racing Queensland as an external lawyer at Fletch Worland Lawyers. According to Mr Gosewisch, at the time of his emails with Ms Lane, Racing Queensland and Racing Victoria had been in discussions regarding the efficacy and governance structure of Racing Australia, an entity to which both Racing Queensland and Racing Victoria were foundation members. Discussions had been held between the PRAs, including Racing Victoria and Racing Queensland, concerning how improvements could be made to the management and governance of Racing Australia.
Mr Gosewisch was asked by Racing Queensland to advise on matters relating to changes to the governance of Racing Australia. Mr Gosewisch believed that there were matters in the draft legal advice about which Racing Victoria would have further information or insight regarding Racing Australia, that were not available to him at the time. Mr Gosewisch shared the draft legal advice with Ms Lane on the basis that she could assist him to provide Racing Queensland with advice on the reform of the Racing Australia constitution and to improve the efficacy of Racing Australia. On the basis of his knowledge of Racing Queensland and Racing Victoria's interests, as derived from his time as general counsel, Mr Gosewisch believed that Racing Queensland and Racing Victoria had a common interest in the subject matter of the advice.

Submissions

The plaintiffs did not accept that there is any relevant "common interest" between the defendants and Racing Queensland. As a result, the disclosure of these documents by Racing Queensland to the defendants was said to constitute a waiver of privilege and those documents should be produced. To the extent the defendants and Racing Queensland were both members of Racing Australia, and both interested in its governance, this was not sufficient to establish a relevant "common interest". They were in competition with each other and their interests are potentially adverse to each other: Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405 at 410 (Giles CJ Comm D). Where all that was known was that the advice related to the governance of Racing Australia, it was difficult to assess the claim for privilege further.
The defendants accepted that there will be no common interest in the advice if Racing Victoria and Racing Queensland's "individual interests in the question are selfish and potentially adverse to each other": Ampolex at 410. Resolving whether the parties' individual interests are selfish and potentially adverse to each other requires the Court to consider "the question" with some particularity: Media Ocean Ltd v Optus Mobile Pty Ltd (No 10) [2010] FCA 1348 at [61] (Katzmann J). It is not enough that there is a mere possibility that at a later point the parties' commercial interests might come into conflict: Inlon Pty Ltd v Celli SpA [2017] NSWSC 569 at [107] (Parker J).
The defendants submitted that the advice concerned the corporate governance of Racing Australia. Racing Victoria and Racing Queensland shared a common interest in the governance of Racing Australia, as both parties had powers under the constitution of Racing Australia and were affected by the administration of Racing Australia. At the time the advice was sent, the PRAs were discussing how the governance of Racing Australia could be improved. This is the particular question and context in which the issue of whether Racing Victoria and Racing Queensland's interests were, at the time the advice was provided, in common or potentially adverse to one another. The fact that Racing Victoria and Racing Queensland may compete in other contexts was said to be not to the point.

Conclusion

The principles are as stated by the defendants. As Parker J summarised the position in Inlon v Celli SpA, Giles J was not referring in Ampolex "to the mere possibility that at a later point in time the parties' commercial interests might come into conflict … [but] to an adversity of interest which potentially existed at the time, depending upon the advice that might be given, [and not] merely … the potential for some sort of change in the parties' relationship at a later point": at [107]; followed in Cygnett Pty Ltd v Souris [2020] FCA 1754 at [23]-[24] (O'Callaghan J). Put another way, "the fact that there is potential for disputes on other matters between the parties with the common interest does not necessarily negate the common interest privilege": UIL (Singapore) Pte Ltd v Wollongong Coal Ltd [2023] FCA 1578 at 122 (per Beach J).
Mr Gosewisch's draft advice has not been provided to me and thus I can only proceed on the basis of Mr Gosewisch's evidence (as conveyed to Mr Bishop) and the contemporaneous material reviewed in the course of preparing these reasons. As I have not sighted the draft advice, I should not be taken as necessarily accepting that it concerns the governance of Racing Australia. But the contemporaneous material indicates that Racing Queensland and Racing Victoria, and their respective legal counsel, were 'on the same page' and working together from March 2022 on, endeavouring to formulate and progress "Plan A" and "Plan B". Or, as Racing Victoria put it, both PRAs were part of "the coalition of the willing". That appears to have been the case when Mr Gosewisch shared the draft legal advice with Ms Lane. The fact that there was a prospect that the coalition may later fracture, or that the members of the coalition may compete on other matters, does not negate the common interest privilege at the time. I am satisfied that common interest privilege applies to the legal advice.

Client legal privilege

The final issue to be resolved is whether the claims for client legal privilege are adequately detailed and supported by evidence, and whether affidavits should be required from the defendants or their in-house counsel - as opposed to Ashurst - as to the circumstances said to give rise to client legal privilege. Again, it is necessary to set out how this issue has been dealt with by the parties since preliminary discovery was first provided.
On 4 October 2023, Mr Price raised concerns with Mr Zaurrini in respect of the defendants' claims for privilege. Further details were sought to support each claim for privilege. The defendants were asked to review the claims. The defendants advised that they were seeking instructions. Apparently, having not heard further, on 23 October 2023 the plaintiffs filed their motion seeking an order that the defendants provide detailed information in support of the privilege claims. Further details were provided in support of the privilege claims on 24 October 2023. On 3 November 2023, Mr Price swore a further affidavit advising that the plaintiffs maintained the view that the defendants had not provided sufficient information to substantiate their claims of legal privilege.
On 6 November 2023, Mr Zaurrini swore a further affidavit, detailing the steps now underway to obtain further instructions in respect of the privilege claims from Racing Victoria's former in-house counsel, Ms Lane. On 20 November 2023, the defendants provided a revised privilege log. On 28 November 2023, Mr Price swore further affidavits, collating his remaining concerns in respect of claims for privilege. Mr Price did not accept that the claims for privilege had been substantiated but, given the voluminous amount of material over which privilege had been claimed, sought to challenge a subset of the privilege claims in the first instance.
The plaintiffs served submissions on 29 November 2023 inter alia calling on the defendants to provide more substantive evidence in support of the claims for privilege, including by the defendants' in-house counsel. On 4 and 5 December 2023, affidavits were made by the defendants' in-house counsel, Ms Foletti and Ms Fielding. Ms Foletti provided details in respect of an email she received and sent on to Mr Jones. Ms Fielding gave evidence in respect of documents with which she was involved, and also gave evidence on information and belief from Mr Jones.
By his final affidavit, Mr Zaurrini gave evidence on information and belief in respect of Ms Lane's role, where Ms Lane no longer works for Racing Victoria and was not available to give direct evidence, given her commitments in her current role. Mr Zaurrini set out Ms Lane's instructions in respect of the privilege claim for documents whilst she was in Racing Victoria's employ, as well as the instructions Mr Zaurrini received and actioned at the time. In addition, Mr Zaurrini set out instructions received from Mr Nichols, Mr Kruger, Mr Jones and the Chief Operating Officer of Racing Victoria, Aaron Morrison, on the information and belief, as to the circumstances in which other privileged communications took place.
According to the defendants' affidavits, the position with Racing Victoria's in-house counsel was as follows. From September 2019 to 29 July 2022, Ms Lane was Executive General Manager - Legal, Risk & Compliance, reporting directly to the CEO, who was initially Mr Thompson but later Mr Jones. Ms Fielding took over from Ms Lane in September 2022. (Ms Foletti filled in the role in an acting capacity between the departure of Ms Lane and the arrival of Ms Fielding).
Four solicitors in the legal team reported to Ms Lane, including Ms Foletti, General Manager, Legal and Regulatory. Together, the in-house legal team provide independent legal advice to the board, CEO and executive management team of Racing Victoria in relation to legal, integrity and regulatory matters. The team also arranged for external legal advice and represented Racing Victoria in legal disputes. Racing Victoria's in-house legal team maintains a separate document repository, access to which is restricted to members of the in-house legal team (and relevant administrative functions such as IT support).
In addition, Ms Lane had responsibility for Racing Victoria's Risk function, Compliance function, Occupational Health & Safety function and Governance function. Three staff reported to her in the Risk and OH&S team. Mr Close, Government Relations Manager and Company Secretary, also reported to Ms Lane. Ms Lane's responsibilities included the preparation of updates to the board in relation to the matters under her supervision. Ms Lane's role did not include responsibility for commercial matters nor for making commercial decisions, but her role did involve providing legal advice to those responsible for and involved in making such decisions. As Racing Victoria's senior legal officer, Ms Lane provided advice to Racing Victoria inter alia on the potential establishment of a new national racing body, intended to operate in addition to Racing Australia.

Submissions

The plaintiffs pressed for the defendants to put on first-hand evidence in support of the claims for privilege, rather that evidence by the defendants' solicitors on information and belief. The onus was on the defendants to establish the facts upon which the claims for privilege are based: Grant v Downs (1976) 135 CLR 674 at 689 (per Stephen, Mason and Murphy JJ); Schreuder v Murray (No 2) (2009) 41 WAR 169 at [60] (per Buss JA, McLure JA agreeing). Specific evidence was required in respect of each communication. "Mere generalised assertions" or "opaque and repetitious verbal formulae" are inadequate: Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796 at [29] (per Beach J); Kennedy v Wallace (2004) 142 FCR 185 at [13] (per Black CJ and Emmett J). The evidence advanced must reveal the relevant characteristics of each document in respect of which privilege is claimed and must do so by admissible direct evidence, not hearsay: Hancock v Rinehart (Privilege) [2016] NSWSC 12 at [7] (per Brereton J); Rinehart v Rinehart [2016] NSWCA 58 at [42] (per Beazley P, Leeming and Simpson JJA).
Where privilege was claimed in respect of in-house counsel communications, the plaintiffs submitted that Ms Lane, in addition to providing legal advice, also operated in a commercial capacity such that her communications were not always privileged or are not privileged in their entirety: Sydney Airports Corp Ltd v Singapore Airlines Ltd [2005] NSWCA 47 at [24] (per Spigelman CJ); Priest v New South Wales [2006] NSWSC 1281 at [43]-[48] (per Johnson J). Nor were such documents privileged if the intended use of the document was to advise and inform the client in making the client's communication with an external lawyer and not to record the communication to be made to the external lawyer: Pratt Holdings Pty Ltd v Federal Commissioner of Taxation (2004) 136 FCR 357; [2004] FCAFC 122 at [47] (per Finn, Merkel and Stone JJ). If Ms Fielding, Ms Lane or Ms Foletti communicated with the defendants where the dominant purpose was not the giving of legal advice, the mere fact that the communication was preparatory to a communication with defendants with its external solicitors will not render Ms Fielding, Ms Lane or Ms Foletti's initial communication privileged.
The defendants relied on section 75 of the Evidence Act and the comments of Ball J in Grocon Group Holdings Pty Ltd v Infrastructure NSW (No 3) [2023] NSWSC 1352 at [13] for the proposition that hearsay evidence is admissible on interlocutory applications. The privilege claims were said to be adequately supported by admissible hearsay evidence and direct evidence, along with the nature of the documents in question and inferences drawn from other proven facts. The defendants added that there is no prohibition on general or formulaic descriptions of documents in privilege logs: Traderight (NSW) Pty Ltd v Bank of Queensland Ltd (No 16) [2013] NSWSC 418 at [13] (per Ball J); Hastie Group Ltd (in liq) v Moore (2016) 339 ALR 635 at [28]-[29] and [32]-[34] (per Beazley P and Macfarlan JA, Leeming JA dissenting at [99(5)]). What will be required will depend on the circumstances of the case, including whether: there is evidence before the Court that undermines the claim of privilege; Traderight, [14]-[15] and the costs of providing detailed descriptions in relation to a high volume of documents is high: Traderight, [16]-[19], [44]-[45] (per Ball J).
The defendants submitted that there was no prohibition on admissible hearsay evidence in support of privilege claims: In the matter of Global Advanced Metals Pty Limited [2019] NSWSC 1545 at [16]-[17] (per Rees J). The first instance decision on which the plaintiffs rely for the contrary view, Hancock v Rinehart; Hancock v Rinehart (Privilege) [2016] NSWSC 12, was best understood as standing for the proposition that, if the party asserting privilege makes a forensic decision to lead no evidence in support of their claim and instead seeks to rely solely on the Court's power to inspect documents, the Court is likely to refuse to do so, with the consequence that the claim ought to fail: Rinehart v Rinehart [2016] NSWCA 58, [26]-[27], [37], [41]-[42] (per Beazley P, Leeming and Simpson JJA); Global Advanced Metals, [12]-[13]; Komlotex Pty Ltd v AMP Ltd [2022] NSWSC 1525 at [8] (per Rees J); Aquasure Pty Ltd v Thiess Pty Ltd (No 2) [2022] VSC 389 at [57]-[59] (per Steffensen AsJ).
The defendants submitted that hearsay evidence on knowledge, information and belief was admissible in interlocutory hearings under s 75 of the Evidence Act. A preliminary discovery application is interlocutory: Liu v The Age Company Ltd (2016) 92 NSWLR 679 at [165] (per McColl JA, with whom Beazley P and Ward JA agreed) quoting Finn J in Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 208 as is the hearing of a challenge to privilege claims made in the discovery process: Global Advanced Metals, [17]. Admissible hearsay evidence may therefore be relied on to support a claim for privilege: Grocon Group Holdings Pty Limited v Infrastructure NSW (No 3) [2023] NSWSC 1352 at [13] (per Ball J). The party claiming privilege may also discharge their onus: "by reference to the nature of the documents supported by argument and submissions"; AWB Limited v Cole (No 5) (2006) 155 FCR 30 at [44(1)] (per Young J) and may seek to draw inferences from other proven facts: Hastie Group, [33]-[34] (per Beazley P and Macfarlan JA) and Komlotex at [9].
Insofar as the defendants' privilege claims was in respect of advice given by in-house lawyers, the defendants submitted that the fact that some in-house lawyers may have a mixed role in their organisation is relevant to the enquiry, but does not preclude their documents and communications from attracting privilege: Sydney Airports Corporation Ltd v Singapore Airlines Ltd [2005] NSWCA 47 at [24] (per Spiegelman CJ). Indicia of independence will assist in a finding that the dominant purpose of a communication was providing legal advice, but are not essential or determinative. Whether privilege attaches to a particular communication or document is a question that is determined in the circumstances as a whole: Andrianakis v Uber Technologies Inc; Taxi Apps Pty Ltd v Uber Technologies Inc [2022] VSC 196 at [140] (per Matthews AsJ).
The defendants also submitted that, where legal advice is intermingled with commercial or administrative matters, including considerations of what the client should or should not do in a particular legal context, privilege may attach so long as the "commercial or administrative aspects of the advice are essentially part of the overall legal advice and cannot be separated from it": Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232 at [194]-[154] (per Wigney J). In appropriate circumstances, documents or communications concerning commercial or administrative matters may form part of a 'continuum' of documents or communications in which legal advice is sought and given, and privilege will attach to all communications in the continuum: Andrianakis v Uber Technologies Inc at [138]; DSE (Holdings) PTY Ltd v Intertan Inc (2003) 135 FCR 151 at [38] (per Allsop J) quoting Balabel v Air-India [1988] 1 Ch 317 at 330 (per Taylor LJ).

Conclusion

The plaintiffs' complaints have, by and large, been overtaken by the affidavits served by the defendants shortly before the hearing. The principles are as stated by the defendants. It is sufficient for present purposes to observe that a privilege claim "must be established by admissible evidence, and what evidence is sufficient will depend on the particular nature of the claim": Grocon Group Holdings Pty Limited v Infrastructure NSW (No 3) [2023] NSWSC 1352 at [13] (per Ball J). This is an interlocutory application. Evidence may be given on information and belief. The manner in which the defendants have put on evidence to substantiate their claims of client legal privilege is not unusual; nor do there appear to be circumstances warranting those giving instructions to Ms Fielding, Ms Foletti or Mr Zaurrini to put on affidavits themselves.
It does appear from the contemporaneous records that Racing Victoria saw the need to involve its in-house and external lawyers from the outset, where it was perceived that Plan A and Plan B was not only ambitious but likely to be ill-received by Racing NSW, such that legal proceedings may well follow. The fact that a large number of claims for client legal privilege have been made may not be all that surprising in the circumstances. In short, I am not persuaded that in the circumstances that the defendants' claims for client legal privilege must be supported by direct evidence. The claims can be ruled on if need be having regard to the evidence already adduced in support of such claims.
This issue was left on the basis that, once I ruled on whether direct evidence was required then, either, direct evidence would be provided or, if not, the parties would identify a sample of documents from the two folders supplied, being Group 1 (in-house lawyer communications) and Group 2 (communications between non-lawyers), for me to inspect and rule on the privilege claims. The parties should now provide those details.
For these reasons, I make the following directions: 1. Parties to advise the Associate to Rees J by 29 February 2024 whether they require her Honour to proceed to rule on privilege claims and, in that event, provide an agreed list of sample documents, following which judgment on that issue will be reserved.

Amendments 20 March 2024 - Coversheet: amend date from "23 December" to "23 February". [69], [80], [120]: minor typographical amendments DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 March 2024

v Bank of Queensland Limited (ACN 009 656 740) (No 16) and 13 related matters [2013] NSWSC 418 UIL (Singapore) Pte Ltd v Wollongong Coal Ltd [2023] FCA 1578 Westgate Finance Pty Ltd v May [2012] NSWSC 806 Texts Cited: John Tarrant, "Construing Undertakings and Court Orders" (2008) 82 ALJ 82 Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, LawBook Co) Category: Procedural rulings Parties: Racing New South Wales (First Plaintiff/Applicant) Russel Balding (Second Plaintiff/Applicant) Racing Victoria Ltd (First Defendant/Respondent) Greg Nichols (Second Defendant/Respondent) Brian Kruger (Fourth Defendant/Third Respondent) Representation: Counsel: O Jones (Plaintiffs) T Maxwell (Defendants)

JUDGMENT

HER HONOUR: These proceedings were commenced in December 2022 by Racing New South Wales and its chairperson, Russell Balding, seeking preliminary discovery from racing agencies in other States (called Principal Racing Authorities (PRAs)), and the directors of PRAs. The parties from whom preliminary discovery was sought included Racing Victoria Ltd, director Greg Nichols and former chairperson Brian Kruger, being the first, second and fourth defendants respectively (the defendants).
In May 2023, Ball J determined that the plaintiffs were entitled to preliminary discovery: Racing New South Wales v Racing Victoria Ltd (No 2) [2023] NSWSC 576. In July 2023, his Honour made orders for discovery by categories: Racing New South Wales v Racing Victoria Ltd (No 3) [2023] NSWSC 838. An issue has arisen as to the proper construction of the categories. Further issues have arisen as to whether the preliminary discovery provided is adequate, whether claims for client legal privilege are supported by proper evidence, and whether common interest privilege attaches to an advice.
These issues were sought to be ventilated by the plaintiffs' motion filed on 23 October 2023, as amended at the hearing on 6 December 2023. The plaintiffs relied on the evidence of their solicitor, Timothy Price. The defendants relied on the evidence of their solicitor Rossano Zaurrini, in-house counsel Simonette Foletti and Michelle Fielding, and solicitor for Racing Queensland Board, Douglas Bishop. (There was no cross examination.) Where the defendants had served a substantial body of material shortly before the hearing, this had the consequence that some of the relief sought by the plaintiffs' motion filed on 23 October 2023 had been addressed, albeit perhaps only recently. It also had the consequence that there was something of a scramble to identify precisely what issues remained to be determined.
Resolving these issues was no easy matter, where the discovery orders were made by another judge, and the number of issues and documents was significant. In what follows, I have found it necessary to review events as revealed by the discovered documents. Obviously, this judgment does not contain findings of fact; that is the province of any proceedings which may be commenced following the completion of preliminary discovery. In the result, I have generally accepted the defendants' position. To be fair to the plaintiffs, that position was revealed only shortly before or during the hearing.

Principles: construction of court orders

The first task is to construe the discovery orders made by Ball J. Court orders are interpreted according to the ordinary rules of construction, without delving into the subjective intention of the judge who made the order: Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 at 503 (Windeyer J); Repatriation Commission v Nation (1995) 57 FCR 25 at 33 (per Beaumont J, Black CJ and Jenkinson J agreeing). Extrinsic materials may be consulted where ambiguity exists on the face of the orders: Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170 at [60] (Basten JA). Less settled is whether extrinsic materials may be taken into account absent ambiguity: Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, LawBook Co) at [36.90].
The ordinary rules of construction, in the context of commercial contracts, were recently restated in Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 407 ALR 613; [2023] HCA 6 at [27]: "It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it."
As to when extrinsic material may be considered in the contractual context, Leeming JA (Gleeson and White JJA agreeing) explained in Cherry v Steele-Park [2017] NSWCA 295; (2017) 96 NSWLR 548 that the ambiguity of a contract may only be revealed once the surrounding circumstances are considered: at [68]-[86]. That is, ambiguity is a "conclusion, rather than a precondition to the admissibility of evidence of surrounding circumstances": at [79]. As such, commercial context may be considered from the outset, for example, in Laundy at [36]. However, if after considering the contract as a whole and the surrounding circumstances, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an "absurd" operation: Cherry v Steele-Park at [73]-[75].
Returning to how the issue of ambiguity and reference to extrinsic materials has been considered in the context of construing orders, Drummond J (Sundberg and Finkelstein JJ agreeing) observed in Yates Property Corporation Pty Ltd v Boland (1998) 89 FCR 78 at 78: "It is impermissible, in my view, as well as being quite unrealistic to attempt to read, that is, to understand, an order in isolation from the context of the reasons for it being made. The Full Court of the Queensland Supreme Court, in Australian Energy Ltd v Lennard Oil NL (No 2) [1988] 2 Qd R 230 held that, in interpreting an order of a court framed in unambiguous language, regard should still be had to the reasons given by the Court for making the order because they form part of a context in which the order was made."

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