Racing Industry Act: The Dissolution of Race Clubs and The Disposal of Surplus Assets.

[Chief Stipe]

OK here is my Bush Lawyer interpretation of the legislation.  LOL don't take what I write as anything other than informed opinion.  Albeit opinion shaped by experiences with law - the typical Kiwi right of passage with driving laws, 14 years of hard slog representing myself in the Family Court, employment grievances and commercial law skirmishes.  I also learnt a lot from the first lawyer I engaged who was a long term family friend and who sadly passed this year - a racing enthusiast and owner, a JCA adjudicator of the best old school, a Senior Partner of Bell Gully, a Chief Justice of Tonga and a respected NZ Employment Court Judge.

I remember him once saying to me as he reached for a case law book (delivered to him by his young legal intern) - with a wink and a smile on his face he said - "Doug you can always find some law or legal precedent to support your case and if you can't find a precedent then create one."  On that last aspect I recognised something innate to him that I shared and that was if something felt unjust then it probably was.

Anyway enough of the introduction in an attempt to give some validity to my interpretation!  I don't think NZTR will take any notice or get any advantage out of it!  ?

 

[Chief Stipe]

With regard to the Racing Industry Act 2020 there are two parts that legislate for closing down clubs and grabbing their assets (excuse the non legal terms) -

Subpart 2 - Transfer of Assets and Surplus Venues and Subpart 3 - Dissolution of Racing Clubs no longer Racing

There are 11 sections in Subpart 2 and 3 in Subpart 3.

Let's start with Subpart 3 first.  It seems more logical to have the Dissolution of Racing Clubs legislation BEFORE the Disposal of theri Surplus Assets.  Maybe Winnie outlined the Act on a napkin.

So...

Subpart 3 - Dissolution of Racing Clubs no longer Racing

Section 34 Racing code may determine that racing club is no longer racing

Well the section title says it all - the Racing Code may determine!

I have named this section the "Chicken and Egg Clause"....more like a flock of chickens and a dozen eggs!  Which comes first deciding a club is no longer racing or removing their race dates and then deciding they are no longer racing....

The Act determines a Club is no longer racing if - 

the racing club has not promoted, conducted, or controlled any race meetings at its own or another racing venue in the previous 2 racing years; or
 
If you haven't been given any race dates then how can promote or conduct or control a race meeting?  Or is this clause intended for Clubs and venues like Foxton or Levin?  LOL assuming their land is freehold!

If a Club that has had a meeting in the previous 2 racing years wants to stop then they can tell the Racing Code that they are are no longer racing.

Section 34 (2) says that the Racing Code when it determines a club is no longer racing must tell the club the reasons for its determination; give the Club 40 working days to respond and then must consider the submissions.

There is no criteria against which the Racing Code consider the submissions.  Essentially they are Judge and Jury.  The Racing Code then determines the outcome and informs the Club.

The Club has 20 working days to take an Appeal to the High Court.  On Appeal the court may -

(a)  confirm, cancel, or vary the decision; or
(b)  refer the decision back to the racing code with a direction to reconsider the determination.
 

(b) seems a bit pointless.  

My Bush Lawyer part of my brain suggests that one could argue on Appeal that a Club not racing for 2 years was not of its own making but because of unilateral decisions made by the Racing Code using dubious criteria or reasons.  Especially when a Club could show that other Clubs haven't been treated equally.

The rest of Subpart 3 basically dissolves the Club after the determination of it not racing.

Now S34 links back to Subpart 2 and prevents the Code from making a determination if the Racing Code has determined that the Racing Venue is Surplus and is involved in negotiations under S26 and S27!  Confused?  I admit I am.

S36 also links back to the Transfer of Assets parts.... S24 and S25 

Anyhoo.... back to....

Subpart 2 - Transfer of Assets and Surplus Venues

 

[Chief Stipe]

Subpart 2 - Transfer of Assets and Surplus Venues

Important definitions:

Section 23 Interpretation

Surplus Racing Venue or Surplus Venue - any racing venue that is in fee simple (essentially freehold and owned by the Racing Club) determined by the Racing Code with which the Club is registered to be a surplus venue;

LOL the first section and the first definition and we have some complexity!  For example does this apply to two racing clubs (one Gallops the other Harness) that jointly own a freehold racing venue where one code determines that the venue isn't surplus?

Now there are a number of clubs that don't freehold own their assets so presumably if they are determined surplus then the assets stay with the owner. 

Further to the definition - it does not include any land that is a Reserve under the Reserves Act or the buildings on that land.

Basically that means even if a Club owns the land and buildings freehold but it is a Reserve then it cannot be considered surplus for the purposes of disposal.  Somewhere in the dark recesses of my troubled mind there is a neuron firing that suggests there are some venues on reserve land and/or have historic buildings.

Transfer of Assets

Section 24 - Transfer of Assets on Dissolution of a Club

Simple this section....

After all creditors claims have been resolved a dissolved Club must vest its assets in the Racing Code to which it is registered.

My advice to Clubs if you want to stay racing where you are fight against dissolution under Subpart 3 first.

Transfer of Surplus Venues

Section 26 - Transfer by Agreement

This section is for the roll over and die Clubs.  Those that agree it is the "right thing to do for the benefit of the industry" to hand their hard earned to the fat cat down the road (or across the Alps).  I guess that ISN'T Avondale.   Reefton might give it to Kumara!

The gotcha clause in this section is s26 (2) - To the extent that an agreement entered into under subsection (1) is inconsistent with the provisions or requirements (if any) of the racing club’s constitution, the agreement prevails.

Essentially this means even if your Club's constitution says that upon dissolution the proceeds go to members or the local community or the Salvation Army if Agreement is reached by those in the Club that have the power to do that then the Agreement prevails.

That is a clause that doesn't feel right to me.  I'm proud of my home club Westland Racing Club when the did a preemptive strike and handed it all back to the community.

S26 (3) - When conducting negotiations for the transfer of a surplus venue, the racing code and racing club must comply with the prescribed process or criteria (if any) in relation to the transfer of surplus venues under this subpart.
The key bit here is "the prescribed process or criteria (if any)".....I can't find any......

Now if Agreement is not reached we go to the next Section:

S27 - Transfer of Surplus Venues by Order in Council

This section applies if a Racing Code has made a reasonable attempt at negotiating an Agreement under s26 but Agreement isn't reached.

I guess the term "reasonable attempt" is one of those terms like "beyond reasonable doubt" which has a definition defined by years of legal argument.  However "reasonable attempt" in regards to NZTR doesn't elicit any feelings of natural justice.

To cut a long story short (s27 is one of the longest sections in the Act) if Agreement isn't reached the Racing Minister can make a recommendation to the Governor General for the transfer of Surplus Venues by Order in Council.

Key points:

• it can get political at this point - because the Minister of Racing makes the decision - remember Muldoon and Kumara?;
• the process of how the recommendation is reached is important;
• as is the criteria on which that recommendation is made;
• the Racing Code will be responsible for formulating that recommendation (Ministers do very little in the way of work ....I mean paper work);

The legislation on what the recommendation proposal must contain is quite light (Minister's are far too busy to read large complicated documents).  It must follow the following format:

s27(4) - The transfer proposal must - 

(a) state the names of the relevant racing code and racing club (or clubs); and
(b) contain a description of the 1 or more surplus venues or identify a means by which, or a document in which, the surplus venues are described; and
(c) in relation to each surplus venue,—
(i) give details of all legal interests in the venue; and
(ii) to the extent possible, give details of any beneficial interests in the venue and any restriction, charge, or other encumbrance relating to the venue; and
(d) state whether either or both of the following payments are warranted and should be made by the code following the transfer:
(i) a payment to the relevant club (or clubs) to enable it to race at another venue:
(ii)a payment to any person in recognition of a community interest in the surplus venue.
 

Basically when you get to an Order in Council what the Minister decides goes.  Not even Parliament is involved.  Very very political.  You can challenge through the courts but we are talking big bucks and big courts e.g. Supreme Courts.  Order in Council are normal used during Wars and Pandemics and other emergencies where time is of the essence.  However my understanding is they can be tested in a court of law for their adherence to the Act that gives the permission for the Order in Council and other Laws of the Land.  Politically I find this part of the Racing Industry Act abhorrent to natural justice.

Hell we have spent decades resolving the confiscation of land by the Crown - ironically it is a Maori in a suit who pushed this legislation through.

HOWEVER THERE IS SOME HOPE....the Act has some "matters" that the Minister must consider....

Section 28 - Matters the Minister must consider...
 

[Chief Stipe]

Section 28 - Matters the Minister must consider...

S28 (3) - If it is not appropriate for negotiations to be resumed for the transfer of the surplus venue by agreement, the Minister must decide whether there are special circumstances regarding the use, or potential use, of the surplus venue by the community in which the surplus venue is located that justify exempting the surplus venue from the application of section 27 and for the purpose of making that decision the Minister must take into account the following:

(Technically it is possible under this section that the Westland Racing Club could have made a case for justifying their decision to hand the venue back to the community.  Again this part of the Act can become political as it lies with the Minister who may consider where politically is it best for the pork barrel to land.)

The Criteria:

S28 (3) (highlights are mine)

(a) the distance of the surplus venue from the nearest major centre; and
(b) the impact (if any) on the purposes of this Act as set out in section 3(a)(ii) and (iv) if the surplus venue is not transferred to the code; and
(c) the relative contributions made to the surplus venue by the community in the area in which the venue is located and the racing code; and
(d) how the racing code intends to use the surplus venue if it were transferred to the code, including—
    (i) the retained venue or venues that the code intends to refurbish with the proceeds from the sale of the surplus venue and whether       those venues are in the same region of New Zealand as the surplus venue; and
     (ii) any other purpose to which the surplus venue is proposed to be used; and
(e) the not-for-profit purposes (for example, sporting, equestrian, or other community purposes) that the racing club and community in the area in which the venue is located intends to use (or continue to use) the surplus venue for if it is not transferred to the racing code, having regard to the other needs of that community; and
(f) the legal or beneficial interests of iwi or other members of the wider community (if any) in the surplus venue; and
(g) whether the surplus venue is, or has been, used as a training facility; and
(h) the ownership and value of any buildings or facilities situated on or at the surplus venue and the likely cost of their removal (as applicable); and
(i) whether the surplus venue is used by racing clubs that do not have a proprietary interest in the surplus venue; and
(j) any proposals put forward by the wider community for the future use of the surplus venue; and
(k) the appropriateness of a payment under section 27(4)(d)(i) or (ii) if the surplus venue is transferred to the racing code under that section; and
(l) any other matters that the Minister considers relevant in the particular circumstances of the case.

So not a forgone conclusion by any stretch that a surplus venue will go to the Racing Code.

The next section is a kicker - 

s29  Minister must not recommend order under section 27 if special circumstances exist
If, having considered the matters in section 28(3), the Minister considers that special circumstances exist regarding the use, or potential use, of the surplus venue by the community in which the surplus venue is located, the Minister must not recommend the making of an order 

Section 30 is another Checks and Balances section if the Minister decides yes the surplus venue is to be transferred to the Racing Code because there is no reason to exempt the transfer under s28 he must have regard to the following:  (basically this is the same as s28 but I think is gives the Minister some room to enforce some conditions on the transfer)

(b)  whether the surplus venue is used for conducting race meetings by racing clubs from more than 1 code (and, if so, the relative interests of the clubs); and (would apply to a venue that has both gallops and harness clubs)
(c)  whether the surplus venue is used by members of the community in the area in which the venue is located for not-for-profit purposes (for example, sporting, equestrian, or other community purposes); and
(d)  the relative contributions made to the surplus venue by the community in the area in which the venue is located and the racing code; and
(e) how the racing code intends to use the surplus venue if it were transferred to the code, including—
(i)  the retained venue or venues that the code intends to refurbish with the proceeds from the sale of the surplus venue and whether those venues are in the same region of New Zealand as the surplus venue; and
(ii) any other purpose to which the surplus venue is proposed to be used; and
(f) the legal or beneficial interests of iwi or other members of the wider community (if any) in the surplus venue; and
(g)  whether the surplus venue is, or has been, used as a training facility; and
(h)  the ownership and value of any buildings or facilities situated on or at the surplus venue and the likely cost of their removal (as applicable); and
(i)  whether the surplus venue is used by racing clubs that do not have a proprietary interest in the surplus venue; and
(j)  any proposals put forward by the local community for the future use of the surplus venue; and
(k)  the appropriateness of a payment under section 27(4)(d)(i) or (ii) if the surplus venue is transferred to the racing code under that section; and
(l)  any other matters that the Minister considers relevant to achieving the purposes of this Act.

Now as I said earlier the Minister actually doesn't do much or read much....he relies on someone else doing the work (e.g. Messara).  So he must appoint a Reviewer to review!

Section 31 - Minister must appoint a Reviewer before recommending Order in Council

Key points in this section are the Reviewer MUST have - the appropriate knowledge, skills and experience in New Zealand racing, community engagement, preparing analysis and advice.  Once again the cynic in me says - a job for the boys.  Of course the normal "conflict of interest" clauses are included.

Section 32 - Effect of transfer of surplus venue

Not much to see in this section - basically administration type clauses like transfer and registration of venue titles to Racing Code.  The transfer recommendation might have set restrictions on the use of the proceeds of a sale of the venue etc etc.  blah blah.

Some exclusions around the Resource Management Act.

Civil liability immunity etc.

Now that leads us to the final Section in this Surplus Venue Subpart -  a short section but an interesting one!

Section 33 - Racing codes must prepare property investment strategy in respect of transferred assets and venues

LOL....this will be challenging for the Racing Codes!!!!!  Especially in light of what we currently see from them!!  It is simple to read so I'll just post the clauses.

(1)  This section applies while a racing code owns any assets or surplus venues that have been transferred to the code in accordance with this subpart.
(2)  The racing code must prepare and maintain a property investment strategy that states how the code proposes to manage those assets or surplus venues, including (without limitation) the code’s priorities regarding the refurbishment of retained venues owned by racing clubs registered with the code.
(3)  The racing code must publish a copy of the strategy on an Internet site maintained by or on behalf of the code.

 

[Chief Stipe]

OK please accept I may have written stuff that is clearly wrong....I haven't reviewed any of this.  In an essence NZTR can't just rock up to your Club door and say handover the keys!  Even then there are heaps of fish hooks in this legislation.

I'm going to have lie down now.....  ??

[Chief Stipe]

I've just reread these posts some small errors to correct.  I'll also draw a diagram showing the process flow and decision points.

I'm not sure if the way this act is structured is the normal way of writing an Act.  Some sections appear to be not in logical order or order of process.

For example I would have thought the final step of Order in Council would be placed after the sections that get you to that point.

Maybe that is a reflection on the last minute changes that were made under Standing Orders AFTER the 2nd reading.  I guess no one really cared in Parliament or was asleep.

Which seems to have happened a lot in the last few weeks under Urgency in the House.  Parliament actually debated and passed the wrong  bill for the Covid-19 Small Businesses loan scheme.  It had to be reintroduced and debated and passed a second time.

Then they passed the law allowing prisoners the vote to only discover afterwards that the Act was unworkable.  So they had to quickly rewrite another.

[Joe Bloggs]

Politely, surely there is a legal eagle who would pro-bono an assistance in dissecting all this........an owner, who pays their trade at the bar......surely?

[Joe Bloggs]

Sorry, plies.....

[Chief Stipe]

25 minutes ago, Joe Bloggs said:

Politely, surely there is a legal eagle who would pro-bono an assistance in dissecting all this........an owner, who pays their trade at the bar......surely?

It isn't hard to see how the legislation is supposed to work.

What I would be interested to see is the legality of those actions that occur outside the Act in relation to the what the actions the Act is designed to support. 

I'll explain it another way.

There is no obligation on NZTR to give a Club race dates.  They don't even have to give a reason if they decide not to.  There is nothing in the Act that covers this important aspect.  But under the Act they can force the dissolution of a Club if it hadn't raced for two years.  That doesn't seem just to me.

The same with regard to the determination of a "Surplus Venue".  There is nothing in the Act that sets the criteria or the process for determining a venue is "Surplus."  The Act is all about determining how and who the assets are disposed of and distributed to.  So I guess that unilaterally NZTR can determine your venue is surplus.  That seems unjust and surely is open to legal challenge.

[Chief Stipe]

Another exercise I was thinking of doing was going through each of the Clubs and determining their venue ownership type e.g. freehold vs leasehold vs reserve act land etc.  That would show which clubs have venue assets that can be disposed of and transferred through the Act.

Of course those Clubs that don't own the venues but have investments or cash in the bank can be dissolved and their investments liquidated and transferred to NZTR along with cash in the bank.  The irony there of course is those Clubs that are in that position have been prudent manager's and in general provide low cost venues for the industry.

LOL I'm sure NZTR have already done this exercise.  Maybe we should just ask for a copy!

[curious]

10 hours ago, Chief Stipe said:

The Act determines a Club is no longer racing if - 

the racing club has not promoted, conducted, or controlled any race meetings at its own or another racing venue in the previous 2 racing years; or
 
If you haven't been given any race dates then how can promote or conduct or control a race meeting?  Or is this clause intended for Clubs and venues like Foxton or Levin?  LOL assuming their land is freehold!

Interestingly "The Act binds the Crown", so if they want to sell up the likes of Foxton, presumably that's who they will be taking the land from overriding the Public Reserves Act?

[Freda]

8 hours ago, Chief Stipe said:

Another exercise I was thinking of doing was going through each of the Clubs and determining their venue ownership type e.g. freehold vs leasehold vs reserve act land etc.  That would show which clubs have venue assets that can be disposed of and transferred through the Act.

Of course those Clubs that don't own the venues but have investments or cash in the bank can be dissolved and their investments liquidated and transferred to NZTR along with cash in the bank.  The irony there of course is those Clubs that are in that position have been prudent manager's and in general provide low cost venues for the industry.

LOL I'm sure NZTR have already done this exercise.  Maybe we should just ask for a copy!

If you can find a copy of the Messara report, there is a list of all clubs and the ownership status of the tracks they race on.

[Chief Stipe]

8 hours ago, curious said:

Interestingly "The Act binds the Crown", so if they want to sell up the likes of Foxton, presumably that's who they will be taking the land from overriding the Public Reserves Act?

"The Act binds the Crown" is a standard clause in many pieces of legislation.

However the Act specifically says land under the Reserves Act cannot be transferred.  I think to do so you would have to remove the land from the Reserves Act by following any process defined in that Act.

That wouldn't be an easy process by any stretch.

[Chief Stipe]

4 hours ago, Freda said:

If you can find a copy of the Messara report, there is a list of all clubs and the ownership status of the tracks they race on.

Yes I've got a copy of that.  The interesting part of the exercise is putting the assets value alongside each.  Including those that don't own their land but have cash in the bank.

LOL I don't think it is a windfall however NZTR could end up with a lot a tractors.  Perhaps they could swap out their and RITA'S corporate cars.

[Joe Bloggs]

What's a surplus asset? Gee I'd kill for one of those!

[Weasel]

this is exactly the kid of turgid, complicated, impossible to negotiate red tape BS that is part of the reason NZ Racing is so poorly governed. We cant even write new legislation to extricate ourselves from the mire! NO CLUB will have the patience or the funds to tackle the legal nonsense, and will end up either surrendering, walking away or going broke  ...exactly the outcome sought by the writers of the legislation!

[Mikie]

6 hours ago, Freda said:

If you can find a copy of the Messara report, there is a list of all clubs and the ownership status of the tracks they race on.

Out of date now Freda!

Mikie

Edited July 6, 2020 by Mikie

[Freda]

5 minutes ago, Mikie said:

Out of date now Freda!

Mikie

Any significant alterations?

[Chief Stipe]

55 minutes ago, Freda said:

Any significant alterations?

Westland Racing Club - SOLD from under the eyes of NZTR.  ?

[Chief Stipe]

1 hour ago, Weasel said:

this is exactly the kid of turgid, complicated, impossible to negotiate red tape BS that is part of the reason NZ Racing is so poorly governed. We cant even write new legislation to extricate ourselves from the mire! NO CLUB will have the patience or the funds to tackle the legal nonsense, and will end up either surrendering, walking away or going broke  ...exactly the outcome sought by the writers of the legislation!

Very good point.  Late last night long after finishing my excruciating convoluted journey through the legislation I had a thought - how much time and money ($millions) was spent on writing that piece of crap? 

[Freda]

40 minutes ago, Chief Stipe said:

Westland Racing Club - SOLD from under the eyes of NZTR.  ?

Yes, we all knew that....big ups to them!

[Joe Bloggs]

By the way, are they funding the Karaka Squillions this year? You know, the race where they steal 500k of the industries money to prop up their mates big gig? x 2!!!

How they got away with that for years is beyond me, did everyone get caught up in the moment?

[Chief Stipe]

5 minutes ago, Joe Bloggs said:

By the way, are they funding the Karaka Squillions this year? You know, the race where they steal 500k of the industries money to prop up their mates big gig? x 2!!!

How they got away with that for years is beyond me, did everyone get caught up in the moment?

They'll have to keep the funding at a $1m afterall imagine what it would cost to rebrand the Karaka Million!

[Joe Bloggs]

Any truth in the rumour it is being replaced by a dwarf throwing comp somewhere on the Waterfront?

[Mikie]

3 hours ago, Freda said:

Any significant alterations?

Yes

Mikie