In the recent case of Bull v Australian Quarter Horse Association [2015] NSWCA 354 the New South Wales Court of Appeal examined a case where a cloned horse was denied registration based on the breed association’s regulations.
The Facts
In December 2010 Mr Bull purchased a Quarter Horse from the USA which was a clone. This horse had not been registered with the American Quarter Horse Association. In April 2011 Mr Bull imported this horse and applied to register the horse with the Australia Quarter Horse Association (“AQHA”). His application was refused. He brought proceedings in the Supreme Court of New South Wales seeking relief from that refusal.
The AQHA had amended its regulations in December 2010 and April 2011 in order to prevent the registration of cloned horses however these changes had not been published in the hard copy regulations available to members. Mr Bull sought to rely on the previous version of the regulations, which did not prohibit the registration of clones, or alternatively he sought to argue that he was entitled to register the horse under the new regulations. There was a significant difference between the previous and amended regulations. The new regulations disallowed the registration of cloned horses whereas the previous regulations had allowed cloned horses, so long as the other requirements for registration were met. One of the requirements for registration was that any imported horse had to be registered with an international Quarter Horse stud book before it could be registered with the AQHA.
The First Decision
Justice Hallen found that the horse could not be registered on the basis that the AQHA regulations required imported horses to be already registered with an international stud book in order to be registered in Australia. As the horse in question was not registered with the American Quarter Horse Association, it was not possible to register the horse under the Australian regulations.
The Appeal
Mr Bull appealed the decision of Justice Hallen on 4 grounds, with the fourth ground requiring leave as it was an argument not raised previously:
In relation to the first 3 grounds of appeal, the Court agreed with the original decision that the horse did not meet registration requirements. In relation to the implied term, the Court held that the implied term was contrary to the express terms in the AQHA constitution and regulations. These both provided that amendments to regulations applied when the resolution was passed, regardless of whether any copy was available for members at that stage. The Court refused leave in relation to the fourth ground of appeal on the basis that the estoppel issue raised factual issues requiring an examination of evidence which Mr Bull failed to adduce at trial.
The Result
The appeal was dismissed with costs.
Take Home Message
When applying to register a horse with a breed association or stud book, you should check the registration requirements for that organisation, which may be contained within the association’s constitution, rules and regulations and other such documents. You should check with that organisation that you are viewing the most up to date version, and whether any amendments are soon to take effect that may impact you.
A new draft code of practice has been issued by Safework NSW entitled ‘Managing Risks when New and Inexperienced Persons Interact with Horses’ (“Draft Code”). You can access the Draft Code here. This is an important document for any individual or business to review which has new or inexperienced people working with or around horses.
The Draft Code is still currently in the consultation process and you can make a submission here, if you wish to comment on the Draft Code and these submissions will be accepted by Safework NSW until 30 June 2016.
What Does the Draft Code do?
The Draft Code is a practical guide for achieving health and safety standards and if approved following the consultation process, it will form an approved code of practice under section 274 of the Work Health and Safety Act 2011 (NSW).
Do I need to follow it?
There are legislative requirements to eliminate and/or manage health and safety risks. The Draft Code will assist you in complying with work health and safety requirements by addressing the particular issues of new and inexperienced people working with and around horses. As all experienced horse people are aware, the inexperienced are at risk. For example, a beginner may be injured by a spooking horse because the beginner stood in front of the horse instead of beside the horse when leading.
The Draft Code provides a guide to the particular risks that exist when inexperienced people handle or ride horses. Reputable businesses and individuals are likely to already abide by much, if not all, of what is detailed in the Draft Code however they should review it to ensure compliance.
The Draft Code applies in New South Wales. If you are in a different jurisdiction, you will need to check your local requirements. If you are unsure, please contact Chamberlains Law Firm and we can assist you to find the legislation that applies to you.
For updates as to the status of the Draft Code, you can click here.
Behavioural Issues
The horse behaved just fine when I tried him, and now he’s bucking me off. Can I return the horse?
As we discussed in Part 1 of Misrepresenting Horses for Sale, it is important to get a pre-purchase examination done when you are considering purchasing a horse. The buyer should also get the horse’s medical history and fitness stage from the seller before purchase, so that the buyer is aware of any past problems or tendencies that do not exist at the time of the pre-purchase examination. This should preferably be recorded in writing from the seller, so that any representations about the horse’s medical history are on record.
It is recommended that both you and your trainer view and try the horse before purchase. You can also ask the owner if he or she would bring the horse to a local competition ground or equestrian centre so that you can view and ride the horse out of its home environment, as this may help to show how the horse behaves in an unfamiliar situation. If the seller will allow it, the buyer may use a trial period to further evaluate the horse’s appropriateness for the buyer.
Despite taking these precautions, some riders find that the horse’s temperament and behaviour changes when they bring the horse home. What can you do then? What if you have sold a horse that seemed a perfect match for its new owner at the inspection, but now the buyer wants to return it?
If the horse shows a sudden change in behaviour, physical causes should be ruled out. A veterinarian should examine the horse to ensure that the behaviour is not caused by pain or injury. For example:
It is also possible that the horse may have been drugged and/or fed excessive calming supplements in preparation for your inspection. Click here to read a recent story out of the UK which resulted in criminal convictions for the sellers, who are currently awaiting sentencing:
The fit and appropriateness of the tack should also be checked. When you purchase a new horse, take note of exactly what the previous owner has been using on the horse in terms of fit, size and type. An ill-fitting saddle or bit, for instance, can cause a normally quiet horse to show behavioural problems or resistance under saddle.
If you are purchasing a horse from a reputable breeder or trainer, he or she may be willing to continue to train the horse and/or give you lessons on your new horse to ensure safety as well as to evaluate whether you are inadvertently causing or permitting the behaviour. If the horse must remain in training for a long period of time, this will likely increase the cost to the buyer of keeping the horse. As a buyer, you may need to consider whether it is indeed the right horse for you.
We recommend that when buying and selling horses, you insist on a properly drafted sale contract regardless of whether you are the buyer or the seller. This contract should address these issues and allow for an agreed way of dealing with a potential return. If you are the seller, you should consider carefully how you wish to handle this scenario. If you sell a horse to a client and it does not work out, there is a risk that you could be found liable if the client gets injured or if the client pursues you for misrepresentation. Stories from unhappy clients also spread throughout the horse community very quickly, especially in these days of social media, so an unhappy client can damage your reputation.
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.
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.
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.
Both buyers and sellers need to be aware of the pitfalls of transactions involving horses. Sayward McKeown, our equine specialist, offers these four tips to avoid disputes.
The horse needs to suit the purchaser’s needs. For buyers it is important to seek advice to make sure it is fit for your purpose instead of relying on just the advertisement from the seller. The buyer should have his or her instructor or coach assist by viewing and riding the horse, and observe the buyer riding the horse in order to determine whether the horse is appropriate. If possible a buyer should view and ride the horse on several occasions or request a trial period as the horse may not display its ‘true colours’ on the first occasion.
Sellers should ensure all riders sign an indemnity and waiver form before riding or handling horses on their property. Sellers should also be wary of selling a horse that is not appropriate for the buyer in order to avoid a dispute later about the horse – a bad sale could lead to a dispute if the buyer later wishes to return the horse, seeks to recover the purchase price back from the seller, or is later injured by the horse. A buyer may seek to claim that the horse was misrepresented by the seller. Sellers should include relevant clauses in the sale contract dealing with warranties, fitness for purpose and return of the horse.
Even if the horse appears appropriate for the rider, the buyer should have his or her veterinarian perform a pre-purchase examination before committing to the purchase. This may change the buyer’s mind about purchasing the horse, or it may allow the buyer to negotiate a better price. In addition this shows that the buyer knew about any soundness issues that are uncovered by the pre-purchase examination, which may assist the seller if a dispute develops.
Often a potential buyer will want to enter into a trial period. This means the buyer wishes to take the horse home to experience what that horse is like being handled by the buyer or other strangers in the buyer’s home environment. Whether this arrangement creates an obligation to buy may form the basis of a dispute between buyer and seller. Establishing the terms of a trial period beforehand means these expectations are addressed.
The seller should protect him or herself with an indemnity and waiver agreement in case an accident occurs during the trial period. The seller will also need contractual clauses dealing with who is responsible in the event of the horse being injured or neglected.
A written agreement ensures potentially contentious issues, such as price and payment arrangements, are clearly defined. Another reason a formal agreement should be entered into is that a horse is an asset and any transaction relating to its sale and purchase must be treated as such.
Since misunderstandings amongst parties are common with verbal agreements, it is essential that a sale agreement be drafted so that each party knows what it is agreeing to do. A written agreement also tends to cover circumstances the parties may not consider as issues when they are not yet in dispute.
If you are given an agreement to sign when selling or purchasing a horse, it is wise to have a lawyer review it to ensure it does not contain any onerous obligations and that it reflects the terms and arrangements you believe you have agreed to with the other party.
Interested in learning more about Equine Legal Services?
Click on our articles below to find out more:
Horse Industry – Waivers in NSW & ACT
Misrepresenting Horses for Sale: The Commonly Asked Questions, Part 1