Racing New South Wales v Fletcher

BELL P: I agree with the reasons of Meagher JA and also the separate reasons of Payne JA.

MEAGHER JA:

Racing NSW’s functions include the supervision and regulation of thoroughbred horse racing in New South Wales. Its powers include to enquire into and deal with any matter relating to racing and to refer any such matter to its stewards or others for investigation and report. Those functions and powers are conferred by Thoroughbred Racing Act 1996 (NSW), ss 13 and 14. As well, by s 13(1)(e) Racing NSW and its stewards have the functions and powers conferred or imposed on them by the Australian Rules of Racing (ARR).

Those powers relevantly include by ARR, rr 15(a), 20(d) and 22(1)(a) and (d):

Following a written direction to Mr Fletcher dated 5 March 2019 made by Racing NSW Stewards under ARR, r 22(1)(d), his mobile phone was produced in relation to an investigation those stewards were then undertaking into the betting activities of a Mr and Mrs Snow; it being suspected that Mr Fletcher, described by the primary judge as a “professional gambler”, may have been placing bets on thoroughbred horse racing in New South Wales on behalf of Mr and Mrs Snow.

The orders made by the primary judge on 9 April 2019 which are presently relevant are orders 2, 3 and 4. Only orders 3 and 4 are the subject of the proposed appeal:

Racing NSW requires leave to appeal because the subject matter of the relevant orders is not property or any other matter in issue amounting to or of the value of $100,000 or more: Supreme Court Act 1970 (NSW), s 101(2)(r); Clyne v NSW Bar Association (1960) 104 CLR 186 at 205; [1960] HCA 40.

That leave is not opposed and should be granted. As Racing NSW submits, the appeal raises questions concerning the use of information obtained in the exercise of its power to investigate and/or inquire into a matter in connection with racing where that information has been lawfully obtained in relation to a particular matter being investigated and is relevant or potentially relevant to another matter relating to racing and deserving of investigation. In circumstances where the statutory functions and duties of Racing NSW include to “control, supervise and regulate horse racing” in this State, the resolution of questions as to the scope of its powers conferred for that purpose is a matter of significant public importance.

Between Judgment [86] and [136] the primary judge addresses what his Honour formulates at Judgment [19] as the six “real questions in dispute”. Question 6 concerned Mr Fletcher being given sufficient opportunity to make claims of privilege in relation to any of the captured information, a subject which is no longer contentious between the parties. Accordingly order 4 made by the primary judge, although challenged on appeal, is not separately supported in the event that order 3 be set aside.

Question 3 as formulated is directed to whether Racing NSW and its stewards are restricted in the purposes for which they can access and use the imaged information obtained from Mr Fletcher’s phone. That is the principal matter in issue between the parties. The primary judge answered that question “upon an assumption that [Mr Fletcher] was not bound, by statute or contract, to comply with the direction given to him by the stewards for production of his mobile phone, but that he agreed to produce his phone on the terms set forth in [Racing NSW’s] letter dated 5 March 2019” (Judgment [107]) (emphasis added). Later at Judgment [132(e)] the primary judge concluded that although Mr Fletcher “was not (in the particular circumstances in which he was given the direction to produce his phone) obliged to comply with the direction, it was open to him to choose to produce his phone in compliance with the direction”.

His Honour’s reasoning in support of the challenged order 3 proceeds as follows. First, the Stewards’ direction given on 5 March 2019 that Mr Fletcher produce his mobile phone for the purpose of taking an image of the information contained in it was within the power conferred by ARR, r 22(1)(d) and did not involve any “abuse of power or process” (Judgment [95], [96], [132(a)]). Secondly, that direction was expressed to be for a “specific stated purpose” – namely inquiring into the betting activities of Mr and Mrs Snow – and accordingly the use of that information “acquired by exercise of that power” was “prima facie” limited to use for that purpose. That qualification appears to acknowledge the possibility that at least “subject to due process being afforded” to Mr Fletcher, the information might be used more generally by Racing NSW in the performance of its powers and functions (Judgment [113], [132(c)]).

Thirdly, in voluntarily handing over his phone to the Stewards Mr Fletcher consented to them taking possession of it, forensically imaging it, and “using it for a specified limited purpose [but] not otherwise” (Judgment [105], [108], [109], [132(b)]). The fact that his decision to produce the phone in compliance with the direction was motivated by an apprehension that, if he did otherwise, he might be called upon to show cause why he should not be warned off racecourses does not prevent Racing NSW from using, in carrying out its functions, information about racing activities acquired from his phone (Judgment [82], [83], [132(f)]). Fourthly, at the time he handed over his phone Mr Fletcher was “on notice” that Racing NSW may in the future claim an entitlement to use information from the phone “beyond” its inquiry into the betting activities of the Snows (Judgment [109]). Furthermore it remained open to Racing NSW to exercise its powers to require Mr Fletcher to provide that information for its use for purposes other than the originally notified purpose (Judgment [109], [113], [132(c), (f)]).

Fifthly, Racing NSW was entitled to retain the imaged information “properly acquired” – so far as it relates to racing activities – and beyond the completion of its inquiry into the betting activities of the Snows (Judgment [121], [122], [123], [132(d)]). What is meant by the qualification “properly” acquired was not separately explained. However Judgment [123] suggests the meaning of that qualification had been addressed earlier in the consideration of question 3; and Judgment [118] and [119] are consistent with “properly acquired” describing information which may bear directly or indirectly on the Snows’ betting activities which has been accessed, and electronically imaged, for the purpose of investigating those activities. It would seem to follow that information which does not directly or indirectly bear on that subject but forms part of the imaged information acquired from the phone has not in this context been “properly” acquired.

Finally, the relief granted – a quia timet injunction limiting the use to which that information may be put to the betting activities of the Snows without Mr Fletcher’s consent or the leave of the Court – was directed to protecting Mr Fletcher against “the risk of an oppressive use of” information obtained for a limited purpose (Judgment [117], [119]).

The two grounds of appeal are:

There is no notice of contention which seeks to support the making of the challenged orders other than for the reasons given by the primary judge. Nor is there any proposed cross appeal by which Mr Fletcher seeks an order for delivery to him of the physical images or other electronic copies of the information extracted from his mobile phone.

As Gaudron J observed in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [60] an injunction is a curial remedy that can “only [be issued] to protect an equitable or legal right or, which is often the same thing, to prevent an equitable or legal wrong”. Although Lenah Game Meats was concerned with the grant of an interlocutory injunction it remained necessary for the granting of that relief “to identify the legal (which may be statutory) or equitable rights which are to be determined at trial and in respect of which there is sought final relief which may or may not be injunctive in nature”: per Gummow and Hayne JJ at [91].

Mr Fletcher’s claim to a final injunction restraining the use of information in Racing NSW’s possession other than for a limited purpose is not founded on any asserted contractual entitlement, personal property interest in the electronic images containing that information or more broadly on the basis that the information was confidential and imparted in circumstances importing an obligation of confidence. That is so notwithstanding that the primary judge’s analysis refers to Mr Fletcher having consented to the Stewards using information on his phone for a “specified limited purpose”, and not otherwise. At Judgment [113] his Honour makes clear that the injunctive relief is directed to protecting a right to restrict the use of information obtained in the exercise of the power under ARR, r 22(1)(d) to the purpose or purposes for which that power was conferred.

Referring to ARR, r 22(1)(d) at Judgment [113] and citing Johns v Australian Securities Commission (1993) 178 CLR 408 at 423-424; [1993] HCA 56 and Flori v Commissioner of Police [2015] 2 Qd R 497; [2014] QSC 284 his Honour said:

In the argument before this Court, Mr Fletcher’s primary position was that the Steward’s power was described as exercised for the purpose of the inquiry into the betting activities of Mr and Mrs Snow, and accordingly any information obtained from that exercise could only be used for that purpose. Alternatively, it was submitted that if Racing NSW sought to use information from the phone for another purpose, it first must give Mr Fletcher notice that it proposed to do so. This submission did not extend to a consideration of whether it was necessary to give that notice to constitute an exercise of the power under ARR, r 22(1)(d) in relation to that other purpose, or to satisfy some obligation arising from the rules of natural justice.

Neither of these arguments makes it necessary to address the issue posed by ground 1. Mr Fletcher’s position depends on the proposition that the following purpose identified by Racing NSW in its letter of 5 March 2019 defines and limits the use which could be made of the information then obtained:

In Johns the power conferred by Australian Securities Commission Act 1989 (Cth), s 19(2) to require persons to be examined on oath was available “where the Commission, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating or is to investigate” (at 418). The Act also provided that information acquired from examinations under s 19 may be used and disclosed for the purposes of the performance or exercise of any of the functions of the ASC. The question was whether the ASC was authorised under the terms of the Act to release transcripts of an examination to a Royal Commission undertaking an inquiry into the affairs of the Tri-Continental Group in circumstances which would have allowed those transcripts to be published generally, and to do so without affording Mr Johns an opportunity to be heard on the question of their release. A majority of the High Court held that those provisions did not authorise such a release.

Citing Sir Nicholas Browne-Wilkinson V.-C. in Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 at 234 and Sir Donald Nicholls V.-C. in Morris v Director of the Serious Fraud Office [1993] Ch 372 at 381, Brennan J summarised the relevant principle at 424-425:

In agreeing that the relevant provisions did not empower the ASC to release the transcripts to the Royal Commission, McHugh J added at 467:

The second decision cited by the primary judge, Flori v Commissioner of Police, concerned the use, for the purpose of a disciplinary action against the plaintiff, of materials seized under an earlier search warrant issued for the purpose of obtaining evidence of the commission of an offence by him. In Australian Securities and Investment Commission v Rich [2005] NSWSC 62; (2005) 220 ALR 324 Austin J described (at [305]) the basis on which any limitation on the use of materials seized under a search warrant arises as follows:

The principle applied in Johns directs attention to the purpose for which the relevant statutory power to obtain information is conferred. The general powers conferred on the Stewards by ARR, r 20(a) include to “regulate and control, investigate, inquire into… matters relating to the conduct of all… persons connected with a horse, persons attending a racecourse, and any other person connected with racing”. In that context, the specific power conferred by ARR, r 22(1)(d) is expressed to be without “limiting any other Stewards’ powers” and to be a power “in relation to investigations and inquiries” to require production, take possession of and examine mobile phones “in relation to any race meeting and/or any investigation, inquiry, hearing or proceeding”. In its terms that power includes to take possession of and examine any mobile phone in relation to “any race meeting or any investigation or inquiry”, the latter being an investigation or inquiry into “any matter in connection with racing” (ARR, r 22(1)(a)).

The Stewards’ power to investigate includes, either as a matter of construction or as a necessary incident, the power to initiate or commence an investigation. That power may be exercised in relation to any matter which comes to the attention of the Stewards as deserving of inquiry or investigation, including a matter arising in the conduct of another investigation or inquiry. If the position was otherwise, the Stewards could not act on that information, notwithstanding that it might require immediate action on their part, as would be the case if it was proposed, to take an example, that a fast horse be substituted in disguise for a slow horse at a forthcoming country race meeting. Furthermore the power to “take possession of and examine” information in relation to “any” investigation or inquiry extends to investigations which are current during the time that the relevant information lawfully remains in the possession of Racing NSW; with the result that the power to examine may be exercised in relation to investigations which were not current at the time the information was obtained.

Thus the information obtained from Mr Fletcher’s phone could be used by the Stewards for the purpose of any investigation or inquiry into a matter in connection with racing, including use by informing a decision to initiate an investigation or inquiry. It follows that neither Racing NSW nor its stewards were subject to the limitation with respect to the use of information obtained under ARR, r 22(1)(d) contended for by Mr Fletcher, and upheld by the primary judge. It is the purpose for which the statute confers the power to obtain information which defines the scope of any obligation limiting its disclosure or use. The primary judge erred in addressing that question by reference to the immediate use of the information identified in Racing NSW’s letter of 5 March 2019. For that reason, ground 2 must be upheld.

This conclusion makes it unnecessary to consider ground 1, which whilst not conceded was not the subject of contested argument. Nor is it necessary to address the terms of the letter of 5 March 2019 or the evidence of Mr Van Gestel, the Chairman of the Racing NSW Stewards, that at the time that letter was handed to Mr Fletcher he was told that information on the phone would not be “distributed to third parties unless it was relevant to the investigation or the Rules of Racing”. As is noted earlier, the primary judge did not restrain Racing NSW on the basis of an equitable duty of confidence arising from the circumstances in which the phone was handed over, or by reason of any enforceable undertaking said to have been given by Racing NSW at that time.

In the result, the appeal should be allowed with costs.

The primary judge did not make any order as to the costs of the proceedings before him, on the basis that each party had achieved some success. That will not be the position if the orders I propose are made. The parties should attempt to agree on any costs order to be made in the proceedings below, taking account of the appellant’s success in relation to the principal matter in question. If the parties are unable to reach agreement, written submissions should be exchanged and the costs question determined on the papers.

Accordingly, I propose the following orders:

PAYNE JA: I have read the judgment of Meagher JA in draft and agree with the orders proposed by his Honour. For the reasons given by Meagher JA, it is sufficient to dispose of this appeal by addressing only ground 2. I agree with his Honour’s reasons in relation to ground 2. Without derogating from that agreement I would emphasise the following matters.

In contrast with the stance adopted at trial, [1] the respondent’s position in this Court was that it should be assumed that the stewards had the power to demand that Mr Fletcher’s mobile phone be produced to them. Senior Counsel for the respondent did not seek to support the primary judge’s apparent conclusion that Mr Fletcher was not bound to comply with the direction by the stewards to produce his mobile phone:

Mr Fletcher produced his mobile phone to the stewards. The respondent’s position was that the production of the phone was for the purposes of the then existing investigation which, it was asserted, was limited to particular gambling activities allegedly being conducted by Mr and Mrs Snow. It followed, so the respondent said in his primary case, that the information obtained from the phone could not be used for the purposes of any other than one limited to particular gambling activities allegedly being conducted by Mr and Mrs Snow. The respondent’s fall-back position was that the stewards may be entitled to use material obtained from Mr Fletcher’s telephone for the purposes of another inquiry, but only after having formally commenced a further investigation and serving a further notice on Mr Fletcher.

I would reject both constructions offered by the respondent of AR 22(1)(d) of the Rules of Racing of Racing NSW. As Meagher JA explains, particularly at [27]-[28], the stewards’ power to investigate includes, either as a matter of construction or a necessary incident of the express power, the power to initiate or commence an investigation. The material obtained from Mr Fletcher’s phone could be used by the stewards for the purpose of any investigation or inquiry into a matter in connection with racing. It also bears emphasising that there was no issue in this case about the circumstances in which material lawfully produced to the stewards may be ordered to be returned.

I also agree with Meagher JA that the way the case was presented by the respondent makes it strictly unnecessary to consider ground 1. Nevertheless, as the primary judge apparently made a finding that Mr Fletcher was not bound to comply with the stewards’ direction, it is appropriate that I briefly explain why I respectfully disagree.

Senior Counsel for the respondent ultimately accepted that Mr Fletcher’s mobile telephone lawfully came into possession of the chief steward. That concession was correctly made.

In Golden v V’landys (2016) 339 ALR 610; [2016] NSWCA 300, with the agreement of McColl and Leeming JJA, I said:

More recently, in Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224 Griffiths and Derrington JJ said:

Racing NSW is established by s 4 of the Thoroughbred Racing Act 1996 (NSW). Section 13 of the Act confers the following “functions” (defined in s 3 to include any “power, authority or duty”) upon the applicant:

It is at least arguable that the investigatory powers conferred upon Racing NSW by the Rules of Racing of Racing NSW are conferred as a statutory power by ss 13(1)(a) and (e) of the Thoroughbred Racing Act. One of those powers is the power, conferred by AR 15(a), to investigate “any matter relating to racing” and to delegate any such investigation to the stewards. Section 14(2)(d) of the Thoroughbred Racing Act specifically empowers Racing NSW to “inquire into and deal with any matter relating to racing and to refer any such matter to stewards or others for investigation and report”.

Although in the absence of a contrary argument being advanced by the respondent it is undesirable finally to decide the issue here, I tentatively incline to the view that the power to investigate a matter relating to racing is given a statutory character by s 13(1) of the Thoroughbred Racing Act. On this construction, the power to require the production of, and to examine, mobile phones in relation to an investigation of a matter relating to racing is a power whose force derives from statute. This is not to deny the proposition that the Rules of Racing of Racing NSW depend for the most part on agreement for their force, but recognises that s 13(1) of the Thoroughbred Racing Act gives the provisions of the Rules of Racing of Racing NSW which confer investigative powers efficacy independent of any agreement.

Assuming, however, and contrary to this tentative conclusion, that the existence of the power in AR 22 depended upon agreement, Mr Fletcher was nevertheless bound to comply with the direction to produce his mobile phone given by the stewards in this case. This is because Mr Fletcher was a professional gambler who employed “runners” to place bets for him at TAB outlets. Subsection 53(1) of the Totalizator Act 1997 (NSW) requires the totalizator licensee in this State to make rules for or with respect to the conduct of the totalizator. Subsection 57(2) provides that “[t]he rules, as in force when a bet is made, form part of the contract between the licensee and the investor” who places the bet. Rule 1.1.4 of the Totalizator Rules provides:

Whether the Rules of Racing of Racing NSW are incorporated into the contract between the TAB and an individual wagerer or the Rules of Racing of Racing NSW form part of a collateral contract as consideration for entry into the wagering contract with the TAB need not be determined here. Whichever way the matter is approached, Mr Fletcher by his conduct as a professional gambler bound himself to comply with the Rules of Racing of Racing NSW.