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.