Background
The Australian Turf Club Ltd (ATC) owns or operates the four Sydney thoroughbred racecourses — Royal Randwick, Rosehill Gardens, Canterbury Park, and Warwick Farm — and is the only entity conducting galloping race meetings in Sydney. The ATC was formed in 2011 through the merger of the Australian Jockey Club and the Sydney Turf Club under the Australian Jockey Club and Sydney Turf Club Merger Act 2010 (NSW). With approximately 65% of its revenue derived from racing-related activities and its constitution dedicated to the encouragement of horse racing, the ATC’s effective functioning is integral to the NSW thoroughbred racing industry.
On 19 September 2025, Racing New South Wales (RNSW) issued the ATC a show cause notice raising concerns about corporate governance and financial management. The ATC responded, attaching a report from KordaMentha (the KordaMentha report). Dissatisfied with the ATC’s response, RNSW on 15 December 2025 exercised the power in s 14(2)(g) of the Thoroughbred Racing Act 1996 (NSW) (TRA) to appoint Morgan Kelly as administrator to conduct the affairs of the ATC. The ATC immediately challenged the appointment in the Supreme Court of New South Wales.
On 11 March 2026, Kunc J declared the appointment invalid on two grounds: first, that the appointment had to be, but was not, made in exercise of one of RNSW’s statutory functions under s 13 of the TRA; and second, that RNSW had committed jurisdictional error by misreading the KordaMentha report. His Honour rejected the ATC’s further arguments that the appointment power was impliedly repealed by the Merger Act or was inconsistent with the Corporations Act 2001 (Cth). RNSW sought leave to appeal, and the ATC filed a notice of contention re-agitating the inconsistency points.
The Court’s Holding
The Court of Appeal (Kirk JA, Stern JA, and Griffiths AJA) granted leave to appeal and allowed the appeal in full, setting aside Kunc J’s orders and dismissing the ATC’s amended summons. On the principal issue, the Court held that the primary judge erred in construing the definition of “horse racing” in s 3(1) of the TRA too narrowly. The promotion, conduct, and control of race meetings necessarily encompasses the financial viability and corporate governance of the body conducting them; those matters therefore fall within the definition of horse racing for the purpose of s 13(1)(b), which confers on RNSW the function of controlling, supervising, and regulating horse racing in the State. RNSW’s concerns about the ATC’s governance and finances went directly to the ATC’s ability to operate race meetings, and the appointment of an administrator was a lawful means of exercising that supervisory function.
The Court also rejected the primary judge’s second ground of invalidity. Reading RNSW’s statement of reasons fairly and as a whole, the Court found that RNSW had not misread the KordaMentha report. RNSW was entitled to give no weight to the report’s ultimate conclusions while having regard to events that post-dated the report, and even if some factual error had been made it was not so irrational or lacking in justification as to constitute jurisdictional error, nor was any such error material.
On the ATC’s notice of contention, the Court held: (i) the Merger Act did not impliedly repeal s 14(2)(g) of the TRA — Parliament’s intention was not to create a special statutory immunity for the ATC from regulatory supervision; and (ii) there was no inconsistency under s 109 of the Constitution between s 14(2)(g) of the TRA and the identified provisions of the Corporations Act 2001 (Cth). The appointment of a racing administrator by a State regulator does not alter, impair, or detract from the operation of the Corporations Act’s provisions concerning the control and management of corporations, drawing an analogy with the accepted validity of court-appointed receivers over incorporated entities.
Key Takeaways
- The statutory definition of “horse racing” in the TRA is broad enough to encompass the financial condition and corporate governance of a race club, because those matters bear directly on the club’s ability to promote, conduct, and control race meetings.
- A State racing regulator’s power to appoint an administrator under s 14(2)(g) of the TRA extends to a registered race club that is also a public company governed by the Corporations Act, provided the exercise of that power does not alter, impair, or detract from the operation of the federal Act — the two regimes can operate concurrently.
- A subsequent State Act (here, the Merger Act) will not be taken to have impliedly repealed an earlier regulatory power absent clear evidence that creating such an immunity was Parliament’s intention.
- Administrative decision-makers’ reasons must be read fairly and as a whole; cherry-picking passages to establish misreading of an expert report will not suffice to demonstrate jurisdictional error, and any factual error must clear the high threshold of legal unreasonableness to be material.
Why It Matters
This decision confirms the scope of RNSW’s supervisory powers over the NSW thoroughbred racing industry and clarifies that a State regulator’s capacity to intervene in the governance of a registered race club is not displaced simply because that club is a Corporations Act company. The judgment provides a practical framework for assessing when State regulatory intervention in the affairs of a corporation is consistent with federal corporations law, drawing on the analogy of court-appointed receivers — a point of significance well beyond the racing industry to any sector where State-specific regulatory regimes overlap with general corporate law.
For racing regulators and the clubs they oversee, the decision makes clear that chronic corporate governance failures or financial difficulties that threaten the delivery of race meetings fall squarely within the regulator’s supervisory mandate. The Court’s caution that its ruling is confined to the specific factual context — a club whose primary purpose is racing and whose dysfunction threatened the conduct of Sydney race meetings — signals that the precise limits of the administrator-appointment power remain open for future cases involving clubs with more diversified activities.