The recent case of Capogreco v Rogerson [2015] NSWSC 1371 (Capogreco) highlighted the issues of misleading and deceptive conduct, as well as the issues that arise when selling a horse that is owned by multiple parties.
The Facts
In 2006 the plaintiffs became part owners in a racehorse alongside the defendant. Accordingly to one plaintiff’s evidence in the case, the defendant allegedly made the following statements in relation to the horse:
This horse will make you money on the track and off it because it’s got good breeding. This horse will change your lives.
This horse is a half-brother to the champion 3 year old winner of the Cox Plate, Savabeel, which I also trained. Its dam, Savannah Success, was a stakes winner.
He has perfect conformation which is important for racing and breeding. If Gerry Harvey bought back a share in the horse after selling it through the sales that should tell you something.
Dr Tim Roberts, who is the best vet in Sydney, said the horse is perfect and has no problems. I can give you a copy of his report.
I will train the horse at Randwick and we will target the big races. You will receive a monthly bill from me for training expenses.
The owners will regularly get together to decide Arlington’s racing and stud plans.
Accordingly to another plaintiff, the defendant made the following statements, which are similar in nature:
This horse will change your life. Not only is he impeccably bred but he also has perfect conformation. Breeders look at both of these things when choosing a stallion to breed their mares with.
This horse is a safe investment. It doesn’t matter if he wins a race or not because his bloodlines make him a valuable stud prospect after his racing career is over. You can’t go wrong with this horse. He will change your lives.
Other owners of the horse will include Gerry Harvey, Sir Patrick Hogan and Bruce Reid. These blokes know what they are doing and wouldn’t buy a horse if they thought they were going to lose money from it.
All the owners will have regular meetings to discuss and decide the plans of the horse.
The plaintiffs argued that they purchased their shares in the horse in reliance on these representations made by the defendant, who was also the horse’s trainer. The defendant sent one of the plaintiffs, Mr Capogreco, an email enclosing a letter summarising the transaction, although the Court noted that the letter was not accurate as it made no mention of the other plaintiffs’ shares. The ownership of the horse was duly registered by the Registrar of Racehorses.
The defendant was listed as the manager of the horse, which under the rules of racing gave the defendant the right to make various decisions in elation to the horse’s racing career, including the right to ‘act for and represent the joint owners, lessees or syndicate members in relation to the horse in all respects for the purpose of these Rules’. The horse was ultimately sold privately instead of at the agreed auction and the plaintiffs alleged that they had not given permission for the sale to proceed and were not kept informed of the offer made to buy the horse.
The Result
The plaintiffs could not make out their misrepresentation case because the Court was not satisfied that the plaintiffs had proved on the evidence that the defendant had made those representations.
The Court then went on to look at the issue of whether the defendant was obligated to inform all owners of the offer for purchase of the horse. The Court found that the parties had all agreed to sell the horse at auction, and that the defendant ought to have informed all owners of the offer received by way of private sale as it was outside of the already agreed auction.
As the defendant did not have the right to sell the plaintiffs’ shares in the horse, the plaintiffs were entitled to declarations in relation to their respective ownership in the horse. They were also entitled to an account from the purchaser of the horse.
Take Home Message
This decision illustrates that if you wish to co-own a horse with other parties, the agreement between the co-owners should be set out in writing, so that there is no doubt as to what was agreed. The agreement should make it clear who is entitled to act in a particular way or to make a particular decision, and ‘majority’ should be defined precisely if that term is used. Without this written agreement, it is much more difficult to be certain what you have agreed to do.
This decision also illustrates that if you have relied on any representations in purchasing a horse, it may be difficult to prove what was said if it was not in writing. We recommend that you save any emails, social media posts, advertisements and other documents when buying or selling a horse. We also recommend a written sale agreement.
Non-lawyers and lawyers alike can take advantage of the phrase “without prejudice” and the protection it offers when making a genuine attempt to settle a dispute.
Using the phrase “without prejudice” clearly indicates that any admissions made in the course of negotiations are not to be referred to in subsequent litigation as evidence against the person making that statement.
The purpose of this privilege is to encourage open and candid discussion about issues arising between parties in an attempt to resolve disputes outside of the Court system. The benefit of this is that disputes are not unnecessarily litigated, saving parties’ expense and time, and freeing up the Court system for those matters where there is a genuine impasse between parties.
However, parties should keep in mind that the privilege does not extend to preventing a party proving the facts in issue by other means. Further, it does not prevent the material being used to show:
• The parties reached a settlement; or
• To establish the terms of the settlement reached.
This is especially relevant when the phrase “without prejudice – save as to costs” appears, as it can have unfavourable consequences for an unsuccessful party.
This is particularly the case where a genuine offer is made by one party (Party A) to settle the dispute, that offer is rejected by the other party (Party B) and that offer is better than the judgment made in favour of Party B. Although Party B is the successful party, the Court may take into account Party A’s attempt to settle the dispute (without the need to use the Court system) and make an adverse costs order against Party B.
For example:
• Party A undertook building work for Party B;
• Party B starts to notice issues with the work – for example cracks in the wall, uneven door hinges and rooms not to the correct size;
• Party B raises these issues with Party A and claims damages of $250,000;
• Party A writes a letter to Party B which features the words “without prejudice – save as to costs” and admits the cracks in the wall and uneven door hinges, but does not admit the incorrect room size and offers $180,000 to settle the matter;
• Party B refuses the offer and commences an action in Court;
• Party B is successful, but only in the amount of $125,000 for the cracks in the wall;
• Any admission with respect to the door hinges in the course of negotiations was inadmissible, which means the fault of Party A with respect to the uneven door hinges was not proved on the facts;
• Further, the existence of an offer to settle for $180,000 could be raised with the Court and may be used to make an adverse costs order against Party B (essentially for wasting the Court’s time).
In summary, keep the following in mind when entering into negotiations on a “without prejudice” basis:
• An attempt to resolve the dispute must be a genuine attempt to do so;
• The admissions made in the course of negotiations will not be admissible; but
• The fact that the parties negotiated and the terms of any agreement reached may be admissible and may result in an adverse costs order against either party.
Parties to a dispute may first wish to attempt to negotiate a settlement without legal assistance. If you wish to do this, be sure to clearly indicate that those negotiations are on a “without prejudice” basis. However, if a matter is complex or you are uncertain as to whether something should be without prejudice, then it is best to seek the advice and assistance of an expert.
Our Litigation & Risk Management team are experts and can assist in the negotiation of settlements. If you require assistance or any further information contact our office on 02 6215 9100.
It is important to be aware of when you may be liable for injury and loss caused by horses that you own or manage. If you have horses, there is always a risk that a horse you own or care for may injure someone or cause damage to other horses or property, whether on your own property or at an event. This damage might include a horse that you own or care for infecting other horses with a disease.
How could I be liable?
In order to be found liable, several things need to be established:
• You had a duty of care
• You breached that duty of care
• The breach caused damages or loss
In brief, a duty of care exists when a person ought to reasonably foresee that his or her conduct may be likely to cause damage to the other person, or a class of people to which that other person belongs. A breach of that duty is an action (or failure to take an action) that is contrary to your duty of care. If that action then causes someone to suffer a loss, then that person may be liable.
Here is an example. You bring a contagious horse onto a property with other horses, which then causes other horses to fall ill. This action of bringing the contagious horse onto the property may likely cause some loss to the owners of the other horses (for example, vet bills). In this scenario, it is possible that you may be found liable for the costs incurred by those other owners in treating their horses.
A court in this scenario would look at what happened in this regard, such as whether you knew that the horse was contagious, whether you followed any isolation quarantine period, whether you had the horse examined by a vet prior to arrival and a whole host of other potentially relevant facts and circumstances. The court may also need to look at actions or inactions of the other horse owners in some circumstances, to see if they contributed to the losses.
What could I be liable for?
The basic rule in the law of damages is that the damages are intended to put the person back in the position he or she would have been in if the wrong had not been committed. So in our example above, you may be liable for the owners’ costs of treating the horses for the contagious disease.
Of course in reality, it is likely to be much more complicated than this example. Evidence needs to be produced. The law surrounding the spread of diseases in horses and damages is not settled. The applicable legislation in the jurisdiction and the individual facts of a given case vary.
It’s important to understand the liability for horse owners and agistment centres. We recommend that you follow a proper protocol regarding biosecurity – assistance and information can be obtained from sources such as your veterinarian, Animal Health Australia, Safe Industries Australia and the various relevant government departments.
In Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15, the Court affirmed the position in Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 (Universal), that a liquidator’s lien trumps the interest of a secured creditor in the distribution of funds recovered by the liquidator.
In Stewart , Atco made loans to Newtronics, a wholly owned subsidiary, and secured repayment with a charge over Newtronics’ assets. Newtronics subsequently went into liquidation and, in an attempt to enforce the charge, Atco appointed receivers over Newtronics’ before a liquidator could be appointed.
The liquidator commenced court proceedings against Atco on the basis that the charge was invalid and against the receivers for damages for the sale of Newtronics’ business.
The liquidator funded the litigation by entering into a funding agreement with Seely International Pty Ltd (Seely), where Seely agreed to indemnify the liquidator for the costs of the proceedings conditional upon being granted priority over all other creditors.
The proceedings against the receivers settled for $1.25 million, and those against Atco continued to a judgment.
The liquidators action to set aside Atco’s charge was unsuccessful, and Atco subsequently demanded that the liquidators pay them the $1.25 million.
The liquidator claimed a lien over the $1.25 million by reference to a liquidator’s right to first be reimbursed for the costs incurred in administering the estate.
Applying Universal, it was affirmed that a liquidator’s costs and expenses are paid first, as equity creates a charge over that fund that takes priority over any secured creditor.
Ironically, given that Atco held a charge over Newtronics’ assets, it was able to call on the $1.25 million.
Secured creditors should:
– Be aware of the liquidator’s lien;
– Consider the possibility of selling the asset; and
– If the liquidator is to sell the asset, negotiate the terms of the sale.
Our Insolvency Team are experts at dealing with the complexities of conflicting interests in funds during the external administration process. If you require any further information please contact Stipe Vuleta, Director at stipe.Vuleta@Chamberlains.com.au or Sayward , Lawyer at Sayward.Brest@Chamberlains.com.au.
Chamberlains Law Firm is pleased to announce that we are a finalist in the 2016 Australasian Law Awards in the State/Regional Firm of the Year category.
We are proud to be representing Canberra in the awards and to be recognised for our expertise, commitment to our clients and innovation through online legal services.
We would like to thank our staff, friends, family and importantly our clients who put their trust in us each day.
The winner will be announced on 19 May 2016 at The Star in Sydney.
On 7 October 2015, the High Court of Australia released a decision in relation to the gene commonly known as the “breast cancer gene”.
In D’Arcy v Myriad Genetics Inc. [2014] FCAFC 115, the High Court held that the patent held by Myriad Genetics Inc for isolated nucleic acids coding for a mutant form of BRCA1 (the “breast cancer gene”) is not patentable.
What are isolated nucleic acids?
Nucleotides are subunits of DNA (deoxyribonucleic acid).
In DNA, there are four nucleotide bases that exist naturally:
A particular sequence of these nucleotides forms a gene.
An alternation of this sequence of nucleotides is known as a mutation.
The mutant form of BRCA1 gene, which was the subject of the High Court decision, was known to make people vulnerable to breast cancer and ovarian cancer.
Isolated nucleic acids are those sequences of nucleotides from DNA (or RNA – ribonucleic acid), which are separated from the human cell.
What is a patentable invention?
The Full Federal Court decision found that the isolated nucleic acids were patentable.
The Full Federal Court identified the nucleic acids, once separated from the human body, was different to the naturally existing nucleic acids.
They reasoned that the nucleic acids when they naturally exist in cells carried out cellular functions, but once they are isolated, they served a different function.
It was also critical for the Full Federal Court decision that:
The High Court approached the decision differently.
The High Court noted that that a particular sequence of nucleotides contained “information”. This information is not “made” by human action.
The High Court said that the “manner of manufacture” as defined in the Statute of Monopolies required that an invention involve some form of “making” or something brought about by human action.
The High Court referred to the Full Federal Court’s characterisation as an “artificially created state of affairs” and said that this was the incorrect test to use. Even if the “artificially created state of affairs” test was applied:
Where to from here?
The High Court decision is similar to the US Supreme Court decision in Association for Molecular Pathology v Myriad Genetics Inc., which similarly reasoned that the sequences of nucleotides exist in nature and is not modified by being isolated.
A potential negative consequence of the High Court decision could be a lack incentive to invest in research which can have a drastic impact on the biotechnology and biochemistry industry. However, thus far, the High Court decision has been fairly narrowly interpreted.
IP Australia’s Examination Practice released after this decision identifies that:
It appears that the High Court decision is currently being interpreted to exclude nucleic acids that are simply containing naturally existing information. Consequently, the impact of the decision on wider biotechnology and biochemistry research could be limited.
Interested in learning more about Intellectual Property?
Click our articles below to find out more:
How to file a patent in Australia
Stop telling everyone you own my patents!
Personal insolvency is a growing market with more and more people declaring bankruptcy or entering into other personal insolvency arrangements to address credit issues arising out of consumer credit, business related debt or over leveraging problems, amongst other things. In this post, we seek to address some common misconceptions about bankruptcy, in order to empower people to make decisions about their personal insolvency in a more transparent way.
You will not necessarily lose your job because you become bankrupt. There is no doubt that bankruptcy precludes individuals from holding certain public and private offices and titles, it does not necessarily however preclude one from paid employment even at executive levels.
Though it is true that there is a national register recording personal insolvency statistics and statuses, it is not a commonly reviewed register and everyone you know will not necessarily find out you are bankrupt, unless you otherwise disclose it to them; either because you would like to or because you are required to by law.
It is true that a trustee in bankruptcy has the capacity to call in the equity in your home to satisfy your creditors however this does not mean you will necessarily need to sell your house. You may be able to with the support of family members refinance to ‘cash out’ such equity or otherwise you may not have enough equity in your home to make the exercise commercially worthwhile.
There is no doubt that bankruptcy will temporarily impact your credit rating, however such statistics will only stay on your credit record for 7 years. With careful planning and family asset protection, you can recover from bankruptcy quite successfully.
It is vital that you obtain personal and detailed legal advice before declaring bankruptcy.
It is common for professionals in the horse industry to be asked to act as an agent in the purchase of a horse for a client. This is a common practice undertaken by professionals in this industry, but the parties involved need to be aware of the potential risks.
What is an agent?
An agent is a person engaged by another person (called the principal) to act on the principal’s behalf. In this example, the professional is asked to find and purchase an appropriate horse for the principal in exchange for a fee, which may be based on a percentage of the price of the horse or as otherwise agreed.
As an agent, the professional is under obligations to:
Authority
An agent acting within his or her authority can bind the principal to an agreement.
If you are a client paying your trainer to act as your agent in the purchase of a horse, you need to make sure the limits of the agent’s authority are clear to reduce the risk of a dispute. We recommend that you contact our office to have a written agency agreement drafted that will spell out the scope of the agent’s authority. For example, you should consider placing limitations on the authority such as:
As an agent, you have the power to enter an agreement on behalf of your client, so be careful that you are acting within your authority and review the terms carefully. If you are unsure, check with your client that he or she is happy with the horse as well as the price, payment terms, transport and other terms of the agreement.
It is possible for a client to be bound by an agreement the client is not happy with, in certain circumstances. If this has happened to you, whether you are the agent or the principal, you should contact us for advice.
In March 2015 Reckitt Benckiser (Australia) Pty Ltd (RB), the producer of health, hygiene and home products in Australia came under fire by the Australian Competition and Consumer Commission (ACCC) over their range of range of ‘pain specific’ Nurofen products.
The ACCC commenced legal proceedings against RB following concerns that the Nurofen Pain Specific Range of products were not correctly advertised and had potential to mislead consumers. This kind of medication alluded to the idea that it was different to other pain relievers because of its ‘specific’ pain relief capabilities, although the chemical recipe didn’t change.
The products of concern were Nurofen Migraine Pain, Nurofen Tension Headache, Nurofen Period Pain and Nurofen Back Pain.
ACCC took issue with RB marketing these products to consumers because it suggested that each Nurofen product was specifically formulated to treat a specific type of pain when in fact the products carried the same active ingredient (ibuprofen lysine 342 mg) and was of the same formulation to the more ‘ordinary’ Nurofen products.[1] Further to this deception, between 2012 to 2014 Nurofen displayed on their website a pain indicator table stating “Relieve pain with the right types of pain medication” suggesting the suitability of each product for your needs.
This meant that although the Nurofen products may generally work for pain relief, the products are misleading to consumers who may be led to purchase the Nurofen Specific Pain Range believing a more targeted treatment for their pain would result. The Nurofen Specific Pain Range products were also priced considerably higher than the other pain relievers at the time, which would have added to potential confusion over product quality and pricing.
The Nurofen Pain Specific Range packaging included representations such as[2]:
[1] Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (no 4)[2015] FCA (11 December 2015) 1.
[1] Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (no 4)[2015] FCA (11 December 2015) 8.
These products were assessed in line with the standards of Australian Consumer Laws (ACL) detailed in Schedule 2 of the Competition and Consumer Act 2010 (Cth). By December 2015 the Federal Court then concluded on the evidence produced by the ACCC that RB was in contravention of:
RB admitted to the contraventions and has since sought to cooperate with the ACCC by ceasing further distribution of the Pain Specific Range and removing these products from Australian shelves. Alongside this RB will need to publish notices, implement consumer protection programs, cover the legal costs of ACCC and pay any pending penalties incurred which are to be decided by the Federal Court at a later date.
This case demonstrates the need for retailers and manufacturers to tread with caution in their related industries and constantly review the way their products are presented to the public. As you can see from above, the price that can be paid is significant even if there was no intention to mislead and no harm eventuated.
Below are 5 Top Tips to ensure that your business’s advertising and product packaging aren’t in breach of the ACL’s prohibition on “misleading and deceptive” conduct:
Your will is an important document that, if drafted effectively, distributes your assets in accordance with your wishes.
In addition to regularly reviewing your will every 3 to 5 years, there are certain events that should trigger the review of your will.
Relationship change
When you marry your current will is automatically revoked. While it is possible to make a will in contemplation of marriage, the vast majority of wills are not drafted to include this.
Similarly, when you divorce, any gift to an ex-spouse becomes invalid. This can have a significant effect on your estate planning and in some circumstances result in partial intestacy.
Family change
A significant change in your family structure is also a crucial time to review your will.
A significant family change might include having children for the first time, having more children or finding yourself in a blended family as a result of a marriage or long term relationship.
When you have children for the first time, it is important that you redraft your will and ensure that you have appointed a guardian. A guardian is responsible for making decisions on the maintenance and care of your minor children.
You should also update your will when you have children to ensure that all children not only receive a share of the estate but that they will be adequately provided, protected from wasting their inheritance and third parties that may seek to take advantage of them.
Asset changes
Asset changes include things like buying or selling property or other significant assets. These transactions can have a significant effect on your estate planning.
In order to ensure that these assets pass in accordance with your wishes, you should review your estate planning documents to ensure that these assets are appropriately dealt with in order to ensure that they pass to your intended beneficiaries.
Not all assets automatically pass in accordance with your will. For example, if you have purchased property as joint tenants with another person, on the death of one of you, the property will automatically pass to the surviving person, irrespective of what your intentions were.
Changing your mind about a gift
You may simply change your mind about the persons you intend to leave assets to in your will. Although it may be tempting to simply draw a line through the gift, this can raise significant issues not only in terms of the validity of the amendment, but also in relation to the will itself.
Where you change your mind about the contents in your will, it is important to ensure that you execute either a new will or an appropriately drafted codicil to your will
Contact us to review your estate planning
Reviewing your estate planning need not be a complicated or a daunting process. If you would like to arrange a complementary review meeting with Canberra’s leading estate planning lawyers, please contact our reception on 02 6215 9100.