Daley v Brooks; Daley v Johnson

[1991] TASSC 158

Serial No B44/1991
List "B"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Daley v Brooks; Daley v Johnson [1991] TASSC 158; B44/1991

PARTIES:  DALEY, Elaine Frances
  v

BROOKS, Phillips Archie

DALEY, Elaine Frances
  v
  JOHNSON, Reginald W
  WEBSTER LTD

FILE NO/S:  3174/1985

600/1988

DELIVERED ON:  23 August 1991
JUDGMENT OF:  Cox J

Judgment Number:  B44/1991
Number of paragraphs:  30

Serial No B44/1991
List "B"
File Nos 3174/1985

600/1988

ELAINE FRANCES DALEY v PHILLIP ARCHIE BROOKS
ELAINE FRANCES DALEY v REGINALD w JOHNSON and WEBSTER LTD

REASONS FOR JUDGMENT  COX J

23 August 1991

1. These two actions were heard together. They arise out of a transaction whereby a pacing horse "Hughie's Return" was sold in Devonport and delivered in Hobart to the plaintiff by the defendant in the first action, Brooks. Involved in negotiations for that sale was the first named defendant in the second action, Johnson, who was an employee of the second named defendant in that action, Webster Ltd In the first action the plaintiff sues the defendant Brooks for damages for breach of warranty as to the soundness and other qualities of the horse, it being alleged that the horse's physical condition was such that it failed to win races and stake moneys and to thereby acquire such a reputation that it would command and return high and frequent fees at stud, which results would have been achieved, it is alleged, had it had the qualities warranted. In the second action the plaintiff sues Johnson in tort and contract claiming that he had agreed to act as her agent in the purchase of the horse, but that he had failed to obey the terms of his engagement, and in breach thereof, and negligently, had failed to inspect the horse and detect its infirmities, and failed to advise the plaintiff as to its true condition, and had failed to ensure that a veterinary certificate of soundness and an ECG heart certificate had been obtained prior to completion of the sale and/or delivery. The second named defendant, Webster Ltd, is alleged to be vicariously liable for the wrongful conduct of the defendant Johnson.

1. The plaintiff is now the wife of Ronald Thomas Heatley, a professional punter. At the time of the sale they had a close relationship but were not yet married. Evidence was given that the plaintiff, at Mr Heatley's suggestion, had decided to acquire a pacer in about mid–September 1985. Mr Heatley suggested that a three–year–old colt, "Hughie's Return", owned and trained by Mr Brooks of Devonport, was a good prospect. Mr Heatley owed the plaintiff $4,000.00 which she had previously lent him and indicated a willingness to put this towards the purchase of the horse and to lend her the balance of the purchase price. He contacted Mr Johnston whose place of work was the Burnie office of Webster Ltd and asked him to make an offer to Mr Brooks on his behalf. I shall make detailed findings later but for the purposes of a broad outline, the facts are that Mr Johnson then approached Mr Brooks, made the offer (of $10,000.00) and upon its rejection, advised Mr Heatley, who increased the offer to one of $14,000.00 plus a further $6,000.00 in three equal instalments out of such prize money as the horse should win. Mr Brooks accepted this price and agreed to the horse being inspected by a veterinary surgeon for the purposes of procuring certain certificates. Mr Johnson had discussions with the vet and Mr Heatley as to the kind of certificate required, and on Friday 27 September 1985 Dr Larner, the vet at Devonport, inspected the horse and conducted an ECG Later that day Mr Johnson visited Mr Brooks' home and paid him $14,000.00 which Mr Heatley had sent up to Burnie by arrangement with Mr Johnson. Mr Johnson did not sight any veterinary certificate. On handing over the money, Mr Johnson procured a receipt therefor from Mr Brooks and both signed a document in the following terms:

"AN AGREEMENT

Drawn up this 20th Day of September 1985 between P A Brooks of 19 Parker Street, Devonport and R W Johnson of 125 Main Street, Ulverstone acting as agent for Miss E. Daley of 7 Pitt Street, Hobart for the sale of the pacing horse Hughies Return.

The purchaser to pay the vendor the sum of $2,000.00 from the horses first three wins making a total of $6,000.00. The vendor to have a veterinary certificate of soundness and ECG heart certificate.

The purchaser to have a sale – lease form from H.R.B. at Tas Pacing Club meeting on Saturday September 21st drawn up to these conditions and to be signed by both parties.

The vendor to deliver horse to Hobart and purchaser to pay cartage.

PURCHASER R W Johnson AGENT

VENDOR P A Brooks

WITNESSED P M Brooks "

1. Mr Brooks, who had already entered the horse in a race at the Hobart Showgrounds transported it to Hobart and delivered it to the plaintiff's agent, Mr Austin, who had agreed to train it and to drive it in the race that day. The horse was raced and came a creditable fourth, but evidence adduced by the plaintiff is to the effect that even before the race the horse's hooves were seen to have some defects, that they were inspected the following morning by Mr Heatley, the day after by a master farrier and two days later by a veterinary surgeon, Dr Springfield, to all of whom the defects were apparent.

1. The horse was given a rest and next raced on 8 November 1985, coming last in a field of ten. Further veterinary inspections took place and the horse's condition was found to be no better. The plaintiff consulted a solicitor who, on 14 November 1985, wrote to Mr Brooks in these terms:

"Re: 'Hughies Return'.

I act for Miss E F Daley who recently purchased the pacing horse 'Hughies Return' from yourself.

It was a condition of the contract of sale that a certificate of soundness would be provided. Contrary to that all that was supplied was a veterinary certificate stating effectively the horse was healthy.

However the warranty was that the horse was sound, i.e. sound at least as a pacing horse. On the night of delivery the trainer Mr Ken Austin drew your attention to the fact that the horse has a ¼ crack on the near side front hoof. You commented to the effect that the horse had raced like this all its life, or that it had been like that all its life.

The trainer has since informed Miss Daley of the unsoundness of the horse and that he will need to take remedies to prevent, so far as possible, further damage and is putting this into effect.

However, on advice the owner is concerned that this defect may develop and cause lameness.

In view of the breach of warranty as to the soundness of the stallion for the expressed purpose of a pacing horse my client after taking advice and lengthy consideration has reluctantly asked me to demand damages from you.

She does not wish to be unreasonable, provided a sensible solution can be reached and in accordance with her instructions to that effect I ask you to advise urgently what offer you have in settlement to avoid the need for Court action.

Had my client known of this disability she would never have considered purchasing the horse for the consideration provided."

1. Mr Brooks claimed not to have received this letter, but acknowledged that he had received one dated 28 November 1989, the text of which was:

"Re: 'Hughies Return.'

I hold a veterinary certificate that the horse is unsound.

On advice the owner has scratched the horse from racing.

I am instructed to institute legal proceedings for damages at the expiration of seven days, unless within that period you contact me to advise how you intend to rectify the position."

1. On November 22, 1985 the horse was raced, again performing poorly. It competed in races on 26 December 1985, 3 January 1986 (when it ran second), 10 (or 15) January 1986, 17 January 1986, 25 January 1986, 8 February 1986 and in a further nine races before its last race on 9 June 1986. Although it was well enough placed in heats to compete in the finals of the classic races "The Guineas", "The Sires' Produce" and "The Derby", it failed to achieve any wins and its total prize money amounted to a mere $539.00. Finally in March 1988, the plaintiff sold "Hughie's Return" for $1,000.00. In December 1985 the horse had been advertised for sale and an offer of $6,000.00 made. This offer was not accepted by the plaintiff.

1. The two initial issues before the court are what were the terms of the contract between Mr Brooks and the plaintiff, and what were the terms of Mr Johnson's engagement. If the plaintiff proves the case she alleges in respect of either of these issues, the next question will be whether or not the horse was in fact unsound as she contends. The first two issues depend to a large extent on the credibility of those witnesses who deposed to the terms in question. I should preface my review of the relevant evidence and my findings by saying that although I was urged by counsel for all the defendants to regard the plaintiff and her husband, Mr Heatley, as unreliable witnesses on the basis that it was really Mr Heatley who owned the horse and met all the expenses of it now claimed by the plaintiff against the defendants, and that he had for some ulterior motive concealed his identity as the owner and held out the plaintiff as the true owner, I see no reason to doubt their sworn and uncontradicted evidence as to the arrangements made between them. I concede the possibility that Mr Heatley may have been the true owner and put the horse in the plaintiff's name for his own reasons, and that the plaintiff's financial position was not such as to enable her to undertake such a venture without the backing of Mr Heatley. But there is nothing inherently improbable about the arrangement to which they have deposed, nor is there anything discreditable about their characters disclosed by the evidence which might lend credence to the suggestion that Miss Daley's ownership of the horse was a sham.

1. The initial approach to Mr Brooks was made after a telephone conversation between Mr Heatley and Mr Johnson on Friday 20 September 1985. Mr Heatley had rung Mr Johnson at Webster Ltd in Burnie. It was common ground that Mr Johnson was a long–standing employee of Webster Ltd and that he had on previous occasions been involved in the sale of horses, although such sales were not a very significant part of Webster Ltd business, its rival, Roberts Stewart & Co, having the lion's share of that market. Mr Johnson was also, however, a pacing enthusiast, had had horses for over thirty years, was President of the Ulverstone Pacing Club for sixteen years, foundation and life member of the North–West Light Harness Association and had served on the Trotting Control Board. Mr Heatley deposed that he asked Mr Johnson if he knew "Hughie's Return" and that Mr Johnson had replied, "Yes, I've seen him run and I think he's got ability." Mr Heatley had said, "Well, have a good look at him and check him out. If he's sound offer $10,000.00 and $2,000.00 out of his first two wins as a contingency sum." Mr Johnson had agreed to do as he was asked. The following Tuesday, Mr Johnson rang Mr Heatley and said, "I've seen Brooks and he wants $20,000.00 for the horse." Mr Heatley said that that was too much, but instructed Mr Johnson to offer $14,000.00 for the horse and a further $6,000.00 to be paid in three instalments of $2,000.00 out of the horse's winnings. Mr Heatley claimed he told Mr Johnson that the offer was "subject to a veterinary certificate of soundness and an ECG heart score certificate", to which Mr Johnson responded, "Righto." He said that on Thursday 26 September, Mr Johnson had rung him again and said, "Brooks has accepted that deal but wants cash up front before signing anything." An arrangement was then made, as it was after banking hours that day, for Mr Heatley to transmit $14,000.00 the next day to a Bankcard number at a bank in Burnie, it being intended that Mr Johnson, on production of the Bankcard, would be able to collect the cash. At the conclusion of that conversation Mr Heatley said, "Make sure that the contract provides for a veterinary certificate of soundness and ECG heart score certificate." He also instructed Mr Johnson to put in the contract that the horse was to be delivered to Hobart by Mr Brooks on the following Saturday, as the horse had already been entered in a race at the meeting at the Hobart Showgrounds on that day. Mr Heatley claimed that he also asked Mr Johnson to make sure that Mr Brooks realised that he would have to sign all the normal Harness Racing Board papers concerning the transfer, and that the purchaser would pay the costs of transport of the horse to Hobart and that that was to be included in the contract, and that he, i.e. Mr Heatley, "must have a certificate of soundness and a veterinary certificate and an ECG heart score certificate for insurance purposes." He also said that he indicated to Mr Johnson that the money should not be handed over unless the certificates were sighted and that after sighting them, they were to be sent down to Hobart with Mr Brooks.

1. Mr Johnson's version of the negotiations was to this effect. Mr Heatley had rung him at Webster Ltd on Thursday 19 September and asked had he known of "Hughie's Return", and if so, what his opinion of him was. Mr Johnson replied, "I think he's going to make a good horse." Mr Heatley asked whether he was for sale and Mr Johnson replied that he did not know. Mr Heatley said, "Find out for me will you and see if you can get him for $10,000.00." The next day Mr Johnson went to Mr Brooks' home at Devonport and asked whether the horse was for sale, and if so, at what price. Mr Brooks had nominated $20,000.00. Mr Johnson had told Mr Brooks that he had a man who was prepared to pay $10,000.00, but Mr Brooks maintained that the price was $20,000.00. That night (Friday 20 September) Mr Johnson had telephoned Mr Heatley and advised him that the horse was for sale but that Mr Brooks wanted $20,000.00. There the matter rested until the following Tuesday when Mr Heatley had rung Mr Johnson again and said that he was prepared to offer $14,000.00 plus $2,000.00 out of each of his next three wins, making a total of $20,000.00. Armed with those instructions, Mr Johnson had again approached Mr Brooks and passed on that offer, to which Mr Brooks replied, "I'll take it." Mr Johnson had then identified the purchaser as "Mick Heatley from Hobart", and thereupon Mr Brooks had said that if it was Mick Heatley he wanted cash. "No cheques whatsoever. It's got to be in cash." Following this conversation, Mr Johnson rang Mr Heatley and advised him of the substance of it. This telephone call had been made on Wednesday, 25 September. That same day Mr Heatley had told Mr Johnson that he required an ECG and a certificate of soundness. Mr Johnson then went to Mr Brooks' home and not finding him there, went to his stables where he was attending to "Hughie's Return". He told Mr Brooks that a certificate of soundness was required and also an ECG and that he would make arrangements with the local veterinary surgeon, Dr Brian Larner. On the evening of Thursday 26 September he had rung Dr Larner requesting both certificates, and had been told by Dr Larner that a certificate of soundness was terribly expensive as detailed blood tests and x–rays, among other things, would have to be conducted. Dr Larner had suggested that a certificate of health would be sufficient. Mr Johnson, having concluded that telephone conversation, then rang Mr Heatley and told him what the vet had said, explaining what work was involved and that it could cost up to $1,000.00 for such a certificate and that he had suggested that if Mr Heatley wanted a certificate of soundness he could possibly get it done a lot cheaper in Hobart. According to Mr Johnson, Mr Heatley agreed to accept a certificate of health rather than a certificate of soundness and he thereupon rang Dr Larner and told him that Mr Heatley had agreed to accept the certificate of health and an ECG and requested Dr Larner to undertake the examinations the following day as the horse was due to go to Hobart on the Saturday to race there and the purchasers wished to have the certificates in Hobart on the Saturday. He also requested Dr Larner to give the certificates to Mr Brooks so that they could be sent down with the horse on the Saturday. That same evening, Mr Johnson rang Mr Brooks' home and left a message with his landlady requesting Mr Brooks to contact Dr Larner the following day to make arrangements for him to go down and examine "Hughie's Return".

1. On Friday 27 September 1985 Mr Johnson went to his bank and collected the $14,000.00 and returned to Webster's office, showing the money to two young women working in the office and commenting upon his sale of the horse. In the afternoon he had rung Dr Larner to ask the result of the examination and had been told that he had done an ECG and had told him in technical terms of the result of the ECG which he said indicated that the horse was a little bit tired but that that would not affect him and that everything else was alright about the horse. Mr Johnson had intended to record the transaction on a private sale form which was in use at Webster Ltd, but not finding his book of pro–formas, had resolved to use the document he had prepared the previous Wednesday to have some record of the transaction. He then went to Mr Brooks' home and asked whether the vet had completed the job, to which Mr Brooks replied in the affirmative and said that he had asked Dr Larner if there was anything to stop the sale of the horse and that Dr Larner had replied, "Not a thing." Mr Johnson then got Mr Brooks to sign the document prepared the previous Wednesday, that is P2, and a receipt for the $14,000.00, which was then handed over. Notwithstanding that exhibit P2 referred to a certificate of soundness and errors had been made in the initials of Mr Brooks which had been corrected and initialled by him, no alteration to the document was made to refer to a certificate of health. This, according to Mr Johnson, was a mere matter of oversight or carelessness on his part. He had asked Mr Brooks for a commission and the latter had agreed to pay a commission when he received the whole of the money. Mr Johnson, because Mr Brooks has been a good client of Websters Ltd in the past, had not insisted upon a pro rata commission on the funds received. Mr Johnson then returned home and rang Mr Heatley, told him that everything was alright and that Mr Brooks would deliver the horse the following day. He also told him that he had spoken to Dr Larner and that Dr Larner had informed him the horse had a slight heart murmur but that the vet had said, "It's nothing to worry about. If I was going to buy the horse I would buy him for myself." Mr Johnson, in his evidence, explained that Dr Larner had not in fact used the expression "heart murmur" but had used a technical term which Mr Johnson had interpreted as heart murmur and that he had relayed this expression to Mr Heatley.

1. Dr Larner confirmed that prior to conducting the examination on 27 September 1985 he had been asked by either Mr Johnson or Mr Brooks (he could not remember which) to examine "Hughie's Return" as it was being sold, and that he made it clear to whoever it was who asked him to examine the horse that there was a difference between a certificate of soundness and a certificate of health, the former being an expensive certificate because of the multiplicity of tests required. Whoever it was he spoke to had gone away and come back to him and said that a certificate of health would be sufficient. Mr Brooks' evidence coincided substantially with that of Mr Johnson as to the course of the negotiations and that it was only on the Wednesday that any mention of a certificate of soundness and an ECG had been made. On the Thursday evening he had received a telephone message left with his landlady for him to contact Dr Larner to see what time the vet could come and inspect the horse, and on the Friday morning he had gone to Dr Larner's surgery and arranged for him to attend at the stables at 11am. At the conclusion of the examination, which Mr Brooks observed included an ECG, he had asked Dr Larner whether there was anything to prevent the sale of the horse and had been told "No." That afternoon when Mr Johnson came with the money he had told Mr Brooks that he had been in touch with Mr Heatley the night before and that Mr Heatley was prepared to accept a certificate of health instead of a certificate of soundness. This was not a matter of any moment to Mr Brooks as he claimed that he did not know the difference between such certificates, and thought that if a horse was healthy, he would also be sound. Mr Brooks had received no certificate or ECG from Dr Larner or anybody else and said he was not asked or instructed to take any such certificates to Hobart with him when he delivered the horse.

1. I do not accept the version of events put forward by Mr Heatley where it differs from that of Mr Johnson. I do not accept that he asked Mr Johnson to inspect the horse before making any offer. It is clear from his own evidence that he never placed any reliance upon a physical examination of the horse by Mr Johnson, the offer ultimately accepted by Mr Brooks had been made before Mr Johnson saw the horse at close quarters and although Mr Heatley claimed that he took it for granted that Mr Johnson had inspected the horse before making an offer on his behalf, he did not ask Mr Johnson whether he had inspected it let alone what his opinion was in the light of any such inspection. I accept that Mr Johnson only mentioned the certificate of soundness and an ECG to Mr Brooks on the Wednesday after the price had been agreed the day before as both he and Mr Brooks claim. I can see no reason why, had he been instructed by Mr Heatley to make that a requirement of the transaction at any earlier stage, he would not have complied with that instruction. I also accept that on the Thursday night Dr Larner had expressed reluctance to give a certificate of soundness and had suggested to Mr Johnson the alternative certificate of health, that Mr Johnson had then received authority from Mr Heatley in a telephone call to settle for the latter, that Mr Johnson had rung Dr Larner back and confirmed that a certificate of health would suffice, and had then left a message with Mr Brooks' housekeeper for Mr Brooks to call on Dr Larner the next day and arrange a suitable time for the inspection. Dr Larner confirms that there were two telephone calls from the person giving the instructions and Mr Johnson, for it must have been he who rang, would have no reason for going through the motions of pretending to get instructions from his principal and phoning back. If he were minded to unilaterally authorise a different kind of certificate, he would surely have done so during the first conversation. Furthermore Mr Johnson called his married daughter, who had been present that evening, and she gave evidence that she had heard Mr Johnson's part of four telephone conversations which were clearly the ones deposed to by her father. Her evidence confirms the substance of his claim. While I would not rely for such a finding on her evidence alone of conversations so long ago, I found her generally impressive as a witness and her testimony does add weight to the evidence of her father. It is true that the document P2 refers to a certificate of soundness and one would have expected Mr Johnson to have amended it when it was signed. Nevertheless, that document is a very badly drawn one, and it is common ground that it does not record the entire transaction. The full purchase price is not mentioned and even the dates are wrong. Mr Johnson's explanation for the errors in dates which was not challenged was that he had looked at the wrong date on his almanac and thought the forthcoming Saturday on which the horse was to be delivered and raced in Hobart was Saturday 21 September rather than Saturday 28 September. He had prepared the document on Wednesday 25th anticipating that it would be signed the following Friday, which would have been the 20 September had the race day been the 21st as he wrongly thought. It is clear from a large body of other evidence that the keeping of accurate records was not one of Mr Johnson's strong points.

1. Finally there is some confirmation that the plaintiff, through Mr Heatley, had expressly abandoned her requirement of a certificate of soundness by her subsequent conduct and that of Mr Heatley. When the horse was delivered the next day by Mr Brooks no certificates at all were handed over but the trainer, Mr Austin, accepted the horse without demur. Although according to the evidence adduced by the plaintiff the horse's defects were repeatedly observed over the ensuing weeks, no protest by the plaintiff or Mr Heatley was made to Mr Johnson, Mr Brooks or Dr Larner, even though on Tuesday 1 October Mr Heatley went to Devonport to take delivery of yet another horse and a few days later the plaintiff received a certificate of health only from Dr Larner dated 27 September 1985 but postmarked 4 October 1985. The first time any claim that provision of a certificate of soundness was a term of the agreement was made was in the plaintiff's solicitor's letter of 14 November 1985 addressed to Brooks and set out above.

1. In considering the credibility of the respective witnesses to the course of the negotiations, I have not overlooked the evidence relevant to the horse's alleged unsoundness, for the evidence called by the defendant Brooks on that question stands in stark contrast to that called by the plaintiff, and if the former should be rejected, and the latter preferred, it might be said to cast doubt on Mr Brooks' evidence concerning the negotiations and his conversations with Mr Austin, the plaintiff's trainer at the time of delivery. Mr Brooks, though suffering from a severe hearing disability, did impress me as a frank and honest witness and a person who is genuinely fond of, knowledgeable about and attentive to his horses. He gave very firm evidence that "Hughie's Return" was not suffering from the condition known as contracted hooves and associated quarter cracks prior to or at the time of delivery as alleged by the plaintiff. In this he was supported by Mr Davis, a fellow Devonport trainer, who was present when Dr Larner examined the horse on Friday 27 September 1985, by Mr Mayne who drove the horse five or six times before the sale and was to have driven him on Saturday 28 September had he not been sold, and by a very impressive witness, Mr Costello, who had shod "Hughie's Return" six to eight times in the period leading up to the sale. In addition, Dr Larner himself conducted an examination which would have revealed the defects complained of if they had existed and his firm evidence was that they did not.

1. On the other hand, Mr Austin, the trainer who took delivery on Saturday 28 September, claimed that when Mr Brooks handed the horse over, he, Mr Austin, had observed the horse's feet were very long, they were contracted and there were quarter cracks in them, that he asked Mr Brooks about the horse's feet and that Mr Brooks had said, "He's been like that all the time. That's no problem." He also said that he asked Mr Brooks where the certificate of soundness and ECG certificate were and was told that they were to be forwarded. Both these parts of the conversation were disputed by Mr Brooks. Then there was evidence that Mr Heatley was told of the horse's condition by Mr Austin later that day and the next morning had himself seen it at Mr Austin's stables. Mr Crossen, an elderly gentleman with long experience as a farrier, claimed to have seen the horse and found that condition to exist on Monday 30 September, but for the date he was totally dependent upon Mr Austin with whom he had had a discussion prior to coming to court. Dr Springfield, a veterinary surgeon, saw the horse on Wednesday 2 October 1985 and again on 3 October. It had, since delivery, run in the race on the previous Saturday and had finished first out of eight in a trial conducted on Tuesday 1 October. He was adamant that the horse by then had contracted heels, quarter and heel cracks and some bruising under the feet. This condition he regarded as amounting to unsoundness for "with respect to his feet whilst he certainly was able and physically able to race or pace his ability to fulfil his assumed potential was not 100% because of the condition of his feet." The cracks however were not infected and he considered that no veterinary treatment was necessary, all that was needed being management by appropriate shoeing.

1. Dr Rees, who was in partnership with Dr Springfield, examined the horse on or about 15 November 1985. He found him to have thickened tendons of his forelegs and he had contracted heels "because he had been shod up in a fashion where his heels had been let grow". He made no mention of quarter or heel cracks. I think Dr Rees' evidence is of little assistance to the plaintiff if only because he first saw "Hughie's Return" six weeks after the sale.

1. Mr Williams, a farrier, gave evidence that he shod the horse on Friday 5 October 1985. His hooves were "in a pretty bad state. He had quarter cracks and cracked heels." He intended to put corrective bar shoes on, but because a welder was not available, he put protective silicon pads on instead and a week later changed the shoes for bar shoes when the welder was available. His explanation for this sequence of events differs from that of Mr Austin who claimed that the pads were deliberately put on first and subsequently bar shoes were used as part of a gradual process of correcting the position.

1. On the issue of the condition of the horse's feet at the time of delivery, I prefer the evidence adduced by the defendant to that by the plaintiff. That the horse developed contracted hooves, quarter cracks and some tendon problems seems clear, but I am satisfied it was not in that condition at the time of delivery. My greatest hesitation in rejecting the plaintiff's version has been the evidence of Dr Springfield. He gave it in an impressive manner and I do not doubt that he genuinely believes it to be true and accurate. Shortly after his inspections on 2 and 3 October he signed two certificates. The first is a "certificate of suitability" and in it he noted under the heading "Abnormalities", "Severely contracted hooves (all four) and associated quarter cracks", while under the heading "Remarks" noted, "Considered undesirable condition responsible for unsoundness." The second was a certificate of examination for mortality insurance purposes. In answer to Q4, "To your knowledge is there any history of disease or injury that might be relevant to the insurance of this animal?", he replied, "No" and gave a similar answer to Q5, "In accordance with the examination as set out in AVA [Australian Veterinary Association] insurance guidelines is the horse clinically sound and in satisfactory condition?" He did not repeat any of the remarks he had made about unsoundness and the condition of the horse's hooves. Challenged about this and responding to a suggestion that the form and guidelines required disclosure of anything relevant to insurance, including the value of the horse, his position was that he considered that he was required to mention only such matters as might affect the mortality of the horse and these were not life–threatening qualities. Other vets. took a different view, but I think Dr Springfield's position is arguable and I am not prepared to draw adverse inferences against him because of his omission to advise the insurer of matters affecting the horse's value. Nevertheless, his experience in the field of equine veterinary science is less extensive than that of Dr Larner, and I prefer the latter's evidence, supported as it is by the witnesses I have mentioned.

1. Having found that the negotiations proceeded in the manner described above, I now have to determine whether the plaintiff has established a breach of contract by the defendant Mr Brooks, or any breach of duty by the defendant Mr Johnson. As to Mr Brooks, it is claimed that he at all material times carried on a business as a dealer in horses and that the plaintiff made known to him that she required the horse to race in pacing races and relied on his skill and judgment in purchasing the horse, and that in consequence there was implied into their agreement, by s19 of the Sale of Goods Act 1896, a term that the horse was reasonably fit to pace in pacing races. In my view, such a contention has not been made out. Mr Brooks has never been a dealer in horses. Notwithstanding an admission in his defence that he "buys and sells horses", the evidence shows that in a long association with horses and with racing he sold only one other horse. In any event, the circumstances show that the plaintiff in no way indicated that she was relying on his skill and judgment. Furthermore, the horse was (even if unsound as alleged) nonetheless reasonably fit to race in pacing races.

1. Next it is claimed that the defendant made representations amounting to warranties that the horse was sound, fit to be raced, useful for the purpose of racing, was of good fitness and condition and was sound. No such representations were made. It is also claimed that the defendant would obtain and supply to the plaintiff a veterinary certificate of soundness and an ECG heart certificate prior to sale and/or delivery. After agreement was reached on the price, the certificates mentioned above were asked for and Mr Brooks agreed to co–operate in their procurement. Prior to the completion of the sale on the Friday, however, the plaintiff had waived any requirement to a certificate of soundness and required only a certificate of health and an ECG certificate. There was, in my view, no representation amounting to a warranty (and certainly none acted on by the plaintiff) that the vendor would obtain and supply even a certificate of health and ECG heart certificate prior to sale and/or delivery. The parties intended that the purchaser would pay for the vet's services in providing such certificates and it was no doubt contemplated that such certificates, if handed to Mr Brooks by the vet, would be transported to Hobart by him and handed to the purchaser, who likewise was to have at the racetrack a document drawn up on a form recognised by the Harness Racing Board for use in sales and leases and recording the terms of the agreement. But these were merely administrative arrangements which were not, in my view, essential parts of the contract and were never insisted upon. In fact the purchaser obtained the certificate of health some days later and an ECG trace. The heart score of the horse on that trace was not revealed by the evidence, but Dr Springfield conducted an ECG and determined a score of 116, which he described in terms of its being good, bad or indifferent as "quite good". It is not pleaded what the ECG certificate was to certify, although Mr Heatley claimed in evidence that what he had instructed Mr Johnson to insist upon was a heart score certificate, presumably to the effect that it was, in the case of "Hughie's Return", at least "quite good". There has never been any complaint that the trace provided by Dr Larner revealed anything detrimental about the horse other than that it indicated the horse was tired. Dr Springfield agreed that Dr Larner's trace was consistent with a horse which was tired, but with no long–term heart problem, and that his own trace taken six days later, after the transfer to Hobart, the race on Saturday 28 September and the trial on Tuesday 1 October was consistent with a horse which had been through another stressful episode and was consistent with having been run in a race following Dr Larner's ECG Dr Springfield said his own trace revealed indications of stress or inflammation of the myocardium or heart muscle which could be corrected by spelling the horse or easing up on its workload for a reasonable time. In view of the fact that, as I find, Mr Johnson told Mr Heatley on Friday 27 September that Dr Larner had said the horse had a heart murmur (which was not in fact the case, as I have noted) and should have a spell, and of the fact that Mr Heatley conceded that Mr Johnson had on that occasion told him at least that Dr Larner had said the horse should have a spell, the plaintiff, in my view, cannot complain that the failure to provide an ECG prior to delivery or the contents of that ECG in any way amounted to a breach of warranty.

1. I find that there was no warranty of soundness. Had the plaintiff made it a condition of the sale that a certificate of soundness and ECG demonstrating soundness had to be procured, such a warranty might be easily inferred, but the plaintiff was content to accept a certificate of health to be forwarded later and an ECG showing nothing worse than tiredness or strain of the heart muscle which a reasonable spell would mend. By the time the contract was concluded as to all its essential terms on Friday 27 September by Mr Brooks and the plaintiff's agent, Mr Johnson, who was authorised to accept them, these were the only material terms as to the physical state of the horse and there was no breach of them. In any event even were there a warranty of soundness, I am satisfied that there was no breach as alleged. It did not then suffer from severely contracted hooves and thickened tendons, nor from associated quarter crack problems, nor did it have a heart murmur or condition amounting to unsoundness. It was also alleged to have been so heavily infested with redworm as to be unsound. The evidence failed to establish that fact. At most it showed that a faecal egg count of 800 eggs per gram. had been taken by Dr Springfield, but the evidence showed that the acknowledged expert in the field regarded 1,000 eggs per gram. as indicative of a heavy infestation. The presence of redworm is common if not universal in horses and is routinely treated with drenches. There was no evidence of lack of performance or condition attributable to the redworm in "Hughie's Return".

1. In my opinion, the plaintiff has failed to make a case against the defendant Mr Brooks. As to Mr Johnson, I find that it was no part of his engagement to inspect the horse and to advise the plaintiff as to its suitability and soundness. He was a mere conduit to transmit the plaintiff's offers. He obeyed the plaintiff's directions to procure veterinary certificates. When he was told by Dr Larner that a certificate of soundness was unduly expensive and that a certificate of health was appropriate, he obtained express authority from the plaintiff to substitute such a certificate for one of soundness. I find that he was not expressly or by implication directed by the plaintiff or her agent to refrain from handing over the purchase price until he had physically sighted the veterinary certificates and that he fulfilled all his obligations to the purchaser, firstly, by satisfying himself by verbal contact with the vet that the horse was in fact healthy and that the ECG had been conducted and did not disclose any serious health problem, and secondly, by advising the plaintiff's agent, Mr Heatley, of the result of his conversation with Dr Larner. The plaintiff's claim against him must fail, and likewise the claim against Webster Ltd.

1. In a Notice of Contribution and Indemnity by Mr Johnson against Webster Ltd, Mr Johnson seeks an order that he be indemnified by Webster Ltd for his costs. This may be of moment as the plaintiff's financial position does not appear sound and this case lasted fourteen full hearing days. It is desirable therefore that I make some factual findings, although they are no longer relevant to the plaintiff's claim against Webster Ltd, she being unable to succeed in any event. I shall reserve to the parties the opportunity to make submissions as to what order I should make.

1. I find that Mr Johnson had in the past been authorised by his employer, Webster Ltd, to conduct sales of horses. He had been involved in auctions and in private sales. He was a valued employee and was something of a Jack–of–all–trades. When Webster Ltd ceased to actively seek a share of the market in the sale of horses, he was given a maintenance role, being a cabinet maker by trade. He was also involved in chattel auctions. However, he was never told not to engage in private sales, nor was his authority to sell horses revoked by the company. I have no doubt that had the commission in this case been recovered and paid to the company, it would have been accepted and his initiative praised.

1. When he was first approached by Mr Heatley, I am satisfied that from Mr Heatley's point of view, his position as an employee of Webster Ltd was purely coincidental. Mr Heatley approached him because of his connection with harness racing. Mr Johnson at first regarded himself merely as a go–between and was not initially expecting to receive a commission at all. However, as the negotiations became a little more protracted and it became necessary for veterinary examinations to be organised and a cash payment transmitted, collected and passed on to the vendor, he not unnaturally decided that he would ask for a commission. On the Friday he did so, and Mr Brooks, being a fair man and recognising that his services had resulted in a profit for him as vendor, agreed to pay it. However he said he would pay the commission when he received the balance of his purchase price, which in fact never eventuated. I am satisfied that Mr Johnson at that time intended that upon receipt of the commission he would account for it to the company. It was never suggested to him at the trial that he intended the transaction as one for his own benefit and intended to pocket any commission received himself.

1. I find that on the day he paid the $14,000.00 to Mr Brooks he took it first to his office at Webster Ltd, showed the money to two clerks there and told them it was in connection with the sale of a horse. I also accept his evidence that he also told Mr Ogilvie, the branch manager, that he had just sold a horse for $20,000.00 but that Mr Ogilvie had been preoccupied with other matters and did not absorb what he had been told. The manner in which the money was transmitted was unusual and contrary to normal Webster Ltd procedure. As Mr Brooks wanted cash, Mr Johnson arranged with Mr Heatley to send it to Mr Johnson's bank at Ulverstone and quoted his own Bankcard number. He later changed the arrangement to one whereby it was to be sent to the Burnie branch of that bank, and on the Friday attended there, produced his Bankcard and collected the cash. It seems the transaction went through on Mr Johnson's Bankcard account, which one would expect in the circumstances. The normal procedure would have been to arrange a payment into Webster Ltd account either at the Hobart office or bank or indeed in Burnie, thus enabling the company to pay by cheque and to have a proper record of the transaction. After the money was paid to Mr Brooks, Mr Johnson failed to make any record of the transaction in the company's books. No demands for commission were sent out, Mr Johnson did not pursue Mr Brooks for the commission, and the company was left in ignorance of the transaction.

1. When Mr Johnson was sued (Webster Ltd was joined in later in the second action) he approached Mr Ogilvie to see if the company would undertake the defence of the action, but Mr Ogilvie would not commit himself or the company because there was no record. It was not unreasonable that Mr Ogilvie should suspect that Mr Johnson had either got involved in the transaction gratuitously and as a private individual or had intended to pocket the commission himself. Mr Ogilvie contented himself with suggesting that Mr Johnson seek legal advice and made an appointment for him to see Mr Bartlett of the legal firm of McLean, Phillips and Bartlett who had previously acted for Mr Ogilvie personally and had advised Mr Ogilvie on the company's business once or twice before. There is no evidence that Webster Ltd ever acknowledged responsibility for Mr Johnson's legal costs.

1. I find that Mr Ogilvie remained in a state of doubt as to Mr Johnson's true involvement for some time and told the secretary to the managing director of the company on 30 October 1989 that he still could not honestly make up his mind whether it was a private deal and that Mr Johnson had come to Webster Ltd when he was in trouble, or whether he was genuinely going to put the sale through Webster Ltd when the final amount of money was paid by the purchaser. Mr Johnson's carelessness in not ensuring that the transaction was adequately recorded in the company's books rendered Mr Ogilvie's doubts not unreasonable, but I find as a fact that Mr Johnson did intend to put the commission through to the company if and when received, and I repeat that the company, at the trial, did not suggest otherwise. Had Mr Ogilvie been persuaded of that fact himself, I think he would have thought it appropriate for the company to take over the conduct of Mr Johnson's defence and to indemnify him. That would not have bound the company because by that stage the decision lay with the managing director who was not persuaded that the transaction was one genuinely conducted by Mr Johnson as an employee of the company and on its behalf.

1. Whether in these circumstances Mr Johnson should be indemnified for his costs by his employer is a matter for further argument.

1. The defendants will have judgment against the plaintiff in each action.