Greyhound Racing New South Wales v Leslie

[2019] NSWSC 1591

Supreme Court

New South Wales

Medium Neutral Citation:	Greyhound Racing New South Wales v Leslie [2019] NSWSC 1591
Hearing dates:	11-12 November 2019
Decision date:	15 November 2019
Jurisdiction:	Equity
Before:	Robb J
Decision:	The parties are directed to provide further submissions, and otherwise provide draft short minutes of order to give effect to these reasons – see par 114 below
Catchwords:	ASSOCIATIONS AND CLUBS — Racing clubs and associations — Validity of appointment of an administrator under s 24(1)(j) of the Greyhound Racing Act 2017 (NSW) — Powers of administrator appointed pursuant to same – Interlocutory regime pending determination of validity of appointment
Legislation Cited:	Betting and Racing Act 1998 (NSW) Corporations Act 2001 (Cth) Greyhound Racing Act 2017 (NSW) Greyhound Racing Regulation 2019 (NSW)
Category:	Procedural and other rulings
Parties:	Greyhound Racing New South Wales (first plaintiff) Grant Carroll (second plaintiff) Dapto Agricultural and Horticultural Society Limited (third plaintiff) Noel Leslie (first defendant) John Anthony Primmer (second defendant) Allan Thomas Shiells (third defendant) Sandra Fernandes (fourth defendant) Craig Harley McKenzie (fifth defendant) Daniel John Norris (sixth defendant) Geoffrey William Thompson (seventh defendant) Kelly Joy McCrea (eighth defendant) Katrina Novak (ninth defendant)
Representation:	Counsel: S Robertson/A Brown (first plaintiff) E Finnane (second plaintiff) R Yezerski/R Pietriche (defendants)   Solicitors: Pryor Tzannes & Wallis (first plaintiff) Uther Webster & Evans (second plaintiff) Unrepresented (third plaintiff) Automic Group (defendants)
File Number(s):	2019/350717

Judgment

1. Greyhound Racing New South Wales (Greyhound Racing), the first plaintiff, is a body corporate constituted by the Greyhound Racing Act 2017 (NSW) (the Act).

2. In circumstances that will be more fully explained below, on 6 November 2019 Greyhound Racing purported to appoint Mr Grant Carroll, the second plaintiff, as administrator of the third plaintiff under s 24(1)(j) of the Act.

3. The third plaintiff is Dapto Agricultural and Horticultural Society Ltd (the Society). The Society is a company limited by guarantee incorporated under the Corporations Act 2001 (Cth).

4. The first eight defendants are the duly appointed directors of the Society. The ninth defendant, Ms Katrina Novak, is the chief executive officer of the Society.

5. By clause 6 of its constitution, the Society's objects are to promote animal racing, to promote agricultural resources, to promote horticultural resources, to provide and maintain facilities, buildings and grounds for any or all of the above objects, and finally to do all such other lawful things as are incidental or conducive to the attainment of those objects. The inclusion of the words "any or all" in clause 6 suggests that the Society may provide and maintain facilities, buildings and grounds for some but not all of the purposes for which it was incorporated.

6. For some 82 years the Society has organised and conducted greyhound race meetings at its Showground at 89–99 Princes Highway, Dapto. This activity has attracted some fame as the "Dapto Dogs".

7. In order to conduct its greyhound racing activities, the Society is required to hold a racecourse licence by s 5 of the Betting and Racing Act1998 (NSW) (Betting and Racing Act). The Society holds such a licence issued under s 7 of that Act. The Society's licence was not in evidence. Section 9 of the Betting and Racing Act gives the Minister administering that Act authority to cancel a racecourse licence if the Minister is satisfied of certain matters. While the Betting and Racing Act is silent on the point, I would assume that the holder of a racecourse licence is free to request the Minister to cancel the licence, and that upon such a request the licence would be cancelled. It was not suggested by any party that the holder of a racecourse licence can be obliged to continue to be a licensee against its will.

8. It is Greyhound Racing's position that the Society is a "greyhound racing club" within the meaning of s 3(1) of the Act, because it is a non-proprietary association holding a racecourse license under the Betting and Racing Act. It is apparently the Society's position that it is not a greyhound racing club, for reasons associated with it not being currently a licence holder. The Society reserved its right to argue this point, but did not develop it at the interlocutory hearing that is the subject of this judgment. I will proceed upon the basis that, for present purposes, the Society is a greyhound racing club.

9. For some time, the directors and CEO of the Society have been investigating strategic proposals for the future optimal use of the Society's facilities for the purposes of the local community served by the Society. One of the considerations taken into account was, as I understand it, that the conduct by the Society of its greyhound racing activities is now loss-making. Be that as it may, the board and the CEO have explored various possibilities, including the continuation of the greyhound racing activities, and in this latter respect negotiations have been conducted with Greyhound Racing. Apparently, the position was reached as between the Society and Greyhound Racing that, from the perspective of the board and the CEO, Greyhound Racing insisted upon conditions that undermined the viability of the Society's proposed strategic direction. From the perspective of the board and the CEO, the proper future course for the Society to take depended upon a balance of all appropriate community interests, and that the indefinite continuation of the Society's greyhound racing activities was not essential if it prevented the Society from pursuing its chosen future objectives.

10. The board of the Society accordingly decided to cease conducting the Society's greyhound racing activities.

11. On 5 November 2019, the Society issued a media release in the following terms:

Dapto Dogs to Finish Immediately

The Dapto Agricultural & Horticultural Society will cease conducting the iconic Dapto Dogs immediately, after the breakdown of almost 12 months of negotiations with Greyhound Racing NSW and the expiration of our racing registration last Thursday, the 31st October.

Greyhound Racing NSW has presented the Society with non-negotiable terms that would put the Society's community development plans at risk, as well as its current tenancy commitments. After extensive and careful consideration, the Society's Board has decided it cannot continue with greyhound racing operations.

Dapto Agricultural & Horticultural Society Chairperson, Noel Leslie said:

“We are enormously respectful of the place the Dapto Dogs holds in the history of our great town, but the community has entrusted us with doing the right thing with their land and their assets…and sustaining an activity at the expense of developing new community infrastructure is a decision that can’t be justified.

“Locking us into a non-negotiable three-year term forced us into an unwinnable and financially damaging situation without the certainty of our regular Thursday night timeslot and we have no alternative but to cease greyhound racing.”

“Dapto is a rapidly growing community and there is a great need to build recreational facilities for families and children.

“We have a progressive strategic plan and exciting vision for the future of the grounds, which responds directly to what the community has been crying out for. Our plans and goals include building both indoor and outdoor recreation, outdoor children's playground, cafes, restaurant and a multi-purpose hall.

“We have a heavy heart that this iconic greyhound track has closed, but the Board has an obligation to act in the best interests of the Society and the community. We are looking at delivering new opportunities for our community and the generations to come.

“The Dapto Dogs employs approximately 15 regular casual employees and the Society will immediately take steps to support its staff and attempt to identify suitable redeployment opportunities.

12. The Court only has incomplete evidence concerning the negotiations between the Society and Greyhound Racing, and indeed the correspondence is one-sided in that it consists almost entirely of correspondence issued by the Society. The Court is largely restricted in respect of Greyhound Racing's position to statements of that position recorded in the Society's correspondence. It is not the function of the Court on this application to make any findings about the negotiations between the Society and Greyhound Racing, or to form any conclusions about the propriety or reasonableness of the positions adopted by either party. However, the following outline account is relevant to the matters considered in this judgment.

13. There apparently was an agreement between the Society and Greyhound Racing, which the Society's solicitor in a letter to Greyhound Racing of 7 November 2019 stated had expired on 31 October 2019. The parties had apparently been negotiating a replacement agreement since sometime in 2018. On 11 February 2019, the Society wrote to Greyhound Racing in relation to the plans that it had developed for the future use of its showgrounds "which includes diversifying its business activities to ensure a sustainable future". The letter demonstrated an intention on the part of the Society to continue with its greyhound racing activities in the following terms:

…As greyhound racing is an integral part of the Society's future, it is important that we take check to ensure that the vision for the Dapto Greyhound Racing Club aligns with that of Greyhound Racing NSW…

14. The letter referred to the proposed track design and kennel plans that had been provided to Greyhound Racing and asked for feedback. It said that preliminary costs had been received and the estimated completion time was two years. The letter continued: "Due to this the Society is seeking a financial contribution from [Greyhound Racing] for the 19/20 financial year to allow construction to begin".

15. A letter dated 7 May 2019 from the Society to Greyhound Racing referred to the receipt of correspondence from Greyhound Racing on 23 April 2019 "advising of a reduction in race meetings for the 19/20 financial year, from 52 to 48." There was also reference to notification of a proposed timeslot change, with the exception of certain types of races, "from Thursday to Saturday with a reallocation to SKY 2". The letter stated: "The draft racing calendar therefore highlights a misalignment in the vision and timeline of [Greyhound Racing] and the Dapto Greyhound Racing Club". The letter advised that, in addition to greyhound racing, the Society engaged in other functions such as being home to the Dapto Rugby League Football Club, Dapto Markets, Friday Night Bingo, Fly Ball Dog Club, and Illawarra Cancer Carers and leasing of its facilities to various users. The letter stated: "Over the years, the Society has structured all of its operations around Thursday night racing. These activities provide reoccurring revenue sources and contribute to the viability of the Society, therefore a change from Thursday to Saturday is not plausible." The letter requested that the Society retain its Thursday night SKY 1 timeslot and 52 race meetings for the 19/20 financial year.

16. Subsequent correspondence ensued in which the Society put to Greyhound Racing submissions concerning the need for financial assistance in respect of its redevelopment plans and the mode in which any financial assistance would be provided. Apparently, Greyhound Racing made certain offers of financial assistance, and explained to the Society the constraints that were imposed on the ability of Greyhound Racing to provide financial assistance to the Society.

17. It seems that, in or about August 2019, Greyhound Racing proposed a new three-year agreement with the Society. The terms of the draft agreement provided by Greyhound Racing are not in evidence, and the Court is not able to form any view about the appropriateness of either party's stance in the negotiations.

18. However, by letter dated 16 September 2019, the Society referred to the negotiations and advised that Greyhound Racing would be aware that over the past number of years the revenue from greyhound racing had progressively declined. There had been significant reductions through the cessation of revenue generated from on-course wagering in 2014, as well as a steady decline in media income. Associated with the decline in revenue, costs had increased. The letter stated the Society's view that the current funding model was insufficient to deliver greyhound racing at Dapto. The Society was said to be currently running at a loss of more than $100,000 per annum in its greyhound racing activity, and relied heavily upon sponsorship funding just to operate at breakeven. The letter observed: "Clearly this is not a financially viable model for any business, including the Society."

19. In apparent response to the draft agreement received from Greyhound Racing, the Society's 16 September 2019 letter advised that the proposed annual funding amount for the continuation of the Dapto Dogs was insufficient, the Society did not agree to assign its media rights from the existing holder to Greyhound Racing, the Society could not commit to a three-year agreement, due to its future development plans and because the Society had not been able to secure a commitment from Greyhound Racing in relation to racing infrastructure, the Society wanted the same right to terminate the agreement as was given to Greyhound Racing, and that the Society required confirmation of race days and timeslots.

20. Further negotiation apparently took place, but the differences were not resolved before the Society issued its 5 November 2019 media release.

21. While, as already noted, the Court will not make findings on this application concerning the reasonableness of either party in the negotiations, it is to be noted that, initially, the Society expressed a strong desire to continue and improve its greyhound racing activities, but was apparently faced with the need to deal with the fact that those activities had become unprofitable, even with the financial assistance received from Greyhound Racing, and other receipts from the Society's share of betting revenue. The Society also needed to be able to accommodate its Greyhound racing activities with the other purposes for which its facilities were used, and this had historically occurred around the Society's Thursday night greyhound racing schedule. Finally, it appears that Greyhound Racing sought to change to some extent the schedule of the greyhound races conducted by the Society as well as its media arrangements.

22. The aspiration of the Society to be able to continue with its greyhound racing activities, provided the right conditions could be secured, may be further demonstrated by the fact that its correspondence throughout was written on the letterhead "DAPTO DOGS".

23. By email dated 6 November 2019, Ms Novak advised the CEO of Greyhound Racing that the Society's board had decided it could not continue with greyhound racing operations. The email stated:

Following the expiration of our racing registration last Thursday, the 31st October, the Dapto Agricultural & Horticultural Society will cease conducting racing immediately.

24. Section 45(1) of the Act provides that a greyhound racing club must not conduct a greyhound race meeting unless the club is registered.

25. Section 53(1) of the Act authorises Greyhound Racing to register a greyhound racing club. In exercising that function, Greyhound Racing must act "in accordance with the regulations".

26. Regulation 21 of the Greyhound Racing Regulation 2019 (NSW) provides that a person may apply to Greyhound Racing for the registration of a greyhound racing club. The application for registration must be in the form approved by Greyhound Racing and be accompanied by the fee determined by Greyhound Racing.

27. Under regulation 22, the registration of a greyhound racing club expires at the end of the period (not exceeding 3 years) specified by Greyhound Racing when the application is determined. An application for the renewal of the registration may be made "within the 3 months immediately before the registration of a greyhound racing club expires". If an application for renewal is made within that period, but not dealt with before the registration expires, that registration continues until the application is determined.

28. The register required to be maintained by Greyhound Racing was not in evidence, although it appears that Ms Novak's assertion that the registration expired on 31 October 2019 is correct, because, on 6 November 2019, within ten minutes of the receipt of Ms Novak's email by Greyhound Racing, the general manager of racing operations of Greyhound Racing sent a return email which included the following:

Just a short note to advise that due to ongoing discussions with the Dapto Greyhound Racing Club in regards to 'Future funding’ that your club registration has been extended until 30 November 2019.

29. It is not clear what procedural steps were taken by Greyhound Racing to extend the registration of the Society as a registered greyhound racing club. I infer from the Society's solicitor's letter to Mr Carroll dated 7 November 2019 which alleges that the Society is no longer a licensed greyhound racing club that the Society may not have made a timely application for the renewal of its registration and paid the requisite fee, although the evidence is uncertain on that issue. While the Society asserts that it is no longer licensed, the licence granted by the Minister is a perpetual licence unless revoked. The position concerning registration may be different.

30. It was apparently necessary in Greyhound Racing's own interests to extend the Society's registration as a greyhound racing club, even if that was done unilaterally, as otherwise the effect of s 45 of the Act would have made it illegal for the Society to conduct a greyhound race meeting. That illegality would presumably arise whether the meeting was conducted by the Society under the control of its board or under the control of an administrator.

31. Be that as it may, Greyhound Racing responded to the Society's media release by issuing its own media release on 6 November 2019 in the following terms:

[Greyhound Racing] has dismissed as unlawful the announcement earlier today by the Dapto Agricultural and Horticultural Society Ltd, which operates the licence for meetings conducted by the Dapto Greyhound Racing Club, that it intends to "cease racing".

[Greyhound Racing] CEO Mr Tony Mestrov said:

"The decision is unlawful and contrary to the club's constitution and, as far as I am concerned, [Greyhound Racing] will do everything in its power to continue racing at Dapto – including tomorrow night.

"The [Society] committee has made a decision behind closed doors without consultation with members or participants – and the Dapto community.

"The sudden decision has been made in the middle of standard negotiations for a new funding agreement – and comes after a request from [Greyhound Racing] for financial records and explanation of certain figures.

"The [Society] committee has failed to comply with [Greyhound Racing's] lawful request for financial records – and we will be making a further announcement on this tomorrow."

Mr Mestrov added:

"Up until this morning, the Dapto club remained the only TAB greyhound racing club in NSW not to have signed a new Funding Agreement with [Greyhound Racing], under which [Greyhound Racing] guarantees financial support for the next three years.

"All other 14 TAB clubs registered with [Greyhound Racing] have signed the Funding Agreement after a process of consultation and negotiation, which started in July, and each of those TAB clubs will now be placed in a more financially sound position with better cash flows and security.

"During the process of negotiations with the Dapto club over recent months, [Greyhound Racing] raised serious questions about the administration and reporting of the Dapto club's accounts.

"[Greyhound Racing] had sought clarification on these accounts, in particular figures listed separately for each of the [Society] and Dapto Greyhound Racing Club.

"[Greyhound Racing] believes the request for clarity and scrutiny of these accounts is the trigger for today's blindsiding of [Greyhound Racing] and the industry's participants.

"We want to make it clear that [Greyhound Racing] will be seeking further clarification of the Dapto club's historic accounts and has not ruled out legal action."

32. No evidence was put before the Court of the alleged requests by Greyhound Racing for clarification of any matters relating to the Society's accounts.

33. The Society's professionally prepared and audited financial report for the year ended 30 June 2019 was put in evidence. It showed a small profit for the period. It also included what was called a separate "greyhound trading statement", which dissected out of the overall profit and loss account income and expenditure attributed to greyhound racing. The total income was almost $550,000 more than the income attributed to greyhound racing. The total expenditure was about $200,000 more than the expenditure attributed to greyhound racing. The loss calculated from greyhound racing was in the order of $275,000. It may be noted that some expenditure items, such as wages, were attributed entirely to greyhound racing. All that can be said is that the financial report was audited and accepted by the board.

34. As has already been noted, Greyhound Racing issued a notice on 6 November 2019 that purported to exercise the power in s 24(1)(j) of the Act to appoint Mr Carroll as the administrator of the Society.

35. The notice did not identify the reasons upon which Greyhound Racing acted, and those reasons have not been formally identified to the Court.

36. In part, those reasons may be found informally in a further media release issued by Greyhound Racing on 7 November 2019 to advise that Greyhound Racing intended to commence legal action to continue greyhound racing at Dapto on Thursday nights.

37. After advising that Greyhound Racing would commence legal proceedings against the Society that day, and that Mr Carroll had been appointed as administrator, the media release contained the following:

…“The message from [Greyhound Racing] is, simply, that if the Dapto club does not have the ability to run greyhound racing at this venue – then we will.

[Greyhound Racing] has been "dumfounded" [sic] by the sudden [Society] announcement yesterday that it intends to cease racing at the iconic Dapto venue, Mr Mestrov said.

"It’s an unlawful decision and against their own constitution, and we will be doing everything in our powers to continue racing at Dapto on Thursday nights, including taking this to the Supreme Court," Mr Mestrov said.

Mr Mestrov said [the Society's] claims that negotiations had broken down between [Greyhound Racing] and [the Society] over a new funding agreement appears to be nothing more than a "convenient excuse and smokescreen" and that as far as [Greyhound Racing] was concerned, the negotiations had been ongoing until yesterday's unlawful decision by [the Society].

"Dapto is the only one of 15 [Greyhound Racing] TAB clubs not to have signed up to a guaranteed funding arrangement for the next three years, and we now suspect there are ulterior motives at play as to why," Mr Mestrov said.

"We are highly suspicious about the [Society's] financial accounts presented to us about their financial position for the Dapto Greyhound Racing Club – and we believe that the [Society's] board's refusal to comply with lawful requests for more information on their accounts and financial reporting procedures is a very loud alarm bell about what is going on within the club.

"We also view with great suspicion the suggestion that [the Society] has plans for community development of the site – and will be legally pursuing the truth about how and why it came to be that the [Society] abandoned its own members, without consultation and notice, and why it has presented these questionable financial accounts to [Greyhound Racing].

"If this is an unlawful action to support a property deal – then that will come out and be exposed for what it is. The [Society] board will be held to account."

As outlined yesterday, Mr Mestrov said [Greyhound Racing] has spent the past 5 months consulting and negotiating with all 15 TAB clubs in NSW to finalise agreements to fund their operations under a guaranteed 3-year Funding Agreement.

"14 of 15 TAB clubs have come to terms with [Greyhound Racing] and signed the Funding Agreement to secure their operations ongoing; this Funding Agreement secures the financial position of each club for the next 3 years," he said.

38. Mr Carroll's affidavit, dated 12 November 2019, in support of the plaintiffs' claim also sheds some light on the purpose for his appointment as an administrator as follows:

11.   At the time of my appointment as Administrator of the Society on or about 6 November 2019, I had a conversation with Tony Mestrov, the Chief Executive Officer of [Greyhound Racing], who said to me words to the effect of:

Mr Mestrov:   Grant, we want to appoint you as Administrator of the Dapto Dogs. As you might know, we have asked the club to provide us with full financials and they have not complied to date. They have also announced to the media that they are ceasing greyhound racing at Dapto.

12.   As such, I expect that my role as Administrator of the Society will be focused around auditing its financial statements and assessing the viability of greyhound racing at the club. I do not expect that my appointment will be a lengthy one; unless irregularities become apparent or serious issues arise out of my audit.

39. The terms of the interlocutory relief sought in the summons filed in this Court by Greyhound Racing and Mr Carroll on 7 November 2019 are also relevant to the identification of the purpose of Greyhound Racing in appointing Mr Carroll as administrator of the Society. Prayer 1 was an order restraining the defendants until further order from doing anything to prevent or hinder the conduct of any greyhound race meeting at Dapto, and prayer 2 was an order requiring Ms Novak to cause Mr Carroll to be admitted to the Society's property and to comply with any reasonable directions given by him to permit the holding of a greyhound race meeting on 7 November 2019.

40. In purporting to appoint Mr Carroll as administrator of the Society, Greyhound Racing executed a function given to it by s 24 of the Act in the following terms: “(1) [Greyhound Racing] has the following functions…(j) to appoint an administrator to conduct the affairs of a greyhound racing club…”

41. By what appears to be a legislative lapse, that is the only provision in the Act that explains or regulates the circumstances in which Greyhound Racing may act to appoint an administrator to conduct the affairs of a greyhound racing club. In particular, there is no statement of the grounds upon which Greyhound Racing may so act. There is no explanation of the consequences. If there is the power claimed by Greyhound Racing, it appears to be exercisable at Greyhound Racing’s will and pleasure.

42. This position may be compared with that which arises under s 22 of the Act, which empowers the Minister by order published in the Gazette to remove all of the directors of the board of Greyhound Racing and appoint a person as the administrator of Greyhound Racing. Such an order may be made if the Minister is satisfied that Greyhound Racing has failed to exercise its functions in accordance with an operating license granted to it, or failed to comply with any direction in writing by the Minister to rectify a matter relating to the obligations of Greyhound Racing under an operating license granted to it. Other grounds are specifically identified. On the appointment of an administrator, each director of the board of Greyhound Racing ceases to hold office, the affairs of Greyhound Racing are to be managed by the administrator, the administrator has a right to exercise all of the functions of Greyhound Racing, and any act of the administrator is taken to have been done by Greyhound Racing.

43. An administrator of Greyhound Racing appointed by the Minister is excluded from personal liability, if acting in good faith, by the operation of s 93 of the Act. No such protection is given to an administrator appointed under s 24(1)(j) of the Act. Consequently, the State will not be responsible, under s 93(3) of the Act, for any liability of Mr Carroll to the Society that may arise if his appointment is found to be invalid or by reason of the manner in which he conducts the administration. For completeness, Greyhound Racing is also not a “protected person” under s 93 of the Act.

44. It is a mystery why, the need for the provisions contained in s 22 of the Act being clearly appreciated, similar provisions were not included in the Act to govern the situation of the appointment by Greyhound Racing of an administrator of a greyhound racing club.

45. There is consequent difficulty in determining the proper and permissible purposes that Greyhound Racing is entitled to seek to achieve by appointing an administrator of a greyhound racing club.

46. Some limited insight into how this exercise is required to be approached may be found in the terms of sub-section (2) of s 24 of the Act which provides: “The exercise of functions by [Greyhound Racing] requires authorisation by an operating licence granted to [Greyhound Racing] and [Greyhound Racing] is to exercise its functions in accordance with any such operating licence.”

47. In this way, sub-section (1) merely lists the functions that Greyhound Racing is to have. Sub-section (2) is a statutory authorisation for Greyhound Racing to carry out those functions, but only to do so “in accordance with any such operating license”.

48. Paragraph 3(xii) of the conditions of the operating licence issued to Greyhound Racing under the Act by the Minister on 3 July 2017 provides: “The Licensee must undertake the following functions…(xii) appoint an administrator to conduct the affairs of a greyhound racing club as required…” The words “as required” have been added and are not included in s 24(1)(j) of the Act. The inclusion of the phrase may not add much to an understanding of how Greyhound Racing is required to exercise its functions, and those words may have been implied anyway. They at least appear to make plain that Greyhound Racing must appoint an administrator of a greyhound racing club if that is required for the purpose of carrying out the functions of Greyhound Racing.

49. Those functions, as listed in s 24(1) of the Act, are:

(1) [Greyhound Racing] has the following functions—

(a)   to conduct greyhound race meetings or authorise greyhound race meetings to be conducted by greyhound racing clubs,

(b)   to allocate the dates on which and the licensed racecourses at which greyhound race meetings may be conducted,

(c)   to register greyhound racing clubs,

(d)   to develop safety standards for licensed racecourses,

(e)   to distribute money received as a result of commercial arrangements required by the Totalizator Act 1997,

(f)   to fund the costs of the Commission,

(g)   to manage greyhound adoption programs,

(h)   to initiate, develop and implement policies conducive to the promotion, strategic development and commercial viability of the greyhound racing industry in the State,

(i)   to direct and supervise the dissolution of a greyhound racing club that ceases to be registered,

(j)   to appoint an administrator to conduct the affairs of a greyhound racing club,

(k)   to order an audit of the books and accounts of a greyhound racing club by an auditor nominated by [Greyhound Racing],

(l)   to scrutinise and approve the constitutions of greyhound racing clubs to ensure they conform to any applicable Act and the rules and that they clearly and concisely express the needs and desires of the clubs concerned and of greyhound racing generally,

(m)   any other functions conferred or imposed on [Greyhound Racing] by an operating licence granted to [Greyhound Racing] or by or under this or any other Act or law.

50. As has been noted above, one of the apparent purposes of Greyhound Racing in appointing Mr Carroll as administrator was to investigate the financial affairs of the Society. Section 24(1)(k) establishes the function of ordering an audit of the books and accounts of a greyhound racing club by an auditor nominated by it. Greyhound Racing did not attempt to exercise this power, and in any event it does not appear that Mr Carroll is qualified as an auditor, although he has some experience that may enable him to carry out that task.

51. The function listed in s 24(1)(j) is, in my view, more of a remedy than a statement of a primary function. The appointment of an administrator will only be authorised by the Act if it is done for the implementation of some other primary function. In practical terms, the question is whether it is properly within power for Greyhound Racing to appoint an administrator for the purpose of conducting the affairs of the Society in a way that includes the indefinite holding of greyhound racing meetings in circumstances where the Society has decided to cease engaging in that activity, for its own reasons, including that the activity is loss-making, and in the circumstances inconsistent with the overall manner in which the Society wishes to utilise its assets. Perhaps an additional question is whether Greyhound Racing may properly appoint an administrator to control how the Society implements its constitution in relation to a decision whether or not to continue engaging in the conduct of greyhound race meetings.

52. Section 24(1)(a) establishes a function for Greyhound Racing of conducting greyhound race meetings or authorising greyhound race meetings to be conducted by greyhound racing clubs. That appears to authorise Greyhound Racing to conduct its own greyhound race meetings, but it is at least doubtful that it authorises Greyhound Racing to require greyhound racing clubs to conduct greyhound racing meetings involuntarily, particularly if that is to be on an indefinite basis. Section 24(1)(h) establishes a function of initiating, developing and implementing “policies” conducive to the promotion, strategic development and commercial viability of the greyhound racing industry in this State. Authorisation of the implementation of policies does not appear to extend to obliging otherwise unwilling greyhound racing clubs to conduct race meetings indefinitely. Section 24(1)(l) authorises Greyhound Racing to scrutinise and approve the constitutions of greyhound racing clubs, but that does not appear to extend to taking steps on its own behalf to enforce those constitutions in some manner satisfactory to Greyhound Racing.

53. Consequently, there is a real question about whether the Act authorised Greyhound Racing to appoint Mr Carroll as administrator of the Society for the apparent purposes that actuated Greyhound Racing, at least in so far as those purposes may be gleaned from the evidence.

54. There is also a real question about whether Greyhound Racing was authorised to extend the Society’s registration in circumstances in which the Society did not want that registration to continue. If Mr Carroll was not in a position to cause the Society to continue to conduct greyhound race meetings lawfully, that may have consequences for the validity of his appointment.

55. Finally, there is a real question, upon which I make no finding at this interlocutory stage of the proceedings, about whether Greyhound Racing has exercised its power to appoint an administrator in order to gain an inappropriate advantage in its commercial negotiations with the board of the Society. There is at least some basis for the argument that Greyhound Racing reacted to a legitimate decision by the board of the Society that it could not viably continue to conduct greyhound race meetings into the future on the terms required by Greyhound Racing by appointing an administrator, as an act of self-help, to achieve its objectives over the objection of the duly-elected board of the Society.

56. As I understand it, at the end of the interlocutory hearing, all parties accepted that there was a sufficiently arguable claim on the Society’s part that Mr Carroll had not been validly appointed as administrator of the Society to justify the Court giving the Society appropriate interlocutory relief, depending upon the outcome that a consideration of the balance of convenience favoured. The parties were at odds as to the appropriate interlocutory orders to be made.

57. To explain the position of the parties, it is necessary to consider the formal claims that have been made in the proceedings to date and the various contending short minutes of order that the parties have asked the Court to make.

58. It is appropriate to start by noting that, after Mr Carroll was appointed as administrator of the Society, he had difficulty gaining access to the showgrounds in order to conduct the greyhound race meeting scheduled for the evening of 7 November 2019. The premises were locked and a security guard employed by the Society had instructions not to give Mr Carroll access.

59. On 7 November 2019, upon the ex parte application of Greyhound Racing and Mr Carroll, Pembroke J made the interlocutory orders sought in the plaintiffs’ summons and described above until 11 November 2019, when the summons was returnable before me.

60. The Society and Ms Novak complied with the orders and Mr Carroll was given access to the showground. He experienced some practical difficulties, including with the electricity system, but these were remedied and the greyhound race meeting scheduled for 7 November 2019 took place.

61. On 8 November 2019, on the ex parte application of Ms Novak, Pembroke J gave leave for the filing in court of a notice of motion which, in substance, sought orders until further order of the Court that Mr Carroll be restrained from taking any further steps as administrator of the Society, and also further orders that would have restricted Mr Carroll’s use of the Society’s documents, data or information. Pembroke J declined to make the orders sought and stood the notice of motion over to 11 November 2019.

62. Some issues have been raised about whether Mr Carroll has been given full access to the Society’s records, and also to a number of computers and other devices that are said not to be on the Society’s premises. The evidence is unclear on this issue, as it was suggested on behalf of the Society that relevant items and records may be with the Society’s accountant. I am satisfied that, in due course, arrangements will be made for Mr Carroll to be given whatever items and records that he may need in order to perform his duties.

63. During the course of the hearing on 11 November 2019, Greyhound Racing and Mr Carroll had separate representation. The defendants all had common representation. The Society was not separately represented because of the existence of the issue as to who was entitled to conduct its affairs.

64. Counsel for Greyhound Racing informed the Court that, as the interlocutory orders obtained by Greyhound Racing and Mr Carroll on 7 November 2019 had been performed, and Mr Carroll was in practical terms in occupation of the Society’s premises, Greyhound Racing did not seek any interlocutory relief.

65. The defendants’ position changed from that which Ms Novak had adopted on 8 November 2019. On 12 November 2019, the defendants were given leave to file in court an amended notice of motion. The substantive interlocutory orders sought by the defendants were in the following terms:

3.   Upon the First and Second Plaintiffs’ giving the usual undertaking as to damages, the Defendants are restrained until further order from:

a.   interfering with the Second Plaintiff’s conduct of greyhound racing activities by the Third Plaintiff; or

b.   taking any steps that would prevent the Third Plaintiff from continuing to host greyhound racing activities in the future; or

c.   causing the Third Plaintiff:

i.   to enter into any transaction other than in the ordinary course of the Third Plaintiff’s business; or

ii.   to enter into any contract or commitment that has a term of longer than three months or which imposes a payment obligation on the Third Plaintiff exceeding $20,000,

without the consent of the Second Plaintiff or the leave of the Court.

4.   Until further order, the Second Plaintiff is restrained from causing the Third Plaintiff:

a.   to enter into any transaction other than in the ordinary course of the Third Plaintiff’s business insofar as it concerns greyhound racing activities, with the intent being that the Defendants may continue to operate the non-greyhound racing activities of the Third Plaintiff until further order;

b.   to enter into any contract or commitment that has a term of longer than three months or which imposes a payment obligation on the Third Plaintiff exceeding $20,000; or

c.   to purport to renew or obtain any licence from the First Plaintiff, or enter into any agreement with the First Plaintiff;

without the defendants’ consent or the leave of the Court.

5.   The Defendants must do all things reasonably necessary to facilitate access by the Second Plaintiff to the Third Plaintiff’s books and records, provided that the Second Plaintiff is not to prevent the Defendants from continuing to have access to those books and records.

66. The approach ultimately adopted by the defendants proceeded upon the basis that the Court would be satisfied, as it is, that the defendants had established that there was a serious question to be tried that the appointment of Mr Carroll as administrator of the Society was invalid.

67. Unlike what may be the situation with many greyhound racing clubs, the Society is an association with substantial assets whose affairs are not limited to the conduct of greyhound race meetings, even though such meetings may give rise to most of the Society’s financial transactions. The Society provides facilities for many other community activities, some of which have been referred to above. That being the case, the defendants submit that Mr Carroll should not be given the right to conduct all of the Society’s other activities, given the doubt as to the validity of his appointment. The orders sought by the defendants in their amended notice of motion were intended to establish an interlocutory regime that would permit Mr Carroll to conduct the greyhound racing activities, and leave the board and the CEO of the Society free to conduct all of the other activities, which have nothing to do with the operation of the Act.

68. Counsel for Greyhound Racing informed the Court that his client would not give the usual undertaking as to damages contemplated by order 3 sought by the defendants. As I understand it, Mr Carroll adopted the same position. That is of some significance, as the evidence appears to establish that the Society’s greyhound racing activities operate at a loss, and that they are likely to continue to do so.

69. It is significant to the consideration of the balance of convenience that the practical effect of the course taken by Greyhound Racing is that, by appointing an administrator, it seeks to take the greyhound racing activities away from the control of the board of the Society, and thereby to impose upon the Society involuntary losses for as long as Mr Carroll is able to continue the Society’s greyhound racing activities without the consent of the board.

70. The defendants’ response to the information that Greyhound Racing and Mr Carroll would not give the usual undertaking as to damages to the Court was that they withdrew their offer to subject themselves to the interlocutory injunction in prayer 3 of their amended notice of motion.

71. It must be borne in mind that, by virtue of s 16 of the Act, Greyhound Racing is not, and does not represent, the Crown, it is not entitled to any privilege of the State, and it cannot render the State liable for any debts, liabilities or other obligations of Greyhound Racing. Furthermore, as noted above, Mr Carroll does not benefit from the exclusion of personal liability created in respect of certain classes of persons by s 93 of the Act.

72. Order 4(c) was sought by the defendants because they fear that, if the substantial purpose of Greyhound Racing in appointing Mr Carroll as administrator is to ensure that the Society becomes obliged to continue undertaking its greyhound racing activities without its consent, Mr Carroll while in control of the affairs of the Society may do something such as extend the licence, or perhaps renew the registration of the Society, which may inhibit the freedom of action of the Society, if the board regains control of the Society.

73. There was no issue between the parties concerning the making of some such order as was offered by the defendants in prayer 5 of the amended notice of motion.

74. Greyhound Racing and Mr Carroll between them proffered to the Court a different version of the orders that should be made. Set out below is a composite of the orders sought by those parties:

1.   Order the Second Plaintiff not to:

a.   enter into any agreement on the Third Plaintiff’s behalf if the term of the agreement may end more than 3 months after the agreement is entered into (other than an agreement that includes a provision permitting the Third Plaintiff to terminate the agreement without cause on 14 days’ notice); or

b.   enter into any transaction on the Third Plaintiff’s behalf other than in the ordinary course [of] the Third Plaintiff’s business.

unless:

c.   the Second Plaintiff has given the First to Eighth defendants seven days’ notice prior to entering into the agreement or transaction; or

d.   the agreement or transaction is entered into with leave of the Court.

2.   The Defendants shall forthwith provide to the Second Plaintiff the following so far as they are in their possession, custody, control or knowledge:

a.   All books and records of the Third Plaintiff, including electronically stored data;

b.   All user names, passwords, access codes, devices and other things necessary to enable the Second Plaintiff to have access to:

i.   The electronically stored records of the Third Plaintiff (whether stored on-site or off-site);

ii.   The security cameras and other security systems of the Third Plaintiff; and

iii.   Anything else used in the operations of the Third Plaintiff;

c.   The computers of the Third Plaintiff; and

d.   Any other property of the Third Plaintiff.

75. The position adopted by Greyhound Racing and Mr Carroll was that the Act authorised the appointment of Mr Carroll as the administrator of the Society “to conduct the affairs of a greyhound racing club”, and, as the Society fell within that category, Mr Carroll had authority to conduct all of the affairs of the Society, irrespective of the fact that they may have nothing to do with greyhound racing. According to that argument, it is immaterial what proportion of the Society’s affairs concern greyhound racing; Mr Carroll has the authority to conduct all of those affairs for as long as his administration continues.

76. Greyhound Racing and Mr Carroll offered the limited interlocutory order in their proposed order 1 to confine the agreements that Mr Carroll could enter into on behalf of the Society without giving the board notice or further order of the Court.

77. The defendants agreed to parts of order 2 set out above, but not in respect of order 2(b)(iii) or order 2(d) in so far as those orders would restrict the ability of the board and the CEO to conduct the Society’s non-greyhound racing activities, and not on the basis that Mr Carroll’s access to any of the information or items listed would be exclusive of the defendants’ access.

78. The following matters are in my view relevant to the determination of where the balance of convenience lies in this case.

79. The first, and most significant, is that neither Greyhound Racing nor Mr Carroll has, in any precise way, explained to the Court the nature of the conduct by the board and the CEO of the affairs of the Society that justified the appointment of an administrator, or what Mr Carroll as administrator actually intends to do, or for how long he intends to do it.

80. This is of great significance, as the board (and the CEO appointed by the board) are, as a matter of general law, entitled to conduct the affairs of the Society. No conduct on the part of the defendants was identified by either the first or second plaintiff that would cause the Court to consider, at the interlocutory level, that the defendants may have engaged in any misbehaviour, or that there was any good reason for compulsory intervention in the affairs of the Society by Greyhound Racing. It is a serious matter for a body charged by the Parliament with powers to intervene in the affairs of the public to do so without good reason. In saying that, the Court allows that it was understandable, and perhaps reasonable, for Greyhound Racing to be concerned about the imminent cessation of greyhound racing at Dapto, and to use its power to appoint an administrator to achieve a short-term continuation of racing, in order to create time to see whether an agreement could be struck satisfactory to both the Society’s board and Greyhound Racing to permit the indefinite continuation of greyhound racing at Dapto. A decision to appoint an administrator to conduct involuntary greyhound race meetings on behalf of the Society indefinitely, or to interfere in the constitutional affairs of the Society, may be another matter.

81. Not only has Greyhound Racing taken the affairs of the Society away from its duly-elected controllers, but, as mentioned, it has created the situation where the Society will continue with a loss-making activity without its consent. Unless an order is made to the contrary, Mr Carroll will conduct the other activities of the Society, when there is no good reason at all for him to be allowed to do so, other than what might be the effect of an unclear provision in the Act. Furthermore, although the parties tended to focus on the practical activities of the Society, Mr Carroll’s power to conduct the affairs of the Society will stultify the legitimate powers of the board to continue to plan and implement the long-term strategy for the Society that has been developed.

82. If the real purpose of Greyhound Racing in appointing Mr Carroll administrator was to achieve some form of audit or investigation of the Society’s books and financial affairs, that is a purpose that could probably have been effected by some less intrusive process than by the appointment of an administrator. In any event, as Mr Carroll said himself in his affidavit, that is an exercise that should take a relatively short time. If the Court had a basis for confidence that the administration would be short, probably little harm would be done by allowing Mr Carroll to conduct the whole of the affairs of the Society for the short period. It would be advantageous not to create the problems that may arise from different persons being able to conduct different aspects of the affairs of the Society.

83. However, it appears plain from the evidence that a major purpose of Greyhound Racing in appointing Mr Carroll as administrator was to ensure that control of the greyhound racing activities was taken out of the hands of the defendants, so that greyhound racing would continue into the indefinite future over the opposition of the board of the Society. That purpose cannot be achieved unless Mr Carroll’s appointment as administrator continues indefinitely. Unless and until the Court makes an order that Mr Carroll’s appointment was invalid, the Society will continue with its greyhound racing activities. If the Court does not declare the appointment to be invalid, it will continue indefinitely until Greyhound Racing changes its mind.

84. It is possible that, by reason of the terms of the Act or other relevant legislation, and the fact that the Society has a licence, and at least until recently was registered on its own application; and because it has accepted what was in effect public money to subsidise its greyhound racing activities, that it is under some obligation enforceable by Greyhound Racing to continue those activities, either indefinitely or for some reasonable period. It is not clear what the source of any such obligation may be, and as I have said, it has not been articulated by Greyhound Racing. That is, however, a real question.

85. It may also be possible that it is problematic for the board of the Society to have decided peremptorily to cease its greyhound racing activities, without some authority from the members of the Society, and it may be possible that, in the absence of any complaint from members, Greyhound Racing may have some right to seek orders requiring the board’s proposal to be put to members. Again, the basis of such a right is not at all clear, and it has not been articulated by Greyhound Racing. It is, however, another real question.

86. Greyhound Racing could have instituted proceedings to attempt to establish the real rights that it claims, instead of appointing Mr Carroll as administrator of the Society. Such an attempt may have been supported with a claim for an interlocutory order requiring the Society to continue to conduct greyhound race meetings pending the determination of the proceedings. I have no doubt that, if such an interlocutory order had been made against the Society, the defendants would have complied with that order, which would have achieved the apparent primary objective of Greyhound Racing, without the intrusion of an administrator into the conduct of all of the Society’s affairs.

87. The problem is that the self-help remedy chosen by Greyhound Racing may perhaps have been justified given the late notice of the Society’s decision to cease conducting greyhound race meetings and to preserve the meeting that was scheduled for 7 November 2019, but the continuation of the litigation concerning the validity of the appointment of Mr Carroll as administrator may not address the real questions or resolve the true dispute between the parties.

88. Another issue of importance to the consideration of the balance of convenience is the length of the period that Mr Carroll may continue in control of the affairs of the Society pending the final determination of these proceedings.

89. The parties accept that it will be appropriate for the plaintiffs to seek expedition of the proceedings in the Expedition List, and I will order that they do so. However, I am in no position to forecast the likely result of the application, and while there is some basis to expedite this case, there may be many other cases with a greater call for expedition. There is at least a real probability that these proceedings will be determined in the General List in the ordinary course. It is not possible to forecast when the proceedings will come to hearing, but that could happen significantly later than a year from now, depending upon the issues that will be exposed by the pleadings that I will order to be served, and the complexity of the exercise of preparing the necessary evidence.

90. Much of the dispute between the parties at the hearing dealt with the relative inconvenience of separating control of the affairs of the Society for different aspects of its activities as between the defendants and Mr Carroll, given the possibility for confusion and dispute that could arise.

91. I am satisfied by the evidence put forward by Mr Carroll that he will be competent to conduct the Society’s greyhound racing activities, and he also has experience with at least some of the other activities engaged in by the Society. It is probable that Mr Carroll could pursue those activities without any real risk of injury to the Society.

92. However, it is clear that Mr Carroll will not pursue any of the more general strategic objectives in which the defendants have been engaged on behalf of the Society – Mr Carroll could not realistically be expected to do so – so in that respect a fundamental aspect of the governance of the Society will be stultified during the term of Mr Carroll’s administration, unless the Court makes some order that retains appropriate aspects of the affairs of the Society in the hands of the defendants.

93. One circumstance that alleviates the difficulty, in a practical way, is that, notwithstanding the apparent intent of Greyhound Racing to change the scheduling of race meetings, for the present the meetings held by the Society occur on Thursday nights. The evidence has not made entirely clear to me whether any other activities occur on Thursday nights.

94. After considering these matters, having regard to the real doubt that exists concerning the validity of the appointment of Mr Carroll as administrator of the Society, the absence of any undertakings as to damages that may protect the Society if Mr Carroll was wrongly appointed, the fact that the conduct of the greyhound race meetings is apparently quarantined to Thursday nights, the possible period that will elapse before these proceedings can be determined by the Court, and the fact that Mr Carroll would have the conduct of affairs of the Society that have nothing to do with its greyhound racing activities – which is a substantial and unnecessary imposition on the Society’s private rights – it will be appropriate in this case on an interlocutory basis to make orders that divide responsibility for conducting the affairs of the Society on an appropriate basis as between the defendants and Mr Carroll.

95. Mr Carroll should be authorised to conduct the greyhound racing activities of the Society generally, but should also be able to conduct all of the activities that occur each Thursday. That may involve Mr Carroll dealing with other activities that are scheduled to occur on Thursdays before or during race meetings. In coming to this view, I have given considerable weight to the argument put on behalf of Mr Carroll that, so far as possible, the delineation of responsibility should be clear and simple. It is also relevant that it appears that all of the employees of the Society, other than I assume Ms Novak, are casual employees engaged in the greyhound racing activities.

96. On balance, the defendants should be authorised to conduct all of the other activities of the Society that occur on days other than Thursday.

97. It would be an unwarranted interference with the rights of the Society for the appointment of Mr Carroll, pending the determination of these proceedings, to frustrate the activities of the defendants, in their proper and official capacities, to conduct the strategic affairs of the Society in respect of all activities other than greyhound racing.

98. I acknowledge that there remains some risk of confused lines of authority and communication, but I will proceed upon the basis that Mr Carroll and the defendants are adults, and any real dispute that cannot be resolved by using common sense may be brought back to the Court. Further, if there are specific difficulties that arise from the division of authority that I have suggested that I have not anticipated, I will receive submissions from the parties concerning the precise terms of the orders that should be made.

99. Mr Carroll and the defendants should all have the necessary non-exclusive access to the books and records, and the Society’s plant and equipment and its premises necessary to enable them to conduct the parts of the affairs of the Society for which they will be responsible.

100. Mr Carroll’s right to conduct the greyhound racing affairs of the Society, and any other of its affairs that take place on Thursdays, should be subject to the qualification that he act only in the ordinary course of business of the Society. Mr Carroll should be restrained from taking any step in respect of the relevant licence or registration of the Society, or making any agreement with Greyhound Racing, that may have the effect of requiring the Society to continue with its greyhound racing activities, without a further order of the Court. Greyhound Racing and Mr Carroll should be given leave to seek any such order upon 7 days’ notice. In a similar way, Mr Carroll should be restrained from interfering with the internal governance of the Society under its constitution without a further order of the Court.

75. I have concluded that the restraints referred to in the preceding paragraph are warranted, because steps of that nature may well be necessary if Greyhound Racing is going to be able to secure its apparent purpose of requiring the Society to continue its greyhound racing activities indefinitely, whether or not the Society consents, and in circumstances where Greyhound Racing has not informed the Society or the Court about the specific purposes that it had in appointing Mr Carroll, and Mr Carroll has only explained in indefinite terms what he understands his task to be.

76. It is really a matter for the parties whether Mr Carroll on the one hand, and the defendants on the other, should also be restricted in respect of the value and duration of contracts that they are authorised to enter into on behalf of the Society without the agreement of the other or the leave of the Court. Any such restrictions should be mutual, and I do not think that it matters that the restrictions may not be supported by the giving of mutual undertakings as to damages. It should be sufficient protection for the Society that, if either Mr Carroll or the defendants wish to cause the Society to enter into contracts outside the limits, they will be free if agreement cannot be reached to apply for the leave of the Court.

77. A real issue that remains for consideration is the control of the Society’s funds and bank accounts. It is one thing for the Court to create a situation that requires Mr Carroll and the defendants to cooperate sensibly in respect of the conduct of different aspects of the affairs of the Society. The control of its funds and its bank accounts is a different matter. The financial security of the Society requires that there be a single controller of the Society’s funds and bank accounts.

78. In considering this issue after I reserved judgment, I have realised that although the parties dealt with the practical consequences of dividing control of the Society’s affairs, they did not sufficiently deal with the financial consequences of the division of control, or what regime should be established by the Court’s orders if I were satisfied that I should divide control in the manner submitted by the defendants.

79. I propose in any event to publish these reasons and to invite the parties to discuss and bring in short minutes of order to give effect to the conclusions that I have reached. Unfortunately, I will have to ask the parties to also provide further written submissions concerning the financial issues.

80. Following are some provisional observations concerning the issues that remain to be addressed.

81. As the greyhound racing aspect of the Society’s affairs dominates its financial dealings, Mr Carroll could not perform his duties if he did not control the Society’s funds and its bank accounts. Prima facie, the interlocutory regime must give Mr Carroll that control so that he can conduct that aspect of the Society’s affairs.

82. On the assumption that the conduct of the balance of the Society’s affairs will require expenditure of funds, some arrangement must be included in the orders to ensure that Mr Carroll meets the defendants’ reasonable requirements for funding the affairs of the Society under their control on a timely basis.

83. However, that consideration raises the problem of what to do with the fact that the income from the Society’s non-greyhound racing activities must, on the basis of the Society’s audited financial report that was in evidence, be used to subsidise the conduct of the greyhound race meetings.

84. I understand that an issue may arise between Greyhound Racing and the defendants as to whether the Society’s accounts present a true picture of the trading position of the Society’s greyhound racing activities. However, on the present evidence there is a real probability that those activities are trading at a loss, and that loss will accumulate during the period of Mr Carroll’s administration, and that, if those activities are continued without any special funding arrangement, the Society’s income from other activities will have to be used to fund the greyhound racing.

85. Accordingly, if the Court ultimately finds that Mr Carroll was not validly appointed, or even if it finds that he was validly appointed, but at some time in the future the Society ceases to continue with greyhound racing because the board regains full control of the Society, or it otherwise becomes apparent that the continuation of greyhound racing is not financially viable, the effect of Mr Carroll’s administration may be to accumulate losses from greyhound racing. The balance of convenience does not favour the Society being left to bear those losses come what may.

86. Neither Greyhound Racing nor Mr Carroll has offered an undertaking as to damages to the Court if, in any of the circumstances considered in the preceding paragraph, the ultimate result is that the actions of Greyhound Racing and Mr Carroll cause the Society to suffer a loss from the involuntary continuation of its greyhound racing activities. I would accept if such undertakings were given that the Society would be adequately protected, even if the result were that in the interim Mr Carroll was required to apply the Society’s non-greyhound racing income to subsidise that activity.

87. However, the Court cannot require Greyhound Racing or Mr Carroll to give the undertakings referred to in the preceding paragraph. If undertakings are not offered, what is the Court to do to protect the Society? The only thing I have been able to think of presently is to make an order that would have the effect of restricting Mr Carroll’s use of the Society’s funds for the purpose of conducting greyhound racing to the income that may be reasonably and genuinely identified as being sourced in that activity. Apart from the difficulty of identifying the sources with appropriate clarity, the consequence may be on the present evidence that the income is not sufficient to fund greyhound racing. That may put Greyhound Racing in the position that it would have to meet any operational funding shortfall. That would not be an unfair outcome in my view as, if Greyhound Racing wishes to use its powers to force the Society to conduct a loss-making activity, it is reasonable that Greyhound Racing cover the loss. Alternatively, the outcome would be that greyhound racing would cease at Dapto, notwithstanding the objectives of Greyhound Racing.

88. It will be necessary for Greyhound Racing to face this problem and inform the Court of its position when making the further submissions that are required. It will then be necessary for the defendants to respond. I direct the parties to confer, and if necessary provide brief written submissions on the outstanding issues by 4 PM on 20 November 2019. If agreement can be reached between the parties, they may send draft short minutes of order to my associate. Alternatively, the parties should provide my associate with suggested draft short minutes of order to deal with the matters that have been decided above, and an arrangement may have to be made with my associate to relist the matter. Any short minutes of order should include appropriate case management directions.

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Decision last updated: 15 November 2019