A Supreme Court (NSW) judge has handed down her decision on 17th September, 2015 in Capogreco v Rogerson  NSWSC 1371 in which it is again made clear by a court that part-owners do not have to sell their interest in a horse against their wishes.
Also in dispute in this case there was the issue of whether Mr. Rogerson’s sales pitch to the Plaintiff, prior to them buying into the horse, was a ‘good investment’ or a ‘safe investment’ and if the latter there would be a claim for deceptive and misleading conduct. Her Honour decided it was pitched as no more than a safe investment and that there was not misleading and deceptive conduct by Mr. Rogerson.
Australian Rules of Racing AR 57 (2) (d) stipulates “The Manager of a horse shall, alone of the joint owners, lessees or syndicate members be entitled 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 judgment states the “Role of Manager is limited to managing the horse for the co-owners for the purpose of the Rules of Racing” but not in the sale of each co-owners interests. Unless an owner specifically gives the Manager the authority to sell their interest the Manager is powerless, without a Court Order, to sell 100% of a horse.
Judge’s comments as to Code of Practice
Interestingly, the judge makes reference to the Australian Bloodstock Code of Ethics and commented that “Private sales and or gifts of shares between co-owners without informing the other co-owners does not appear to be consistent with the Code’s aim to reach high standards of transparency”.
The relevant clause of the Code in this case was 3.8 “If an agent receives an offer to purchase a horse he must relay that offer in its entirety to his principal at the earliest opportunity and respond in accordance with the principal’s instructions”.
In this case the Manager was the Trainer and when he received an offer to purchase a horse in his care then this judge was of the belief that the offer should have been made known to all co-owners.
Going forward should the industry insist that all owners be notified when one co-owner sells a part or all of his interest to his mate, bearing mind that currently the Transfer of Ownership form only needs to be signed whilst a registered racehorse? Once retired and being offered as a stallion prospect or a broodmare there is currently no obligation for co-owners to be advised of private sales or gifts of part interests.
Would the industry accept that all co-owners have the first right of refusal on any pending private sale?
Courts can force a sale
Applications can be brought before the Supreme Court to have a horse sold where the co-owners cannot resolve their differences under the Property Law Act in Victoria or the Conveyancing Act in NSW, but due the cost involved very much a last resort action.
Rather than having to go to court to get an order for the sale of the horse our recommendation is that at the commencement of a group of owners buying a horse a simple written agreement setting out all the potential issues that may arise in the period of time that the horse is owned by them as a group and how they are to be dealt with. Such a document can then work as a road map as to ensure everyone can understand what they are entitled to and the processes that apply.