Hartley v McCarrey

[2019] NSWDC 647

District Court

New South Wales

Medium Neutral Citation:

Hartley v McCarrey [2019] NSWDC 647

Hearing dates:

3 – 7 June 2019

Date of orders:

24 June 2019

Decision date:

24 June 2019

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

Verdict and judgment for the plaintiffs against the defendant for $90,935

Catchwords:

CONTRACT.

 

Contract for the sale of a rural property and the dog breeding business being conducted from it. Action for damages for breach of those parts of the contract relating to the sale of the business. Meaning of “breeding dogs”.

  Whether solicitor who drew the contract (acting for both vendors and purchasers) was a concurrent tortfeasor.

Legislation Cited:

Civil Liability Act 2002 Part 4, The Companion Animals Act 1998, Greyhound Racing Act 2017, Personal Property Securities Act

Cases Cited:

Chaplin v Hicks [1911] KB 786

Category:

Principal judgment

Parties:

Plaintiffs – Samuel Hartley, Gemma Hartley

  Defendant – Kim McCarrey

Representation:

Counsel

 

Plaintiff – T. Sowden

 

Defendant – S. Blount

 

Solicitors

 

Plaintiff – Joliman Lawyers

  Defendant - Jennings & Kneipp Solicitors

File Number(s):

2017/00153350

Publication restriction:

Nil.

Judgement

1. HIS HONOUR: This is an action for damages for breach of contract.

2. The late John Edward McCarrey was the registered proprietor of lot 2 in deposited plan 1010860 in the Parish of Nunnagoyt in the County of Wakool, a rural property known as "Wood Park" having a road address of 516 Gonn Road, Barham in this State. As a result of his first marriage, the deceased had two daughters, Gemma and Breanne. The deceased's first marriage broke down in approximately 1999. At that time, Gemma was aged 15 years. She moved with her mother, and I presume her sister, from Wood Park to Wakool township. She completed her high schooling in New South Wales and then moved to Melbourne both to work and to study. She studied to be a beautician. Whilst she was living in Melbourne, she met Samuel James Hartley whom she refers as to Sam. They met in 2008. Gemma and Sam married in 2011.

3. When Gemma was still living at Wood Park, her father was conducting a business which included agisting dogs. He had been doing that for at least five years prior to the breaking up of his first marriage. After his first marriage broke down, the deceased met and married a lady known as Kim Therese McCarrey.

4. The deceased and Kim decided to establish a dog breeding business. The deceased and Kim and carried on that business at Wood Park, the land owned by the deceased. In or around June 2014, the deceased was diagnosed with leukaemia. The deceased's condition was such that he was advised not to be concerned with land or animals.

5. Around December 2014, Gemma and Sam offered to buy Wood Park from the deceased, and the dog breeding business from the deceased and Kim. That offer was accepted. The agreed price for the purchase of the realty and the dog breeding business was $750,000. According to the contract, $390,000 was ascribed to the land and its improvements and inclusions, $350,000 was assigned to the goodwill of the business, and $10,000 was assigned to the business plant and equipment. According to Sam's affidavit, the deceased "was overjoyed that the property was to stay in the family as it had been passed down through three generations".

6. The vendors engaged Mr Ed Glowrey of "Glowreys Riverina Law Firm", whose address is shown in the contract as being in Deniliquin, but evidence was given that Mr Glowrey, or one of his employees, attended Wakool from time to time. Glowreys acted, not only for the vendors, but also for the purchasers.

7. The contract or the sale of both the land and the business is the 2005 edition of the contract for sale of land which is copyrighted by the Law Society of New South Wales and the Real Estate Institute of New South Wales. The contract bears date 21 May 2015. It passed through the Stamp Duties Office on 17 June 2015. Besides the standard terms for the contract of sale of land, the contract contains a number of other provisions. The first is a "Schedule of vendors" which shows the first vendor as being the deceased, as the owner of the real property. The second vendor is the deceased and his second wife, Kim Therese McCarrey, being the vendors of the goodwill, business plant and equipment, domain name, and inclusions recorded in their joint names for taxation and depreciation purposes. There is then a schedule which list the assets of the "farm" and the assets of the "dog business".

8. The farm included a three bedroom house, a fully self-contained, fully furnished two bedroom cottage, two hay sheds, a machinery shed and birthing pens, a six berth car garage, rain water tanks with a capacity of 120,000 litres, 11 mega litres of stock and domestic pumps, a tractor, a six inch pump with a water meter, a slasher, a spray unit, three hectares of laser laid out paddocks, which were irrigated, 40 acres of property with 180 centimetre fencing, fully operational cattle yards with RPM head bales and two electronic fence units.

9. The dog business comprised a 250 dog licence from Wakool Shire attached to the property, the up and running website with 109,000 hits over two years, 12 months full membership to the Australian Association of Pet Dog Breeders, with regulation full vet audit completed in April 2015, a dog hydrobath, clippers and blades, a dog shed with twelve pens, kitchen, refrigerator, hot water cylinder which was insulated and made of steel and concrete, 60 fenced pens with kennels and auto drinkers, a quad king 400 motorbike, a feed out bin on a trailer and 63 breeding dogs.

10. There are then 13 special conditions headed "Special conditions to agreement for sale of land". Special condition 5 concerns the obligation of the purchasers to obtain approval for financing the purchase from the Swan Hill branch of the Commonwealth Bank. Special condition 12 contains a provision for partial vendor finance. It is a fairly lengthy condition comprising two and a half pages of typescript. The condition commences thus:

"The Vendors will advance to the Purchasers the difference between

the amount to be provided by the Commonwealth Bank and the

amount required to complete the transaction, inclusive of costs, stamp

duties and registration fees, less the Purchaser's own contribution,

subject to the following conditions:..."

The first sub-condition was the requirement of the purchasers to give security by way of a registered second mortgage over the reality, a first secured interest under the Personal Property Securities Act, and security over two properties owned by the purchasers in Victoria. The third sub-condition was a provision for interest payable at the rate of 8% per annum, monthly in arrears, calculated from the completion date of the contract, but a reduction in the interest to 5% per annum if the interest was paid on time. Special Condition 7 provided for the apportionment of the sale price which I have already mentioned. Special Condition 8 is this:

"The Vendors shall execute all and any documents required by the Purchasers for the Purchasers to receive the benefit of the 250 Dog Licence from the Wakool Shire Council for the operation of the business on the property. Any fees payable in respect of the licence and the transfer with a responsibility of the Vendors, subject to point of transfer and the Purchasers from that point, including any application fee for the transfer."

Special Condition 9 is headed "Restraint of Trade", and prevents the Vendors without the consent of the Purchasers operating a business of breeding dogs for sale within Australia for a period of three years from the date of completion of contract.

11. The only other term which appears to be referrable to the sale of the dog breeding business, is Special Condition 13:

"The Purchasers acknowledge that, upon completion of this Contract they assume all responsibility and ownership of the breeding dogs on the property, warrant that they have read the NSW Code of Practice for the Breeding of Dogs and the March 2015 full vet audit report received by the purchasers on 9 May 2015, and they acknowledge, and are aware of their obligations in respect of the Care and Management of the Dogs."

The evidence is that that special condition was drafted by Kim Therese McCarrey. The contract was completed on 28 June 2015.

12. Kim’s affidavit continues, thus:

"Gemma grew up around the pups and always had an awareness and knowledge of what John was doing [agisting] and breeding the dogs. As a teenager, Gemma earned pocket money helping clean the kennels.

6. The business became quite successful and built a positive reputation. We sold our pups privately and to pet shops. John and I hardly needed to advertise, as we found 'word of mouth' was very effective.

7. In about 2006 we registered the business 'JE and KT McCarrey'. In addition to dog breeding, the business also carried out business in livestock more generally. About the same time, Gemma was commencing living in Melbourne.

8. As part of the breeding business, John and I transported pups to Melbourne to pet shops, dealers and private purchasers. This happened on average about 2-3 times per month. When we travelled to Melbourne, we often saw Gemma. This meant that she kept up with the business and what we were doing in terms of sales."

The commencement of the subsequent paragraph of Kim's affidavit contains an understandable error, however it refers to the time when Sam and Gemma commenced their relationship. It then continues, thus:

"John and I would then communicate with both Sam and Gemma about the business, including, for example: sales; any problems we were having such as hernias [sic] an overshot jaw (common dog ailments); which dogs were currently in pup; how many litters certain dogs had had; and if any dogs had left us for re-homing.

10. In about 2009, I recall Sam and Gemma approaching John and me to ask whether they could take over selling the pups for us. I recall Gemma saying words to the effect:

'Can we start selling the pups for you? We can sell direct to the public and cut out the pet shops which means much more money. I can set up a website that the general public can see photos of the pups, and can contact us.'

11. John and I agreed. I recall either John or myself saying words to the effect,

'Dealing with the public is time-consuming. We are busy raising and caring for the dogs and pubs. We would still like to sell our Scottish Terrier pups privately.'

The negotiations for this agreement took place partly face-to-face and partly on the phone, over a period of about a month. What Sam and Gemma earned varied, depending on the sale price. For example, we may sell a dog to a pet shop for $350, but we could sell the same dog privately for $900.

12. John and I were happy with this for two reasons; first because Sam and Gemma agreed to look after the dogs at Wood Park if John and I went away. Secondly it saved John and I dealing with the public, and this was something Gemma was really good at.

13. Although Gemma established the website, John and I still had to be involved because I had to give Gemma the information to put on the website. John and I had to control our image so we ensured everything on the website was approved by us. This meant that John and I were communicating with Sam and Gemma almost on a daily basis about the business.

14. Gemma called the website 'WoodparkPuppies'. I took photos of the puppies at around 2, 4, 6 and 8 weeks of age, and Gemma posted them either on the website, or emailed the photos to their new owners to be. By eight weeks of age, Gemma had usually sold the pups. John then transported the pups to Sam and Gemma's residence in Kilmore where they we're living. Gemma either organised the new owner to pick up the pup from Kilmore, or took the pup to the airport for transportation to purchaser."

13. Around 2010 Sam and Gemma bought a property across the Gonn Road from Wood Park to be used as a weekender. They anticipated at that stage that Wood Park and the business would be sold to them at that time. That did not eventuate. The deceased and Kim decided to stay as the owners of the property and the business. Sam and Gemma went on to sell the weekender.

14. In 2012, there appears to have been a partial falling out between, on the one hand, John and Kim, and the other hand, Sam and Gemma. John and Kim terminated the relationship that they had with Sam and Gemma, for Sam and Gemma to sell dogs for them, and to operate the website. Kim then started her own website which was known merely as "Wood Park". In 2013, John and Kim applied to be members of the Australian Association of Pet Dog Breeders. In her affidavit, Kim said that the reason for that was because they were told by Wakool Shire Council staff, and they believed, that breeders needed to be members of a State or local government recognised association of breeders to register the dogs and to obtain discounts for registration. I shall refer to the Australian Association Pet Dog Breeders merely as the “Association" rather than the compendious abbreviated name. The association code of ethics recommended that breeders obtain a veterinary audit each year.

15. In her affidavit, Kim pointed out that after the diagnosis of leukaemia, the deceased was not supposed to have anything to do with animals or soil. That clearly motivated the deceased and Kim to sell the business to Gemma and Sam. According to Sam's affidavit, he was around, about the time of negotiations for the contract, working in mines in Western Australia on a fly-in, fly-out basis. By occupation, Sam is an electrician. Because of the need for the deceased to have chemotherapy for his leukaemia, Kim and the deceased moved to Melbourne on 1 April 2015. They were living in an apartment opposite the Royal Melbourne Hospital that was owned by the Leukaemia Foundation. They stayed there whilst John underwent chemotherapy as both an inpatient and outpatient. After that treatment was completed, they moved to Indented Head on Port Phillip Bay, south of Geelong. That is a property owned by relatives. In July 2015, they moved to St Leonards in Victoria, and they remained living at St Leonards until the unfortunate death of John on 13 April 2016. The inference to be drawn from Kim's evidence, is she remained living at St Leonards until she moved to Tenterfield in this State in September 2016.

16. Because of the need for John to go to Melbourne for treatment, and no doubt because of the need of Kim to look after him, and also because of the need for someone to manage the business, Gemma moved on to the property in about March 2015. At that time Gemma had a son, Xavier, who was born in 2014. She subsequently gave birth to a daughter, Sasha, in 2016. It is not clear to me from the evidence when it was that Sam finished his FIFO work in Port Headland in Western Australia. He thought that he worked for about eight months, commencing probably in December 2014, so he may have moved permanently on to the property in July 2015. However it is clear that when he was not in Western Australia, he would have been staying with Gemma and their son, so he probably started living on and off the property in March 2015 as well.

17. According to Sam, he had a conversation with the deceased at the time that the contract was being drafted. Sam said in paragraph 12 of his affidavit:

"John...confirmed that they re-homed or put down the non breeding dogs (around 30 in the last year or so), however they had 63 breeding dogs left. ...Gemma and I accepted and trusted John's representations, and therefore did not negotiate the value of the goodwill. We decided not to negotiate further on the price due to John's ill health, and John and Kim had a contract drawn up."

18. The relationship between Gemma and Sam, and Kim broke down very soon after the death of John. According to Sam's affidavit, on the night before John's funeral, Kim sat down with Gemma and him and she informed them that she was not only the executrix of the deceased's will, but also the sole beneficiary of John's estate. That created tension. The tension appears to have led to some dissension.

19. According to Kim, things occurred in this fashion:

"...in mid-March 2015, Gemma and the children moved into the house at Wood Park. John and I employed staff to look after the dogs. We had two staff, Peter who lived in the cottage on the property and looked after the big dogs. Peter had everything provided for him, and in addition he was paid about $150 per week, and our neighbour, Jane was paid $25 per hour, and mainly looked after the pups.

26. On 1 April 2015, John and I left the property to live in Melbourne while John received treatment. I travelled back and forth from Melbourne as often as I could until we knew for sure that Gemma and Sam would buy the property. We continued to run the business from Melbourne, with the help of the staff.

27. In about mid-April 2015, Sam, who'd been working away in the mines in Western Australia, returned to join Gemma.

28. After Gemma came to live on the property, but before the Contract was signed, I provided Gemma with records of veterinary treatment for each dog (the vaccination folder) some of these records are attached at annexure H to Sam's affidavit of 20 October 2017."

20. Accordingly, according to Kim, she gave the "vaccination folder" to Gemma prior to the 21 May 2015. That is denied by Gemma. In her affidavit, Gemma said that she did not receive the records of veterinary treatment from Kim before the contract was signed. She said that following settlement of the contract in or around August 2015, Kim handed over to her "some vaccination cards for the dogs, with handwritten notations". She then referred to annexure H to Sam's affidavit. According to Gemma, the records which were handed to her were incomplete. She swore that she and her husband tried to obtain further information from Kim. They asked Kim to provide to them the computer program called "Zoo Easy", which she believed contained all the necessary information that they would need to run the dog breeding business. However, according to Gemma, Kim refused to provide access to that program to Gemma and Sam. The evidence is that Gemma and Sam had to go and buy their own Zoo Easy program, which they started to use after they had come into possession of the property.

21. A question is who should I believe on this issue? I have no reason to doubt either Sam or Gemma. However I found the evidence of Kim regarding the records of the business to be unsatisfactory. It is clear that she and John kept records, in particular a register known as the "Blue book", which according to Kim had records of the matings of animals which would identify both paternity and maternity, the frequency of the coupling of the dogs, and the size of their litters. It is clear that the "Blue book" was kept by her and the deceased, and she referred to it being present at St Leonards. However it appears that this book was not handed over to Sam and Gemma, and that Kim referred to records having been left at Wood Park, but that evidence was vague, and unsatisfactory. I had thought at first there may have been a misunderstanding by Gemma and Sam as to what was meant by "settlement", whether it meant the signing of the contract, or the completion of the contract, “settlement” of course being used by lawyers to refer to the completion of contract. However no attempt was made to ascertain whether that be the case, but it is clear from Gemma's evidence that she did not receive the records until very late in the piece.

22. The records that are contained in the "vaccination file" are not complete. I had a look at some of the original documents, and for example, there were other veterinary records not meaning records other than vaccinations, which were present for some dogs, but not for others.

23. In the statement of claim the following breaches of contract are alleged:

"7. Wrongly and in breach of the agreement, the defendants failed to deliver the assets and the goodwill of the business in accordance with the terms of the agreement in that:

(a) of the 63 breeding dogs, 49 were not registered with the

Wakool Shire Council.

(b) 17 breeding dogs were over the age of 6 (nine were over the    age of 8) and had to be desexed and re homed;

(c) The defendant failed to keep, maintain and or deliver to the

plaintiffs records of preventative and veterinary procedures for

each dog.

8. By reason of the matters referred to above the plaintiff suffered loss and damage.

PARTICULARS

The plaintiff's registered 49 dogs with the Wakool Shire Council at a total cost of $2,548. It cost them $4,335 to desex all dogs over the age of 6. The plaintiff's were required to vaccinate and have each dog checked by a veterinary surgeon at a cost of $35 for each dog, for a total of $2,205. They claim a total cost of $35,100 to replace the dogs that had reached retirement age. In addition they claim the costs of feeding those dogs prior to re-homing them, and lost sales from the litters that they would have had, had they been of breeding age. Further particulars of which will be provided in accordance with Division 2 of Part 31 of the Uniform Civil Procedure Rules 2005."

The plaintiff's also make a claim under the Australian Consumer Law.

24. There is some information of which the parties would have been well aware, but which they have not given to the Court, that is, evidence which could have easily been adduced, but has not been.

25. The dogs which were bred at Wood Park included West Highland Terriers, Scottish Terriers, Beagles, Golden Retrievers, King Charles Cavaliers, American Cocker Spaniels and Poodles. Some were deliberately cross-bred, giving "Beagliers" being crosses between Beagles and King Charles Cavaliers. There is a reference to Westipoo, which are a cross between West Highland Terriers, and Poodles. There is also a reference in the evidence to a crossing of Scottish Terriers and West Highland Terriers.

26. I attempted to make a schedule of the 63 dogs which were the subject of the sale. I listed the name, sex, date of birth and age of the dog at the time of completion of the contract, and the dogs breed, and if known, the dog's last litter, or any other relevant material. The number which I came to on the information contained in the documentary evidence was 54 dogs. The parties then advised me of the remaining dogs in question, but all told, the number available to me is only 59, rather than 63. Probably if I had kept hold of the original vaccination file, I may have been able to find out which of the four dogs are missing from my list, but I left it behind at Albury, because the plaintiffs needed the records back to continue with their dog breeding business. Furthermore, I did not want to entrust original documents to the government courier which was supposed to get the file and the exhibits to me on Tuesday 11 June, but they did not turn up until late on Thursday 13 June and did not enable me to give judgment during that week as I had intended. I had 14 June off work for medical investigations, and the following week I was on circuit in Newcastle, hence today's listing.

27. Evidence which could have been led that both the plaintiffs and the defendant knew about would be the life expectancy of a dog, or if dogs have different life expectancies according to their breed, the life expectancy of each breed. The parties failed to advise me when dogs reach breeding age, that is, when a female dog first goes into oestrus, and as to when it is thought that male dogs are capable of being used as stud dogs. I do not know whether dogs reach "menopause" to use a concept well known to the human race. I do not know at what particular age dogs can no longer be bred, as distinct to an age at which they should no longer be bred. I do not know at what age a male dog should not be used for breeding purposes, if there be any limitation on that. I do not know how frequently female dogs go into oestrus, although there is evidence as to what ought be done as far as the breeding of dogs is concerned.

28. The first thing to note about the contract is that there is an express provision that included in the sale of the dogs would be "63 breeding dogs". A contract must be construed according to its proper meaning. One would have thought that the term, "breeding dog", means a dog which is capable of breeding, that is a female dog capable of whelping, or a male dog capable of impregnating a female dog. I realise that technically a dog means a male of the genus canis familiaris and that a female of that breed is called a bitch, but I prefer to use the terminology, male and female dogs, merely for the sake of euphony.

29. The veterinary "vaccination file" does identify seven dogs which needed to be either rested or re homed. Those dogs were not "breeding dogs" on a representation made by the vendors to the purchasers. It was Kim who put into the vaccination file a note telling the purchasers to re home the seven dogs in question, and indeed for one of the dogs, Gemima, was also known as Jet, that she should not only be re homed, but rested.

30. One thing that can be said is this: the contract specifically provided that the purchasers were aware of their obligations in respect of the care and management of dogs in accordance with the NSW Code of Practice for the Breeding of Dogs. They were also well aware of the membership of the Wood Park dog stud with the Association, so that relevant information concerning dogs contained in publications of the Association and the NSW Government document are completely relevant.

31. I shall first refer to the relevant parts of the Animal Welfare Code of Practice for the Breeding of Dogs published by the New South Wales Department of Industry and Investment, and its Animal Welfare Branch. This document is exhibit 3, and was first published in August 2009. Part 3.2 provides definitions. There is a definition of "breeding" which means this:

"Breeding means the business of breeding of litters of animals for sale."

There is also a meaning of "re-home". It is this:

"Re-home means the process of providing an animal with a new owner and a new place to live."

Section 5.1 specifies standards. Some of those standards are these:

"5.1.1. The following information must be recorded relating to each dog...housed at the breeding facility:

a description of the dog...which includes name, microchip number, sex (including whether desexed), breed, colour, distinguishing features, vaccination status, details of any special medical and dietary requirements, and;

the date of birth, and the date of acquisition/arrival, and registration number (for pure bred animals) of owned and leased dogs...

5.1.2. Information which details each litter bred must be recorded and must include, the name and microchip number of both the dam and the sire, the date of mating (s), the date of whelping..., identification details of each animal within the litter, including any abnormalities or deaths.

5.1.3. Records must be retained for no less than three years, at the facility, and all staff must be able to produce the records."

Section 8.2 concerns veterinary care. Some of the standards are these:

"8.2.1.6. Dogs must be vaccinated against distemper, hepatitis, parvo virus, and canine cough in accordance with the manufacturer’s recommendations, unless with a written approval of a veterinary practitioner.

8.2.1.8. ...puppies must be vaccinated against common infectious diseases in accordance with best practice clinical guidelines, in accordance with a veterinary practitioner.

8.2.1.10. A program for heart worm prevention for dogs must be in place and in accordance with veterinary advice."

Section 9 concerns the transfer of ownership. It again provides certain standards, they include these:

"9.1.1.1. Puppies...must not be re-homed before they are eight weeks of age.

8.1.1.3. No dog or puppy...may be sold unless vaccinated in compliance with the requirements of section 8.2 of this Code."

Later in the same section of the code is this:

"9.1.1.2.4. Desexing of dogs and cats not intended for breeding is strongly encouraged."

Section 10 of the Code is headed "Reading and rearing". It contains a number of standards which include:

"10.1.1.1. Bitches...must not be intentionally mated during their first oestrus cycle.

10.1.1.9. Bitches must not have more than two litters in any two year period, unless with the written approval of a veterinary practitioner.

10.1.1.13. ...puppies must not be separated from their litter or their lactating mother until they are seven weeks of age to facilitate socialisation, except in the best interest of the puppy...or their [sic] mother."

Later under the heading "Guidelines" in this section of the Code is this matter:

"10.1.2.8. When dogs or cats reach the end of their useful breeding life, or when mature potential breeding stock is found in some way unsuitable for breeding purposes, it is the responsibility of the owner to:

Have such dogs...spayed or castrated;

Settle the dogs...into their new condition...;

Either provide a pet home for the desexed dogs...themselves, or to canvas for and carefully select a new pet home for the animals;

Exercise patience and retain responsibility for the dog...until such time as a satisfactory new home is established."

32. Exhibit E is a publication of the Association called "Responsible Dog Breeding Standards". It is copy righted as at 2010. The relevant provision in it is that numbered 1.5.1, and it provides this standard for the breeding of dogs:

"It is recommended that breeding bitches be retired and desexed by seven years of age. No bitch should be bred for more than seven litters, or after eight years of age without written approval from a veterinary surgeon.

Retired bitches should be desexed, and re-homed or kept as pets.

Retirement from breeding is never an acceptable reason for euthanasia."

33. It is common ground that there were more than 63 dogs at Wood Park. However some of the dogs were family pets. For example there was reference to one of the dogs having been Breanne's pet dog, and dogs belonging to the purchasers were present at the property. However, it is clear from the vaccination file prepared by the defendant herself that seven of the dogs ought to have been re-homed. The seven dogs and their ages as at the date of settlement were these: Paris aged 7, Pippa aged 10, Matilda aged 7, Gemima (Jet) aged 7, Jeanie aged 9, Lucy aged 8, Kelly aged 7. However there were other female dogs aged 8, which included Mitzi, Cassie, and a number which were still 7 years of age but were still thought to be capable of breeding.

34. Applying both the New South Wales Code and the Association Responsible Dog Breeding Standards, one can see that a female dog ought not have more than seven litters, and should not be bred after having achieved the dog's eighth birthday. The statement of claim states that it was a term of the agreement, that "all breeding dogs the subject of the sale would be between the ages of 2 and 6". That is completely unsupportable. It is based upon the dog breeding audit done for the Association on 6 March 2016, in which it is recorded by the vet that the average age for retirement for dogs was six years. An average is an average, not an absolute. To have a retirement at the average age of 6 years, in some dogs would have been retired earlier, and some dogs later than 6 years. However, I prefer to proceed on the basis of the New South Wales Code and the Association's standards that a dog can have seven litters, but that it should not be bred after attaining its eighth birthday.

35. Of the dogs which can be identified, the dogs Kelly and Lucy were both Golden Retrievers. However no claim was ultimately pressed by the plaintiffs concerning those two dogs because they must have been bred after their respective ages of seven and eight, despite the fact that the defendant had indicated that they ought to be re-homed. Two of the female dogs were beagles. They are Pippa and Cassie. Pippa was 10 and was not bred. Cassie was 8, but was bred, and no claim is made in respect of her. The plaintiff's claim in respect of Pippa that she would have had two litters on average had she been a breeding dog, because dogs are bred from the ages of 2 to 7, and according to the plaintiffs, the average of that is about five, so the dog could have two litters.

36. There was then a dispute about how many pups could be born from any particular dog. In evidence is a report from Ms Luke Annetts, a senior veterinarian at the Tenterfield Veterinary Clinic. Although having bachelor degrees, Mr Annetts arrogates himself the title of Doctor, as is common amongst veterinarians. His report tells me this, in response to a question as to whether the assumption of seven dogs per litter for the dog, Flame was reasonable, and whether the assumption of five dogs per litter for other dogs was reasonable:

"The litter sizes are similar to those quoted by other witnesses, and also litter sizes quoted in the literature. One study quotes an average litter size of 5.4 across a wide range of pure bred dogs...."

I have omitted giving the reference provided by Mr Annetts. However, I am happy to proceed on the basis that each dog would have produced a litter of five pups.

37. Two litters for the dog, Pippa, would have given ten pups, and the price for Beagle pups was $1,100. That gives a gross amount of $11,000. However it cost $130 to rear each pup, thus reducing the total amount for ten pups to $9,700.

38. Amongst the dogs too old to breed were a number of West Highland Terriers. They included Paris, who was 7, Crystal who was 7, and Mitzi who was 8. No claim is made in respect of Crystal. The plaintiffs claim two litters from each of Paris and Mitzi. Two litters for each of those dogs would have generated 20 pups. The going price for a West Highland Terrier pup was $1,275. If one multiplies that by 20, one comes to a total of $25,500. However, again, the cost of rearing the pup must be excluded, and that reduces the total to $22,900.

39. There were five Scots Terrier dogs that could not be bred. They were Jeanie aged 9, Matilda aged 7, Gemima (Jet) aged 7: the two seven year old dogs were on the list of dogs to be re-homed. Again the plaintiffs claim two litters from each of those dogs, which would have generated 30 pups. Amongst the Scots Terriers who were not of breedable age were Emma, who at the date of settlement was one year old, and Ellie who was also one year old. Again, I would allow for each of those dogs who were too young to breed, one litter each, so that there was a loss of ten potential pups, taking the total loss of pups of Scotts Terriers to be 40. 40 times the going price of a Scots Terrier, $1,650, makes a gross total of $66,000. However the cost of breeding each of the 40 dogs must reduce the total to $60,800.

40. One of the West Highland males was called Digby. Digby was aged 7 at the time of sale. However there was a medical reason why Digby ought not be bred. The vaccination records indicated that Digby was cryptorchid. Sam believed that meant he only had one testicle, but as any speaker of classical Greek knows, it means that there is one undescended testicle. One does not expect electricians in Australia to be conversant in classical Greek. In Mr Annetts report is this:

"In my opinion the fact that Digby had only one testicle, without knowing anything further, is not sufficient evidence that he was unable to breed. It would depend on his overall health, and the reason for only having one testicle. Ideally a breeding soundness examination would be undertaken. The reason for only having one testicle could be because of a number of factors, for example, previous surgery (orchidectomy) for medical reasons, or he could have an undescended testicle (cryptorchid). The use of cryptorchid males dogs in many breed societies is not allowed, and in many cases is unethical, due to the inheritability of the trait. Cryptorchidism is the most common congenital defect of the testes in dogs, with a reported incidence ranging from 1.2 to 10%...."

Again I have omitted the reference which was provided by Mr Annetts. I accept that Digby ought not to have been used as a breeding dog. The replacement cost for a West Highland Terrier male is, on the evidence, $2,000. The plaintiffs, sensibly, do not claim that sum. The plaintiff only claims half of that sum on the basis that Digby would have had to have been retired in any event in some near future time. Half of that sum is $1,000.

41. The total of the four sums I have referred to is $94,400. However there is need for a further reduction. It appears to have been common at the Wood Park stud, and perhaps it is common practice in other studs, for dogs from litters produced at the stud to be kept to become breeding stock. The stud would then have to incur the cost of keeping the dog until it reached breeding age, which appears to be, doing the best I can, somewhere between the ages of one and two. Therefore further reduction is called for. All told, I believe the appropriate sum to allow for the loss of pups, and the replacement cost of Digby is $90,000.

42. The other cost claimed by the plaintiffs was the cost of the registration of dogs, which had not been registered with the local council. Despite the claims made in the statement of claim, the plaintiffs did not press the cost of vaccinating each dog, and having each dog checked by a veterinary surgeon as claimed in paragraph 8 of the statement of claim. The statement of claim also maintains that the defendant ought pay the costs of feeding the dogs prior to re-homing them, but that was not pressed. Nor was any claim pressed, although it maybe implicit in paragraph 7(b) of the statement of claim, the cost of deseing the dogs, and the cost of re-homing them. It appeared to me, and it obviously appeared to learned counsel for the plaintiffs that there was duplication in claiming both those costs and the costs of what the dogs would have produced had they been "breeding dogs".

43. The only other head of damage pressed by the plaintiff was the costs of registering the dogs that were not registered with the local council. In fact despite the fact the allegation was that 49 dogs were not registered with the local council, in fact there were only 17 dogs which were the subject of the sale which were not registered with the local council.

44. The Companion Animals Act 1998 s 9 provides this:

"1. A companion animal must be registered under this Act from the time the animal is six months old. The owner of the animal is guilty of an offensive if it is not registered.

Maximum penalty:

(a) In the case of a dangerous, menacing or restricted dog - 60 penalty

units for the first offence, or 70 penalty units for a second or

subsequent offence; or

(b) In any other case - 50 penalty units for the first offence, or 60

penalty units for subsequent offence.

Note. The regulations may provide for exceptions to this section. An owner

does not have to wait until an animal is six months old to register it. An animal

of any age can be registered.

2. The regulations may change the age from which a companion animal is

required to be registered under this section from six months to any other age,

either generally or for all companion animals, or for particular kind or class of

companion animal.

3. A person is taken to commit a separate offence under this section, on every

day the companion animal remains unregistered. However, a person:

(a) may not be convicted for the commission of more than one offence in

relation to failure to register a companion animal during any single calendar

month, and;

(b) may be convicted only once in relation to any failure to register a

companion animal that occurred before the failure came to the notice of the

council of the area in which the animal in ordinarily kept.

Note. This subsection does not limit the number of times a person maybe

prosecuted under s 10B (notice requiring companion animal to be registered)."

There is a final subsection but it only refers to greyhounds registered under the Greyhound Racing Act 2017.

45. The 17 dogs were registered by the plaintiffs. The cost of each registration was $55. That amounts to the princely sum of $935. When I add that to $90,000, I come to $90,935.

46. The question is, is this claim maintainable under the pleading? Although the pleading says that 49 dogs were not registered with Wakool Shire Council and claims the cost of registering them, that a lesser number needed to be registered is merely a matter mitigating the extent of the damage. Any person is entitled to regulate his or her affairs on the basis that others will comply with the law. Were it otherwise, no person would drive a motor vehicle on a public street because one would almost certainly be involved in an accident almost straightaway. When the plaintiffs bought the business they were entitled to believe that the defendants had registered dogs in accordance with their statutory obligation. According to the list of dogs I have, the youngest of them was a male West Highland Terrier known as Lachie, was 10 months old. The 17 dogs ought to have been registered prior to completion by the defendant. Therefore the $935 is claimable.

47. As far as the pleadings are concerned, there is a claim made in paragraph 8 for a loss of sales from litters, and I have done my best to calculate those losses.

LUNCHEON ADJOURNMENT

48. I should have pointed out that the defendant submitted that there should be a deduction, not of $4,400, but of 20% of the loss, because this was only the loss of a chance, as that has been considered in Chaplin v Hicks [1911] KB 786. However, the agreement reached between the parties was before the conveyance by the defendants to the plaintiffs of 63 breeding dogs. 63 breeding dogs were not conveyed to them, the damages have been calculated on the basis of the lost puppies that breeding dogs would have generated. The average litter size, as I have already said, with 5.4, which I reduced to five to account for the fact that sometimes puppies can die early or be still born. I do not consider this to be a loss of a chance, but rather a valid method of computing the damages.

49. I now turn to the Civil Liability Act 2002 Part 4. The allegation made by the defendant is that there was a concurrent wrongdoer in relation to the claim, namely Glowreys, the law firm at Deniliquin. I accept that were they a wrongdoer, Glowreys would fall within s 34(2) of the Civil Liability Act. Although the claim made by the plaintiffs against the defendant is for breach of contract, there was also a contract of a different nature, between Glowreys and the plaintiffs and the defendants, and no doubt the Glowreys could also be sued in the tort of negligence.

50. The question is, were they a concurrent wrongdoer? A lawyer can only act on instructions. If Messrs Glowreys had been told that not all of the dogs had been registered with the local council within the six months provided by the Act, no doubt Glowreys would have included a term such that the purchasers could take no exception, or make any claim for compensation arising out of the fact that some of the dogs had not been registered with the local council. However, Glowreys do not appear to have included such a provision, and therefore one can infer that Glowreys were not told that all the dogs had not been registered. Glowreys like the plaintiffs, are entitled to accept that the vendors had complied with their legal obligations. If there was any doubt about that, it should have been drawn to their attention by the vendors. The inference to be drawn is that it was not.

51. The next thing to note is that Glowreys were a firm of solicitors, not dog breeders. They would not know what words, "Breeding dog", means other than to give the words their ordinary meaning which I have sought to do, meaning a dog that was capable of either begetting or conceiving pups. If the solicitor had been told that some of the dogs included in the purchase were not breeding dogs, one would have expected the solicitors to point that out, or to state that how many dogs were included in the sale, but not to use the gerundive “breeding”. That did not occur. The inference to be drawn is that the vendors told Glowreys that contained in the sale of the business was the sale of 63 "breeding dogs". In the circumstances, I find it difficult to see how Glowreys could be held legally responsible. They were acting on, no doubt, instructions, and would expect those involved in the dog breeding business to know what “breeding dogs” mean.

52. It is indeed unfortunate that Glowreys did not prepare two contracts; one for the sale of the reality, and another for the sale of the business. But no doubt wanted to keep what was then considered to be a family transaction, and relatively cheap. The problem with the term, breeding dogs, is that Kim tried to give it a specialised meaning. In [42] of her affidavit, she said this:

"63 breeding dogs were provided to Sam and Gemma. 'Breeding Dogs' was a term used within in our family to refer to dogs presently breeding, pups less than two years of age that would breed in the future, dogs being rested from having pups, and retired dogs."

That maybe her understanding of the words, "breeding dogs", but when it becomes a contractual term, it must be given its normal meaning, not a meaning peculiar to Kim. Implicit in that part of her affidavit is an acknowledgement that some of the dogs were not "breeding" dogs.

53. I am not persuaded that the defendant has established that Glowreys were a "concurrent wrongdoer", as that term is defined in s 34(2) of the Civil Liability Act 2002. Accordingly, the defendant's contention that the damages which I have calculated should be apportioned between Glowreys and the defendant does not arise. I should indicate that Kim Therese McCarrey is sued in two capacities: firstly, in her own right, and secondly as executrix of the estate of her late husband, John Edward McCarrey. However probably nothing turns on that as she is the sole beneficiary of the deceased's will, and therefore her funds, and the funds of the estate are really the same body of money.

54. There is much to be said about the inadequacy of the plaintiff's pleadings. For example, paragraph 5(g)B says that it was a term of the contract that the business would be fully compliant with all regulations, ordnances, laws and statutory rules relating to commercial breeding of dogs, and that included the keeping of records of all preventative and veterinary treatment of dogs, including routine husbandry procedures such as worming or parasite control will be kept and maintained for at least three years in accordance with the provisions of the Animal Welfare Code of Practice published from time to time by the Department of Industry and Investment. As I have indicated earlier, not all worming and parasite control records were available for each and every "breeding dog". However, in paragraph 7 of the statement of claim, it is alleged that there was a breach of contract because the defendant failed to keep, maintain and or deliver to the plaintiffs, records of preventative and veterinary procedures for each dog. The simple answer to that allegation, of course, is that there was no contractual obligation for the vendors to provide to the purchasers the full records of the business. It is amongst the erroneous pleadings that one can easily get lost in this relatively small claim.

55. However I am persuaded on the balance of probabilities that the plaintiffs are entitled to judgment for $90,935.

56. The plaintiffs wish to rely upon an affidavit of Michael Rosner sworn 21 May 2018, together with the documents annexed thereto. Mr Rosner is a forensic accountant. Much of his assessment is a matter that a lawyer is capable of assessing, and there is no need for a forensic accountant to provide any assessment. However the parties agree that mathematically, Mr Rosner has not made any error. The only material that I have used from him in calculating the plaintiff's damages is the cost of rearing a new born pup, which can be found on the page numbered 307 of the tender bundle, and is the final page of the work done by Mr Rosner, the final page of exhibit MR2 to his primary affidavit. That shows the cost for each pup is $130, being the registration fee, vaccination fee, feed of half a bag, light and power and other expenses as shown in the document which is numbered appendix 3, the final page of his material. That was ascertained from an email sent by Sam Hartley to Mr Rosner, and that is the only matter that I have relied upon in the material provided by Mr Rosner. It appears not to be a matter of any dispute between the parties. Accordingly, every other part of the report of Mr Rosner is rejected.

57. I have inquired of counsel for the defendant whether any further reasons for judgment are required, I am told that none is so required. For those reasons, I give verdict and judgment for the plaintiffs against the defendant for $90,935.

(Timetable set as to written submissions on costs).

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Decision last updated: 08 November 2019