Latassa v Tolj
[2024] VSC 765
•12 December 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2024 05634
| ANDREW LATASSA | Plaintiff |
| v | |
| JURE TOLJ | First Defendant |
| -and- | |
| ROBERT CILIA (AS TRUSTEE FOR THE SMC TRUST) | Second Defendant |
---
JUDGE: | Attiwill J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 December 2024 |
DATE OF RULING: | 12 December 2024 |
CASE MAY BE CITED AS: | Latassa v Tolj |
MEDIUM NEUTRAL CITATION: | [2024] VSC 765 |
---
INTERLOCUTORY INJUNCTION – Two persons claim to be owners of a racehorse – Whether serious question to be tried – Whether balance of convenience supports the injunctive relief sought – Held that there is a serious question to be tried, but both persons’ claims of ownership are not strong claims – Held that the balance of convenience is against the injunctive relief – Australian Rules of Racing.
PRACTICE AND PROCEDURE – Whether Court should vacate order that passport for the racehorse be held on trust pending the determination of the proceeding – Passport now held on trust by former solicitors – Held no basis established for the vacation of the order but order should be varied so that it is held on trust by a party’s current solicitors.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M J Stirling | JAG Lawyers |
| For the First Defendant | Ms T Stretton | Madison Branson Lawyers |
| For the Second Defendant | Ms K Laycock-Walsh | Neill Ogge Lawyers |
HIS HONOUR:
INTRODUCTION
One racehorse. No registered owner. Two alleged owners. Training to be done and races to run. What to do?
This proceeding concerns the ownership of a thoroughbred colt racehorse known as ‘Sammarco’ (Camelot ex Saloon Sold). The plaintiff (Mr Latassa) and the second defendant (Mr Cilia), in his capacity as trustee of the SMC Trust (the Trust), both claim to be the sole owner of Sammarco, having purchased the horse from a Mr Helmut von Finck, a vendor situated in Germany. The first defendant (Mr Tolj), who recently also claimed to be the sole owner, now supports Mr Cilia’s claim of ownership as trustee of the Trust. Children of Mr Tolj are identified as some of the beneficiaries of the Trust, which is a discretionary trust.
On its commencement, this proceeding was between Mr Latassa and Mr Tolj. Mr Latassa brought an urgent application that was heard before me, sitting as the Commercial Court Duty Judge, on 23 October 2024. Upon Mr Latassa giving the usual undertaking as to damages, the Court made orders (the Court’s orders):
1. Until further order, the defendant, Jure Tolj, is restrained from taking physical possession of the thoroughbred Sammarco (Camelot ex Saloon Sold), or from directing any person in possession of Sammarco to transfer or deal with the possession or location of Sammarco.
2. The parties shall not, either by themselves or others, attend the training premises of Sammarco or interfere with the training of Sammarco.
3. The horse passport of Sammarco (currently held by International Racehorse Transport Pty Ltd) be delivered to and held by John Gdanski, solicitor for the defendant, on trust pending the determination of this proceeding or further order.
4.The defendant is restrained from taking any steps to register himself as an owner of Sammarco with Racing Australia.
…
9. The plaintiff’s summons filed 22 October 2024 is adjourned until 10:00am on 28 November 2024.
The parties confirmed at the hearing on 5 December 2024 that the passport is presently held by Mr Gdanski. Mr Tolj has since retained new solicitors but the passport remains with Mr Gdanski pursuant to the Court’s orders.
On 25 November 2024, Mr Tolj filed his defence which contained, inter alia, allegations that Sammarco had in fact been purchased by Mr Cilia as trustee of the Trust from Mr von Finck. On 28 November 2024, upon the return of Mr Latassa’s amended summons, I made orders that, inter alia, Mr Cilia (as trustee for the Trust) be joined as the second defendant and Mr Latassa’s amended summons filed 11 November 2024 be adjourned to 2:15pm on 5 December 2024. On 3 December 2024, Mr Cilia filed a summons seeking, inter alia, that order 3 of Court’s orders be vacated.
Mr Latassa ultimately submitted at the hearing that the following orders are appropriate (the proposed injunctive relief) (see T18.30-19.6):
(a) order 3 of the Court’s orders be vacated;
(b) Mr Latassa and Mr Cilia as trustee for the Trust take all necessary steps as soon as practicable to:
(i) record in the passport of Sammarco that they are each co-owners of Sammarco as to 50% (subject to final determination of sole ownership); and
(ii) register Sammarco with Racing Australia on the basis that they are each co-owners of Sammarco as to 50% (subject to final determination of sole ownership).
Mr Latassa gave the usual undertaking as to damages.
Mr Latassa submitted that no party should have sole access to the passport and no party should be able to register themselves as sole owner until ownership is determined by the Court. Mr Latassa submitted that, if the Court did not make the proposed injunctive relief then the passport should be held (by the Court or a solicitor) until such time as the Court determines ownership (Mr Latassa’s supplementary submissions, [5]). Mr Latassa, by his counsel, also gave an undertaking to the Court to pay the sum of $411,000 into Court or to a solicitor to be held on trust. The undertaking was given as the purchase monies paid by Mr Latassa have been refunded.
Mr Cilia opposed the proposed injunctive relief and submitted that order 3 of the Court’s orders should be vacated. Mr Cilia accepted during the hearing that, in the absence of the proposed injunctive relief, upon the vacation of order 3 of the Court’s orders, it is likely that Mr Gdanski, of Mr Tolj’s former solicitors, will provide Mr Cilia with the passport. Mr Cilia will then use the passport to take steps to assert rights as the sole owner, in his capacity as trustee of the Trust, of Sammarco. This will include seeking to register an interest as trustee of the Trust as sole owner of Sammarco with Racing Australia. This is despite the fact that ownership is disputed and the Court has not determined that issue. Mr Cilia offered to give various undertaking during the hearing which I further address shortly. This included undertakings concerning not selling or encumbering Sammarco; training and racing Sammarco with Ciaron Maher Racing; and holding prize money on trust and transferring sole ownership to Mr Latassa, if that is what the Court ultimately decides.
Both parties relied upon the Australian Rules of Racing as at 1 November 2024 (being exhibited to an affidavit made by Mr Latassa’s solicitor). The parties did not identify or rely upon any other rules, including any local Victorian rules. Mr Latassa submitted that no other rules applied.
The principles applicable to an application for an interlocutory injunction are well established and are not in dispute between the parties. As a result, Mr Latassa needs to establish the following matters:
(a) there is a serious question to be tried, that is, Mr Latassa has made out a prima facie case in the sense that there is a sufficient likelihood of success at trial to justify, in the circumstances, the proposed injunctive relief;
(b) Mr Latassa will suffer irreparable injury for which damages will not be adequate compensation unless the proposed injunctive relief is granted; and
(c) the balance of convenience, or justice, favours the granting of the proposed injunctive relief.
These principles are not entirely separate and must be examined together. Whether the relief sought is prohibitory or mandatory, the Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong to grant or refuse the proposed injunctive relief.
REGISTRATION OF SAMMARCO AND ITS PRESENT CONDITION AND LOCATION
Mr Latassa gave evidence:
6. In this case Sammarco is to be trained by an Australian trainer and that section of the Racing Australia website provides that an import application must be submitted upon each entry in to Australia to the Australian Stud Book. The import application is set out at [PB 76-7]. The process is then that the Australian Stud Book will send an identification kit to be completed by an Australian Stud Book approved veterinarian. Once that occurs the horse will be eligible for registration. An application for registration is then made. The most recent horse registration application templated is dated 1 September 2015 as shown on the Racing Australia website and set out at [PB 78-82]. The Racing Australia website also stipulated a naming policy that needs to be followed when submitting the racehorses name for approval (it is often the case that horses in Australia and overseas have common names so duplication has to be avoided). The naming policy is set out at [PB 83-86].
Mr Cilia gave evidence:
12. In Australia, horse passports are used to facilitate the international transportation of a horse, much like a human’s passport. The passport is used to track vaccinations, vet assessments, and as the identification of the horse as it travels.
13. When a horse arrives in Australia from overseas, the shipping agent sends the horse’s passport and an export declaration to the Australian Stud Book. The horse’s stable will then lodge an import application, and a vet will complete a DNA test to confirm the identity of the horse.
14. The application is then sent to the Australian Stud Book and once approved, the horse can be registered as belonging to its owner.
15. Once the above process is completed, the horse’s passport is not used as a domestic identification document. In Australia, horses use Foal Cards or ID Cards issued for this purpose.
16. Sammarco’s DNA testing has not yet been completed so he cannot yet be registered according to the process set out above.
17. Possession of Sammarco’s horse passport will be necessary for me to facilitate registration of Sammarco reflecting his rightful ownership (being myself as trustee for the SMC Trust).
I refer to following terms and conditions concerning horse registration issued by Racing Australia:
12. The owner agrees that all information provided to RA, PRAs, Stewards, RIBs and Race Clubs is true and correct to the best of the owner’s knowledge, and that the owner may be subject to penalty for providing any false or misleading information or failing to disclose any information the owner is required to provide.
13. The owner (manager) agrees the names listed on the Horse Registration form fully discloses the true, complete and accurate ownership of the horse.
Rule 31 of the Australian Rules of Racing provides:
AR 31 Provision of incorrect information
(1) A person must not provide incorrect information in an application to register a horse with Racing Australia.
(2)If a person breaches subrule (1), the Stewards may suspend the horse from racing pending a decision by Racing Australia as to whether or not the registration of the horse should be cancelled.
The following must occur for Sammarco to be able to race in Australia:
(a) the passport must be sent to the Australian Stud Book;
(b) an ‘Import Application’ must be completed; and
(c) Sammarco must be registered with Racing Australia.
These matters require the identification of the owner of Sammarco. This is the central matter the parties dispute in these proceedings.
As I have said, Sammarco’s passport is presently being held by Mr Tolj’s former solicitor, Mr Gdanski.
Sammarco is presently being kept at Ciaron Maher Racing. Both parties agree that Ciaron Maher Racing should train and race Sammarco. They have co-operated to that extent. Sammarco is ready to race. In the event that Sammarco cannot be trained and raced his ‘value will plummet exponentially’. None of these matters are in dispute.
CONSIDERATION
It is convenient to first consider Mr Latassa’s application for the proposed injunctive relief.
Mr Latassa’s application for the proposed injunctive relief
Has a prima facie case been established?
Mr Latassa has established a prima facie case of sole ownership but it is not a strong claim. Mr Cilia also has a prima facie case of sole ownership but it is also not a strong claim. A critical person has not given evidence, namely a Mr David Baker, who was the agent for Mr von Finck and engaged in the dealings with both Mr Latassa (including his representative Dr Adam Matthews) and Mr Tolj. Mr Tolj purportedly acted on behalf of the Trust. Much of the evidence given on behalf of both parties is lacking and inconsistent. I make the following observations on the claims noting that none of the evidence has been tested by cross-examination or been the subject of full argument.
I make the following observations on Mr Latassa’s claim:
(a) there is evidence that Dr Matthews, on behalf of Mr Latassa, made an offer to Mr Baker, the appointed agent for Mr von Finck, to purchase Sammarco for €200,000 in early August 2024 and the offer was accepted by Mr Baker. I refer to Mr Latassa’s first affidavit at [6]–[8] and Dr Matthews’ affidavit at [6]–[12]. The agreement was subject to Sammarco undergoing and passing a veterinary examination. The examination was conducted in Cologne, Germany and passed by Sammarco on 8 August 2024. This invoice for this was €2,844.62 and was paid by Mr Latassa;
(b) Mr von Finck’s agent, Mr Baker, texted Mr Latassa and asked him for his email so that he could send his invoice;
(c) on 28 August 2024, after there had been difficulties experienced by Mr Latassa in making payment of the purchase price, Mr Latassa paid the sum of $411,000 to a Mr Troy Holmes to be provided to Mr Baker. I refer to Mr Latassa’s first affidavit at [30]. Mr Baker informed Mr Latassa by text message on 29 August 2024 that €100,000 had arrived and on 30 August 2024 that €200 had arrived, which I infer is a reference to €200,000. As a result, Mr Baker received all the funds no later than 30 August 2024 and possibly as early as 29 August 2024. This may have been prior to the alleged sale on 29 August 2024 by Mr von Finck to Mr Cilia as trustee of the Trust;
(d) Mr Tolj admits that Mr Latassa entered into an agreement with Mr von Finck but alleges that it was terminated;
(e) Mr Tolj admits that Mr Latassa has a prima facie case but it is weak. At the hearing, new counsel for Mr Tolj sought to withdraw a submission that there was a prima facie case but subsequently accepted that there is a prima facie case;
(f) the purchase monies were only returned to Mr Latassa on 11 October and 14 October 2024. Mr Holmes only returned the monies as he did not wish to hold them;
(g) on 31 August 2024, Mr Tolj sent a text message to Mr Latassa in which he stated, inter alia: ‘Horse is always been yours [sic], you bought him and you have indirectly involved me into your affairs with those two to help you with the situation with money transfer’ (emphasis added);
(h) Mr Latassa’s claim is not strong as:
(iii) Mr Latassa signed an agreement together with Mr Tolj (I infer sometime around 3 September 2024) styled ‘Short Deed of Agreement’ for the purchase of Sammarco. That agreement referred to Mr Latassa and Mr Tolj as ‘Purchaser 1’ and ‘Purchaser 2’ respectively. Mr Latassa gave evidence that he signed this document because Mr Tolj said to him: ‘It’s just a letter that says that was changes and that we except [sic] his ‘hermit’ [ie Mr von Finck] conditions to be honoured…Right now just a letter of intent to sign and change his mind’;
(iv) the monies he paid for Sammarco were returned to him and he has not sought to retender them. I do note, however, that the monies were only returned to him after Mr Latassa’s solicitors made demands concerning his ownership of Sammarco, including upon Mr Tolj. Counsel for Mr Latassa submitted during the hearing that Mr Latassa undertakes to pay the sum of $411,000 into Court or to be held on trust pending the determination of this matter; and
(v) on 31 August 2024, Mr Latassa sent a text message to Mr Baker in which he stated, inter alia: ‘Dave I want out send me my money back please!!’ (emphasis added). Mr Baker responded by stating, inter alia, ‘I have no money to send you. The horse has been sold’. On one view, this was a rejection by Mr Baker of the request for a refund.
I make the following observations on the matters relied upon by Mr Cilia to assert that Mr Latassa has not established a prima facie case.
Mr Cilia relies upon the evidence of Mr von Finck as being significant. In my view, the evidence is weak. This is because:
(a) Mr von Finck’s evidence in paragraph 11 that he told Mr Baker on 3 September 2024 that he would only sell Sammarco to Mr Tolj is inconsistent with Mr Cilia’s evidence that he purchased Sammarco on 29 August 2024. Mr Cilia accepted this and submitted that ‘there are some issues’;
(b) Mr von Finck’s evidence concerns a conversation with Mr Baker. There is no evidence that Mr Baker communicated these matters to Mr Latassa;
(c) Mr von Finck makes no mention of Mr Cilia;
(d) Mr von Finck refers to Mr Tolj as the trustee of the SMC Trust. Mr Cilia accepted that this is inconsistent with the evidence of Mr Cilia; and
(e) Mr von Finck’s evidence is that on 28 August 2024 he told Mr Baker that he would not sell Sammarco to, inter alia, Mr Latassa but was comfortable to sell Sammarco to Mr Tolj. There is no evidence that this was communicated by Mr Baker to Mr Latassa prior to Mr Latassa paying the purchase price for Sammarco.
Mr Cilia also relies upon the evidence of Mr Tolj and Mr Cilia concerning Mr Cilia’s claims of ownership. I accept that Mr Cilia has a prima facie claim. This was accepted by Mr Latassa. This is because of the following key matters:
(a) there is a document titled ‘Contract of Sale’ between Mr Baker, as agent for Mr von Finck, and Mr Tolj (‘on behalf of the SMC Trust’) for the purchase of Sammarco;
(b) there is a document that appears to be a receipt issued by Mr Baker to the Trust for the sum of $362,825.66 for Sammarco; and
(c) the owner of Sammarco believes that he sold Sammarco to the Trust.
The claim of ownership by Mr Cilia as trustee of the Trust, however, is not a strong claim based upon the present evidence. This is because:
(a) Mr Cilia submitted that he entered into a contract to purchase Sammarco on 29 August 2024 as the trustee of the Trust but the terms of the trust deed were not made until 18 September 2024;
(b) none of the critical matters relied upon Mr Cilia are supported by the evidence of Mr Tolj or Mr Holmes, including the following:
(vi) Mr Cilia gave evidence that he was approached by Mr Tolj on 29 August 2024 to be the trustee to purchase a racehorse and that Mr Holmes agreed to arrange for the preparation of a trust deed. Mr Tolj and Mr von Finck make no reference to any of these events concerning the trust on 29 August 2024. Moreover, Mr Tolj gives evidence that, on 3 September 2024, Mr Latassa contacted him with a proposal to purchase Sammarco from Mr von Finck on a shared ownership basis. Then, on 4 September 2024, Mr Tolj sent Mr Latassa a text message stating, inter alia: ‘Have a think about it I want to work with you, you can be in charge of the horse and you can take 55%–45% also you can choose the trainer, city whatever’;
(vii) Mr Cilia relies upon the contract of sale dated 6 September 2024 (referring to a purchase on 29 August 2024). That contract of sale is signed by Mr Tolj (on behalf of the Trust) and contains no reference to Mr Cilia;
(viii) the purchase receipt for the sum of $362,825.66 is undated;
(ix) Mr Cilia gave evidence that Mr Tolj acted as his agent and that he communicated an offer to Mr Tolj to buy the horse on 29 August 2024 and that Mr Tolj told him that it was accepted in principle on that day by Mr von Finck. Mr Tolj and Mr von Finck make no reference to any of these events on 29 August 2024;
(x) Mr Tolj gave evidence that, on 29 August 2024, the only event that occurred was that Mr Baker told Mr Holmes that Mr von Finck was not going ahead with the sale to Mr Latassa; and
(xi) Mr Holmes gave evidence that he was told by Mr Tolj that the Trust had purchased Sammarco on ‘13 September 2024 dn [sic] 20 September 2024’.
(c) on 14 and 18 October 2024, Mr Tolj, by letters from his solicitors to Mr Latassa’s solicitors, repeatedly asserted that he was the owner of Sammarco. There was no mention of Mr Cilia or the Trust;
(d) Mr Tolj admits signing the agreement (I infer sometime around 3 September 2024) together with Mr Latassa as joint purchasers of Sammarco. Upon this matter, Mr Cilia accepted that there are some difficulties with the evidence;
(e) on 31 August 2024, Mr Tolj sent a text message to Mr Latassa in which he stated: ‘Horse is always been yours [sic], you bought him and you have indirectly involved me into your affairs with those two to help you with the situation with money transfer’. Upon this matter, Mr Cilia said that there is not much he can say about this but it is not consistent with Mr Cilia’s evidence; and
(f) Mr Tolj does not identify anywhere in his affidavit the circumstances in which Mr Cilia became the owner as trustee of the Trust. He does not refer to any offer or acceptance involving Mr Cilia. He does not even name Mr Cilia. Mr Tolj simply asserts that ‘[t]he SMC Trust is the owner’.
Mr Cilia also submitted that Mr Latassa’s claim is that Mr von Finck wrongfully terminated the agreement and that, if Mr von Finck did wrongfully terminate the agreement prior to transferring ownership, that is a claim against Mr von Finck and not Mr Cilia. Mr Cilia submitted that Mr von Finck did not transfer ‘ownership’ of Sammarco to Mr Latassa prior selling Sammarco to Mr Cilia. Mr Cilia submitted that Mr Latassa cannot rely upon the principles of Nemo dat quod non habet (ie 'no one can give what they do not have'). Mr Cilia submitted that it depends upon ‘timing’. Mr Cilia relied upon two factual matters on timing to make this submission:
(a) the evidence of Mr von Finck at paragraph 10 of his affidavit. Mr Cilia described this as the ‘key’ matter Mr Cilia relied upon. It was submitted that Mr von Finck made this decision and told Mr Baker this prior to Mr Baker receiving the funds; and
(b) Mr Cilia’s purchase of the Sammarco on 29 August 2024.
Mr Cilia accepted that, if there was a serious question to be tried in relation to these two factual matters, then there is a serious question to be tried as to whether Mr vonFinck did transfer ownership to Mr Latassa prior to the alleged sale to Mr Cilia. I have already addressed each of these factual matters. In my view, there is a serious question to be tried concerning this matter. Mr Latassa has established a prima facie case that he obtained ownership and possession prior to any sale to Mr Cilia. I refer to the matters I have already addressed on this issue.
Mr Cilia, however, also submitted that no payment was received personally by Mr von Finck from Mr Latassa. Mr Cilia accepted that Mr Baker was Mr von Finck’s agent. Mr Cilia did not otherwise address the timing of the receipt of the monies by Mr Baker.
Mr Cilia also submitted that no veterinarian certificate was provided prior to the sale to Mr Cilia. Mr Latassa alleges that it was a term of the agreement that Sammarco was subject to and passed a veterinary inspection as a condition of sale. He does not allege that a certificate was required. He alleges that Sammarco passed that inspection on 8 August 2024. There is also, contrary to Mr Cilia’s submissions, a certificate dated 8 August 2024.
Ultimately, Mr Cilia submitted that the facts in this case are ‘unclear’ and the bar for a prima facie case is not high.
Adequacy of damages
Damages will generally be considered an adequate remedy in relation to claims concerning ordinary chattels.[1] However, where the chattel has some intrinsic value or character, courts of equity have generally not regarded damages as an adequate remedy.[2] Damages are not an adequate remedy for the loss of Sammarco. This was accepted by the defendants. Mr Cilia submitted that he undertakes not to sell, dispose or encumber Sammarco.
[1]See eg, Cook v Rodgers (1946) 46 SR (NSW) 229, 232 (Roper J).
[2]Gedbury Pty Ltd v Michael David Kennedy Autos [1986] 1 Qd R 103, 104 (Thomas J).
Mr Cilia submitted that Mr Latassa is not entitled to the proposed injunctive relief as damages are an adequate remedy for any loss of ownership by Mr Latassa between now and the determination of the proceeding in the event that he is the sole owner of Sammarco. Mr Cilia submitted that there is no evidence that damages will be inadequate for this loss of ownership.
In my view, in the event that Mr Latassa is the sole owner of Sammarco, damages will not be an adequate remedy for the loss of ownership by Mr Latassa between now and the determination of the proceeding. The following analysis assumes that the Court ultimately determines that Mr Latassa is the sole owner of Sammarco.
In the event Mr Latassa is the sole owner of Sammarco and the proposed injunctive relief is refused, Mr Latassa would lose the enjoyment of being an owner of Sammarco. There is an obvious enjoyment in being an owner of a racehorse. Mr Cilia said that there is no evidence of any loss of enjoyment. Mr Latassa submitted that he would not be able to attend race meetings as an owner. I accept this. Attending races is an obvious benefit and enjoyment conferred on an owner of a racehorse. The loss of the availability of the horse for a purpose for which it was likely to be put between now and the determination of the proceeding means that damages are not an adequate remedy for this loss of enjoyment.
In addition, if Mr Latassa is the sole owner of Sammarco and the proposed injunctive relief is refused and Mr Cilia became the sole registered owner (ie upon the vacation of order 3) prior to trial, then I make the following observations. The parties conflated these applications in their oral submissions at times and so it is convenient to address these submissions now. This is in contrast to their written submissions that did not conflate the issues.
First, damages would not be an adequate remedy as decisions made by Mr Cilia concerning the training and racing of Sammarco may adversely affect its wellbeing, assuming that Mr Latassa is in fact the sole owner. Mr Cilia submitted that he would undertake to delegate decisions for the training and racing of Sammarco to the present trainer, being a trainer approved of by Mr Latassa. In my view, this adequately addresses this matter.
Second, damages would not be an adequate remedy for the loss of prize money, assuming that Mr Latassa is in fact the sole owner. This is because the Trust has a settled sum of $10 and there is no evidence concerning its present financial circumstances. In addition, there is no evidence of the source of the payment of the monies for Sammarco. During the hearing, Mr Cilia said that this may be addressed by him undertaking that any prize money would be held on trust by his solicitor. In my view, this adequately addresses this matter.
Third, damages would not be an adequate remedy as Mr Cilia would be held out as the owner of Sammarco, assuming that Mr Latassa is in fact the sole owner. I accept that this would be, to say the least, embarrassing to Mr Latassa in circumstances in which he also claims sole ownership. Mr Cilia does not even submit that he would inform Racing Australia of the disputed ownership or these Court proceedings when seeking to register Sammarco with Racing Australia. During the hearing, Mr Cilia said that he would undertake to transfer ownership to Mr Latassa if that is what the Court ultimately decides. This does not adequately address this matter.
Finally, damages would not be an adequate remedy, as the information provided by Mr Cilia upon registration would be incorrect, assuming that Mr Latassa is in fact the sole owner. Not surprisingly, the Australian Rules of Racing provide that a person must not provide incorrect information in an application to register a horse with Racing Australia. See Racing Rule 31. This may even result in suspension of Sammarco or the cancellation of his registration. As I have already said, during the hearing, Mr Cilia said that he would undertake to transfer ownership to Mr Latassa if that is what the Court ultimately decides. This does not adequately address this matter.
Balance of convenience
First, as Ward J (as her Honour then was) observed, ‘it is the concern of any court of equity to see that the stable door is locked before the horse has gone’.[3] The status quo requires the maintenance of the physical wellbeing and value of Sammarco as a racehorse. The parties accepted that this requires him to be raced.
[3]AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676, [193], quoting PCW (Underwriting Agencies) Ltd v Dixon and another [1983] 2 All ER 158, 163 (Lloyd J) and the authorities cited therein.
Second, the status quo is also that no name is entered into the passport and no application of ownership has been made to Racing Australia. Sammarco is an unregistered racehorse. Mr Latassa and Mr Cilia as trustee of the Trust both claim to be the sole owners of Sammarco. They both seek to, in effect, disturb this status quo for the maintenance of the physical wellbeing and value of Sammarco as a racehorse.
Third, the nature of the parties’ claimed interest in Sammarco is identical. Both claim sole ownership of Sammarco.
Fourth, Mr Latassa and Mr Cilia as trustee of the Trust both have prima facie claims but they are not strong claims. I accept that it is likely that one of them is the sole owner.
Fifth, the terms of the proposed injunctive relief seek to compel Mr Cilia to make an application that he is a 50% co-owner of Sammarco (pending determination of this proceeding). This is self-evidently incorrect. It is not the status quo. It is a convenient legal fiction but it does not reflect the facts or the law. The Court will never find such ownership at the final hearing. Mr Cilia is either the sole owner or not an owner. The proposed injunctive relief would compel Mr Cilia to make an application for registration to, among others, Racing Australia. The assertion within such an application that Mr Cilia is a 50% co-owner of Sammarco would be a misrepresentation. There are penalties for the provision of incorrect information. This is a significant vice in Mr Latassa’s proposed interlocutory relief. I have considered whether this may be addressed by granting the proposed injunctive relief and also compelling the parties to inform Racing Australia of these proceedings. In my view, this does not address the vice that the proposed injunctive relief still compels Mr Cilia to make an application that he is a 50% co-owner of Sammarco when that is not the case. It does not reflect the status quo. The status quo is that there is a dispute about ownership and not that they are co-owners as to 50%.
Sixth, difficulties may arise if the proposed injunctive relief is granted. These may be addressed by liberty to apply, but it is nonetheless important to identify them. The Court raised with the parties a potential difficulty in Mr Cilia as trustee for the Trust being an owner when entering and racing Sammarco given the present trust deed. Rule 36B of the Australian Rules of Racing provides:
AR 36B Ownership via certain trusts prohibited
Without limiting any other provisions of the Rules and except where permitted by a PRA, an ownership or lease interest in a horse is not permitted to be held in a trust where the persons having an interest in the horse, beneficial or otherwise, are not readily and accurately identifiable (for example, where the trust is a discretionary trust with broad and potentially unlimited beneficiaries).
This provision was brought to the attention of the parties by the Court. As I have already said, the Trust is a discretionary trust. Counsel for Mr Cilia submitted at the hearing that this will be addressed imminently by limiting the beneficiaries to the named beneficiaries pursuant to the trust deed. It was confirmed during the hearing that these named beneficiaries are Mr Tolj’s children. The owner of a racehorse must be 18 years or older. There is no evidence as to the ages of these children. If they are under 18 years of age the application will be refused. In addition, Racing Australia would have to be satisfied that any persons are fit and proper persons.
Seventh, I have already said that damages (together with the proposed undertakings) are not adequate to protect the interests of Mr Latassa of a loss of ownership between now and the determination of the proceeding in the event that he is the sole owner of Sammarco.
Eighth, I accept that the proposed injunctive relief would require the parties to co-operate about Sammarco, potentially for many months. The parties share a common interest in the preservation of the wellbeing and value of Sammarco. Both parties presently agree that Ciaron Maher Racing should train and race Sammarco. They have co-operated to that extent. In the event that the proposed injunctive relief was granted it is likely that they will co-operate on the training and racing of Sammarco.
I do not accept Mr Cilia’s evidence that registration as co-owners is not a ‘practical solution’ given the ‘bad history’ of Mr Latassa, which he says ‘includes a proven charge of using a banned substance’. Mr Cilia accepted that the only ‘bad history’ concerns the proven charges in 2014. Mr Cilia does not identify the ‘bad history’ with any precision except for the proven charges. There is evidence that Mr Latassa pleaded guilty to charges in 2014 concerning a horse named ‘Chilly Reception’ and that the only penalty was that Chilly Reception was disqualified from fifth position in a race. Mr Cilia does not explain why he will not be able to ‘co-operate’ with Mr Latassa because of these proven charges in 2014.
I accept that if the proposed injunctive relief is granted there is a risk that Mr Latassa and Mr Cilia as trustee of the Trust may not be able to co-operate. In that event, the matter could be brought before the Court, on liberty to apply.
Ninth, I accept the proposed injunctive relief would be a significant imposition and restriction on Mr Cilia, especially if he is, in fact, the sole owner. It is a mandatory injunction. He would still, nonetheless, be able to enjoy the rights and benefits of ownership, just not as the sole owner.
Tenth, I do not accept Mr Cilia’s evidence that Mr Latassa is unlikely to be registered as an owner by ‘Racing Victoria’ due to having previously pleaded guilty to the charges. There is no basis for these assertions provided by Mr Cilia. Mr Cilia deposes that he is an engineer and there is no evidence before the Court that he has any expertise or practical experience in racehorse registration, training or management. Mr Cilia’s counsel accepted that Mr Cilia’s reference to ‘Racing Victoria’ is wrong as the relevant body is Racing Australia. This gives further support to the fact that he has no experience in racing. I give his evidence on these matters little weight. Mr Tolj, who has made an affidavit deposed to relevant horse racing experience, has not addressed any of these matters of concern of Mr Cilia.
Eleventh, I do not accept Mr Cilia’s evidence that the value of Sammarco will be adversely affected if Mr Latassa has a stake in Sammarco. I refer to the matters I have addressed immediately above. In addition, counsel for Mr Cilia accepted that this evidence should be given no weight.
Twelfth, Mr Cilia did not give evidence that he did not wish to be ‘associated’ with Mr Latassa given the proven charges from 10 years ago. He did give evidence that he considers he would not be able to co-operate with him. I have already addressed this.
Finally, Mr Latassa gave the usual undertaking as to damages in support of the proposed injunction.
Weighing up all of these factors, in the present circumstances, I am of the opinion that the balance of convenience weighs very firmly against the proposed injunctive relief. Critically, the proposed injunctive relief has the significant vice that it seeks to compel Mr Cilia to make an application that is inaccurate and does not represent the status quo. As I have said, it involves a legal fiction. Mr Cilia would be compelled to take steps to register as a 50% co-owner of Sammarco, including by entering his name in the passport and taking steps to register himself as the co-owner with Racing Australia until ownership is determined by the Court in this proceeding. He is not a 50% co-owner. As a result:
(a) compelling Mr Cilia to do this would be to compel him to make an application to Racing Australia that does not reflect the status quo, does not reflect his ownership of Sammarco and risks incurring a penalty for providing inaccurate information;
(b) it would represent to Racing Australia and the racing community that they are 50% co-owners when they are not.
These matters outweigh the potential significant benefits, being that the successful registration of Mr Cilia and Mr Latassa as the co-owners of Sammarco would mean that Sammarco could race and Mr Cilia and Mr Latassa could both enjoy the benefits of co-ownership of Sammarco, subject to them being able to co-operate, prior to the determination of sole ownership.
Mr Cilia’s application to vacate order 3
I have determined that I will not make the proposed injunctive relief.
Mr Cilia submitted:
26. The continuation of paragraph 3 of the 23 October Orders will have the effect that no-one will be registered as Sammarco’s owner. There will therefore be no-one in a position to make the many decisions required to maintain his wellbeing, to continue his training and to enter him in races. Such a situation will have a negative impact on his physical wellbeing and value as a racehorse and therefore be destructive, rather than protective, of the status quo.
27. This is sufficient reasons to vacate paragraph 3 of the 23 October Orders.
Mr Cilia also offered to provide various undertakings, if the Court considered this appropriate, concerning: not selling or encumbering Sammarco; training and racing Sammarco with Ciaron Maher Racing; holding prize money on trust and transferring ownership to Mr Latassa, if that is what the Court ultimately decides.
Mr Latassa submitted that, if the Court did not make the proposed injunctive relief, then the passport should be held (by the Court or a solicitor) until such time as the Court determines ownership (Mr Latassa’s supplementary submissions, [5]). Mr Latassa submitted that until such time as the Court determines sole ownership, the position should be neutral. He submitted that it would be wrong for either Mr Latassa or Mr Cilia as trustee of the Trust to be registered as sole owners of Sammarco.
It would be manifestly unjust and inappropriate to vacate order 3 of the Court’s orders. There is no basis to do so. It prefers the rights of Mr Cilia over Mr Latassa.
First, order 3 of the Court’s orders was made to protect both parties’ interests. I have already found that Mr Latassa has a prima facie case. In the absence of the proposed injunctive relief, if order 3 is vacated, Mr Cilia is likely to obtain the passport and take steps to register himself as owner. He will obtain it as it is apparent that Mr Cilia as trustee of the Trust and Mr Tolj are very closely associated. Mr Cilia intends to disturb the status quo and take steps to act as the sole owner of Sammarco, including by entering his name in the passport and taking steps to register himself as the sole owner with Racing Australia despite ownership being disputed before the Court in this proceeding. In the circumstances, Mr Cilia’s proposed course of action is a manifest affront to the administration of justice. Mr Cilia submitted that the parties are not in an equal position as Mr Cilia organised and paid for the transport for Sammarco and Mr Latassa’s monies have been refunded. In my view, these matters do not mean that they should not be treated equally. First, neither of them have possession of Sammarco. Second, both claim to be the sole owner. Third, Mr Latassa, by his counsel, has given an undertaking to pay the sum of $411,000 into Court or to a solicitor to be held on trust.
Second, the status quo requires the maintenance of the physical wellbeing and value of Sammarco as a racehorse. This requires him to be raced. The status quo is also that no name is entered into the passport and no application of ownership has been made to Racing Australia. Sammarco is an unregistered racehorse. Mr Latassa and Mr Cilia as trustee of the Trust both claim to be the sole owners of Sammarco.
Third, I refer to the matters I have addressed at paragraph 62 on the undertakings offered by Mr Cilia. These undertakings do not address the clear vice that the vacation of order 3 will have as it will prefer the interests of Mr Celia as trustee of the Trust over those Mr Latassa. I also refer to the matters I have addressed at paragraphs 40 and 41 of this ruling.
Fourth, in the absence of the proposed injunctive relief, if order 3 is vacated, there would be no restraint upon Mr Latassa seeking to protect his alleged interest by informing Racing Australia that the ownership of Sammarco is disputed, that he has a prima case of ownership as found by this Court, and that the question of ownership is the central issue in dispute in these proceedings and has not been determined. He may even take the step of providing this ruling to it. The vacation of order 3 would not declare any rights. It would not improve Mr Cilia’s clam of sole ownership. There is a real risk that Racing Australia would not register Mr Cilia as the sole owner in those circumstances. This is, however, a matter for Racing Australia. As a result, if the proposed injunctive relief is not granted and order 3 is vacated there is a real risk that Mr Cilia will not be registered as the sole owner of Sammarco. He would then not be able to race. The proposed benefits of vacating order 3 are illusory and wholly depend upon the co-operation or agreement of Mr Latassa.
Fifth, I accept that the successful registration of Mr Cilia as the sole owner of Sammarco would vindicate his rights if he is, in fact, the sole owner.
Sixth, I accept Mr Cilia’s submission that he has an interest in the maintenance of the physical wellbeing and value of Sammarco as a racehorse and that he is likely to take steps to maintain his physical wellbeing and value.
Seventh, in the absence of the proposed injunctive relief, if order 3 is not vacated, the parties may protect and advance the wellbeing of Sammarco by agreeing, for example, upon 50% co-ownership now, with Ciaron Maher Racing as manager, pending the determination of sole ownership in these proceeding. This would make it much more likely, in my view, that Racing Australia would register Sammarco. Both parties would be supportive of registration and the registration would reflect the status quo. The Court cannot, however, compel the parties to agree upon this. This is a matter that Mr Latassa has proposed previously to Mr Tolj (when he asserted the right as the owner). This would enable training to be done and races to run.
Finally, in the absence of the proposed injunctive relief, if order 3 is not vacated, any party may make an application to the Court for the appointment of a receiver over Sammarco. This would be a drastic remedy but may be the only viable solution to ensure that the value of Sammarco does not plummet in the absence of the parties making any temporary agreement. I express no concluded view on these matters, but raise it for the further consideration of the parties.
As a result, I will dismiss the application to vacate order 3 of the Court’s orders.
Given that the passport is currently being held by a solicitor who has ceased to act in this proceeding I will order that Ms Gdanksi of SLF Lawyers forthwith deliver up the passport for Sammarco to a solicitor for a party (to be determined upon the making of these orders) to be held pending the determination of this proceeding or further order and paragraph 3 of the Court’s orders be vacated upon such delivery up.
CONCLUSION AND ORDERS
As a result, I will record the undertaking provided by Mr Latassa (as set out in paragraph 8 of this ruling) and otherwise order (subject to hearing from the parties on the precise terms of order):
(a) Mr Latassa’s application for injunctive relief made at the hearing on 5 December 2024 is dismissed.
(b) Mr Cilia’s application by summons filed 3 December 2024 is dismissed.
(c) Mr Gdanksi of SLF Lawyers forthwith deliver up the passport for Sammarco to a solicitor for a party (to be determined upon the making of these orders) to be held pending the determination of this proceeding or further order and paragraph 3 is vacated upon such delivery up.
(d) Mr Latassa forthwith serve a copy of this order upon Mr Gdanksi of SLF Lawyers.
(e) Liberty to apply.
My preliminary view is that the parties’ costs should be their costs in the proceeding. I will, however, give the parties an opportunity to address on the issue of costs.
---
0
1
0