Racing New South Wales v Racing Victoria Ltd

Case •

[2024] NSWSC 147

•

20 March 2024

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Racing New South Wales v Racing Victoria Ltd [2024] NSWSC 147
Hearing dates: 6 December 2023
Date of orders: 23 February 2023
Decision date: 20 March 2024
Jurisdiction:Equity - Commercial List
Before: Rees J
Decision:

Directions made in respect of determination of privilege claims.

Catchwords:

JUDGMENT AND ORDERS – parties bring in orders to reflect reasons – construction of orders – whether ambiguity required before judgment consulted – principles at [5]-[11] – ambiguity not a pre-condition to consider judgment.

COMMON INTEREST PRIVILEGE – legal advice shared between competitors – whether joint interest in governance of an industry body constitutes a “common interest” – principles at [115] –– whether parties’ interests are selfish or adverse to one another.

PRELIMINARY DISCOVERY – adequacy of preliminary discovery challenged – whether direct evidence should be given as to compliance with orders – whether claims for client legal privilege ought be supported by direct evidence.

Legislation Cited:

Competition and Consumer Act 2010 (Cth), s 45

Evidence Act 1995 (NSW), s 55(1), s 75

Cases Cited:

Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200

Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1995) 37 NSWLR 405

Andrianakis v Uber Technologies Inc; Taxi Apps Pty Ltd v Uber Technologies Inc [2022] VSC 196

Aquasure Pty Ltd v Thiess Pty Ltd (No 2) [2022] VSC 389

Asahi Holdings (Australia) Pty Ltd v Pacific Equity Partners Pty Limited (No 4) [2014] FCA 796

Australian Competition and Consumer Commission v NSW Ports Operations Hold Co Pty Ltd [2020] FCA 1232

Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483

AWB Limited v Cole (No 5) (2006) 155 FCR 30

Cygnett Pty Ltd v Souris [2020] FCA 1754

Drivetime Radio Australia Pty Ltd v Pivotal Creative Solutions Pty Ltd trading as Broadcast GP [2010] NSWSC 763

DSE (Holdings) PTY Ltd v Intertan Inc (2003) 135 FCR 151

Grant v Downs (1976) 135 CLR 674

Grocon Group Holdings Pty Limited v Infrastructure NSW (No 3) [2023] NSWSC 1352

Hamersley Iron Pty Ltd v National Competition Council (2008) 247 ALR 385

Hancock v Rinehart (Privilege) [2016] NSWSC 12

Hastie GroupLtd (in liq) v Moore (2016) 339 ALR 635

Inthe matter of Global Advanced Metals Pty Limited [2019] NSWSC 1545

Inlon Pty Ltd v Celli SpA [2017] NSWSC 569

Kennedy v Wallace (2004) 142 FCR 185

Komlotex Pty Ltd v AMP Ltd [2022] NSWSC 1525

Lim v Comcare (2019) 165 ALD 217

Liu v The Age Company Ltd (2016) 92 NSWLR 679

Media Ocean Ltd v Optus Mobile Pty Ltd (No 10) [2010] FCA 1348

Pratt Holdings Pty Ltd v Federal Commissioner of Taxation (2004) 136 FCR 357

Priest v New South Wales [2006] NSWSC 1281

Racing New South Wales v Racing Victoria Ltd (No 2) [2023] NSWSC 576

Racing New South Wales v Racing Victoria Ltd (No 3) [2023] NSWSC 838

Rinehart v Rinehart [2016] NSWCA 58

Schreuder v Murray (No 2) (2009) 41 WAR 169

Sydney Airports Corp Ltd v Singapore Airlines Ltd [2005] NSWCA 47

Traderight(NSW) Pty Ltd (ACN 108 880 968) 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)

Solicitors:
Yeldham Price O’Brien Luck (Plaintiffs)
Ashurst (Defendants)
File Number(s): 2022/386737

JUDGMENT

  1. 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).

  2. 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.

  3. 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.

  4. 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

  1. 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].

  2. 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.”

  1. 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].

  2. 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.”

  1. In Athens v Randwick City Council (2005) 64 NSWLR 58, Santow JA explained at [129], [130] and [137] (emphasis in original):

“The purpose of a court order is, ordinarily, to give effect to a judgment. The judgment is not some kind of penumbral context surrounding the order. Rather the judgment is the source of the order. A court order derives from its originating judgment … The order must therefore conform to the judgment, with only such latitude as the judgment allows. …

… It is the judgment which controls the scope of any consequential orders, setting the parameters for what conformance requires. …

Orders when delivered have a continuing life of their own, once the umbilical cord has been thereby severed from the originating judgment. But it does not follow that orders so launched are to be treated thereafter as completely self-contained when it comes to their interpretation. Convenience and clarity, especially for the party bound, dictate that the orders should so far as reasonably practicable, be self-standing…”

  1. In Lim v Comcare (2019) 165 ALD 217, the Full Federal Court considered that regard may be had to the reasons for the court order “whether the orders are ambiguous or not”: at [40] (per McKerracher, Markovic and Snaden JJ). See likewise Hamersley Iron Pty Ltd v National Competition Council (2008) 247 ALR 385; John Tarrant, “Construing Undertakings and Court Orders” (2008) 82 ALJ 82 at 84-85.

  2. I agree. Where the categories were to give effect to Ball J’s earlier reasons, I consider that it is important to have regard to the judgment when considering how the orders should be read. I do not consider that ambiguity in the orders is a pre-condition to having regard to the judgment, where ambiguity may only become apparent after considering both the reasons and the orders made to give effect to those reasons. The need to have regard to Ball J’s reasons is accentuated here where his Honour directed the parties to bring in orders to reflect his reasons; his Honour then amended the orders as drafted by the parties slightly, to quell remaining points of disagreement.

Events leading to these proceedings

  1. It is necessary to say something about the events which led to these proceedings. As Ball J explained in Racing NSW (No 2), thoroughbred horseracing in Australia is regulated by Racing Australia, the members of which are directors nominated by the PRAs. By its board and committees, Racing Australia classifies horse races, including the most prestigious category of race, called “Group 1”. Racing Australia also regulates the program of thoroughbred horse races in Australia with a group or listed status, commonly known as the “Australian Pattern”. The rating allotted by Racing Australia to races is submitted to two international committees for consideration: the Asian Racing Federation (ARF) and the International Federation of Horseracing Authorities Longines World’s Best Racehorse Rankings Committee (IFHA).

  2. Under its constitution, the directors appointed by Racing NSW and Racing Victoria each have a veto on decisions made by Racing Australia. From 2017 to 2021, a dispute arose between Racing NSW and Racing Victoria, with each, effectively, vetoing the other such that the board of Racing Australia was at an impasse. In short, Racing NSW sought to introduce a new horse race called The Everest, but its efforts to have The Everest classified as a Group 1 race were vetoed by Racing Victoria. At the same time, Racing Australia was endeavouring to change the Australian Pattern, but Racing NSW would not agree to these proposals until The Everest was granted Group 1 status. More broadly, Racing NSW’s position was that the Australian Pattern reflected an historical remuneration model, where the earnings of each PRA were calculated by the local TAB and bookmakers irrespective of where the race was run, resulting in little competition between the PRAs as to when races were run. Changes in the system of remuneration now meant that a PRA earned fees by reference to gaming income generated by races conducted by that PRA, resulting in substantial competition between horse races, which Racing NSW contended ought be recognised by the Australian Pattern: Racing NSW (No 2) at [13].

  3. Efforts to revise the Australia Pattern were unproductive. This led to the doors of the Court in February 2021 and the appointment of an independent chairman, John Messara, in May 2021. Mr Messara attempted (unsuccessfully) to resolve the dispute between Racing NSW and Racing Victoria. By the end of 2021, there was speculation in the racing press, including in an interview with Mr Kruger, that Racing NSW may be excluded from Racing Australia.

  4. I note in passing that, in late January 2022, Mr Zaurrini of Ashurst Australia received instructions from Racing Victoria’s most senior legal officer, Louise Lane, to give legal advice in relation to the potential establishment of a national racing authority and the Australian Pattern. I also note in passing that the Relevant Period in the discovery categories commenced on 1 February 2022.

“a process”

  1. In what I assure the reader will become relevant in due course, on 9 February 2022, Racing NSW published a media release, announcing increases in prizemoney for a number of NSW thoroughbred races, together with a date change for the Spring Champions Stakes. This announcement appears to have caused some consternation. At 5.49pm on 11 February 2022, Mr Messara, as Chairman of Racing Australia, wrote to Racing NSW expressing concern that the two-week date change for the Spring Champion Stakes was problematic, where Australia was a member of the ARF and the Asian Pattern Committee. The date change without approval of the Asian Pattern Committee contravened its rules (and possibly the Australian Pattern) and may affect the race’s Group 1 status.

  2. Mr Kruger had been provided with a briefing on Racing NSW’s announcement by Racing Victoria’s chief executive officer, Giles Thompson, on 9 February 2022, together with the statement issued by Racing Victoria in response. At 6.39pm on 11 February 2022, Mr Kruger responded to Mr Thompson (emphasis added):

“While the initial public response is ok, I think it’s time to stop trying to “play by the rules” and start firing some real bullets. Me, you and the team need to get more creative (and aggressive) with our response. Greg [Nichols] has already initiated a process to have Spring Champion [Stakes] lose its [Group 1] status. We need more of that type of thinking and fast, including the Plan B initiatives …”

As will also be seen, “Plan B” came to refer to the establishment of a new racing body which did not include Racing NSW as a member. Whether this is what Mr Kruger was then referring to is not clear.

  1. From 13 to 15 February 2022, Ms Lane drafted a “February 2022 Racing Australia Update”, said to be for the dominant purpose of providing legal advice regarding the potential establishment of a new entity, the Australian Pattern and the conduct of Mr Balding. An agenda was prepared for a meeting of the board of Racing Victoria on 15 February 2022, by which 20 minutes was set aside to discuss “Racing Australia”. A claim for privilege has been made over this portion of the agenda, which is challenged.

  2. On 25 February 2022, Mr Kruger wrote to the Chairman of IFHA, Winfred Engelbrecht-Bresges, in respect of the ongoing difficulties in finalising changes to the Australian Pattern. In light of this, Mr Kruger asked:

“…we would like to explore with ARF … the process by which ARF might consider recognising a separate entity, appropriately constituted and authorised, that is willing to agree to the Rules subject to any appropriate modifications for the application of Australian law.”

  1. Mr Kruger also drew to IFHA’s attention “a recent example of a potential non-compliance with your Rules, being the recent actions by Racing NSW in respect of … the [Group 1] Spring Champion Stakes … outside of the Rules.” Mr Kruger suggested that this presented “a good opportunity to understand how non-compliances are addressed by ARF”, including whether the consequence of non-compliance was a loss of Group 1 status. As I read it, this was a none too subtle attempt by Racing Victoria to enlist the ARF and IFHA to bring pressure to bear on Racing NSW in respect of its unapproved change to the Australian Pattern.

Approaching other PRAs

  1. On 3 March 2022, the minutes of a board meeting of Racing Victoria noted Racing Victoria’s letter to IFHA of 25 February 2022, “seeking support for resolving current issues in respect to the operation of Pattern Guidelines.” At this time, Mr Zaurrini was asked by Ms Lane to prepare a draft confidentiality agreement and a competition protocol in relation to negotiations for the potential establishment of a new racing body. On 3 March 2022, he sent these draft documents to Ms Lane.

  2. In early March 2022, Ms Lane asked Ashurst to provide legal advice in respect of the preparation of legal documentation for negotiations for the potential establishment of a new national racing body. On 16 March 2022, Ashurst prepared a draft Term Sheet, which was sent to Ms Lane. Ms Lane reviewed, amended and commented on the draft documents, which she sent to Mr Nichols on 17 March 2022. On 18 March 2022, Mr Nichols forwarded this material to Mr Kruger. Ms Lane exchanged emails with her counterparts at Racing Queensland and Racing WA, to arrange a time for the three RPAs to meet “to discuss some topical issues”. A non-disclosure agreement was suggested, which Ms Lane offered to prepare.

  3. On 22 March 2022, Racing NSW’s solicitors raised concerns with Racing Victoria that it had entered into contracts or arrangements with others, that had the effect of “substantially lessening competition” including “the position adopted by Racing Victoria in relation to the application of Group status to NSW thoroughbred races and the conduct of Racing Victoria employees on international rating committees which has been detrimental to NSW thoroughbred races”: Racing NSW (No 2) at [17]. When the board of Racing Australia met on 24 March 2022, the parties remained at an impasse in respect of the classification of Racing NSW’s Group 1 races and changes to the Australian Pattern: Racing NSW (No 2) at [18]-[20].

  4. Following the Racing Australia board meeting, Mr Messara pressed Racing NSW to turn their minds to the proposed changes to the Australian Pattern, but Mr Balding remained firm. On 30 March 2020, Mr Messara tendered his resignation as Independent Chairman of Racing Australia, where he had been unable to reconcile the differences between the parties. (Ms Lane also circulated a draft confidentiality agreement to her counterparts at other RPAs.) As Ball J later observed in Racing NSW (No 2) at [21]:

“The evidence suggests that, following the Board meeting, or perhaps some time earlier, Racing Victoria started to work on a plan to resolve the impasse. That plan involved setting up a new organisation, or at least threatening to set up a new organisation, that would take over some of the functions of Racing Australia, including making decisions in relation to the Pattern. Neither Racing Victoria, nor Racing NSW if it joined, would have a right of veto on the new organisation. To assist it to formulate and promote the plan, Racing Victoria, on or about 13 April 2022, engaged … public relations consultants. At some stage, it seems that RQB, RSA, RWWA and TR also became involved…”

  1. On the morning of 31 March 2022, a meeting was held with representatives of Racing Victoria, Racing WA, Racing Queensland and Racing Tasmania. Other than an electronic document recording the time at which attendees joined or left the meeting, Racing Victoria has not discovered any records of the meeting. Mr Zaurrini is instructed by Mr Kruger and Mr Nichols that they have no notes or records from the meeting, although Mr Kruger did attend the meeting.

  2. Following the meeting, Jeff Ovens of Racing WA sent a “1st attempt” to Mr Nichols, being apparently a draft letter to Racing Australia in respect of changes to the Australian Pattern and the voting rights of members of Racing Australia, such that vetos were lost and progress could be made. The finishing touches were put on a confidentiality agreement between Racing Victoria, Racing Queensland and Racing WA, where Racing Victoria had proposed a point for discussion: “possible establishment of a joint venture for the provision of services relating to thoroughbred racing”.

  3. On the evening of 31 March 2022, Mr Ovens emailed his fellow directors of Racing WA in respect of “the disfunction around the operations of Racing Australia”, where the veto rights given to NSW and Victoria had brought the organisation to a standstill. Further:

“Victoria, Queensland, SA, WA, and Tas/NT today discussed the need to call upon NSW to be part of constitutional reform that would dispense with the types of deadlocks that exist under the current arrangements.”

  1. Mr Ovens attached a paper, “RA reform”, that had been “circulated between those bodies and outlined the problems”. Mr Ovens reported that it was the opinion of the directors of Racing Australia, other than NSW, that “we should become public given that attempts to deal with this matter behind closed doors has done little to bring NSW to the table.” Mr Ovens sought the support of the chair of Racing WA to work with the other states on the matter and, if necessary, be part of an open letter to NSW outlining their wishes for reform, “Legal advice is being obtained to ensure that as a Director of RA I am not in breach of any of my duties or expose RWWA to any action because of such release.” Mr Zaurrini said Mr Ovens’ email was reviewed by Ashurst during the discovery process but was not discovered on the basis that it was not responsive to the preliminary discovery orders. I must say that this decision appears to have been based on an unduly narrow view of those orders, to which I will return at [74].

  2. The emails between Ms Lane and her counterparts suggest that there was a meeting between them on 1 April 2022. Racing Victoria has not discovered any notes of such a meeting. (Mr Zaurrini was informed by Ms Lane that she does not make handwritten notes of meetings.) On 1 April 2022, Ms Lane received an email from the CEO of Racing Victoria, attaching a draft open letter, for her advice. Ms Lane progressively gave comments and proposed amendments to the document.

  3. On 6 April 2022, Mr Nichols sent a further draft to Mr Ovens with a note, “I’ll call in 5”. Perhaps curiously, Mr Nichols does not have a copy of this email in his possession, notwithstanding having been assisted by Ashurst’s e-discovery team to locate it. Ms Lane continued to provide further advice and comments on the draft letter.

  4. On 11 April 2022, Ms Lane sent her counterparts at other PRAs a draft open letter to Racing Australia and a Tactical Communications Plan for comment and review. Mr Ovens suggested that a call be arranged to resolve the content of the documents. A meeting was arranged on 13 April 2022. Although some of the emails between PRAs involved Racing Victoria’s CEO, these emails were not discovered, as Ashurst determined that they were not responsive to the preliminary discovery orders. Again, this may suggest that an unduly narrow approach has been taken. Racing Victoria did, however, provide by way of further discovery, an email from its CEO on 13 April 2022 with notes of the meeting. The content of the open letter was agreed. The PRAs also agreed to “Appoint PR agency to help with comms”. Later that day, Racing Victoria contacted public relations consultants, Cato & Clive.

  5. On 14 April 2022, Mr Ovens sought approval from his fellow directors for the open letter to Racing Australia, noting that the letter would now be from the heads of each PRA rather than from the directors of Racing Australia “to ensure there is no conflict of roles etc.” Racing NSW was expected to respond unfavourably to the letter:

“This is expected by all the PRA’s and having tried to solicit NSW participation to the reform process previously without success, we are of the view that there are no other effective means of changing the current situation for the better, even though that “better position” might take some time and involve some solid resistance and challenges from NSW. Given their past history that resistance could also be by legal means.”

  1. Mr Ovens’ colleagues sought further information as to whether the PRAs would share the legal costs which may ensue. Mr Ovens replied later that evening, “This is going to be messy, and we know that. To do nothing means the joke that is [Racing Australia] will hang over our collective heads. I think we would then have to consider whether we remain under [Racing Australia] at all.”

  2. On 19 April 2022, Racing Victoria provided Cato & Clive with the draft open letter to Racing Australia and Tactical Communications Plan, ahead of a meeting. On 20 April 2022, Ms Lane exchanged emails with Mr Kruger and Racing Victoria, over which a claim for privilege is made and challenged. Further emails passed between Racing Victoria and Cato & Clive; the public relations firm was asked whether it could “live with changes requested by our Legal Department”.

  3. In advance of their initial discussion, Cato & Clive sent Racing Victoria some initial thoughts, including to bring Racing NSW “to the table” by a genuinely threatened development such as a breakaway body, coupled with a compelling argument that it was standing in the way of critical change:

“The threat of a new body is the shock-and-awe component of the campaign. That will get attention. But the non-NSW states must be prepared to follow through (has this been modelled and wargamed?). It must be portrayed as the only viable option (more in sorrow than in anger) and it must be portrayed as in the best interests of racing.”

  1. Following an initial discussion with Racing Victoria on 21 April 2022, Cato & Clive circulated a further draft of its document of consideration on 22 April 2022, which now referred to “Plan A” and “Plan B”. Plan A was that extracted above. Plan B was “the other States would simply go it alone [and] ignore NSW” and either form a new body or simply coordinate necessary reforms directly. Racing Victoria commented that the revised note “captures our discussion well”. Racing WA and Racing Queensland were more circumspect, suggesting that more work needed to be done on Plan B, including with input “from the legal minds of PRAs”.

  2. On 26 April 2022, Racing Victoria staff reported to Ms Lane that Cato & Clive’s advice had been provided to Racing WA and Racing Queensland, which had “given both jurisdictions pause and has focussed their thinking on what more we can be doing ie areas of mutual interest/benefit that we can just start doing rather than picking a public fight that we can’t win.” These PRAs wished to wait until the next Racing Australia meeting, before making a further decision on the open letter. On 27 April 2022, Racing Victoria’s CEO advised Mr Kruger and Mr Nichols that, given Cato & Clive’s advice, and the feedback from Racing WA and Racing SA, it was thought better not to send the open letter but “for the willing PRAs to just start doing things together that matter. … Getting some momentum in certain areas and making our points by doing rather than words.”

SWOT analysis

  1. On 28 April 2022, Mr Kruger emailed Ms Lane, copied to the CEO of Racing Victoria, in response to an email from Ms Lane apparently attaching an agenda to an upcoming meeting of the board of Racing Victoria. Mr Kruger suggested that the agenda was too broad and should focus on the key goals of the session, “which should maybe be … how do we compete more effectively with [Racing NSW] [and] how do we ensure [Racing Australia] (or its successor) can deliver what’s needed.” In respect of the first issue, Mr Kruger suggested that “a good old fashioned SWOT analysis” be prepared by the CEO or relevant executives.

  2. Later on 28 April 2022, the directors of Racing Australia met, including Mr Balding for Racing NSW. Recent communications between the other PRAs were not mentioned. There was some discussion about commencing an independent governance review of Racing Australia, which was deferred for further consideration once terms of reference were circulated for review. The minutes record, “Racing NSW advised it would oppose any dilution of Its effective veto and ownership.”

  3. On 9 May 2022, the board of Racing Victoria held a board meeting. Ms Lane and Janet Whiting of Gilbert + Tobin provided oral legal advice. Further advice was requested in relation to the governance of Racing Australia, the potential establishment of a new entity, the Australian Pattern and the recent conduct of Racing NSW. Ms Lane prepared various drafts of a report to the board in respect of the meeting, over which privilege has been claimed in respect of various portions, and challenged. (Ms Lane appears to have updated this board report from time to time, including to add the results of subsequent meetings).

  4. Insofar as Ms Lane’s report is not subject to a claim for privilege or commercial sensitivity, it reports that the board met to discuss the current impasse and inertia at Racing Australia, the desired strategic role that Racing Victoria should take in the operation of Racing Australia, and how Racing Victoria could strengthen racing in that state and compete with Racing NSW “including in circumstances where existing arrangements at Racing Australia are no longer applicable (new world order).” The board noted that the IFHA and ARF were not willing to engage in domestic affairs. The board had requested previously, and requested again, a SWOT analysis of potential competition opportunities against Racing NSW. The board wanted Racing Victoria to lead all PRAs, “the coalition of the willing”, in taking the matter forward vis a vis Racing Australia.

  5. On 17 May 2022, Mr Nichols asked Ms Lane to provide legal advice regarding negotiations for the potential establishment of a new national racing body. He asked Ms Lane to prepare a short summary of the key objects and matters that would need to be negotiated in order for such a body to be established. Ms Lane provided this advice in preparation for a meeting with other PRAs on 18 May 2022. Cato & Clive also circulated an agenda for the meeting, including key matters to discuss through working groups (including “Structure – Legals” and “Pattern”), “Create Newco to address areas on which PRAs do not compete” and Racing Australia’s obligations going forward.

  6. Ms Lane then updated the draft May 2022 board report to include a section summarising the meeting and proposed next steps. In short, the open letter was abandoned. The PRAs intended that Racing Australia would continue as a services and administrative body, with a new national peak body established to pursue matters of importance to the industry. Various working groups were established to discuss these issues “as well as legal and structural issues for such a newco”.

  7. On 23 May 2022, the board of Racing Victoria met. The board was advised that the SWOT analysis would be provided to the chairman by 9 June 2022. On 8 June 2022, Ms Lane updated her report to the board, attaching various papers addressing the board’s requests.

  8. The SWOT analysis was prepared sometime in June 2022. On 15 June 2020, Ms Lane emailed the SWOT analysis to a colleague, Simonette Foletti, in preparation for a meeting to discuss the allocation of requests for legal advice, including legal advice from Ashurst in respect of the Australian Pattern. The SWOT analysis also included legal advice to the board regarding intellectual property and contractual rights in connection with Racing Victoria’s media ownership interests and media rights management.

  9. As explained by Ms Fielding, the SWOT analysis assessed Racing Victoria’s strengths, weaknesses, opportunities and threats vis a vis Racing NSW. Ms Fielding expressed the view that the information contained in the analysis is commercially sensitive, used to develop strategic planning and to enable decision-making within Racing Victoria. The information is valued highly by the organisation to assess its current and future operations. Ms Fielding considers that the disclosure of this information would damage Racing Victoria’s competitive position, revealing important information as to its approach to investment, broadcasting, wagering, resourcing and other competitive activities, as well as reveal sensitive personal information. Accepting that for the moment, the initial question is whether the material ought be redacted as irrelevant. I will return to this at [82].

Racing Queensland legal advice

  1. On 10 June 2022, Racing Queensland emailed the PRAs, proposing to “kick-off discussions with respect to setting up a new entity to provide services to the thoroughbred industry.” A confidentiality deed was provided, together with a competition protocol “to ensure that discussions do not lead to any competition law concerns.” The confidentiality deed referred to the establishment of a new entity and the establishment of a joint venture. Ms Lane forwarded the deed to Mr Kruger, Mr Nichols and the CEO, who responded. Privilege is claimed over these emails, but challenged.

  2. By 21 June 2022, the confidentiality deed had been revised to incorporate comments of various PRAs, and signed. An agenda was circulated for the first meeting of the “Newco Steering Committee” on 23 June 2022. On 7 July 2022, Mr Gosewisch emailed draft documents to Ms Lane, being a draft resolution to put to Racing Australia with respect to establishing a new entity and a draft legal advice to Racing Queensland, the latter shared with Ms Lane on the basis that common interest privilege applied.

  3. According to Mr Zaurrini, Ms Lane informed him that she noted that the legal advice related to the governance of Racing Australia. She considered that Racing Victoria and Racing Queensland had a common interest in the advice at the time it was provided, because of the problems of governance that she understood were being experienced at the time within Racing Australia, including the effective veto powers held by Racing NSW and Racing Victoria which meant that Racing Australia was at an impasse. Ms Lane sent the email and its attachments to her colleague, Ms Foletti, in the final week of Ms Lane’s employment at Racing Victoria so that Ms Foletti could consider the material when providing or obtaining legal advice for Racing Victoria following Ms Lane’s departure.

  4. On 8 July 2022, Mr Nichols provided Mr Kruger and others with a note of his conversation with Mr Balding. Mr Kruger observed: “Interesting comments on the legal threat re collusion. … we’ll need to continue to be careful from a legal point of view with Plan B."

WhatsApp group

  1. On 14 July 2022, Mr Nichols created a WhatsApp group called “PlanB". Mr Nichols updated group members on his progress with Cato & Clive and his recent conversation with Mr Balding. On 15 July 2022, Mr Nichols sent a message to group members arranging a meeting.

  2. On 18 July 2022, Mr Gosewisch followed up Ms Lane for her comments on the draft documents earlier provided, noting “I'm no longer getting emails sent to my Racing Queensland address". (There is nothing sinister in this; Mr Gosewisch had left his role as general counsel at Racing Queensland and was now advising Racing Queensland as an external lawyer at Fletch Worland Lawyers.) Ms Lane appears to then have been in the process of handing over her role and was thereby delayed.

  3. On 18 July 2022, the board of Racing Victoria met. The minutes note that Mr Nichols provided an update on Plan B: he was progressing a plan such that Racing Australia would end up attending to some matters “and maybe the pattern". Racing NSW would be invited to be a part, presumably of the Newco, and the voting structure would be different.

  4. On 22 July 2022, Mr Nicholl sent further WhatsApp messages to the Plan B group in respect of potential consultants to manage Plan B, who were available to meet on 2 August 2022. On 25 July 2022, Mr Nichols sent a WhatsApp message to Mr Ovens, planning an upcoming meeting “with Plan B prospects”, with interviews being conducted on 2 August 2022. On 27 July 2022, Mr Nichols drafted a document entitled “Newco Briefing Document", which he provided to Ms Lane for review and advice.

  5. On 27 July 2022, the board of Racing Australia met. Racing NSW's representatives raised concerns about anti-competitive behaviour. Reference was made to Mr Kruger's interview “talking about excluding NSW", presumably a reference to the radio interview at [15]. It was said to be evident that there was collusion against Racing NSW, which affected its ability to compete in the national wagering market. Mr Balding is reported to have suggested, “There are issues of collusion between directors to take anti-competitive behaviour." The meeting then appears to have moved to other topics.

  6. On 29 July 2022, Ms Lane ceased employment with Racing Victoria. On 1 August 2022, messages were exchanged on the Plan B WhatsApp group in preparation for the upcoming interviews. A “NEWCO Briefing Document" appears to have been prepared for the interviews on 2 August 2022, noting that the objective of the day’s discussions was “to elaborate on the scope of work that may culminate in the establishment of a new entity for the provision of prescribed services to the sport of thoroughbred racing in Australia and defined the scope of advisory services that will be required to accomplish this objective." As Ball J observed in Racing NSW (No 2) at [22]:

“The plan, at least as it stood by about August 2022, appears to have involved progressing the establishment of a new organisation in which no member (or director) would have a veto to the point where it was possible to invite Racing NSW to join that organisation or to agree to a restructure of Racing Australia to remove the effective vetos enjoyed by it and Racing Victoria (referred to as Plan A). If that did not work, Racing NSW would be excluded from the new organisation (Plan B).”

Options paper

  1. On 10 August 2022, Mr Nichols and the new CEO of Racing Victoria, Mr Jones, held a confidential meeting regarding the potential establishment of a new national racing body. On 11 August 2022, Mr Jones emailed Mr Nichols and others at Racing Victoria following their meeting “re plan B. Next steps". These steps included establishing a budget, legal, communications and, also, considering Plan A.

  2. On 16 August 2022, Mr Jones prepared a report for the Racing Victoria board entitled “Options for Racing Victoria's Competitive Response to Racing NSW". This document has been heavily redacted for relevance and commercial sensitivity. Ms Fielding explains that this document is an options paper for the board, outlining current options for Racing Victoria's business strategy and market position with respect to Racing NSW. The document summarises Racing NSW’s strategy as perceived by Racing Victoria and strategic options that could be adopted in response. The redacted portions are said to be highly commercially sensitive as they demonstrate Racing Victoria's internal processes of developing strategic planning, and the substance of Racing Victoria's current strategic plan. The document is said to reveal Racing Victoria's vision and objectives, together with the rationale and assumptions behind them. Disclosing this material would put Racing Victoria to significant disadvantage with respect to its competitors. I will return to this is at [85].

  1. The unredacted portion of Mr Jones’ paper mentions Racing Australia. Mr Jones considered that issues should be divided into three categories: where Racing Victoria and Racing NSW could work together, where they could not agree, and where they might be able to agree. Mr Jones observed:

“Maybe this will work, maybe it won’t, but I think this is the next step before we go all out on Plan B (while being prepared to use Plan B as a negotiating tactic or if non progress is possible under Plan A).”

Depending on the categorisation of the issues, various organisational models could result, including maintaining the existing structure or splitting Racing Australia into functions undertaken by Racing Australia and “potentially the Plan B structure where national advocacy is separated.”

  1. On 17 August 2022, Mr Nichols emailed Mr Kruger, Mr Jones and another, suggesting that most Racing Australia directors “are thinking that Plan B is a live prospect, which if it comes to fruition renders [Racing Australia] as no more than a technology service provider … We need to get in the room and resolve what we want in terms of an Australian racing governance structure and what we are opposed to".

Racing NSW finds out

  1. In August 2022, Racing NSW came into possession of some documents in relation to the PRAs’ plans: Racing NSW (No 2) at [23]. Perhaps unaware of this, Racing Victoria approached Racing NSW “to meet up and advocate for constitutional change”, where the PRAs had discussed the matter and “all supported an attempt by [Racing Victoria] to broker an outcome that would lead to governance reform without pressing the button on an alternative structure from matters exclusive of [Racing NSW].”

  2. In advance of a Racing Australia meeting on 6 September 2022, Mr Nichols reported to the PRAs that little had happened since, with Racing NSW apparently considering the matter. Mr Nichols also advised that he had informed the successful consultant, Ben Buckley of Buckley Advisory Group, “of our intention to reach out to Racing NSW and look to resolve outstanding issues as a precursor to confirming their appointment.”

  3. On 14 September 2022, Mr Kruger sent comments on board papers to Racing Victoria staff ahead of a board meeting, including that if Mr Jones had still not received a response from Racing NSW to meet in respect of the Racing Australia charter, “should we be just pushing on with Plan B?” On 19 September 2022, Racing Victoria’s company secretary, Mark Close, provided Mr Kruger with notes from the board meeting, including “Will give it another go before giving up”. Mr Kruger replied that he was “happy with outcomes”.

  4. In September 2022, Racing Victoria staff exchanged emails concerning a speaker program for an upcoming conference, and whether to include a speaker from Racing NSW. Mr Kruger thought that Racing NSW ought not be included, where “they’d done nothing to support/promote anything other than [Racing NSW], so don’t think we should give them a platform.” Against this, Mr Jones had no issue with including Racing NSW, which he considered may be politically strategic. Mr Kruger mused whether Racing NSW representatives should be invited “and highjack them with a meeting on [Racing Australia] charter”, but if there was still no response to Racing Victoria’s request for a meeting, “we really need to just get on with Plan B, I think.”

  5. In November 2022, further WhatsApp messages were exchanged as to whether Colin Holt would replace Mr Ovens on the “Newco subcommittee”, now that Mr Ovens was no longer on the Racing WA board.

These proceedings

  1. 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)…”

  1. 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].

Judgment and orders

  1. On 4 and 10 May 2023, Ball J heard the application for preliminary discovery orders. On 31 May 2023, his Honour gave judgment, summarising the claims which the plaintiffs were considering making against the defendants in Racing NSW (No 2) at [38]:

“… in substance what is alleged is that there is evidence to suggest that the defendant PRAs have reached or are proposing to reach an arrangement or an agreement to exclude Racing NSW from all or part of the national framework for regulating thoroughbred horse racing in Australia because Racing NSW will not agree to a Pattern which places what it regards as unacceptable (and anti-competitive) restrictions on its ability to conduct races as part of its Spring Carnaval…”

  1. His Honour noted that, as finally put, Racing NSW sought three types of information which it needed in order to decide whether to commence the proceedings: how far the proposal had advanced and whether the defendants were planning to continue with it; the nature and scope of the proposal; and “The third concerns the defendants’ purpose. Are they merely seeking to resolve an impasse or are they, for example, seeking to reduce competition?”: Racing NSW (No 2) at [39]. In opposing the plaintiffs’ application, Racing Victoria had submitted that the purpose of the plan was to reform the governance of thoroughbred racing in Australia, so that each of Racing NSW and Racing Victoria gave up its veto for the benefit of the industry as a whole. His Honour considered that this itself raised various questions, including “whether the purpose of the plan to eliminate the veto is to force on Racing NSW a Pattern which Racing NSW submits is anti-competitive and which may therefore involve an agreement, arrangement or concerted practice that contravenes s 45 of the CCA”: Racing NSW (No 2) at [50]. Further, at [52]:

“… It is not simply the fact of possible exclusion that may give rise to a contravention, or threatened contravention, of s 45 of the CCA, and possibly to other causes of action. It is also the purpose of any agreement, arrangement or concerted practice which has exclusion as a possible outcome that is relevant. It is Racing Victoria’s position that the purpose of the plan was or is to bring about a reform of the administration of racing to Australia for the benefit of the industry as a whole. It cannot come as a surprise to the PRA defendants in the context that Racing NSW may seek to argue that the purpose of the plan was to get Racing NSW to agree to a Pattern that was anti-competitive and the plan is anti-competitive for that reason.”

  1. His Honour was satisfied that each of the three types of information sought by the plaintiffs was relevant to the types of claims that the plaintiffs might wish to bring and were not matters on which the plaintiffs had sufficient information to decide whether to bring those claims: Racing NSW (No 2) at [58]. In setting the starting date for Relevant Period at 1 February 2022, his Honour also observed that internal documents of the defendants may shed light on the purpose of the defendants, which was a relevant matter: Racing NSW (No 2) at [74].

  2. His Honour asked the parties to prepare short minutes of order which reflected his reasons. A further hearing took place on 27 June 2023. On 18 July 2023, after dealing with some remaining drafting disputes, Ball J made orders for preliminary discovery, including the following categories:

1   All Documents created in the Relevant Period constituting, recording or evidencing any agreement, draft agreement or proposed agreement between the PRAs concerning:

(a)   the exclusion of, or threat to exclude, Racing NSW from the Australian thoroughbred racing industry; or

(b)   the establishment of, or threat to establish, a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia.

…

3   All Documents created in the Relevant Period constituting or recording communications between RVL (and any of its employees or agents) and any Other Person concerning:

(a)   the exclusion of, or threat to exclude, Racing NSW from the Australian thoroughbred racing industry;

(b)   the establishment of, or threat to establish, a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia; or

(c)   the object sought to be achieved by, or the purpose of any agreement, draft agreement or proposed agreement of the type referred to in paragraph 1.

…

5   All Documents created in the Relevant Period constituting internal communications, briefing notes or work papers concerning:

(a)   any agreement, draft agreement or proposed agreement between the PRAs concerning the exclusion of, or threat to exclude, Racing NSW from the Australian thoroughbred racing industry;

(b)   any agreement, draft agreement or proposed agreement between the PRAs concerning the establishment of, or threat to establish, a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia; or

(c)   the object sought to be achieved by, or the purpose of (a) or (b).

  1. Of the defined terms used in the categories, relevantly:

A.   Document has the meaning provided in the Evidence Act 1995 (NSW) and includes (without limitation) all originals and drafts, letters, notes, file notes, memoranda, diary entries, facsimiles, electronic mail and computer records (whether stored on a computer disk or otherwise), text messages (including Whatsapp, Signal and iMessage), and any other written communications in your possession, custody or control.

B.   Other Person means the persons, entities, organisation or associations described below (and their officers, employees, representatives or agents):

a.   any other PRA;

b.   any public relations adviser or strategic adviser;

…

g.   any of the International Federation of Horse Racing Authorities, the Asian Racing Federation Handicappers Committee or the IFHA Longines World’s Best Race Horse Rankings Committee;

…

C.   PRA means any or all of Racing Victoria … Racing Queensland … Racing SA … Racing [WA] … TasRacing … Racing NT … and/or Canberra Racing … (and their officers, employees, representatives or agents).

  1. Further orders were made on 18 August 2023 by Ball J, permitting the defendants to redact irrelevant material in accordance with a regime. First, the defendants could produce documents with redactions applying to commercially sensitive material that was not relevant to the categories of preliminary discovery. Second, the defendants were to provide the plaintiffs with a list of all documents containing redactions to commercially sensitive information, including the basis for each redaction, and also to produce unredacted copies of the documents to the plaintiffs’ external legal advisers, subject to those legal advisers providing a written undertaking to the defendants and the Court that they would not share the documents or the information contained in the redacted passages with any other person without further order. Third, the plaintiffs were to inform the defendants of any redactions to which they objected. Finally, the matter would then come before the Court to resolve any objections by the plaintiffs to the defendants’ redactions.

Construction of discovery categories

  1. 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

  1. 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.

  2. 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.

  3. 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.

  4. 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

  1. 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.

  2. 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.

  3. 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.

  4. 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”.

  1. 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.

  2. 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.

  3. 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.

  4. 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

  1. 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.

  2. 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.

  3. 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].

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  1. 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.

  2. 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.

  3. 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.

  4. 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

  1. 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.

  2. 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.

  3. 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.

  4. 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

  1. 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.

  2. 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”.

  3. 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.

  4. 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

  1. 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.

  1. 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.

  2. 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

  1. 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.

  2. 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).

  3. 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

  1. 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).

  2. 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

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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).

  7. 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).

  8. 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

  1. 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).

  2. 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.

  3. 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 GroupLtd (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).

  4. The defendants submitted that there was no prohibition on admissible hearsay evidence in support of privilege claims: Inthe 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).

  5. 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].

  6. 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).

  7. 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

  1. 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.

  2. 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.

  3. 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.

  1. 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.

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Amendments

20 March 2024 - Coversheet: amend date from "23 December" to "23 February".


[69], [80], [120]: minor typographical amendments

Decision last updated: 20 March 2024

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Cases Cited

42

Statutory Material Cited

2

Airservices Australia v Transfield Pty Ltd [1999] FCA 886
Airservices Australia v Transfield Pty Ltd [1999] FCA 886
Kadian v Richards [2004] NSWSC 382