Racing New South Wales v Sydney Turf Club - [2005] NSWSC 426

No judgment structure available for this case.

CITATION:
Racing New South Wales v Sydney Turf Club & Ors [2005] NSWSC 426

HEARING DATE(S): 26, 27, 28, 29 April 2005
2 May 2005

JUDGMENT DATE :

3 May 2005

JURISDICTION:
Commercial List

JUDGMENT OF:
Bergin J

DECISION:
[SEPARATE QUESTIONS]- Part 31 questions - Did the plaintiff have power to issue the particular directions - Were the directions actually authorised - Should the directions be quashed for failure to provide procedural fairness. Answers: No; No; Yes

CATCHWORDS:
[STATUTORY CONSTRUCTION] - The role of the plaintiff as the representative body controlling thoroughbred horse racing in New South Wales - Whether the Thoroughbred Racing Act 1996 (NSW) and / or the Totalizator Act 1997 (NSW) gave to the plaintiff power to issue directions to the defendants prohibiting them from entering into contracts for the broadcasting of horse races from their racecourses without the plaintiff's written consent - [CONTRACTS] - The nature and extent of the plaintiff's obligations under a series of contracts which provide for the distribution of revenue from wagering to the racing industry - Whether those contracts entitled the plaintiff to issue the directions - [ADMINISTRATIVE LAW] - The nature of the plaintiff's obligations under the Acts - Apprehension of Bias

LEGISLATION CITED:
Australian Jockey Club Act 1873 (NSW)
Supreme Court Act 1970 (NSW)
Supreme Court Rules 1970 (NSW)
Sydney Turf Club Act 1943 (NSW)
Thoroughbred Racing Act 1996 (NSW)
Totalizator Act 1997 (NSW)
Totalizator Agency Board Privatisation Act 1997 (NSW)

CASES CITED:
Aerial Taxi Cabs Co-operative Society Ltd v Lee (2001) 178 ALR 73
Allen v Thorn Electrical Industries Ltd [1968] 1 QB 487
Bropho v State of Western Australia (1990) 171 CLR 1
FCT v Australia & New Zealand Banking Group Ltd (1979) 143 CLR 499
Hughes & Anor v NM Superannuation Pty Ltd & Anor (1993) 29 NSWLR 653
Kioa v West (1985) 159 CLR 550
Legal & General Insurance Australia Ltd v Board of Fire Commissioners of NSW [1982] 1 NSWLR 555
Legal & General Insurance Australia Ltd v Board of Fire Commissioners of NSW [1983] 2 NSWLR 131
NM Superannuation Pty Ltd v Hughes & Ors (1992) 27 NSWLR 26
The Commonwealth of Australia v The State of New South Wales (1923) 33 CLR 1
Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83
Waterhouse v New South Wales Thoroughbred Racing Board [2003] NSWSC 541

PARTIES:
Racing New South Wales (Plaintiff)
Sydney Turf Club (First Defendant)
Dr Treve Williams (Second Defendant)
The Australian Jockey Club (Third Defendant)
Thoroughvision Pty Ltd (Fourth Defendant)

FILE NUMBER(S):
SC 50059/05

COUNSEL:
Phillip Taylor SC and M. Allars (Plaintiff)
T.F. Bathurst QC and A.S. Bell (First, Second, Third Defendants)
R. Beech-Jones (Fourth Defendant)

SOLICITORS:
Gilbert + Tobin (Plaintiff)
Mallesons Stephen Jaques (First, Second, Third Defendants)
Phillips Fox (Fourth Defendant)

LOWER COURT JURISDICTION:

- 91 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

3 MAY 2005

50059/05 RACING NEW SOUTH WALES V SYDNEY TURF CLUB & ORS

JUDGMENT

1 The issues in this case relate to entitlements to broadcast thoroughbred racing in New South Wales. Sky Channel Pty Ltd (Sky) has for some years broadcast the races pursuant to agreements with the Australian Jockey Club (the AJC), The Sydney Turf Club (the STC) and the provincial and country race clubs. Those agreements expired in March 2004. Subsequently the AJC and the STC entered into an agreement with ThoroughVision Pty Ltd (TVN) for the broadcasting of the races that expires on 3 May 2005. The shareholders of TVN are Victorian Racing Limited as to 50% and the AJC and the STC as to 50%. Between March 2004 and April 2005 interim arrangements have been in place whilst negotiations in respect of rights to broadcast the races after 3 May 2005 have continued. During that period some race meetings have not been broadcast; this has been referred to in the litigation as "blackouts".

2 The plaintiff, Racing New South Wales, is a body corporate established under section 4 of the Thoroughbred Racing Act 1996 (NSW) (the Act). In January and February 2005 it purported to issue a number of directions to the AJC, the STC and provincial and country race clubs requiring them not to enter into any new agreements in relation to the broadcasting of the races without its written consent. On 1 April 2005 the plaintiff commenced these proceedings in which it seeks injunctions against the AJC and the STC restraining them from acting inconsistently with its purported directions. Subsequently the plaintiff joined TVN to the proceedings and seeks restraining orders against it.

3 The defendants proffered undertakings to the Court to enable an urgent final determination of separate questions prior to 4 May 2005 because relevant contracts expire on 3 May 2005. The hearing took place on 26, 27, 28 and 29 April 2005 and 2 May 2005 when Mr Phillip Taylor SC, leading Ms M Allars of counsel appeared for the plaintiff, Mr TF Bathurst leading Dr A Bell of counsel appeared for the AJC and the STC and Mr R Beech-Jones of counsel appeared for TVN. On 29 April 2005 I made orders pursuant to s 110K of the Supreme Court Act 1970 that the parties attempt to settle their disputes by mediation with a mediator of their choice on 30 April 2005. That mediation failed to achieve an agreed outcome.

Separate Questions

4 An order has been made pursuant to Part 31 of the Supreme Court Rules 1970 that the following questions be decided separately:

1. Whether, having regard to the terms of the directions dated 28 January 2005, 1 February 2005 and 17 February 2005 ("Directions") referred to in the affidavit Peter Nicolas V’Landys sworn 1 April 2005 in these proceedings, Racing NSW had power to issue any one or more of those Directions, whether by reason of its statutory powers and functions under the Thoroughbred Racing Act 1996 (NSW) and Totalizator Act 1997 (NSW) or pursuant to the agreement and deeds referred to in paragraphs 6(a) – (c) of the Amended Summons and any acknowledgements and consents signed by STC or AJC.

1A. Were the Directions purportedly made by Racing NSW in fact authorised by Racing NSW.

(a) for an improper purpose or purposes;

(b) in circumstances where there was a denial of procedural fairness, namely actual or apprehended bias on the part of Racing NSW; or
(c) on the basis of Racing NSW having taken into account irrelevant considerations and having failed to take into account relevant considerations,
as pleaded in the cross-claim (of the first, second and third defendants) and particularised.

3. To the extent that any of the Directions was issued pursuant to any contract, arrangement or other agreement with STC and/or AJC, whether the issue of that or those Directions was in breach of implied duties of good faith and co-operation or duties to exercise any power or right impartially and without actual or apprehended bias or to exercise any power or right for a proper purpose and by reference to relevant considerations and not by reference to irrelevant considerations.

4. Subject to the answers to 1, 1A, 2 and 3 above, whether, on the assumption that the Directions were valid and binding on STC and AJC, the entry into the agreements referred to in paragraph 32 of the Amended Summons, was in contravention of the Directions.

Thoroughbred Racing Act

1996 (NSW

)

5 The long title to the Act states that it is an "Act to make provision for the establishment, management and functions of “the plaintiff” as the representative body to control thoroughbred horse racing in the State; and for other purposes". Section 4 provides for the establishment of a body corporate with the corporate name of Racing New South Wales that may, in the exercise of its functions, use the name "Racing NSW". Section 5 provides that the plaintiff does not represent the Crown and is not subject to direction or control by or on behalf of the Government. The membership of the plaintiff consists presently of nine members, nominees of: (1) the AJC; (2) STC; (3) the Provincial Association of New South Wales (PANSW); (4) the Board of Directors of the Country Racing Council Ltd (CRC); (5) eligible industry bodies representing the interests of owners and breeders of thoroughbred racehorses; (6) eligible industry bodies representing the interests of license trainers, licensed jockeys and apprentice jockeys, licensed bookmakers and bookmakers’ clerks, stable hands and race club employees; and (7) the Chairperson selected by the nominated members: The other two members are the Chief Executive and an additional member appointed by the plaintiff who is considered to have "expertise relevant to the functions exercisable" by the plaintiff (s 6).

6 The functions of the plaintiff are set out in section 13 of the Act which provides:

13 Functions of Racing NSW

(1) Racing NSW has the following functions:

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

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

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

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

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

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

7 The powers of the plaintiff are set out in section 14 of the Act as follows:

14 Powers of Racing NSW

(1) Racing NSW has power to do all things that may be necessary or convenient to be done for or in connection with the exercise of its functions.
(2) Without limiting subsection (1), Racing NSW has power to do the following:

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

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

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

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

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

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

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

(h) register and identify galloping horses,

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

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

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

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

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

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

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

(p) enter into contracts,

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

(r) borrow money,

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

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

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

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

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

8 The Act also includes the following sections:

19 Procedure

(1) Racing NSW may regulate its proceedings as it considers appropriate, subject to this section.

(1A) Proceedings in respect of an inquiry conducted by Racing NSW may be conducted in public or in private, or partly in public and partly in private, as Racing NSW may decide.

(1B) In conducting an inquiry, Racing NSW may examine any witness on oath or affirmation, or by use of a statutory declaration.

(2) The quorum for a meeting of Racing NSW is a majority of the voting members of Racing NSW as constituted for the time being.
(3) The Chairperson or, in the absence of the Chairperson, the Deputy Chairperson is to preside at a meeting of Racing NSW. If neither the Chairperson nor Deputy Chairperson is present at a meeting, the members present may elect one of their number to preside at the meeting. The person presiding at a meeting has a deliberative vote and, in the event of an equality of votes, has a second or casting vote.

(4) A decision supported by a majority of the votes cast at a meeting of Racing NSW at which a quorum is present is the decision of Racing NSW.

(5) A failure to nominate a person to a category of nomination specified in section 6 (1) (a)–(f) does not affect the membership of persons who are nominated in accordance with that section.

(6) If an eligible industry body fails to participate in the nomination of a member referred to in section 6 (1) (e) or (f), the nomination by the other eligible industry bodies or body, as the case may be, is taken to be effective for the purposes of the relevant provision.

20 Transaction of business outside meetings or by telephone

(1) Racing NSW may, if it thinks fit, transact any of its business by the circulation of papers among all of its members, and a resolution in writing approved in writing by a majority of the voting members is taken to be a decision of Racing NSW.

(2) Racing NSW may, if it thinks fit, transact any of its business at a meeting at which members (or some members) participate by telephone, closed-circuit television or other means, but only if a member who speaks on a matter at the meeting can be heard by the other members.

(3) For the purposes of:
(a) the approval of a resolution under subsection (1), or
(b) a meeting held in accordance with subsection (2),

the Chairperson and each other member have the same voting rights as they have at an ordinary meeting of Racing NSW.

(4) A resolution approved under subsection (1) is to be recorded in the minutes of the meetings of Racing NSW.
(5) Papers may be circulated among members for the purposes of subsection (1) by facsimile or other transmission of the information in the papers concerned.

9 Section 24 of the Act provides:

24 Delegation of functions

(1) Racing NSW may delegate to unauthorised person or body any of its functions, other than this power of delegation.

(2) A delegate may sub-delegate to an authorised person or body any function delegated by Racing NSW if the delegate is authorised in writing to do so by Racing NSW.

authorised person or body

Totalizator Act

1997 (NSW)

10 For the purposes of the Totalizator Act 1997 (NSW) (the Totalizator Act), the plaintiff is a "controlling body" and the AJC and the STC are "major racing bodies". TAB Limited is entitled to the exclusive off-course totalizator license during the exclusivity period expiring 15 years after a day declared by the Minister as the operative date (s 11 & 13).

11 The "racing industry" is defined in this Act as comprising such one or more persons as the controlling bodies and major racing bodies nominate in writing to the Minister for the purposes of the licence concerned. The Minister is unable to grant a licence unless satisfied that the applicant has made "commercial arrangements with the racing industry in respect of the licence and the conduct of activities authorised by the licence" to the satisfaction of the racing industry (s 21A). The Minister supervises the conduct of totalizators and is able, inter alia, to direct licencees to terminate certain contractual arrangements (s 67).

12 Clauses 14 and 15 of Schedule 2 of the Totalizator Act provide as follows:

14. Commercial arrangements with racing bodies

Each controlling body has such additional powers, authorities, duties and functions as may be necessary or convenient for enabling it to enter into and perform its obligations under the following arrangements:

(a) commercial arrangements for facilitating the conduct of totalizator betting and other betting activities authorised by this Act and arrangements ancillary to those arrangements,

Liquor Act 1982

Registered Clubs Act 1976

(c) arrangements for the giving of financial assistance and support to the racing industry or individual racing clubs, and arrangements ancillary to those arrangements,

(d) arrangements for the distribution of moneys payable under the arrangements referred to in paragraphs (a) and (b),

Totalizator Agency Board Privatisation Act 1997

15. Power of controlling bodies to give directions

(1) Each controlling body has power to give the racing clubs for which it is responsible such directions as the controlling body considers to be necessary or desirable for the purpose of enabling it to exercise its rights and perform its obligations under, and otherwise to give effect to, arrangements referred to in clause 14.

(2) A contract under seal is taken to exist between each controlling body and the racing clubs for which it is responsible, under which each racing club agrees to comply with the directions given to the racing club under this clause.

(3) Each controlling body must exercise is powers under this clause to give directions to the racing clubs for which it is responsible so as to ensure that the arrangements referred to in clause 14 are carried into effect.

The “Commercial Arrangements”

13 There are a number of “commercial arrangements” that the plaintiff claims fall within the categories described in clause 14. The first is what has been referred to as the Government Agreement entered into on 25 November 1997 between the New South Wales Government and "Representative Bodies" defined to include the plaintiff, the AJC, the STC, PANSW, CRC, Harness Racing New South Wales (HRNSW), and the Greyhound Racing Association (GRA). This Agreement is said to be the “arrangement” referred to in clause 14 (e) of the Totalizator Act. Although it is not in evidence it is described as "setting out a package of reforms, measures and procedures for the reform of the financial and other arrangements of the New South Wales racing industry".

14 Prior to 25 November 1997 off-course wagering on the races was conducted through the Totalizator Agency Board of New South Wales. As part of the reforms of the racing industry that Board was converted to a public company, TAB Ltd (TAB), pursuant to the Totalizator Agency Board Privatisation Act 1997 (NSW). TAB is licensed under the Totalizator Act to conduct off-course totalizator wagering in New South Wales, and elsewhere. In December 1997 TAB entered into a Racing Distribution Agreement (RDA) with an entity known as NSW Racing Pty Limited, referred to as “Racingcorp”, as agent for the plaintiff, HRNSW and GRA. The RDA was amended a number of times up to April 2003. In December 2004 the same parties, together with TABCORP Limited, which by that time had acquired TAB, which in turn had acquired Sky, entered into a Deed of Accession, Co-Operation and Amendment (DACA). Both the RDA and the DACA are claimed to fall within the description of the commercial arrangements referred to in clause 14(a) and (b) of Schedule 2 of the Totalizator Act.

15 Under the RDA, TAB pays Racingcorp as agent for the other entities, including the plaintiff, a product fee and a wagering incentive fee (WIF). For each dollar that is earned as revenue by TAB the Racing Industry receives 4.5c distributed to it pursuant to two further agreements, the Racing Inter-Code Deed and the Intra Code Deed. These two Deeds are claimed to fall within the description of the commercial arrangements referred to in clause 14(c) and (d) of Schedule 2 of the Totalizator Act.

The RDA

16 In the RDA, the letters “NSWR” refer to Racingcorp and the term “Representative Bodies” includes the plaintiff. It is acknowledged by TAB, Tabcorp and Racingcorp, that Racingcorp entered into the RDA in its capacity as agent for the plaintiff and that the plaintiff is severally and not jointly responsible for the performance of the obligations of Racingcorp under the RDA. In that regard the obligations of the plaintiff are “the supply of the NSW Racing Programme and NSW Racing Information and other obligations insofar as they relate to thoroughbred racing (cl 2.1(b)(i)). The NSW Racing Programme is defined as “the annual programme of Race Meetings which NSWR determines will be staged in New South Wales pursuant to clause 5.2” of the RDA. The NSW Racing Information is defined as “in respect of a Race in New South Wales, the information described in Schedule 2 which, for the avoidance of doubt, does not include the racing spectacle itself or any reproduction thereof” (emphasis added) (cl 1.1).

17 The plaintiff undertook "to make, maintain in force and enforce directions in relation to the Racing Clubs under Schedule 2, clause 15 of the Act required to enable NSWR to comply with its obligations" under the RDA (cl 2.5). Clause 3.1 provides as follows:

3 Relationship of Parties

3.1 Independent representation

The parties acknowledge and agree that on and subject to the terms set out in this Agreement:

(a) they will consult with each other in the conduct of their respective businesses as is expressly provided for in this Agreement;

(b) subject to any express contractual obligations, covenants and undertakings of this Agreement each party has the right to conduct its own business as it thinks fit and management of the party's business remains solely the function and responsibility of that party;

(c) nothing in this Agreement will be deemed to confer on one party the right or ability to direct or manage the business of any other, and

18 TAB and TABCORP undertook to Racingcorp and the plaintiff that they would "not take actions or make decisions (to take an action or not take an action) which could reasonably be expected to materially reduce the Total Financial Benefit and otherwise could reasonably have been expected to have been payable to Racingcorp but for such actions or decisions (cl 3.4). They also undertook not to "take actions or make decisions to take an action which could reasonably be expected to materially adversely affect the development of the Codes in New South Wales (cl 3.5).

19 The RDA provided for the establishment of a Racing Product Committee comprised of representatives appointed by TAB and Racingcorp. TAB and Racingcorp agreed that they would ensure that their respective representatives would monitor the compliance of the obligations under the Agreement in relation to "the supply of racing programme, racing information and TAB coverage and operational aspects associated with the activities contemplated" by the RDA (cl 4.4). Functions of that Committee included the discussion of any issues of concern, the proposal of solutions and working towards the resolution of the issue of concern. TAB and Racingcorp agreed "to consider in good faith “any matters raised in any meeting of the Committee and to "engage in good faith discussions" in relation to any such matters (cl 4.4). It was agreed that the role of the Committee was only advisory (cl 4.9).

20 Racingcorp and TAB acknowledged that one of their objectives in relation to determining each NSW Racing Programme was to enhance that Programme so as to: (a) maximise Wagering Revenue; (b) maximise Wagering Earnings; (c) encourage public interest in racing in New South Wales; (d) encourage public attendance at Race Meetings in New South Wales; and (e) otherwise promote the quality and development of the Codes in New South Wales (cl 5.1).

21 Racingcorp agreed to “procure the supply to TAB of NSW Racing Information in respect of each of the Races included in each NSW Racing Programme at the times and in the manner specified” in the RDA. TAB agreed to obtain at its cost and to supply to Racingcorp and the Racing Clubs, NSW Racing Information and interstate and overseas Racing Information and wagering information (cl 6.1 and 6.2).

22 The RDA contains a number of provisions relating to broadcasting, including the following:

7 Broadcasts

7.1 NSWR to Enable Broadcast of NSW Coverage Programme

NSWR must use its best endeavours to ensure that each Racing Club makes available facilities at the relevant Racecourse to enable all Race Meetings in a NSW Coverage Programme to be broadcast by a third party (including by television and radio), live or as soon as practicable, to TAB Outlets and to all oncourse venues in New South Wales operating on the day of the Race Meeting and TAB must use its be endeavours to facilitate receipt of such broadcast by TAB Outlets.

clause 7.1 amended – clause 4.1 (mm) Second Amending Agreement]

7.2 Broadcasting Agreements

(a) Both TAB and NSWR will use their respective best endeavours to ensure that any new arrangements with third parties for television, radio or other broadcasting of Races and Race Meetings in New South Wales will be on commercial terms which do not cause financial detriment or commercial disadvantage to either party which in the case of TAB is limited to financial interests in relation to Wagering or Gaming.

(b) On renegotiation or renewal of any existing broadcast arrangements, TAB and NSWR will confer with each other and use their respective best endeavours to ensure that those arrangements or contracts are renewed or made on commercial terms which do not disadvantage the financial interests of either party which in the case of TAB is limited to financial interests in relation to Wagering or Gaming.

clauses 7.2(a) and (b) amended – clause 4.1 (nn) Second Amending Agreement]

7.A Sky Broadcasting Arrangements

7A.1 Arrangements for the Provision of Broadcast/Audio-Visual Rights

(a) If prior to the Control Date [5 July 2004], a NSW Racing Entity [which includes NSW thoroughbred racing clubs] entered into an arrangement or arrangements with any Existing TAB/SKY Company in relation to the provision to any Existing TAB/SKY Company of broadcast or audio-visual rights of any nature then (notwithstanding any contracts in effect at the Control Date) that NSW Racing Entity will be entitled to elect (by notice to TAB given at any time on or before 31 December 2005) either:

(i) to remain with any arrangement or arrangements in place and in operation as at the Control Date; or

(ii) to maintain or reinstate (as the case may be) with effect from the date (the “Election Date”) on which the relevant NSW Racing Entity delivers to Sky Channel the executed documentation referred to in clause 7A.1(c) until 30 June 2006, the full contractual arrangements which were in place and in operation as at 30 June 2003 between the NSW Racing Entity and the relevant Existing TAB/SKY Company in relation to the provision to the relevant Existing TAB/SKY Company of broadcast and other audio visual rights of any nature (as amended to the extent necessary to reflect the extended or reduced (as the case may be) term) in which case such new arrangements shall supersede and replace any arrangements of the nature referred to in clause 7A.1(a)(i) to which that NSW Racing Entity was party.

Provided that if the NSW Racing Entity does not give a notice to TAB by 31 December 2005, the NSW Racing Entity will be deemed to have made the election set out in clause 7A.1(a)(i) (in the case where arrangements referred to in clause 7A.1(a)(i) exist) or in any other case to have elected not to exercise the rights contemplated by this clause 7A.1.

For the avoidance of doubt, nothing in this clause 7A.1 will require any party to ensure that any NSW Racing Entity or Existing TAB/Sky Company is made good or compensated for the difference between its actual situation at or before the Election Date and the situation it would have been in at or before the Election Date if the full contractual arrangements referred to in clause 7A.1(a)(ii) had been in place continuously between their expiry and the Election Date, or continuously between their expiry or the Control Date and the Election Date.

(b) TAB and TABCORP will ensure that each relevant Existing TAB/Sky Company gives effect to each election made (or deemed to have been made) pursuant to clause 7A.1(a)(i) and to each maintained or reinstated arrangement to which that election (including any deemed election) relates.

(c) Subject to the relevant NSW Racing Entity executing and delivering to Sky Channel confirmatory documentation to give effect to an election pursuant to clause 7A.1(a)(ii) (which documentation, when executed by the relevant Existing TAB/SKY Company or Existing TAB/SKY Companies, would record the renewed conferral of the relevant broadcast or other audio-visual rights on Sky Channel and in the case where the arrangement or arrangements in place and in operation as at the Control Date were not also in place and in operation as at 30 June 2003, result in the termination without liability to any party of the arrangement or arrangements in place and in operation as at the Control Date). TAB and TABCORP will ensure that each relevant Existing TAB/SKY company promptly executes such documentation and gives effect to each election made pursuant to clause 7A.1(a) and to each maintained or reinstated arrangement to which that election relates.

(i) for all Racing Clubs other than the Australian Jockey Club and the Sydney turf Club, any rights of first or last refusal or options to renew or extend in favour of any Existing TAB/SKY Company in those maintained or reinstated contractual arrangements shall not apply; and

(ii) for the Australian Jockey Club and the Sydney Turf Club, any rights of first or last refusal or options to renew or extend in favour of any Existing TAB/SKY Company in those maintained or reinstated contractual arrangements will continue to apply in accordance with their terms, as amended to the extent necessary to reflect the extended term of the contractual arrangements.

(e) For so long as the relevant NSW Racing Entities negotiate in good faith. TAB and TABCORP will ensure that prior to 30 June 2006, Sky Cannel will negotiate in good faith with any NSW Racing Entities which wish to participate in negotiations with Sky Channel in relation to the provision by such NSW Racing Entities to Sky Channel of broadcast and other audio-visual rights for the period from 1 July 2006.

(i) waives and will ensure that its Related Bodies Corporate (including Sky Channel) which hold any right of veto or objection will waive any right of veto or object they may otherwise have had; and

(ii) irrevocably consents and will ensure that its Related Bodies Corporate (including Sky Channel) will consent

to any or all NSW Racing Entities within and across Codes negotiating collectively in respect of the provision to Sky Channel of broadcast and other audio-visual rights for Races in New South Wales (and associated spectacle) for the period from 1 July 2006 through NSWR or a body nominated by NSWR (notwithstanding the terms of any existing contract with TAB or any of its Related Bodies Corporate (including Sky Channel)).

7A.2 Disposal of Sky Channel

(i) Sky Channel or any of its audio-visual Race broadcasting businesses (“Relevant Business”); or

(ii) any other Relevant Business conducted by TAB or any of its Related Bodies Corporates.

to any Victorian racing entity unless a corresponding and contemporaneous offer is made to NSWR or the relevant NSW Racing Entities nominated by NSWR.

…

7.A6 No Requirement to Broadcast

Nothing in this clause 7A requires a member of the TABCORP Group to continue to provide or procure the provision of the Sky Commercial Service or the Sky Domestic Service.

…

8.3 No Broadcast Rights

10 Television and Radio Broadcasting Charges

10.1 TAB and NSWR each acknowledge and agree that there are issues in relation to broadcasting and that they will consult with each other and use their respective best endeavours to develop a strategy to deal with broadcasting issues by 31 December 1998. Such broadcasting issues shall include that not be limited to:

(a) increases in charges by television or radio broadcasters for coverage of the NSW Racing Program;

10.2 Without limitation to any other provision of this Agreement, TAB and NSWR will in good faith discuss, on an ongoing basis, existing and proposed arrangements in relation to international broadcasting of Australian Races and, in that context the associated taking of overseas bets on Australian races as a result of such international broadcasting arrangements and the associated pooling of such overseas debts.

23 The RDA provided for the establishment of a Business and Strategy Committee with representatives from each of TAB and Racingcorp. The functions of that Committee included considering and making recommendations to NSWR in relation to: "its proposed strategies which impact on Wagering"; and "business plans for the conduct, promotion and development of the racing industry in New South Wales" (cl 16.4 (a) (ii) & (iv)). Its function also included reviewing: (i) material policy; (ii) medium to long term strategy; (iii) monthly reports; (iv) draft operating plans and budgets; and (v) advertising programs, in relation to the Wagering business and the Gaming business (cl 16.4 (c)). The parties agreed, through their respective representatives on the Business and Strategy Committee, to "consider in good faith any matters raised in any meeting" of the Committee and to "engage in good faith discussions in relation to those matters" (cl 16.4A(a)). TAB agreed not to adopt or implement any matter referred to in clause 16.4 (c) without the Committee having the opportunity to review it and the NSWR representatives having a reasonable opportunity to express their views about that matter and to resolve any differences (cl 16.4A (c)). The parties agreed to provide to each other all material information to allow the Committee representatives to evaluate matters coming before the Committee (cl 16.5). This Committee was also only advisory.

The DACA

24 The DACA was entered into for reasons that included TABCORP becoming a party to the RDA and to amend the RDA. Recital G of the Deed provided that the DACA and the RDA and some other agreements constituted “commercial arrangements for the purposes of s 43A(1) of the” Totalizator Act. The terms of the RDA include the amendments made by the DACA.

The Racing Inter-Code Deed

25 The parties to the Racing Inter-Code Deed (the Inter-Code Deed) are Racingcorp (NSWR), the plaintiff, HRNSW and GRA. The Recitals record that the Inter-Code Deed sets out: (a) the terms and conditions upon which NSWR is to be operated, controlled and funded; (b) the basis upon which funds received by it will be distributed between the Racing Codes; (c) the respective obligations, rights and entitlements of each party in respect of the Totalizator Act, the RDA, the Government Agreement and associated matters; and (d) the terms of NSWR’s agency.

26 The Objectives of NSWR are set out in clause 3.14 as follows:

3.14 Objectives of NSWR

(a) The primary object of NSWR is the encouragement and promotion of animal races, including the provision of grants to the Racing Codes.

(b) The secondary objects of NSWR are:

(i) to be a successful business operating at least as efficiently as any comparable business and maximising the revenue received by the Racing Codes under the Racing Distribution Agreement; and

(ii) to conduct its activities having regard to the interests of each other Racing Codes, including metropolitan, provincial and country racing activities,

taking into consideration:

(iii) the scale and operations of each of the Racing Codes and the country/provincial and metropolitan divisions within those Racing Codes; and

(iv) the desire of each of the Racing Codes to increase their operations.

27 Each of the Controlling Bodies, including the plaintiff, appointed NSWR as its sole and exclusive agent and they agreed, pursuant to clause 3.15, to procure that the business of NSWR was, inter-alia, to appoint representatives to the Racing Product Committee and Business and Strategy Committee (cl 3.15 (b) & (c)). Such business also included:

(d) to remit all moneys received under the Government Agreement and the Racing Distribution Agreement in accordance with the provisions of this Deed;

(e) to procure that the Racing Facilities are maintained and made available in accordance with its obligations under the Racing Distribution Agreement;

(f) to determine the NSW Racing Programme and procure that it is made available in accordance with its obligations under the Racing Distribution agreement;

(g) to procure that the NSW Racing Information is made available in accordance with its obligations under the Racing Distribution Agreement; and

(h) anything else determined by the Board of NSWR having regard to the objectives of NSWR set out in clause 3.14.

28 Clause 3.18 provides:

3.18 Racing Programme and Racing Information to be supplied to NSWR

Each of the Controlling Bodies will procure and they and all Racing Clubs in their respective Racing Code will throughout the term of the Racing Distribution Agreement:

(a) supply the NSW Racing Programme and the NSW Racing Information to NSWR on an exclusive basis for the purposes set out in the Racing Distribution Agreement;

(b) stage the NSW Racing Programme;

(c) maintain the Racing Facilities available in accordance with their obligations under the Racing Distribution Agreement; and

(d) do all things necessary to ensure compliance with their obligations and the obligations of NSWR under the Racing Distribution Agreement and the Government Agreement (including the issue and enforcement of directions as required under the Racing Distribution Agreement).

29 "Racing Facilities" are defined to include "any racecourse, track or other place and associated structures and equipment at which the racing club of one of the Racing Codes conducts or is authorised to conduct" thoroughbred racing (cl 1.1).

30 The Inter-Code Deed provides for the allocation of funds pursuant to specific formulas and provides that the plaintiff receives approximately 70% of the available funds, with HRNSW and GRA sharing the balance, with the former receiving a little more than half of the remaining funds.

31 It is agreed that "neither NSWR nor any Controlling Body of a Racing Code will take any action which would materially adversely affect the welfare of, in the case of NSWR, any of the Racing Codes and in the case of a Controlling Body, any other Racing Code (cl 8.6(a)). The plaintiff agreed that each year it would procure the production of a business plan for its respective racing code and produce it to NSWR (cl 9.1). The plaintiff also agreed to use "its best endeavours (consistently with due prudence and the other provisions of the Deed) to foster the development and profitable operation of NSWR's business" and that it would provide "such assistance as may from time to time be reasonably requested of it by NSWR or which the parties agree would assist in the development of NSWR’s business" (cl 9.4).

The Intra-Code Deed

32 The parties to the Intra-Code Deed are the plaintiff , the AJC, the STC, PANSW and CRC. In the “Background” section of the Deed the parties record that they each intend to put in place appropriate arrangements to ensure the obligations, rights and entitlements of race clubs in connection with and arising from the Deed, including arrangements to ensure that the race clubs can be compelled to do all things necessary to enable NSWR to comply with its obligations under the RDA.

33 The Deed provides:

4 Objectives

Each Racing Club acknowledges that principal objectives of these arrangements include to:

5 General Obligations

Each Racing Club will, in accordance with the [plaintiff's] and NSWR’s obligations under the RDA:

…

(c) maintain the Racing Facilities and make the Racing Facilities available to ensure compliance by the [plaintiff] and NSWR in accordance with their respective obligations under the RDA.

(d) provide all information to NSWR required by the [plaintiff] and NSWR from time to time including that required to properly and fully exercise its rights and fulfil its obligations under the Act, the RDA, the Government Agreement and the Racing Inter-Code Deed; and

(e) do all things which the [plaintiff] considers necessary, convenient or desirable to ensure the [plaintiff] and NSWR are able to fully exercise their respective rights and fulfil their respective obligations under, and to otherwise give effect to, the Act, the Government Agreement, the RDA, the Racing Inter-Code Deed and any ancillary agreements, arrangements or understandings from time to time (as any or all may be amended from time to time).

34 The Racing Clubs agreed to supply to the plaintiff "all information available to it as requested from time to time" (cl 8). Clause 9 provides as follows:

9 Broadcasts

9.1 Each Racing Club will use its best endeavours to make available facilities at its Racecourse to enable all Race Meetings in a NSW Coverage Program to be broadcast by a third-party (including by television and radio), live or as soon as practicable, to TAB outlets and to all on-course then use operating on the day of the Race meeting.

9.2 Each Racing Club will do all things necessary or desirable to ensure NSWR complies with its obligations under clause 10 of the RDA.

35 The Deed also includes the following:

17 Breach

17.1 Each Racing Club acknowledges that any breach by it of their obligations under this document may have an adverse effect on the entitlements of the [plaintiff] and other Racing Clubs. Accordingly, each Racing Club agrees that it will:

…

(b) comply with all directions issued by the [plaintiff] under the Act.

36 Clause 24 of that Deed provides as follows:

37 The AJC, on 19 February 1998, and the STC, on 23 February 1998, wrote to the plaintiff in the following terms:

BACKGROUND

We acknowledge that the New South Wales Government and the TAB have entered into Agreements with you and the other major racing bodies in the three Codes of Racing in New South Wales (the "Representative Bodies").

Those agreements relate to the reform of the Racing Industry and the financial and other arrangements presently existing for that Industry and contain the commercial arrangements contemplated by the Totalizator Act 1997 (NSW) ("the Act"), the Liquor Act 1982 (NSW) and Registered Clubs Act 1976 (NSW) as amended.

The New South Wales Government and the TAB require the receipt of this acknowledgement and consent in order to give effect to certain aspects of the arrangements.

This acknowledgement is required to provide evidence to the New South Wales Government and the TAB about consent to you for the above purposes.

OPERATIVE

We hereby acknowledge and consent to you:

(a) Issuing directions in your discretion, binding this Club and all Racing Clubs in our Code, as are necessary or convenient for enabling you:

(b) Appointing NSW Racing Pty Ltd ACN 080 959 495 as your agent or otherwise to act on behalf of and to represent your interests and those of this Club in respect of the rights, entitlements and obligations under those Agreements

The facts

38 Sky Channel Pty Limited (Sky) was acquired by TAB in or about April 1998 and is a subscription channel broadcaster that holds extensive rights to broadcast live thoroughbred, harness and greyhound race meetings conducted by various racing clubs across Australia and internationally for which it pays the racing clubs a rights fee. Sky specialises in the broadcasting of racing and operates a commercial service (Sky Channel) which is telecast to subscribers in commercial premises such as hotels, registered clubs, TAB agencies and other wagering outlets seven days a week. It also produces a pay television service that it provides to pay television licensees such as Foxtel, Optus and Austar for inclusion in their pay television service to residential subscribers. This service is known as Sky Racing Domestic Service (Sky Racing).

39 As I have said earlier the rights that Sky had to broadcast the NSW races pursuant to agreements with the AJC and the STC expired in March 2004. At that time the AJC and the STC granted commercial and pay TV rights to TVN up to and including 3 May 2005.

40 In August 2004 TABCORP Limited (TABCORP) acquired control of TAB and Sky. Shortly thereafter, on about 6 August 2004 TVN and TABCORP signed Heads of Agreement regarding the production of a new thoroughbred racing/sports channel to operate in conjunction with Sky Channel (the joint venture). In January 2005 TABCORP and TVN decided that the joint venture would no longer take place and TVN then announced that it intended to establish a new channel in its own right. Although the decision was not announced until January 2005, it is apparent that the plaintiff was aware in late 2004 that the joint venture would probably not go forward.

41 On 23 December 2004 the Chairman of the plaintiff, Gary Pemberton, sent an e-mail to the Chief Executive of the plaintiff, Peter V’Landys, in the following terms:

Subject: TVN

42 On 21 January 2005 the Chief Executive of Racingcorp, Gary Purcell sent the Chairman of the plaintiff a memorandum entitled “Broadcast Discussion Draft” that included the following:

Broadcast, wagering & racing product are inextricably linked and of significant strategic importance. The successful exploitation of intellectual property is core to the commercial performance of the NSW Racing Industry.

RDA arrangements do not deal in a comprehensive manner with the linkage between wagering and broadcast. This brings inherent risk and potential opportunities to Tab Limited and RACINGCORP and race clubs.

…

Sky Channel currently holds an effective monopoly of the broadcasting of Australian racing. Sky Channel established this effective monopoly by obtaining broadcast rights of all race clubs of all codes in all states of Australia. Sky has maintained its monopoly position by ensuring contracts with individual race clubs have concertina expiry dates, wide definitions of broadcast rights (some now including right to racing information), different contractual terms, significant confidentiality obligations, various extension options and first and last rights of refusal. Sky Channel broadcasted approximately 5581 race meetings in FY04.

…

For the period between 20 March 2004 and 14 May 2004 Sky Channel decided not to broadcast Sydney metropolitan race meetings despite an offer from the AJC and STC for Sky to do so free of charge.

The blackout had a detrimental effect on Tab Limited revenue. Wagering growth had grown by 6.0% during the period 1 July 2003 to 19 March 2004 and dropped back to a growth rate of 3.3% during the blackout period.

The number of Tab Limited operating agencies has reduced by 38% over a six-year period, from 525 in FY99 to 324 in FY04. During the same period PubTAB and ClubTAB operations have increased by 85% from 955 to 1771.

Incremental Sky Channel revenues generated from the 716 new PubTAB and ClubTAB operations do not form revenue for the purpose of Wagering Earnings under the RDA.

However, there has been no appropriate pro-rata reduction under the Sky Channel Domestic Agreement.

43 After setting out what he saw as the risks to the NSW Racing Industry of both a joint-venture and/or TVN arrangements with other third parties Mr Purcell wrote:

The fundamental starting point in considering how to progress this issue is to determine:

1. If broadcasting issues fall within the responsibilities of Racing NSW (and the other controlling bodies)?

Section 13 (1) (c) of the Thoroughbred Racing Act 1996 states:

"Racing NSW has the following functions:

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

2. Should Racing NSW be involving itself in broadcast issues?

3. If Racing NSW decides to involve itself in these issues then its objectives need to be determined. These may include:

· Ensuring ownership and control of intellectual property

· Maximising NSW Thoroughbred Racing Industry revenue, having regard to:

O Total broadcast revenue (as opposed to individual club revenue)

O Optimising broadcast exposure of racing product

4. What approach to broadcast arrangements should Racing NSW undertake?

There are four broad alternatives:

· Do nothing

Allowing others determine the direction of broadcasting arrangements will not optimise the NSW Racing Industry's strategic and commercial objectives.

· Join TVN arrangements

Racing NSW could integrate its position through TVN. This would maximise commercial leverage with Sky Channel and other parties.

However it does so by significantly reducing control and increasing what is already a high-level of Trade Practices exposure that TVN faces.

· Undertake a structure of NSW arrangements

Establish a single structure for the negotiation of broadcast rights in NSW. This may replicate previous RACINGCORP proposals or the TVN model.

· Negotiate an equity position in Sky Channel

Take an equity position in Sky Channel

44 Although a “Board” of the plaintiff is not constituted under the Act the members have referred to themselves collectively as a Board and have held what have been described as “Board Meetings”. The plaintiff’s Board Meetings were usually held on the third Monday of each month and one such meeting was held on 25 January 2005. The Minutes of that meeting, at which all members were present, record the following:

TVN

It was moved that Racing NSW place the following conditions on the AJC and STC, if TVN start another thoroughbred racing channel(s), and it were to broadcast AJC and STC races:

Carried

45 Notwithstanding that the Minutes of this meeting were approved at the next usual meeting on 21 February 2005 without change to this resolution, the evidence establishes that the discussion at the meeting conveyed at least to one member, John Bernard Costigan, that the members agreed to a different condition (iii) in the following terms:

(iii) subject to Trade Practices considerations the broadcast cannot be provided to outlets in NSW that do not have existing Sky Channel subscription.

46 The Minutes of the meeting on 25 January 2005 also recorded the following:

It was moved that Racing NSW issue a directive to the AJC and STC, that they:

(i) terminate their current agreement with TVN; and

(ii) pursuant to the provisions in the RDA that allow extensions of the broadcast right, extend the AJC/STC/Sky Channel agreement as a 30 June 2003, for a period to 30 June 2006.

Carried

It was further moved that the Directive not be issued until the Chief Executive ascertain from Sky Channel that they agree:

(i) to amend the above agreement so as to make it a non-exclusive license to grant broadcast rights to Sky Channel, rather than an exclusive license;

(ii) that the rights of first or last refusal, or options to review or extend, in favour of any existing Tabcorp Sky Channel company not apply; and

(iv) that NSW Hotels and Clubs have their Sky Channel subscriptions reduced by the equivalent rights reduction on a formula agreed by Sky Channel and Racing NSW.

Carried

47 On 27 January 2005 the Chief Executive spoke to the CEO of Sky, Mr Peter Caillard. The Chief Executive informed Mr Caillard that the plaintiff would not “sit back and let the picture be turned off again”. He said that the plaintiff would "compel the AJC and the STC to sign up with Sky up to 30 June 2006 in accordance with the option contained in the RDA" but suggested in his evidence that he said that this was “one option” that the plaintiff had. He denied that he said that "conditions will be imposed on the AJC/STC which may make continuing with tvn unattractive". He admitted that he asked Mr Caillard to share with him its financial analysis "which shows the loss to tvn/racing", but denied that this was a general request and related only to why Sky had pulled out of the joint venture. There was also discussion in which the Chief Executive expressed his concern about the inclusion of the first and last right of refusal.

48 On 28 January 2005 at 7.45 am the Chairman sent the following email to the Chief Executive:

Subject: TV Rights

If AJC/STC trigger the non-exclusive, they will create a situation where NSW fees are related to TAB turnover. I think that has advantages to both ourselves and Tabcorp next time round. AJC/STC will have triggered a loss of their rights premium (they currently get paid at 2.5 times the rate in relation to TAB turnover – an additional reason for them to think hard)

28 January 2005 Direction

49 On 28 January 2005 the Chief Executive wrote to both the AJC and the STC in the following terms:

Re: Broadcast Rights
Could you please provide as a matter of urgency a copy of your agreement with TVN.

Further and taking into account our recent discussions, your club should not extend or vary the above agreement with TVN or enter into any new agreement regarding broadcasting rights until and unless specifically agreed with Racing NSW.

50 Also on 28 January 2005 the Chief Executive wrote to Mr Caillard of Sky suggesting that he consider the following:

1. The AJC/STC agreements be varied so as any rights or first or last refusal or options to review or extend in favour of any existing TAB/Sky company shall not apply.

2. The broadcast rights be exclusive on the pre-existing payment schedule. The AJC/STC have the option to revert to non-exclusive agreement during the term. If the option is exercised by either club, the fee to that club reduces to an annual rate of $2m for non-exclusive rights.

3. NSW hotels and clubs have their Sky Channel subscriptions reduced by $1m per annum on a formula agreed to by Sky and Racing NSW.

4. The domestic agreement between Sky Channel and NSW provincial thoroughbred clubs dated 14 August 1998 be amended to increase the rights fees by $500,00 per annum.

51 The Chairman sent a further email to the Chief Executive on 29 January 2005 in the following terms:

Subject: TV Rights

52 On 30 January 2005 the Chairman sent a further email to the Chief Executive in the following terms:

Subject: TV Rights

53 The attachment to that e-mail was entitled “TV and Media Rights”. After the Chairman advised that he proposed that the members agree by “circular resolution” the following is recorded in a section headed “Proposed Media Directive”:

A directive will not of itself solve the problem. In fact, we may find ourselves in a very difficult situation trying to unravel the looming blackout problem – given that Tabcorp is unlikely to agree with our demands and we would not want them to agree with those of TVN.

I think NSW is in for a painful time in the short term which will only be avoidable by unacceptable concessions against our future long term interests. As usual, Victoria is in a far stronger position having long since prepared for these issues. The Victorians have a common expiry date, a common negotiating entity, all their pubs and clubs are geared to take TVN, and they have AJC and STC (and their key rights) halfway into the Victorian tent.

For NSW to achieve its common expiry objective, we need an AJC/STC deal with SKY to June 2006, ie past the Victorian rollover date. For roughly $15 million, Victoria could decide to go ahead with a minimum cost, bare-bones version of its own thoroughbred channel. There is a possible combination of circumstances where Victorian outlets could have access to our picture but NSW have no Victorian thoroughbred picture.

It is a complex chess game with many possible outcomes and no clear solution. There is a wealth of information and detail to which Racing NSW is not currently privy. Under these circumstances, and in the first instance, it is better that Racing NSW issues a general directive based on negative powers of approval rather than positive powers of direction, ownership or control. There is no barrier to Racing NSW issuing supplementary orders later to instruct clubs to act in a specific manner when such a requirement has been clearly identified.

Despite the difficulties, the downside risk of not becoming involved from a state perspective is substantial. We are a week away from adverse effects on NSW wagering income from the AJC and STC situation. The more we learn of TVN, the more apparent it becomes that TVN objectives are capable of being leveraged at the expense of NSW in general, eg NSW may be facing an AJC/STC blackout because, in part, TVN is insisting on access to unrelated rights to further its own objectives. Whether conscious or otherwise, TVN has the potential to divert returns that would go more broadly to NSW to the benefit of the AJC and STC.

The situation is complex, with a wide range of potential outcomes. A number of possible outcomes have long term implications and impacts of important strategic and financial significance to thoroughbred racing in NSW. I submit to directors that we cannot responsibly stand aside from this issue, despite the risk of “why don’t you fix it” criticism. We should ensure that Racing NSW gains access to a wide range of information not currently available to us as a pre-requisite to determining and exerting an influence on the eventual outcome in the best long term interest of all thoroughbred participants in the state.

Essential to that position, is first ensuring that the “status quo” cannot be changed, nor new arrangements entered, without our consent – pending the determination of Racing NSW’s overall strategy and specific requirements.

I propose that a directive be issued to all clubs, and their representative associations requiring that, either directly or indirectly, including through agents or associated bodies or corporations, no new agreements or arrangements or variations to existing agreements or arrangements in relation to any aspect of media or broadcast rights, may be entered without the specific written consent of Racing NSW. For the purposes of clarity, this directive incorporates all forms of media, including without restriction, new media internet, interactive etc and is both national in and international in scope. The directive is given in accordance with powers and responsibilities under the Act, RDA, DACA etc.

54 The evidence is that the Chief Executive sent this material by email to the members of the plaintiff. Some members responded in writing, by email or fax, although only one email has been found. Some responded orally. A resolution was not recorded in the Minutes of any of the Board Meetings prior to the commencement of this litigation.

55 On 31 January 2005 Sky responded to the Chief Executive’s letter of 28 January 2005 advising that the “first and second amendments” proposed were “acceptable” subject to the condition that “(c) if the option to revert to a non-exclusive agreement is exercised, then the fee payable to the relevant club reduces to $1 million per annum and Sky will be under no obligation to include their races in its programming”.

56 On 1 February 2005 the STC and the AJC responded by separate letters to the purported direction of 28 January 2005 in the following terms:

Our agreement with TVN in relation to the broadcast rights is one which contains certain confidentiality obligations on the parties. Accordingly, it will be necessary to seek TVN’s consent in relation to your request for provision of a copy of that agreement. It would be of assistance in so doing if you were able to indicate the basis on which that request is made and the purpose for which you require access to the agreement.

Secondly, you have issued a direction in relation to any extension or variation of agreement with TVN for the broadcast rights and, indeed, as to the entry by the club into any new agreement regarding broadcast rights. I would appreciate it if you could set out the basis on which that demand has been made, so that there is no misunderstanding as to the position which Racing NSW is adopting.

1 February 2005 Direction

57 On 1 February 2005 the plaintiff issued a Notice signed by the Chief Executive to all racing clubs in New South Wales in the following terms:

NOTICE TO ALL CLUBS

I wish to advise that the agreements between the three codes of Racing in NSW and TABCORP in relation to the take over of TAB Limited have now been finalised. I enclose for your information a summary of the major items of the agreement.

The matter which however I particularly bring to your attention relates to broadcast and media rights.

The amended Racing Distribution Agreement incorporates important changes which provide an opportunity for all three sectors of thoroughbred racing in NSW to vary their Sky Channel Agreements and lay the foundation for an integrated state wide media policy.

To ensure these opportunities are exercised in the best overall interest of thoroughbred racing in New South Wales a coordinated approach will be essential.

In this regard, no NSW thoroughbred club, representative body, or its agent or associated corporations, is to enter into any new agreements or arrangements or vary existing agreements or arrangements in relation to any aspect of media or broadcast rights without the specific written consent of Racing NSW.

Racing NSW Act

Totalizator Act

By order of the Board.

58 At 7.19pm on 1 February 2005 the Chairman sent another email to the Chief Executive in the following terms:

59 The document attached to the Notice included the following:

Sky Channel

New South Wales racing clubs will be given an option of maintaining, until 30 June 2006, the contractual arrangements relating to Sky Channel which were in place as at 30 June 2003. Alternatively, those clubs will have the option to continue with any other arrangements agreed before TABCORP acquired control of Tab. For clubs other than New South Wales metropolitan thoroughbred racing clubs, any rights of first or last refusal or options to renew or extend in favour of Tab or Sky Channel will be disregarded.

NSW thoroughbred clubs can terminate their Sky Channel domestic agreements at 30/6/2006, by providing six months notice.

TABCORP will be required to procure that Sky Channel Pty Ltd negotiates in good faith with the New South Wales racing clubs in relation to broadcast rights for Sky Channel from 30 June 2006 onwards. The future TABCORP group (including Tab and Sky Channel) will not object to those clubs negotiating collectively if they wish to do so.

TABCORP has also given NSW Racing a number of assurances that Sky Channel Pty Ltd will not give undue preference to the Victorian racing industry to the detriment of the New South Wales racing industry.

There will be annual meetings of a consultative committee comprising representatives of state racing industries to discuss the Sky Channel coverage program.

60 The document that was attached to this e-mail put a proposal that AJC and STC received $2 million per year for non-exclusive rights and that Tabcorp had a most favoured nation clause which prohibited the charging of fees less than the escalated fees in the document to another party. It contained an arrangement between the plaintiff and Tabcorp fixing the minimum price which the AJC and the STC could obtain for their rights. The document also included the following:

Some will argue that this package has the potential to limit or eliminate the development of a competitive channel. I have insufficient access to TVN plans to pass a judgment. If that were to be the case, it is important to pitch the AJC and STC potential numbers at a level that it can't be argued that they have been forced by Racing NSW to take a discount as part of a manouvre to protect Sky. What these numbers show is that objective can only be achieved at a lower differential between exclusive and non-exclusive value than what Tabcorp has put forward. I accept that increases the obligation on me to address the term and security issues you have advanced and any ancillary benefits such as MFNs.

The numbers also illustrate the importance of dealing with this issue in conjunction with TVN and associated matters to better judge the likely future shape of the competitive landscape. However, it would be nice to make more progress on this issue in the meantime, or at least to better progress our understanding of our respective constraints and priorities.

61 On 9 February 2005 the AJC and the STC wrote in the following terms to the plaintiff in response to the direction of 1 February 2005:

I refer to your notice of 1 February 2005 directing all New South Wales thoroughbred clubs, representative bodies, agents or associated corporations not to enter into any new agreements or arrangements or vary existing agreements or arrangements in relation to any aspect of media or broadcast rights without the specific written consent of Racing NSW.

Could you please confirm whether this supersedes the direction issued by you under cover of your letter dated 28 January 2005.

Racing NSW Act

Totalizator Act

You have summarised in the Notice the major items of the agreement which have been finalised between the three codes of racing in NSW and Tabcorp in relation to the takeover TAB Limited and have noted that the amended Racing Distribution Agreement will provide an opportunity for variation of the Sky Channel agreements and lay the foundation for an integrated state-wide media policy. I would appreciate it if you could provide me with a copy of the amended Racing Distribution Agreement.

62 On 4 February 2005 the Chairman sent a further email to the Chief Executive in the following terms:

Subject: Sky Deal

There is a simple alternative which leaves everybody on our side except AJC and STC the same or better off.

We agree their deal with following modification.

Their point 1. Incentive amount not conditional ongoing exclusive.

Their 2-4. $0.5 to provincials unconditional.

5. Our escalation.

10. Sky agrees to remit reduced fees (net $1.5m) to outlets on basis to be agreed.

11. Incentives not conditional on exclusivity. No additional incentives to Country and provincial.

13. Term 5 + 5. Payments not conditional on exercise of option. All payments based on their 12 year proposal.

131 This direction was not in fact authorised by the plaintiff.

132 The 17 February 2005 direction was issued, it seems, because the plaintiff had considered the prospect of the AJC and the STC entering into an agency agreement with TVN to broadcast on its behalf, rather than licensing its rights directly or indirectly to TVN. A special meeting of the members of the plaintiff took place on 16 February 2005. The following is recoded in the Minutes:

Steps need to be examined to reinforce compliance by the AJC and the STC with directions regarding broadcast rights.

133 This statement in the Minutes is not in the form of a resolution but rather it seems, as a record of some discussion about the need to examine the situation. There is no resolution that any further direction is to be given to the AJC or STC and the only authorisation, to put the content of the minutes at their highest, was for the examination of what steps may be needed to “reinforce compliance” with “directions regarding broadcasting rights” without any specificity. This direction was not in fact authorised by the plaintiff.

134 After the litigation commenced and two business days before the hearing commenced the members of the plaintiff signed the document dated 20 April 2005 purporting to be a resolution pursuant to s 20(1) of the Act. That document admits that, “there may be some deficiencies in the record of the formal approval of the directions”. It is obvious that it was intended to convey that the directions were approved but that the paperwork was merely deficient. That seems to evidence a misunderstanding of what went on in January and February 2005. It also seems to indicate a lack of understanding of the need to comply with the Act in relation to the conduct of the business of the plaintiff. The members of the plaintiff were endeavouring to issue directions to the racing clubs restricting their freedom to enter contracts in relation to broadcasting rights. The seriousness of the consequences of such directions called for strict adherence to the Act and the procedures for the transaction of the plaintiff’s business. There was no such adherence and the discipline and professional attention to the requirements needed in such circumstances is sadly lacking .

135 The document was admitted with limitations on the content of the section headed “background”. That section includes a suggestion that on 25 January 2005 the Board “determined to impose conditions” on the AJC and the STC “which required them to obtain” the plaintiffs prior written approval to “certain actions in respect of broadcast arrangements”. This document makes no mention of the resolution in relation to the proposed direction to the plaintiff to cancel its contract with TVN and enter into a contract with Sky until June 2006. Of course the resolution relating to the conditions to be imposed suggested that the “parties confirm a mechanism” for the plaintiff to have a veto in relation to the contractual rights of AJC and STC. The background also presumes and assumes what was “approved”. For instance it contains a clear misunderstanding of the requirement of s 20 of the Act in respect of business transacted by way of circular resolution.

136 This resolution includes an attempt to “approve, endorse and ratify” the issue of the Directions. On 21 February 2005 TVN acquired contractual rights to act for reward as agent for the AJC and the STC. It was submitted that such rights acquired before ratification cannot be divested by ratification. In support of that submission reliance was placed on NM Superannuation Pty Ltd v Hughes & others (1992) 27 NSWLR 26 Cohen J; affirmed on appeal, Hughes & Anor v NM Superannuation Pty Ltd & Anor (1993) 29 NSWLR 653. The plaintiff submitted that this case does not assist the defendants because no estate was vested. Notwithstanding the correctness of that particular statement, I am of the view that because there was the intervention of third party rights and valuable contractual rights established on 21 February 2005 the principle applies. In any event I have the same “serious doubts” as expressed by McLelland J, as his Honour then was, in Legal & General Insurance Ltd v Board of Fire Commissioners (1982) 1 NSWLR 555 at 560 that it possible to render effective a direction when it was issued without authority:.

137 It is true that the direction of 28 January 2005 and 1 February 2005 were included in the Board papers for the meeting of 16 February 2005. In the Minutes of that meeting there is a resolution that the Chief Executive write to TVN confirming its undertakings: “to respect the directives issued by RNSW on the AJC-STC re new broadcast agreements”. That entry is said by the plaintiff to be a ratification of the direction of 28 January 2005 and 1 February 2005. In this regard reliance was placed upon what Hutley JA said in Legal & General Insurance Ltd v Board of Fire Commissioners (1983) 2 NSWLR 131 in the appeal from McLelland J, that the Board’s noting of the officer’s readiness to proceed amounted to a direction that he so proceed. By analogy it is suggested that the resolution of the plaintiff referring to the directions “issued” is an unequivocal statement that the directions were issued by the plaintiff – in other words issued with the authority of the plaintiff. This statement is in a different category to that with which Hutley JA was concerned. There was no authorisation of the direction of 28 January 2005 and 1 February 2005 and a statement that they were “issued” does not in my view ratify the issuing of those directions. There is no unequivocal and clear statement that it was the plaintiff’s intention to ratify the issue of the directions. There is no evidence of any cognisance of what had occurred in respect of the issuing of those directions, for instance that there was a failure to comply with s 20 of the Act in respect of the circular resolution.

138 The answer to Question 1A is NO

139 However I shall as indicated proceed to deal with part of the answer to question 2 on the assumption that the answer to questions 1 and 1A are “yes”.

Question 2

140 The next question for determination is question 2: Whether, if Racing NSW had power to issue any one or more of the Directions, that or those Directions was or were vitiated and ought to be set aside or quashed on the basis that it was or they were issued:

(b) in circumstances where there was a denial of procedural fairness, namely actual or apprehended bias on the part of Racing NSW; or
(c) on the basis of Racing NSW having taken into account irrelevant considerations and having failed to take into account relevant considerations,
as pleaded in the cross-claim (of the first, second and third defendants) and particularised.

141 I intend only to deal with the apprehension of bias. If it is assumed that the Directions were within power, they were issued pursuant to very broad powers under the Act and required the adoption of fair procedures. The statutory power must be exercised fairly and reasonably and, having regard to the nature of the power: Kioa v West (1985) 159 CLR 550 at 585. Subject to the submissions in relation to the doctrine of necessity, all parties agreed that the content of the duty in the plaintiff in the exercise of its powers and functions included a requirement that it be free from any apprehension of bias. I agree with the plaintiff’s submissions that in assessing what the hypothetical reaction of a fair–minded observer would be, the court attributes to the fair–minded observer knowledge of the actual circumstances of the case but not that of a lawyers understanding. I do not agree with the plaintiff’s submissions in paragraphs 5.13 to 5.18 of its final submissions in chief that the doctrine of necessity ousts the application of the requirement for procedural fairness in this instance. In further submission in reply the plaintiff recognised the power to delegate in s 24 of the Act but sought to distinguish the finding by Davies J in Waterhouse v New South Wales Thoroughbred Racing Board [2003] NSWSC 541 at [63] on the basis that his Honour was dealing with a disciplinary matter involving very different considerations to those with which the members of the plaintiff must deal in the general operation of the plaintiff. It was submitted that the persons referred to in s 24(3) as those to whom delegations of the plaintiff’s functions may be made, do not appear to be suitable. I disagree. The development of a policy for the broadcasting of races taking into account the public interest, would seem to me to be able to be handled appropriately by any of the delegates. The presence of section 24 of the Act in fact ousts the doctrine of necessity.

142 It seems to me that the resolutions at the meeting of the plaintiff on 25 January 2005 are of major significance on this aspect of this case. For ease of reference they are set out again (the italicised (iii) accommodates the evidence that there was a “typographical” error in the Minutes):

TVN

It was moved that Racing NSW place the following conditions on the AJC and STC, if TVN start another thoroughbred racing channel(s), and it were to broadcast AJC and STC races:

[(iii) subject to Trade Practices considerations the broadcast cannot be provided to outlets in NSW that do not have existing Sky Channel subscription

Carried

It was moved that Racing NSW issue a directive to the AJC and STC, that they:

Carried

It was further moved that the Directive not be issued until the Chief Executive ascertain from Sky Channel that they agree:

(i) to amend the above agreement so as to make it a non-exclusive license to grant broadcast rights to Sky Channel, rather than an exclusive license;

(ii) that the rights of first or last refusal, or options to review or extend, in favour of any existing Tabcorp Sky Channel company not apply; and

(iv) that NSW Hotels and Clubs have their Sky Channel subscriptions reduced by the equivalent rights reduction on a formula agreed by Sky Channel and Racing NSW.

Carried

143 There is no discussion in the Minutes as to how it was that the plaintiff thought it had any entitlement to direct cancellation of third party contracts in this proposed fashion nor is there any discussion about its apparent power to require the entry into contracts by third parties. Indeed there is no discussion at all in the Minutes in relation to these resolutions. However three of the conditions in the first resolution mirror what the Chairman wrote to the Chief Executive in his email of 23 December 2004. The attitude and approach of not dealing fairly with the AJC and the STC is evidenced in that email when the Chairman wrote:

144 The Chairman’s email of 28 January 2005 to the Chief Executive referring to his “overnight thoughts” further evidences his approach, in particular, after referring to the AJC and STC triggering a loss of their rights premium, he wrote: “if you like this, the spin should be this is [the plaintiff’s] proposal to Tabcorp which insulates Tabcorp from having to comment on the logic”. There is also the suggestion that the plaintiff should not “comment publicly on the turnover logic until we get the deals done”.

145 Immediately after the 25 January 2005 meeting the Chief Executive commenced the negotiations with Sky and from then until mid February 2005, he and the Chairman endeavoured to reach an agreement with Sky on terms that the plaintiff informed Sky it would approve. This included the valuation of exclusive and non-exclusive broadcasting rights without any input form the persons who owned the rights, the AJC and the STC. The need to maintain the status quo, as it has been described, was to allow the plaintiff to move forward with its plan to get the Sky deal approved by the plaintiff.

146 At the time he wrote his TV and Media Rights memorandum that was circulated in the unsuccessful attempt to achieve a circular resolution under s 20 of the Act, the Chairman had no relevant information in relation to the TVN business model but stated that “we would not want” Tabcorp to agree with the demands of TVN. This of course is at a time when the negotiations with Sky pursuant to the 25 January 2005 resolution had already commenced. That same document included the statement that “there is no barrier” to the plaintiff “issuing supplementary orders later to instruct a club to act in a specific manner when such a requirement has been clearly identified”. This is obviously a continuation of the plan hatched in the 25 January 2005 resolution to direct the Clubs to cancel their contracts and enter the contracts with Sky when, of course, they had agreed the terms with Sky, or to put it another way when the “requirement” was clearly identified.

147 Where the Chairman thought the powers to issue “orders” forcing people in and out of contracts came from has never been explained adequately. The Chairman was not called to give evidence in these proceedings. It was the subject of a number of questions directed to Senior Counsel for the plaintiff during the trial. His candour would not allow him to suggest that there was such a power but he suggested at one stage that this was really not an issue in the trial. I disagree. It is a factual issue on this aspect of the case. The fact that the plaintiff proceeded with its plan in this environment of directions and possible supplementary orders purporting to force third parties in and out of contracts, with no proper understanding of the confines within which it had to act is a matter to be taken into account when deciding whether a fair minded person, knowing of this and the other conduct and surrounding circumstances, would apprehend that the plaintiff had closed its mind as and from 25 January 2005 about what it was going to force the AJC and the STC to do, irrespective of their views.

148 Senior Counsel for the plaintiff relied upon the Chairman’s circular memorandum in support of the submission that the plaintiff had advised the defendants what it was doing. The first paragraph of that memorandum refers to the Chairman speaking to the Chairmen of the AJC and the STC indicating “as a matter of courtesy” that the plaintiff held the view that the amendments negotiated in the DACA to the Sky agreement could avoid a potential blackout on 6 February 2005. It is suggested that the second and third paragraphs include content of the discussions with the defendants’ representatives. Accepting that suggestion as accurate, it seems that the Chairman was intending to convey that negotiations were taking place to achieve a non-exclusive arrangement with Tabcorp and that the plaintiff had concerns about TVN. The note also includes a reference what the plaintiff “would require” if it was successful in obtaining non exclusive arrangements with Tabcorp. Finally the note suggests that the Chief Executive had “parallel but more detailed” conversations with the CEOs of the AJC and the STC.

149 The Chief Executive’s evidence does not support the content of these paragraphs. He was cross-examined about his conduct in late January 2005, and in particular the negotiations with Sky. He gave the following evidence (tr. 141):

Q: Why not?
A: Because I needed to progress the matter before we went to the AJC and the STC.

150 In the light of this conflicting evidence and in the absence of the Chairman, the construction to be placed on the commencing paragraphs of the memorandum is that if they reflect discussions, they were in the most general of terms without any disclosure to the defendants that the plaintiff had passed a resolution evidencing its intention to direct the defendants to “cancel” their contract with TVN.

151 The notes of the 16 February 2005 meeting are quite devastating for the plaintiff on this aspect of the matter. It evidences the continuation of the plaintiff’s clear intention to force the AJC and the STC into a contract with Sky and out of a contract with TVN without letting it know what it had done in detail in respect of its negotiations with Sky/Tabcorp in respect of their rights until the “deal was done”. The notes record that a member of the plaintiff, Mr Hopkins, states that “there is no doubt they [AJC/STC] are not going to sign it”. Whether that particular reference is to the Sky/Tabcorp agreement or an undertaking to comply with directions does not matter much because there is then proposed the following plan:

152 This is totally consistent with the resolutions of 25 January 2005. Far from giving the clubs the option to provide their input into the negotiations with Sky, the plaintiff appears and would appear to the fair minded bystander to have acted in the manner described by the Chairman in his email of 29 January 2005 to get in “boots and all” and carry out their plan. It was also accompanied by some window dressing. In the email of 1 February 2005 the Chairman suggested that in the deal they were progressing with Sky, the AJC and the STC must be able to retain their total income levels “so that if the competition evaporates, we can’t be accused of screwing our own clubs to prop up Sky”. There was also the disclosure of they way in which he intended to deal with the AJC and the STC in his email of 6 February 2005 to the Chief Executive: “At $5m and $2m, its a good deal for us and we could go in hard with AJC, STC and TVN. Either of the other combinations, I would be more cautious and inclined to consult the clubs on their preference”. This email demonstrates at the very least a lack of consultation and also comprehension of the alternative to consult with the clubs. This was not done. The email also evidences the boots and all approach of going in hard with the defendants.

153 There does not seem to have been any comprehension that the clubs may have negotiated differently with Sky and perhaps in a more effective manner. The plaintiff’s conduct took away from the clubs the capacity to go into negotiations with Sky with a possible lever that the plaintiff would be using its best endeavours to ensure the terms were commercial. That ground was taken from under them because the plaintiff decided what it thought was apparently commercial without any input from the Clubs.

154 The Chief Executive gave evidence that he thought the Chairman was trying to promote competition. A fair minded person, reading the resolution of 25 January 2005, observing the conduct referred to including the strategy proposed by Mr Hopkins, and knowing that the plaintiff sought to prohibit TVN from operating in any outlet unless Sky was already present, would not accept the Chief Executive’s observations, in particular in the absence of any explanation by the Chairman by way of evidence.

155 The strategy proposed by Mr Hopkins of appointing an administrator to these clubs plummeted the plaintiff’s lack of professionalism to an all time low. The legal principles to be considered for the justification of the appointment of an administrator were not part of the discussion evidenced in the notes at which this strategy was proposed. Neither could they be. This was not a principled approached but rather strong arm tactics to force contracts upon clubs operating pursuant to statutory and contractual obligations. A fair minded bystander would be left with no doubt that this was a further step along the way for the plaintiff to implement the resolution it had passed on 25 January 2005 irrespective of the views of the clubs.

156 Senior counsel for the plaintiff suggested that a benign view of the plaintiff’s conduct could be justified by observing that the clubs were in fact not forced into the contract with Sky, because they rejected Sky’s offer. I am afraid I do not find favour with that submission. The fact that the clubs would not brook being treated in this fashion does not change the character of the plaintiff’s conduct which I have outlined above.

157 I should say something about the controversial condition (iii) in the first resolution of 25 January 2005. The version that it is in the Minutes precludes TVN from going into any premises in which Sky is present. That resolution remains on the books of the plaintiff and if it truly is a reflection of what occurred at the meeting it may have serious consequences for the members of the plaintiff. However Mr Costigan’s evidence establishes that he at least did not intend to pass that resolution but intended only to approve of prohibiting TVN from going into premises where Sky was not present. This debacle of minutes recording such serious matters and being approved without amendment at the next formal meeting of the plaintiff, is further evidence available to the fair minded observer as to the state of the plaintiff’s mind. It would be reasonably expected that an open minded corporate body would review those minutes and adjust them if they are inaccurate. It is not unreasonable to conclude that such lack of attention to erroneous minutes demonstrates that the plaintiff was on a course of conduct settled as at 25 January 2005 and did not pay attention to further detail after it had decided that it wanted the clubs to cancel the TVN contract. Of course if the Minutes are accurate the position may be worse.

158 The evidence given by two of the members of the plaintiff, Mr JB Costigan and Mr DPR Esplin in relation to their motivation does not impact upon this aspect of the matter.

159 The plaintiff has placed much emphasis on its alleged motivation to act in the public interest of protecting wagering revenue. It has been suggested by the Chief Executive that the plaintiff was acting to ensure that the revenue distributed to the racing industry was maximised. I have little doubt that there was an aim akin to that buried somewhere in all of this . What is troubling is that in exercising its powers the plaintiff seemed to forget that it had to be fair to interested parties whose rights may be adversely affected by its conduct and decisions. The correspondence between the Chairman and the Chief Executive in particular demonstrate business strategies with the use of military epithets to describe the planned outcome suggesting that the war could be won. The Chairman expressed possessory interest in the “network”, claiming that he had two gorillas trying to damage “his network”.

160 The plaintiff had a responsibility to be open and fair with the defendants and in the public interest, to provide to them procedural fairness in respect of the decisions made by it as they affected the defendants’ rights. Any fair-minded observer of this conduct would in my view have a reasonable apprehension of bias such that would infect each of the directions and justify the quashing of those directions.

161 The answer to question 2 is YES

162 There is in the circumstances no utility in answering questions 3 and 4. The parties are to agree Short Minutes to dispose of the proceedings consistently with the answers to these separate questions. Those Minutes should include an agreed costs order. The matter is listed in the Commercial List at 9.15 on 6 May 2005 for that purpose. If the parties are unable to agree on a costs order I will hear argument on that occasion.

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Citations

Racing New South Wales v Sydney Turf Club [2005] NSWSC 426

Cases Citing This Decision

0

Cases Cited

11

Statutory Material Cited

7

Waterhouse v New South Wales Thoroughbred Racing Board [2003] NSWSC 541

Bass v Permanent Trustee Co Ltd [1999] HCA 9

CITATION:	Racing New South Wales v Sydney Turf Club & Ors [2005] NSWSC 426
HEARING DATE(S):	26, 27, 28, 29 April 2005 2 May 2005
JUDGMENT DATE :	3 May 2005
JURISDICTION:	Commercial List
JUDGMENT OF:	Bergin J
DECISION:	[SEPARATE QUESTIONS]- Part 31 questions - Did the plaintiff have power to issue the particular directions - Were the directions actually authorised - Should the directions be quashed for failure to provide procedural fairness. Answers: No; No; Yes

CATCHWORDS:	[STATUTORY CONSTRUCTION] - The role of the plaintiff as the representative body controlling thoroughbred horse racing in New South Wales - Whether the Thoroughbred Racing Act 1996 (NSW) and / or the Totalizator Act 1997 (NSW) gave to the plaintiff power to issue directions to the defendants prohibiting them from entering into contracts for the broadcasting of horse races from their racecourses without the plaintiff's written consent - [CONTRACTS] - The nature and extent of the plaintiff's obligations under a series of contracts which provide for the distribution of revenue from wagering to the racing industry - Whether those contracts entitled the plaintiff to issue the directions - [ADMINISTRATIVE LAW] - The nature of the plaintiff's obligations under the Acts - Apprehension of Bias
LEGISLATION CITED:	Australian Jockey Club Act 1873 (NSW) Supreme Court Act 1970 (NSW) Supreme Court Rules 1970 (NSW) Sydney Turf Club Act 1943 (NSW) Thoroughbred Racing Act 1996 (NSW) Totalizator Act 1997 (NSW) Totalizator Agency Board Privatisation Act 1997 (NSW)
CASES CITED:	Aerial Taxi Cabs Co-operative Society Ltd v Lee (2001) 178 ALR 73 Allen v Thorn Electrical Industries Ltd [1968] 1 QB 487 Bropho v State of Western Australia (1990) 171 CLR 1 FCT v Australia & New Zealand Banking Group Ltd (1979) 143 CLR 499 Hughes & Anor v NM Superannuation Pty Ltd & Anor (1993) 29 NSWLR 653 Kioa v West (1985) 159 CLR 550 Legal & General Insurance Australia Ltd v Board of Fire Commissioners of NSW [1982] 1 NSWLR 555 Legal & General Insurance Australia Ltd v Board of Fire Commissioners of NSW [1983] 2 NSWLR 131 NM Superannuation Pty Ltd v Hughes & Ors (1992) 27 NSWLR 26 The Commonwealth of Australia v The State of New South Wales (1923) 33 CLR 1 Transfield Pty Ltd v Arlo International Ltd (1980) 144 CLR 83 Waterhouse v New South Wales Thoroughbred Racing Board [2003] NSWSC 541
PARTIES:	Racing New South Wales (Plaintiff) Sydney Turf Club (First Defendant) Dr Treve Williams (Second Defendant) The Australian Jockey Club (Third Defendant) Thoroughvision Pty Ltd (Fourth Defendant)
FILE NUMBER(S):	SC 50059/05
COUNSEL:	Phillip Taylor SC and M. Allars (Plaintiff) T.F. Bathurst QC and A.S. Bell (First, Second, Third Defendants) R. Beech-Jones (Fourth Defendant)
SOLICITORS:	Gilbert + Tobin (Plaintiff) Mallesons Stephen Jaques (First, Second, Third Defendants) Phillips Fox (Fourth Defendant)