Racing New South Wales v Racing Victoria Limited

1. [1]

   Cato & Clive Partners Pty Limited is a corporate communications and public relations consultancy firm.

2. [2]

   By Notice of Motion filed on 14 February 2023, Cato & Clive seeks to set aside a subpoena served on it on 25 January 2023 by the plaintiffs, Racing New South Wales and its director, Mr Russell Balding AO. For convenience, I will simply refer to the plaintiffs as “Racing New South Wales”.

3. [3]

   For the reasons that follow, I decline to set aside the subpoena.

Racing New South Wales’ pending application for preliminary discovery

1. [4]

   Racing New South Wales is a statutory corporation constituted under the Thoroughbred Racing Act 1996 (NSW).

2. [5]

   It is the Principal Racing Authority in New South Wales.

3. [6]

   There are other Principal Racing Authorities in each state and territory.

4. [7]

   The subpoena served by Racing New South Wales on Cato & Clive relates to a pending application by Racing New South Wales for preliminary discovery under Uniform Civil Procedure Rules 2005 (NSW), r 5.3, against five of those Principal Racing Authorities: Racing Victoria Limited, Racing Queensland Board, Racing SA Ltd, Racing and Wagering Western Australia and TasRacing Pty Ltd.

5. [8]

   Racing New South Wales’ application for preliminary discovery is listed for hearing on 4 May 2023.

6. [9]

   All Principal Racing Authorities are subject to the Australian Rules of Racing, as determined by Racing Australia Limited.

7. [10]

   Each of the Principal Racing Authorities has board representation at Racing Australia. Each of Racing New South Wales and Racing Victoria have effective veto power over decisions made by Racing Australia at board level.

8. [11]

   Racing New South Wales apprehends that Racing Victoria and the other Principal Racing Authorities may be engaging in a plan to establish a “breakaway body” from Racing Australia, and to exclude Racing New South Wales, and the New South Wales thoroughbred racing industry, from the Australian thoroughbred horseracing market.

9. [12]

   Racing New South Wales contends that this may give rise to an entitlement for it to bring a claim against the defendant Principal Racing Authorities on various grounds, including breach of competition law, breach of directors’ duties and breach of contract.

10. [13]

    Racing New South Wales contends that it does not know the detail and extent of any discussions that have taken place amongst the other Principal Racing Authorities, or whether any agreement has in fact been reached or acted upon. Racing New South Wales contends that preliminary discovery is necessary for it to determine whether to commence proceedings against the defendant Principal Racing Authorities.

11. [14]

    The defendant Principal Racing Authorities deny, categorically, the existence of any such agreement.

12. [15]

    One matter that will arise on Racing New South Wales’ application for preliminary discovery is whether it “may be entitled” to bring a claim of the kind to which I have referred. [1] That will depend on, amongst other things, whether Racing New South Wales can show that it may be able to establish an agreement between the other Principal Racing Authorities to establish a “breakaway body” of the kind I have discussed.

13. [16]

    Racing New South Wales seeks by way of preliminary discovery eight categories of documents from the defendant Principal Racing Authorities. [2]

14. [17]

    Six of those categories are directed, in various ways, to documents referring to or recording any agreement between those Principal Racing Authorities to exclude Racing New South Wales from the Australian thoroughbred racing industry and to establish “a new entity or joint venture for the provision of services relating to thoroughbred racing in Australia”; this being the “breakaway body” that Racing New South Wales apprehends may be in the process of being established.

15. [18]

    A seventh category relates to documents recording the reasons for the alleged exercise by Racing Victoria on a specified occasion of the veto right to which I referred at [10] above.

16. [19]

    The final category seeks:

The subpoena

1. [20]

   The subpoena that Racing New South Wales has served on Cato & Clive is said by Racing New South Wales to be directed to the question of whether it “may be entitled” to bring a claim of the kind I have described against the defendant Principal Racing Authorities.

2. [21]

   It seeks production of:

3. [22]

   The “Principal Racing Authorities” identified in the subpoena are the defendant Principal Racing Authorities, together with the Principal Racing Authorities from the Northern Territory and the Australian Capital Territory. [3]

4. [23]

   It can immediately be seen that there is considerable overlap between the documents sought by Racing New South Wales on subpoena from Cato & Clive and the documents sought by Racing New South Wales from the defendant Principal Racing Authorities in the category set out at [19] above.

A connection between Cato & Clive and the defendant Principal Racing Authorities

1. [24]

   On this application, there is evidence of a connection between Cato & Clive and the defendant Principal Racing Authorities.

2. [25]

   First, Racing New South Wales’ solicitor has deposed, on information and belief from Racing New South Wales’ General Legal Counsel, that “one or more” of the defendant Principal Racing Authorities has “retained Cato & Clive Partners”.

3. [26]

   Further, on 20 February 2023, the solicitors for Racing Victoria wrote to the solicitors for Racing New South Wales:

4. [27]

   The claim made in that letter that the documents called for by the subpoena directed to Cato & Clive might be the subject of a claim of confidentiality by Racing Victoria carries with it the implication, indeed the strong implication, that Cato & Clive have provided some service to Racing Victoria or have given some advice to Racing Victoria of a confidential nature.

5. [28]

   There is also in evidence on this application a document called “Technical Communications Plan”, which has been provided to Racing New South Wales from an anonymous source. That document speaks of there being a “public announcement” of a “call for reform” of Racing Australia made by “major thoroughbred racing jurisdictions”. It also speaks of the “objective” of that “call for reform” being a “reform agenda” of the Victorian, Queensland, South Australian and Western Australian Principal Racing Authorities “as it relates to the ongoing operation of Racing Australia”.

6. [29]

   The document also speaks of the “key messages” to be delivered by a “spokesperson” of media management and of “stakeholder engagement”. That document is said by Racing New South Wales to appear, on its face, to have been drafted by or with the assistance of a corporate communications or public relations consultancy. It has the hallmarks of such an engagement.

7. [30]

   Together, these matters point to Cato & Clive’s possible, if not probable, involvement with one or more of the defendant Principal Racing Authorities, particularly Racing Victoria.

Abuse of process?

1. [31]

   A subpoena will be set aside if it constitutes an abuse of process. A subpoena will not constitute an abuse of process if it has a legitimate forensic purpose.

2. [32]

   Racing New South Wales accepts that it must show that its subpoena directed to Cato & Clive has a legitimate forensic purpose.

3. [33]

   During argument, much attention was paid to the decisions of Darke J in Rinehart v Rinehart, [4] and of Slattery J in Yes Family Pty Ltd v Sphere Healthcare Pty Ltd. [5] The circumstances before their Honours were, however, quite different to the circumstances here. The question of whether a subpoena is an abuse of process or has a legitimate forensic purpose is, necessarily, one dependent on a careful consideration of the particular circumstances.

4. [34]

   The relevant test was recently discussed by the Court of Appeal in Secretary of the Department of Planning, Industry and Environment v Blacktown City Council. [6]

5. [35]

   To justify a subpoena, what must be shown is that:

6. [36]

   Here the question is whether the documents sought satisfy these requirements vis-à-vis Racing New South Wales’ application for preliminary discovery.

7. [37]

   In my opinion, the documents sought in the subpoena answer each of these requirements.

8. [38]

   The relevant issue in Racing New South Wales’ application for preliminary discovery is whether it “may be entitled to make a claim for relief” against the defendant Principal Racing Authorities arising from the existence of a “breakaway agreement” of the kind the subject of Racing New South Wales’ apprehension.

9. [39]

   Here, there is some evidence that one or other of the Principal Racing Authorities has retained Cato & Clive. As I have set out, there is evidence to suggest that Cato & Clive provided some service or advice to, at least, Racing Victoria. There is also evidence from which an inference can be drawn that one or more of the Principal Racing Authorities has obtained, from some source, advice of a marketing or public relations nature. It is unlikely that an organisation like Cato & Clive would be retained unless there was some circumstance, perhaps a proposed arrangement or agreement, in respect of which the retaining party wished to have public relations or like advice.

10. [40]

    In those circumstances, it appears to me that there is a reasonable basis, beyond speculation, that Cato & Clive has in its possession documents which may assist Racing New South Wales to establish whether it may be able to make a claim such an agreement exists.

11. [41]

    In those circumstances, I cannot see how the subpoena can be characterised as an abuse of process.

12. [42]

    It was common ground before me that Racing New South Wales could not have served a Notice to Produce on any one of the defendant Principal Racing Authorities seeking production of the documents now sought in the subpoena against Cato & Clive. There is clear authority that such a course would be an abuse of process. [9]

13. [43]

    That is because such an exercise would result in Racing New South Wales’ application for preliminary discovery becoming self-perfecting.

14. [44]

    That appears to me to be what Finn J was alluding to when he made the observation that “preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions [of an application for preliminary discovery] themselves”. [10]

15. [45]

    In that context, it has been stated:

16. [46]

    In this case, the scope of the subpoena is, on the face of it, wide, in that it seeks “all communications” since 1 July 2021 between Cato & Clive and the state and territory Principal Racing Authorities. However, Cato & Clive does not contend that it would be onerous or oppressive for it to respond to the subpoena.

17. [47]

    The purpose of the subpoena is apparent: to obtain documents which have apparent relevance to the contention Racing New South Wales wishes to make, on its preliminary discovery application, that it may be entitled to make a claim for relief arising from the “breakaway agreement” it apprehends has been made.

Fishing?

1. [48]

   On behalf of Cato & Clive it was also submitted that by issuing the subpoena, Racing New South Wales was “fishing”.

2. [49]

   However, as Racing New South Wales submitted, reference in the authorities to a “fishing expedition” is generally used in contradistinction to the existence of a legitimate forensic purpose. If it cannot be said that the documents sought have apparent relevance to an issue in the dispute, the subpoena might be characterised as a “fishing expedition”.

3. [50]

   Indeed, in this context, it has been stated authoritatively:

4. [51]

   That is the position here. The terms of the subpoena are not vague, and are not said to be oppressive.

Subversion of the process for preliminary discovery?

1. [52]

   Cato & Clive also made the separate submission that the effect of the subpoena was to predetermine “much of” Racing New South Wales’ application for preliminary discovery “because the scope of documents sought by the subpoena overlaps to a significant extent with the documents [Racing New South Wales] seeks by way of preliminary discovery”.

2. [53]

   In that context, it was said on behalf of Cato & Clive:

3. [54]

   It is true that there is overlap between the documents sought in the subpoena and the documents sought in one of the eight categories the subject of Racing New South Wales’ application for preliminary discovery. But that does not itself bespeak an abuse of process, [13] nor a subversion of the preliminary discovery process. As Racing New South Wales submitted, the starting point is that the subpoena has been in accordance with the rules and that there is no rule preventing a party seeking preliminary discovery from issuing a subpoena in aid of that application. [14] Accepting that the Court should be mindful of the potential for abuse of its processes when a subpoena is issued in that context, an applicant for preliminary discovery faced with an outright rejection of the contention that it may be entitled to make a particular claim, [15] ought generally be able to avail itself of the Court’s interlocutory processes to assist it to establish such a matter. [16]

4. [55]

   And here, the ambit of Racing New South Wales’ application for preliminary discovery is far broader than communications between any of the defendant Principal Racing Authorities and Cato & Clive.

5. [56]

   I do not see this as a separate basis to set aside the subpoena.

Conclusion

1. [57]

   Cato & Clive’s Notice of Motion of 14 February 2023 is dismissed with costs.