Racing NSW wins appeal over Australian Turf Club administration

Racing NSW has successfully appealed a ruling invalidating its appointment of Morgan Kelly of EY as administrator of Australian Turf Club Ltd, with the NSW Court of Appeal holding that the appointment was authorised under the Thoroughbred Racing Act 1996 (NSW).

Justices Kirk and Stern and Acting Justice Griffiths on 19 June set aside the March judgment of Justice Kunc and reinstated Kelly’s appointment, although its operation has been stayed until 5:00 p.m. on 13 July to allow the club to consider its next steps.

The appointment followed months of concern about the club’s financial position, governance and ability to refinance a $30 million Commonwealth Bank facility due in October 2026.

The Australian Turf Club owns or leases and operates Royal Randwick, Rosehill Gardens, Canterbury Park and Warwick Farm. A KordaMentha report prepared for the club said it employed about 280 full-time-equivalent staff and 1,200 casual workers, with racing accounting for approximately 65% of revenue.

Racing NSW issued a show cause notice in September 2025 alleging that the club was financially unstable, strategically directionless and affected by governance failures. It later concluded that the board had failed to present a credible plan to stabilise the business, manage refinancing risks or address corporate governance concerns.

Justice Kunc invalidated the appointment in March, finding that the club’s finances and governance did not fall within Racing NSW’s statutory function of controlling, supervising and regulating horse racing. He also held that Racing NSW had materially misread the KordaMentha report, which concluded that the club was solvent and identified several potential refinancing options.

The Court of Appeal rejected both findings. It held that horse racing under the Act extends beyond the running of races and may include the governance, finances and facilities required to conduct race meetings safely and effectively.

The Court said the concerns identified by Racing NSW went directly to the club’s ability to function and operate Sydney’s four thoroughbred racecourses. It cautioned that not every financial or governance problem affecting a race club would justify intervention, with the connection depending on the facts and degree of the issue.

The Court also found that Racing NSW had not misread the KordaMentha report. By the time of the appointment, the club’s focus had shifted heavily towards securing an extension of Racing NSW’s guarantee, while the alternative refinancing options required the regulator’s consent to security over club property.

Even if there had been an error in Racing NSW’s treatment of the report, the Court held that it would not have met the high threshold for legal unreasonableness and would not have been material, given the regulator’s other concerns about financial planning and governance.

The Court rejected the club’s arguments that the appointment power was inconsistent with the Corporations Act or had been impliedly repealed by the legislation governing the merger that created the Australian Turf Club. It held that the statutory administrator would be subject to directors’ duties and that the club’s directors would remain in office with limited residual powers.

The Australian Turf Club was ordered to pay Racing NSW’s costs at first instance and on appeal.

Read the decision here.

Professionals involved:

• Justin Gleeson SC of Banco Chambers, Oliver Jones SC of Eleven Wentworth, Kate Lindeman of Banco Chambers, Katrina Woodforde of Eleven Wentworth, and YPOL Lawyers for Racing NSW

• Scott Robertson SC of University Chambers, Pouyan Afshar of 9 Wentworth Chambers, Myles Pulsford of Banco Chambers, and Johnson Winter Slattery for Australian Turf Club

• Minter Ellison for the administrator, Morgan Kelly of EY