New South Wales Supreme Court CITATION : Reinke and Ors v Greyhound &Harness Racing Regulatory Authority [2005] NSWSC 341 HEARING DATE(S) : 31/03/05 01/04/05 JUDGMENT DATE : 15 April 2005 JUDGMENT OF : Patten AJ DECISION : See paragraph 27 Greyhound & Harness Racing Administration Act 2004 LEGISLATION CITED : Rules of the Greyhound Racing Authority 1999 Greyhound Racing Control Board Act 1985 CASES CITED : FAI Insurance Ltd v Winneke (1982) 56 ALJR 388 Carolyn Reinke 1st Plaintiff Ken Paull - 2nd Plaintiff Kon Kola - 3rd Plaintiff PARTIES : Keith Pedrana - 4th Plaintiff Matthew Sarkis - 5th Plaintiff Greyhound and Harness Racing Regulatory Authority (NSW) - Defendant FILE NUMBER(S) : SC 30009/05 D. Campbell SC- Plaintiffs COUNSEL : P. Callaghan SC - with D. Robertson - Defendant Abbott Tout - Plaintiff SOLICITORS : Hartmann & Associates - Defendant LOWER COURT JURISDICTION : - 7 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST PATTEN AJ 15 APRIL 2005 NO: 3009 OF 2005 JUDGMENT: REINKE v GREYHOUND AND HARNESS REGULATORY AUTHORITY: JUDGMENT: 1 HIS HONOUR: The Plaintiffs commenced this action by summons on 2 February 2005. They seek various forms of declaratory relief, damages and costs. They were successful in having the hearing expedited on the ground that the defendants alleged wrongful conduct, significantly impacts upon their capacity to earn income. 2 In the result, at the hearing before me I directed that the proceedings be confined to the application for declaratory relief. In the event that the Plaintiffs are successful and wish to pursue their claim for damages, a further hearing will be required to deal with that issue. 3 In connection with the claim for declaratory relief, it is convenient to treat the matter as if the 1st Plaintiff, Carolyn Reinke, were the only Plaintiff). I will hereafter refer to her as Ms Reinke. I will refer to the Defendant as the Authority. 4 For the most part, the salient facts are not in dispute. Those deposed to by Ms Reinke which I regard as important for the disposal of the case, I take from her affidavit, sworn 2 February 2005 as follows. "1. I am a self employed greyhound trainer. I have been breeding and training greyhounds in South Australia since 1993 and then later in New South Wales. 2. I am well recognised in the greyhound racing industry. I have won numerous races as a greyhound trainer since obtaining my professional greyhound training license in or about 1994. 3. I am the registered proprietor of the property known as White Acres Stud and conduct a business as a trainer and breeder of greyhound dogs from that property. I have been responsible for the training and breeding of approximately 40 greyhound dogs. Until recently, Harry Sarkis ("Harry") has managed greyhound sires at the property as well. I have, from time to time, assisted him in this regard. 4. I met Harry, my de facto partner, in or about 1996 in South Australia. I eventually relocated to New South Wales to live with Harry. We have together three children, Dionne Sarkis who is 6 years old; Ben Sarkis who is 5 years old; and Aaron Sarkis who is two years old. WHITE ACRES STUD AND DUTIES OF A STUD MANAGER 5. In or about 1999, I raced two dogs, Spoken Joe and Dalalla. They were moderately successful and I decided, in conjunction with the owners. To retire the dogs from racing and to stand them at stud for the purposes of breeding. The stud at this stage did not have a name. In or about 2001, I decided to name the stud White Acres Stud. 6. White Acres stud has two fully bricked subdivided kennel blocks. The first kennel block has reverse cycle air-conditioning, kitchen facilities and is divided into 8 separately drained brick kennels and 7 portable kennels. The second kennel block is divided into four separate brick kennels. Both kennel blocks have a secured adjoining yard, which is used to exercise the dogs. 7. Adjoining the kennel blocks is a 440metre slipping track which is used to train the greyhounds and four 70 metre puppy runs. There is a two acre secured paddock to rear puppies and a bull ring for teaching puppies. A bull ring is a miniature circular track with a manual lure system that is used to educated puppies for racing purposes. 8. White Acres Stud also has its own laboratory. The equipment in the laboratory includes a microscope linked to computers for imaging purposes. The images are used to test semen quality. There is an immulilte progesterone testing machine which is used to test when a bitch is ready for mating. There is a centrifuge which is used to spin blood to separate the red from the white blood cells. The white blood cells are used in the progesterone testing procedure. 9. The laboratory also has a spermacue which counts the number of sperm per millilitre and there are two freezer fridges for freezing semen, semen storage tanks and laboratory warming baths which are used to thaw semen. Exhibited to this Affidavit and marked as Exhibit "CR1" are photographs showing the property White Acres Stud. 10. Harry was initially responsible for the stud duties at White Acres Stud. 11. A stud manager is a person who has the care, control, custody or supervision, whether delegated or not, of a greyhound registered as a sire. The stud manager is responsible for the general care of greyhounds, which includes the veterinary, dietary, exercise and maintenance of greyhounds. Stud managers ensure the integrity and safety of a service. …………………………………. ………………………………….. 15. On or about 3 December 2004, I was advised by the authority that the stud activities of Brett Lee were the subject of an inquiry. Brett Lee was a stud dog owned by Keith Pedrana and managed by Harry. Annexed hereto and marked with the letter "A" is a copy of a letter from the Authority to me dated 3 December. 16. The inquiry, amongst other things, investigated the number of services performed each month by Brett Lee and whether the information relating to the number of those services was true and accurate. 17. I attended the inquiry with Harry on 7 January 2005. The inquiry was conducted by James Perry and George Capel, stewards of the Authority. Harry was found guilty and disqualified for a period of five and a half years and fined the sum of $1000.00. 18. I spoke to James Perry and George Capel in the hearing room following the inquiry. I said words to the following effect: "Where does Harry's disqualification leave me? I have bitches sitting in the kennels at home that need to be mated. What can I do?" George Capel said words to the effect: "We have no solution for you Ms Reinke." I said words to the following effect: "Can I transfer the dogs in Harry's name into my care so I can honour our commitments?" George Capel said words to the following effect: "A formal application will have to be lodged by the owners of the stud dogs for the care of those dogs to be transferred to you. It would seem unlikely that this would be approved. The owners should also r write a letter to the CEO of the Authority, Mr John Coughlan, outlining their request to have their dogs transferred into your care." 19. On or about January 2004, I contacted Kon Kola, owner of stud dogs Hallucinate and Placard; Keith Pedrana, owner of stud dog Brett Lee; Matthew Sarkis, owner of stud dog Fire Fly Boy; and Ken Paull, owner of stud dog Stately Bird. I advised them of the inquiry and my conversations with Mr Capel thereafter. All of the owners advised me that they wished to have their dogs transferred into my care. 20. As a result, I informed each owner that they would need to write a letter to John Coughlan and to fill out and send a copy of the Form A to the Authority. ……………………………………….. ………………………………………… 24. I am informed and do believe that letters and applications were submitted to the Authority. I was not afforded any opportunity to make any submissions or to answer any enquiries. I was not at any stage consulted by the Authority regarding the owners' request(s) to transfer their dogs from Harry to me. 25. On or about 19 January 2005, Kon Kola, owner of stud dogs Hallucinate and Placard, telephoned me and informed me that his application to transfer the management of his dogs to me had been declined by the Authority. Later that day, I received similar telephone calls from Keith Pedrana and Ken Paull. On or about 20 January 2005, I received a telephone call from Matthew Sarkis to like effect. 26. On or about 20 January 2004, I rang John Coughlan at the authority. After introducing myself he said words to the effect: "Hello Carol, how are you?' I said words to the effect: "I am devastated. I have heard from Keith Pedrana and Kon Kola that I will not be able to take over the car of their dog. I want to know why not?" John Coughlan said words to the effect: "It is quite clear in Rule 24. It is a very strong Rule. Harry Sarkis is a disqualified person and as he partner this means that the dogs under his care cannot be transferred to you." I said words to the effect: "Harry Sarkis is not here. He will not have anything to do with the dogs." John Coughlan said words to the effect: "You do not understand the disqualification. There is a stigma attached to you and we have to be seen to be doing the right thing." I said words to the effect: "But Harry is not here. Does this mean I am guilty before proven innocent?" John Coughlan said words to the effect: "We do not know that he is not there. We would have to put people out on your stud 24 hours a day. ;You would have to prove beyond reasonable doubt that Harry is not there and we would have to accept your word". I said words to the effect: "Don't you give people the benefit of the doubt? I want to do the right thing and I play by the rules. I am qualified to do this job. I have state of the art equipment and the backing of the owners". John Coughlan said words to the effect: "There have been no special circumstances shown." I said words to the effect: "Was I meant to make an application myself? I am amazed that nobody from the Authority has contacted me regarding this decision." John Coughlan said words to the effect: "We do not have to contact you. The bottom line is that whatever you put in writing wouldn't have satisfied the Board anyway. I understand that to some extent you are an innocent party, but Rule 24 clearly states that dogs cannot be transferred from a disqualified person to his or her partner." I said words to the effect: "This is my livelihood. I have not done anything wrong. I don't think my case has been judged on tis merits." John Coughlan said words to the effect: "You might have the right intentions but this is all about perception. Didn't the stewards make it clear to you that the dogs couldn't be transferred". I said words to the effect: "No. The stewards told me to ask the owners to make a formal application." I then said words to the effect: "So it would be okay for the dogs to go to Rocky Ridge Farm? John Coughlan said words to the effect: "Yes, because to the best of our knowledge there is nobody disqualified there." 28. The decisions of the Authority have occasioned me and are continuing to occasion severe financial loss. 29. I have, because of the Authority's decisions, sent bitches home not mate. I have not taken any bookings since 7 January 2005. I am concerned that if this state of affairs continues, that the goodwill I have built up will be destroyed. The owner will not tolerate the present situation much longer. 5 Although Ms Reinke was cross examined, there was no challenge to her evidence regarding the conversations with Mr Capel and Mr Coughlan. I accept her testimony. 6 Other evidence in the case established that the enquiry referred to in Ms Reinke's affidavit led to Mr Harry Sarkis being charged with and found guilty of a number of breaches of the rules of greyhound racing. He was fined, in total, $1000 and disqualified for a period of 5 years. His subsequent appeal to the Greyhound & Harness Racing Appeals Tribunal was dismissed although the period of disqualification was reduced to 3 years. 7 It will be necessary for me to return in some detail to the applications to the Authority and its refusals as referred to in Ms Reinke's affidavit, but before doing so it is appropriate that I say something about the regulations in this State of the Greyhound Breeding and Racing Industry. It is relevantly governed by the Greyhound & Harness Racing Administration Act 2004 (the 2004 Act) and the Rules of the Greyhound Racing Authority 1999 (the rules). Although the rules were promulgated under s.10 of the Greyhound Racing Control Board Act 1985, they have been preserved by saving provisions in the 2004 Act, and were in force at the relevant time. 8 The 2004 Act establishes the Authority as a statutory body representing the Crown. Relevantly s.12 provides: TAKE IN B. 12 (i) (a) 2 (a) This hearing has focussed on clause 24 of the rules. It is appropriate that I state the rule in full which appears under the heading 'Effect of Disqualification or Suspension'. 9 10 TAKE IN C a b Returning to the applications made by dog owners Messrs Matthew Sarkis, Keith Pedrona. Kim Kola and Ken Paull, it is appropriate to note that at least two were made on the form A, prescribed by the Defendant for applications for registration or renewal of registration of a greyhound as a sire. However, each of the dogs was already registered and presumably, for that reason, the applicants left blank the space on the form calling upon the applicant to indicate whether he was applying for registration, renewal of registration or registration under the Frozen Semen Insemination program. In all cases, by letter, the dog owner indicated to the effect that he wanted his dog transferred to Ms Reinke's care. Each of the applications was refused by the Defendant at a board meeting on 19 January 2005. The relevant minutes read: 11 TAKE IN D The situation of Mr Kola differed from the others in that he provided an alternative to Ms Reinke. Ms Reinke and her advisors believed, or so I was informed from the bar table, that until the submissions of Mr Callaghan SC, Senior Counsel for the Defendant, it had purported to act under subclause 4A of clause 24. They took this view because of the reference to "close association" which only appears in subclause 4A and to the reply by the solicitor for the Defendant, Mr Hartman, to a letter from Ms Reinke's solicitors Abbott Tout. In response to the questions in a letter dated 25 January 2005: 12 TAKE IN E Mr Hartman replied: 13 TAKE IN F The belief that subclause 4 was involved prompted the Plaintiffs to seek a declaration in the summons that the subclause was invalid as, inter alia, an unlawful restraint of trade. However, in the result, Mr Callaghan made it clear that in his submission the Defendant was purporting to act on clause 24 (i) (b). TAKE IN G: There is, at least, one difficulty in treating the matter before the Defendant as an application for permission under clause 24 (i) (b), and that is that the subclause appears to contemplate that the application will be by the disqualified person. That certainly did not occur as all the applications were by the owner. In any event, Mr Callaghan's submissions persuaded Mr Campbell SC, counsel for Ms Reinke, that it was no longer appropriate for him to seek a declaration of the invalidity of subclause 24 (4A). On one view of the matter, there was no formal application before the authority which it was authorised to grant or refuse and to that extent at least it misdirected itself. However, its purported refusal of the applications were, it might be inferred, acted upon by the applicants and for that reason alone, caused and continue to cause considerable financial harm to the Plaintiff's business. Treating the applications made to the Authority as validly made, as the Authority contends, pursuant to rule 24 (i) (b), the Authority, in my opinion, was obliged to extend procedural fairness to the Plaintiff. Her position was, I think, analogous to that of the Plaintiff in FAI Insurance Ltd v Winneke (1982) 56 ALJR 388, a case which concerned the refusal by the Government Council for Victoria to review an approval previously granted under the Workers Compensation Act. In the course of his judgment, Mason J observed: Page 395 The fundamental sale to Salemi v McKellar. In my opinion, the Authority was here exercising or purporting to exercise powers, which it must have known affected, in a most significant way, the Plaintiff 's expectation that she would be permitted to continue her calling unless prevented from doing so following a fair hearing. It was common ground that no formal opportunity was given to the Plaintiff to be heard before decisions were made which adversely affecter her interests. The Authority relies upon the conversations which the Plaintiff had with Mr Capel on 7 January 2005, the conversation between Mr Coughlan and the dog owners and with the invitation contained in the letter from the Authority's solicitors to the Plaintiff's solicitors dated 25 February 2005 in these terms TAKE IN P. (AFFIDAVIT Hartman – (30. 3. 05) Although Mr Coughlan was not a member of the Authority, he was its Chief Executive and was present at its meeting of 19 January 2005 when the applications were refused. It is, I think, to be inferred that he participated in the proceedings of the Authority, particularly as the use of the expression "close association grounds" in the minutes, mirrors the statements made earlier by Mr Coughlan to the Plaintiff and to the owners. Although the Plaintiff was obviously aware that her relationship with Mr Sarkis would operate to her disadvantage, procedural fairness, in the circumstances, required, in my view, that she be given a formal opportunity to make submissions to the Authority. The financial consequences to her of adverse decisions were very grave and, of course, so was the potential damage to her reputation in the greyhound racing industry. But there are other reasons, in my opinion, why the Authority's purported decisions cannot be allowed to stand. It seems to me that it was under a fundamental misapprehension as to the interpretation of the rules under which it operated. Rule24 (i) (b) under which the Authority now says it acted makes no reference to "close association". Presumably the Authority is required to consider any application made by virtue of clause 24 (i) (b) according to the best interests of the industry. An industry in which the Plaintiff was a licensed practitioner, who, according to the unchallenged evidence had the most up to date equipment. Clause 24 (4A), now disavowed as a source of the Authority's power, but mentioned in the letter from the Authority's solicitors dated 31 January 2005, refers to " a close associate or member of the family of a disqualified person". However, that rule has clearly no application to the present case, as was conceded by Mr Callaghan SC, counsel for the Authority. The import of the various conversations deposed to by the Plaintiff, none of which were denied, was to the effect that the stewards and Mr Coughlan believed that the rules virtually required the Authority to refuse any application involving the Plaintiff. The minutes of the meeting of the Authority on 25 January 2005 suggest to me that it was of a like mind. If so, it misdirected itself in law. By any test, in my opinion, the treatment of the Plaintiff by the Authority was unfair and the Plaintiff is entitled to relief. Among the relief sought in the summons was a declaration that rule 24 (4A) was invalid. As the Authority does not rely on that rule, such a declaration would be superfluous. However, the Plaintiff is, I think, entitled to a declaration that the resolutions of the Authority on 19 January 2005, in so far as they purport to refuse applications to transfer greyhounds from Mr Matthew Sarkis to the Plaintiff, were void, in that they failed to afford the Plaintiff procedural fairness. I make a declaration, accordingly. Costs should, I think follow tha event and I order the Authority to pay the Plaintiff's costs Exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.