Robert H Jones Investments Pty Ltd v Smith - [2025] NSWDC 58

District Court

New South Wales

Medium Neutral Citation: Robert H Jones Investments Pty Ltd v Smith [2025] NSWDC 58
Hearing dates: 8 – 12 April 2024
16 – 17 April 2024
29 April 2024 (closing submissions)
Date of orders: 14 March 2025
Decision date: 14 March 2025
Jurisdiction: Civil
Before: Waugh SC DCJ
Decision:
(1) Judgment in favour of the first plaintiff against the defendants in the sum of $78,132.25.
(2) Defendants to pay the first plaintiff’s costs.

Catchwords:
DAMAGES - FOR BREACH OF DUTY OF CARE, CONTRACT AND BAILMENT - Injury to a horse - Valuation of a chattel - Loss of a commercial opportunity - Mitigation

Legislation Cited:
s5A, s5D, s5E, s14 Civil Liability Act 2002

Cases Cited:
Arsalan v Rixon (2021) 274 CLR 606
Badenach v Calvert (2016) 257 CLR 440
Bell v Thompson (1934) 34 SR 431
Berry v CCL Security Pty Ltd (2020) 271 CLR 151
Diamond v Lovell [2002] 1 AC 384
Fox v Percy (2003) 214 CLR 118
Liesbosch Dredger v SS Edison [1933] AC 449
Payton v Brooks [1974] RTR 169, [1974] 1 Lloyd’s Rep 241
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Spencer v The Commonwealth (1907) 5 CLR 418
Talacko v Talacko (2021) 272 CLR 478
The Georgiana v The Anglican (1873) 21 WR 280
The Kingsway [1918] P 344
Wallace v Kam (2013) 250 CLR 375
Williams v Toyota Motor Corporation Australia Limited [2024] HCA 38

Texts Cited:
McGregor on Damages (22nd edition, 2024, Thomson Reuters)
Palmer on Bailment (3rd edition, 2009, Sweet & Maxwell)

Category: Principal judgment
Parties: Robert H Jones Investments Pty Ltd (First Plaintiff)
Lineloc Pty Limited (Second Plaintiff)
Trent Jonathan Smith (First Defendant)
Claudia Smith (Second Defendant)
Representation:
Counsel:
Mr J Simpkins (Plaintiff)
Mr M Kalyk (Defendant)
Solicitors:
Koffels Solicitors & Barristers (Plaintiff)
Murphy Lawyers Inc (Defendant)

File Number(s): 22/171851
Publication restriction: Nil

Judgment

Judgment

Introduction
A.UNCONTROVERSIAL FACTS
Before the accident Moore Metal had been a competitive cutting horse and breeding stallion
The accident (26 May 2018)
After the accident
Veterinary reports

B. EVIDENCE ADMITTED ON A LIMITED BASIS
Evidence of trainers and riders of their observations about Moore Metal’s qualities ~ admitted on a limited basis
(a) Mr Smith
(b) Mr Todd Graham
(c) Mr Jason Leitch
(d) Mr Corey Holden
(e) Mr Hugh Miles

C. VALUATION EVIDENCE
D. THE DAMAGES CLAIMED BY THE PLAINTIFF AND THE DEFENDANTS’ RESPONSE IN OUTLINE
The plaintiff’s claim
Mr and Mrs Smith’s response

E.THE APPLICABLE LEGAL PRINCIPLES
General legal principles
Mitigation
Loss of a commercial opportunity
Causation – Civil Liability Act 2002

F. CREDIBILITY OF WITNESSES
G. DID THE PLAINTIFF FAIL TO MITIGATE ITS LOSS?
The defendants’ submissions about the failure to euthanise
Evidence about consideration or advisability of euthanasia
(a) Dr Pedrana
(b) Mr Jones
My analysis
Failure to sell Moore Metal

H. THE PLAINTIFF’S PRIMARY CLAIM BASED ON LOSS OF A CHANCE (USING MR NGUYEN’S REPORT)
How the plaintiff puts its primary case in more detail
Mr Nguyen’s Scenario 6
The claim for loss of prize money
Is the plaintiff entitled to pursue a claim based on Mr Nguyen’s report?
My analysis, findings and conclusions on the plaintiff’s primary claim
My conclusions
Loss of prize money based on Mr Nguyen’s report
My conclusions about the plaintiff’s primary claim

I. THE PLAINTIFF’S ALTERNATIVE CLAIM BASED ON INCURRED AND FUTURE EXPENSES AND LOSS OF VALUE
Claim for past and future expenses
Past expenses
Life expectancy
My finding on life expectancy
Future expenses
A check on the plaintiff’s suggested buffers
My conclusion about future expenses
Claim for a sum on account of the diminution in market value of Moore Metal

J. Proceeds of insurance
K. Summary of damages payable
L. Costs
M. Orders

Introduction

Mr and Mrs Smith (the defendants) operate a business in partnership together taking care of and training horses.
On 26 May 2018 Mr Smith was transporting 17 horses to a cutting horse competition at Tamworth by road with his father and his nephew when the vehicle he was driving was involved in a serious accident near Dubbo. Mr Smith’s father was killed. His nephew was seriously injured.
One horse was killed, and another 8 were euthanised at the scene. The remaining 8 horses were taken to a local equine vet (Dr Ross Pedrana).
One of the surviving horses was Moore Metal, owned by the first plaintiff, a company controlled by Mr Jones.
The second plaintiff is another company controlled by Mr Jones. It had previously owned Moore Metal but had transferred ownership to the first plaintiff well before the accident. Unless there is a need to distinguish between the 2 companies, I will refer to the first plaintiff simply as the plaintiff. The parties accept that if there is to be a judgment against the defendants, it should be in favour of the first plaintiff.
The plaintiff claims damages from Mr and Mrs Smith as a result of the injuries sustained by Moore Metal in the accident.
Liability was conceded at the hearing. Mr and Mrs Smith have admitted liability for breach of contract, for breach of a duty of care in negligence and as bailees for reward.
In the end, the hearing was about what sum of money (if any) Mr and Mrs Smith ought to be ordered to pay.

A.UNCONTROVERSIAL FACTS

Before the accident Moore Metal had been a competitive cutting horse and breeding stallion

In the sport of cutting, (as described by Mr Smith) the aim is to separate a single beast out of a herd of cattle with your horse. Once you have separated a single beast from the herd, you put your hand down on the horse’s withers (the top of the shoulder, at the base of the neck) and let the reins go slack. The horse then has to stop that cow from getting back to the herd. From that point the horse cannot feel any sort of cueing from your hand. Part of the judging includes how much slack you have in your reins. You cannot pick your hand up. You have 2.5 minutes to cut a minimum of 2 cows, maximum of 3. Once you have cut the cow out of the herd and put your hand down you have to hold that cow for a certain duration. The duration ranges from 5 to 30 or 40 seconds. According to the rules, you cannot get “off” that cow until the cow has shown submission, which means the cow either needs to be standing still, or facing away from you and the herd, showing that it has given up trying to return to the herd. On average, your horse would be “on” a cow for 15 to 30 seconds. Normally there is about a minute of actual working time. The other part of the 2.5 minutes is actually cutting a cow from the herd. When you are cutting a cow you are steering the horse. The rider of the horse chooses the cow.
Cutting is to be distinguished from the sport of campdrafting. Campdrafting involves (as described by Mr Smith) cutting a cow out of a mob of 5 to 7, controlling the cow at the front of camp (which is a small pen or yard). Once you have demonstrated control, call for the gate and there will be 2 people who open the gate into a bigger paddock. Once in the bigger paddock, you have to guide the cow in a figure of 8 pattern around a set of markers. You are judged on how you control the cow in the camp (maximum score of 26), how you control the cow around the markers (maximum score of 70) and how much of the course you complete (maximum score of 4).
In 2011, Mr Jones decided that he wanted to produce a horse that would be able to compete in cutting and campdrafting competitions by purchasing an egg from a mare in Australia and semen from a stallion in the United States. He arranged for the second plaintiff to purchase frozen semen from a US based sire known as “Metallic Cat” and an egg produced by a dam known as “One More Annie”. The semen cost USD 6,500 in September 2011. The egg cost AUD 13,200 inclusive of GST. Metallic Cat was a very successful cutting champion and One More Annie was a very successful campdrafting champion. The reproduction to produce Moore Metal took place at the Quipoly Equine Centre located in Quirindi NSW in January 2012.
Moore Metal was foaled (or born) on 30 October 2012. It was registered with the Australian Quarter Horse Association on 3 July 2014.
Mr Jones and Mr Smith first met in 2014 at the Tamworth Futurity event. At that time, Mr Jones was looking for a trainer to prepare Moore Metal for competition. During 2014 they had several phone calls and in-person meetings at Mr and Mrs Smith’s property at Tubbul in New South Wales, near Young. During these meetings they agreed that Mr and Mrs Smith would train, feed, house and care for Moore Metal at their property for a fee and they would also pass on any additional costs for things such as medicines, transportation and farriering.
Between 2010 and 2013 Mr Smith had spent 3 years in the United States learning to be a cutting horse trainer and competitor under the guidance of a renowned cutting horse trainer. In 2012, while in the US, he won a “World Title” for novice riders. Mr and Mrs Smith started their business in 2013. As part of the business, Mr Smith breaks in and trains horses for cutting, campdrafting, general stock work and farm work. It takes Mr Smith 1 to 2 years to train a cutting horse and 8 months to train a campdrafting horse. He also rides the horses he trains in competition, particularly in cutting events. At any one time, Mr Smith would be training up to 45 horses.
Mr Jones had Moore Metal delivered to Mr and Mrs Smith on 30 December 2014 to look after and train as a cutting horse. Moore Metal had already been broken in. Mr Smith began training immediately. There was never a written contract. The arrangements were made verbally and on a handshake.
By 2016 Moore Metal was ready to enter cutting horse competitions as a “Futurity” horse. Only 3-year-old horses in their first year of competition can compete in Futurity events.
On 12 June 2016, Mr Smith rode Moore Metal to win the Futurity event at the National Cutting Horse Association Futurity show at Tamworth. This was the largest and most prestigious of the 4 or 5 “major” events held for cutting horses in Australia each year. Moore Metal won with the highest ever Futurity score. Mr Smith had not won the event before. The prize money for winning was $75,000.
On 17 July 2016, Mr Smith rode Moore Metal to third place in the Futurity event at the Darling Downs Cutting Club Futurity show at Toowoomba, in Queensland. This was one of the other 4 or 5 major events held for cutting horses in Australia each year. The prize money for coming third was $4,110.60.
Moore Metal first started servicing mares, generating revenue from breeding, on 23 October 2016. In general, the competition and breeding seasons occur at different times during the year and do not overlap. The competition season for cutting horses runs from about February to about September or October. Breeding generally occurs outside that time. Moore Metal was engaged regularly in providing breeding services after 23 October 2016.
In 2017, Moore Metal finished in 6^th place in the Derby event at the National Cutting Horse Association Breeders Incentive show on 22 March 2017 (prize money $296.71); finished in 2^nd place in the $10,000 Novice event at the Northern Rivers CHC show on 25 April 2017 (prize money $751.52); and won the Derby event at the Cotton Country Futurity Show, also known as the Goondiwindi Futurity, on 20 August 2017 (prize money $5,786.80). Derby events are aged events for 4-year-old horses.
In 2018, Moore Metal won the Open event at Peel Valley, also known as the PVCC – Armidale Show on 29 March 2018 (prize money $1,396.90), finished 2^nd place in the $15,000 Novice event at the same show (prize money $807.56) and 3^rd place in the $5000 novice event at the same show (prize money $801.33); won the $15,000 Novice event at the Northern Rivers CHC (prize money ($1,232.22) on 8 April 2018 and finished 5^th in the $5000 Novice event at the same show; and finished in 2^nd place in the $5000 Novice event at the Southern Cross CC show on 13 May 2018 (prize money $319).
By 13 May 2018, Moore Metal had won a total of $91,214.67 in prize money, or lifetime earnings. It is common ground that upon reaching $100,000 in lifetime earnings, Moore Metal would have qualified to be inducted into the National Cutting Horse Association Hall of Fame.
Mr Smith had ridden Moore Metal in all of his competitive events, except for one.
On the day of the accident, Moore Metal was on his way to compete in the Open Classic event at the 2018 National Cutting Horse Association Futurity show at Tamworth. Classic events are for 5, 6 and 7 year old horses.

The accident (26 May 2018)

It is unnecessary to say anything further about the circumstances of the accident other than that the consequences of it were tragic and Mr Smith has admitted that at the time, he was driving a motor vehicle that was towing a trailer in which Moore Metal was being transported when he lost control of the vehicle causing it and the trailer to crash.
Moore Metal’s left front leg was badly injured in the accident. More precisely, in the words of Dr Pedrana, who attended the scene of the accident, Moore Metal “sustained a deep wound to the palmar aspect of the left fore pastern which severed the majority of the sesamoidean ligaments and the deep flexor tendon as well as numerous nerves and blood vessels in this area. Small lacerations were evident over the right eye and these were sutured.”.

After the accident

Moore Metal was taken to Dubbo Equine Hospital where he remained under the care of Dr Pedrana for the next 4 months, until 26 September 2018.
Whilst Moore Metal was under the care of Dr Pedrana, a Kimzey splint was applied over the wound dressings on the pastern and this splint was left in place for around one month and then a series of fabricated splints were utilised to support the injured limb and allow wound healing. There was a very high risk of tendon sheath infection in the initial stages of the management of the wounds. Wound dressings were changed daily for weeks.
By 3 September 2018, Dr Pedrana was able to report that:

“There is significant contraction of the heels of this foot however the horse is now able to bear weight on the injured leg. The wound has healed to a 2-3mm scar and there is new hoof growth of reasonable width that is growing down. I am currently using a railed shoe with heel extension and with a heart bar welded in place to achieve frog pressure in an (a)ttempt to minimise heel contraction.
I would expect that this hoof growth will reach the shoe in approximately 6-8 weeks at which time an experienced farrier working closely with a skilled equine veterinarian will need to collaborate and x-ray the foot and fabricate an appropriate shoe.
Moore Metal is in excellent body condition and is bright and alert and very active despite being confined to a stable however we intend to allow him daily yard exercise after discussing this with Rob Jones today.
X-rays of the contralateral limb (right foreleg) confirm that due to our management of this patient we have been able to avoid laminitis in this foot. Our farrier, Kevin Bell, has been instrumental in assisting us achieve this outcome. It has been necessary to administer anaesthesia to allow shoeing of the right foreleg due to his inability to bear full weight on the left foreleg.
…
In my opinion this stallion should be able to breed onto a breeding mount for semen collection given no adverse events. There is no external evidence of any injury to the external genitalia. I have not attempted to collect semen from this stallion as of today's date.”

The significance of Dr Pedrana’s reference to laminitis and the concern to avoid it following the accident is explained by Dr Derek Major’s description of the phenomenon in his report of 9 August 2023. Dr Major is a veterinary consultant. According to Dr Major, supporting limb laminitis occurs to the excessive weight-bearing in the limb opposite a disabled or otherwise painful leg. The hoof becomes progressively detached from the bone structure of the limb. Eventually the bone will ulcerate through the sole, exposing the bone to the ground surface. This situation invariably requires euthanasia, as it is extremely painful, and the horse can bear weight on neither front foot.
On 26 September 2018, Moore Metal was moved from Dubbo to WestVETS Equine Hospital & Equine Reproductive Centre at Marburg in Queensland where he has been under the care of Dr Frank Low and has remained.
Since moving to Queensland Moore Metal has not been able to compete in any cutting or campdrafting competitions. He has, however, been able to resume his activities as a breeding stallion by mounting a phantom mare for semen collection. The majority of his breeding is either fresh (inseminated within the hour of collection) or chilled (inseminated within 24 hours of collection), as opposed to frozen.

Veterinary reports

In addition to the report of Dr Pedrana I have already referred to, there were a number of veterinary reports in evidence. A number of those reports chart the course of Moore Metal’s treatment and recovery in Queensland. The events and opinions recorded in those reports are particularly relevant to the question of the reasonableness of the plaintiff’s failure to euthanise Moore Metal at the time of the accident or to sell him at a later time – issues raised by the defendants. The reports are also relevant to the question of the need for and cost of treatment into the future – another issue contested by the defendants. As I understand it, the facts and opinions stated in these reports were not controversial.
On 26 February 2019 Moore Metal was admitted to UQ Vets Equine Specialist Hospital for an MRI scan of its left fore foot and pastern region on referral from Dr Low. On examination Moore Metal was “bright, alert and in good general health”. The MRI study was performed on 27 February 2019 and a detailed report was provided to Dr Low by Dr Frederik Pauwels.
On 28 March 2019 Dr Low provided a written report to Mr Jones stating that Moore Metal’s prognosis for a return to its previous athletic career was “nil” and that its prognosis to continue its career as a breeding stallion was “fair to good”, on the basis that he continued to receive ongoing veterinary treatments and remedial farrier works. Dr Low also said:

“Due to the severity of the injury the stallion has progressive arthritis of the left fore limb. At this time the stallion requires monthly remedial farrier treatment with survey radiographs (x-rays) of the limb every 3-4 months. Ongoing medical management of pain, which varies on a day to day basis. It is not possible to reliably predict the rate of deterioration of the left fore limb due to the injury. It is highly likely that the stallion will need surgical intervention to stabilize the left fore pastern as the arthritis progresses.”

On 22 December 2022, Dr Ian Fulton, a veterinarian from Victoria specialising in equine surgery, examined Moore Metal at WestVets Marburg Clinic in Queensland and provided a written report. Dr Fulton said in his report:

“The horse is in excellent physical condition and has an excellent demeanour. The left front upper forearm musculature is slightly wasted in comparison the right side, which is typical of a horse not using the leg normally over a long period of time.
At the walk there is no evidence of an obvious lameness. However, there are some strides when there is a slight upward tilt of the toe of the left front. At the trot there is a variable lameness between 1/10 (very mild) to 3/10 - more obvious but by no means severe.
Standing flexion of the fetlock and pastern region with maximal force does not elicit a response from the horse at all. This indicates to me that the pastern joint is effectively fused. While there is no evidence of complete bone fusion radiographically, my opinion is there is no movement of the joint able to be induced by manual flexion.
The farrier work has achieved a great outcome over a long period of time. Despite a functional deficit, debilitating degenerative joint disease has not taken place. While there is contracture of the heel region, I would not try to aggressively change the trimming and shoeing approach, rather embrace what the hoof has turned into and work with it.

If there is a sudden change in the degree of lameness and it can be attributed to either pastern or coffin joint arthritis, surgical options still exist into the future. Currently the risks of surgery cannot be justified while the conservative management has achieved such a great result.”

On 17 May 2023, a new MRI study was performed of Moore Metal’s left front distal extremity and distal pastern at UQ Vets Equine Specialist Hospital on referral from Dr Low. A report was provided to Dr Low by Dr Alex Young, a registered specialist in veterinary radiology.
On 22 May 2023, Dr Low examined Moore Metal and prepared a detailed report dated 25 May 2023. His report included the following:

“I examined the above stallion on the 22nd of May 2023. At the time the stallion was not shod in either front foot due to recent MRI examination at the University of Queensland.
The stallion has a chronic career (Cutting performance) ending injury to the left fore limb. There is a approximately 9-10cm thickened scar to the palmar aspect of the left fore pastern. …
There is slight muscle loss to the left fore antebrachium (carpi radialis, carpis lateralis and carpi ulnaris group) when compared to the right fore.
The stallion weight bears evenly on both front limbs when standing on a level concrete floor. However, when the contralateral (right fore) limb is picked up, dynamic collapse (sinking) of the left fore pastern region is observed. During full weight bearing, the toe of the hoof capsule raises from the ground approximately 1cm.
When trotted in hand on grass (unshod), the stallion is 2/5 lame left. Moderate flexion of the distal left limb worsens the level of lameness.
Radiographs of the left and right fore distal limb was performed on the 21st of May 2023;
Left fore- …
Right fore – There is no radiographic evidence of weight bearing laminitis of the right fore foot.
An MRI examination was performed at the University of Queensland on the 17th of May 2023 (appendix 1).
Recommendations- The severe injury sustained on Moore Metal’s distal left fore has left the stallion with chronic instability of the left fore pastern, this has resulted in development off severe osteoarthritis of the left fore pastern. The stallion requires ongoing remedial farriery of the left fore foot with raised heel extensions, so that the dynamic collapse of the pastern is minimised.
Weight bearing laminitis of the right fore foot is a risk for this stallion and supportive shoeing of the right fore is recommended to reduce this risk.
Continued monitoring of the level of lameness clinically (daily) and radiographically (every 6-12 months) is recommended. At present there is slow progression to the degeneration of the pastern injury (observed on radiographs and MRI).
Treatments for the increased pastern synovial effusion (inflammation) should continue daily eg. 4cyte (Epitalis). Further, intraarticular biological medications should be strongly considered for the pastern joint (eg. Prostride) to reduce the inflammatory cycle (6-12 months).
At present, the stallion is able to continue his career as a stud horse. The above treatments allow him to mount a phantom mare for semen collection, usually on a daily basis during the stud season without detrimental effect on his level of lameness.
However, it should be noted that the degenerative disease of the left fore pastern joint will continue to progress. Surgical arthrodesis of the joint may be required should the above supportive measures no longer maintain an appropriate level of soundness for his welfare and career.”

B. EVIDENCE ADMITTED ON A LIMITED BASIS

Evidence of trainers and riders of their observations about Moore Metal’s qualities ~ admitted on a limited basis

Mr Smith and a number of other witnesses, variously describing themselves as trainers, riders and breeders, gave evidence of their observations about Moore Metal’s qualities and performance. None of this evidence was received as expert evidence of the value of Moore Metal. Most of it was admitted on a limited basis as evidence of the witness’s personal observations. Because of that, it was left largely unchallenged.

(a) Mr Smith

Mr Smith trained Moore Metal from 30 December 2014 until the day of the accident on 26 May 2018. He is the one who trained him to be a cutting horse capable of winning one of the 5 major events of the year. He is also the one who rode the horse when he won that event. He rode him in many other events as well. Clearly no one in the courtroom knew the horse better than Mr Smith up to the time of the accident. He had not seen Moore Metal since the accident.
Mr Smith gave evidence by affidavit and orally.
In his affidavit Mr Smith described Moore Metal as “a nice horse although he was small and I considered him a bit weaker than other horses. I could not ask a lot from him as he was not very strong. Through the process of training he became better, but he was not one of the better horses that I had at that time. I considered him in the middle-range of the horses I had that year and middle-range in terms of competitive cutting horses generally.”. Mr Smith’s evidence that “he was not one of the better horses I had at that time” was admitted as proof of his belief only.
Mr Smith gave evidence that Moore Metal was around 14.2 hands high. There was some dispute about this. Mr Jones gave evidence that he was 15 hands high. The difference between Mr Smith and Mr Jones about how high Moore Metal was was left unresolved in the evidence. In cross-examination, Mr Smith said that he had not measured Moore Metal but would not agree that he stands at 15 hands. Mr Jones was not cross-examined on the topic. Neither side produced any objective evidence of Moore Metal’s height. I assume that it would have been a straightforward exercise to use a measuring tape. No doubt it could have been done by Dr Low had he been asked.
The significance of whether Moore Metal is 15 hands high or less is explained by Mr Smith’s evidence that campdrafting horses generally need to be at least 15 hands high.
In his affidavit, Mr Smith provided a commentary about his winning ride on Moore Metal in the 2016 National Cutting Horse Futurity show at Tamworth. He said: “At the futurity I showed Moore Metal very well. I cut three really good cows. Each of the cows showed Moore Metal off well. They had a very controllable flight zone, and submitted quite quickly. I consider that the stars aligned at that showing. I still do not consider him to be the best horse going in to or coming out of the event. I put it down more to the cows than to Moore Metal's skill at that time. There is a level of showmanship involved in it as well. When my hand was up, I separated the cows very neatly. It was a tidy separation. I also know when to turn away or "get off' the cows . I make that decision, not the horse, and then I guide the horse to return to the herd to cut a new cow.”. And: “In cutting, the horse needs to mirror the cow. If the horse is not very athletic, they are unlikely to be very good at mirroring the cow's actions. However, in competition, I know that the competition judges prefer when the horse appears not to do too much. I believe this played to Moore Metal's advantage on that day.”
He said that “(a)fter the Futurity event, I could not get Moore Metal to progress from a futurity horse to a sound competitive older horse. I could not get him to the next level that was required to be competitive when a horse got older and stronger. In that sense, he plateaued.”.
He said that after competing on Moore Metal throughout the rest of 2016 and 2017 he did not consider Moore Metal to be improving and believed he had plateaued. He felt that Moore Metal was lacking his desire to do his job. This led Mr Smith to approach Mr Todd Graham for advice. Mr Graham was a more senior cutting horse trainer and experienced rider. Mr Smith had sought his advice from time to time about a number of horses he had been training. Mr Smith said that Mr Graham made a number of suggestions about Moore Metal’s daily training routine and as to riding him. Mr Smith said he tried the suggestions “but it did not improve Moore Metal’s performance in any meaningful way”.
Notwithstanding his intimate knowledge of Moore Metal over a number of years, what Mr Smith has said on the above matters needs to be considered with some circumspection. I say that for the following reasons.
For example, in cross-examination when shown an article in Australian Performance Horse 2016/2017 Yearbook, he agreed that he had said after Moore Metal’s 2016 NCHA Futurity win that Moore Metal “has been a very well mannered colt all his life… He has always been an athlete and has a lot of integrity. He has a way of using himself in a very smooth soft manner which seems to never scare a cow, resulting in the cow drawing to him.”.
In cross-examination, Mr Smith agreed that Moore Metal’s win in the 2016 NCHA Futurity was and remains his greatest achievement as a trainer. He agreed it is an achievement that up to the hearing he still used to promote his business. He agreed that the traits he liked most about Moore Metal in 2016 were his athleticism and his temperament. He agreed that he would describe Moore Metal as very well mannered in 2017. He agreed that he had not won another NCHA Futurity or trained another NCHA Futurity winner since his win with Moore Metal. He agreed that Moore Metal’s dam, One More Annie had produced champion offspring, including Moore Metal.
In cross-examination Mr Smith agreed that he used ideas in training Moore Metal given to him after speaking to Mr Graham and that as a result he would be looking for some improvement. Curiously, he did not agree that any improvement would be shown in results in competition.
Overall, I formed the impression that in his affidavit and in giving his oral evidence, Mr Smith sought to downplay both Moore Metal’s achievements in competition up to the time of the accident and his prospects for the future. Whether he did this consciously or subconsciously it does not really matter.

(b) Mr Todd Graham

Mr Graham had been training horses professionally for 32 years by the time of the hearing. He also competed in Australia and the United States solely in cutting events. He has won the NCHA Futurity event 8 times and the NCHA Derby for 4-year-old horses 9 times. He has trained around 280 horses that have competed in the NCHA Futurity event. He is a former president of the NCHA and was a member of the board for 15 years.
Mr Graham saw Moore Metal compete on numerous occasions, by his estimate maybe 20 times. From his observations of Moore Metal in competition, Mr Graham formed the view that Moore Metal was “a nice type of horse” but “had little instinct to work a cow”. From his observations, Moore Metal seemed to not be improving since the Futurity “and likely going backwards”.
Mr Graham recalled that when Mr Smith came to him for advice about Moore Metal he went and watched Mr Smith work Moore Metal on the practice areas at a show. Mr Graham rode Moore Metal himself and could feel for himself what the horse was doing. The experience solidified Mr Graham’s opinion that “he was too much of a stallion” and “he was getting in the way of his own training and just did not want to put in the work”. Mr Graham offered some advice and he and Mr Smith tried a few things to make it better, but nevertheless Mr Graham was left with the opinion that Mr Smith “did a great job winning the Futurity with Moore Metal but that Moore Metal would not improve”.
In his oral evidence, Mr Graham agreed that the Tamworth show (i.e. the NCHA Futurity show) was the biggest of the 4 majors. He explained that “there’s no guarantees in our sport. It’s not like racing that the fastest horse wins.”. Mr Graham could not recall what competitive results Moore Metal had after he had spoken to Mr Smith and offered him some tips, but he agreed that if the horse then went on and won its next competition that would be a sign to him that there had been some improvement. This is what actually happened - the competition record I set out earlier shows that Moore Metal won events on 29 March 2018 and 8 April 2018 both of which, on the timing of the events as recounted by Mr Smith and Mr Graham must have occurred after Mr Graham had spoken to Mr Smith and offered him some tips.

(c) Mr Jason Leitch

Mr Leitch is a trainer, competitor, owner and breeder of cutting and campdrafting horses. He has been involved in the cutting horse world for over 20 years. He is also a former president of the NCHA.
Mr Leitch came second to Moore Metal when he won the NCHA Futurity in 2016. He remembered that Moore Metal cleared all of the major events in the 3-year-old and 4-year-olds. He remembered that Moore Metal “tailed off” after the Futurity.
He said that his professional opinion as a trainer, breeder and rider was that Moore Metal “threw too much to his mother, who was a campdrafting mare. She was an impressive campdrafting mare but not a good cutting mare”. In his opinion, “Moore Metal did not have a style that would gravitate to cutting types”.
It is difficult to see that Mr Leitch’s opinions can carry much weight given that Moore Metal in fact won one of the majors as a cutting horse. Alternatively, if he was correct in his assessment that he “threw too much to his mother”, that potentially bode well for Moore Metal’s future as a campdrafting competitor prior to the accident.

(d) Mr Corey Holden

Mr Holden had been a professional cutting horse trainer in both Australia and the USA for 35 years. He rode Moore Metal to a win at the North Star show in New South Wales. In Mr Holden’s opinion, “Moore Metal was outstanding” in the 2016 NCHA Futurity. In his opinion, Moore Metal did “taper off” throughout the rest of his Futurity year.

(e) Mr Hugh Miles

Mr Miles had been training and competing in campdrafting and in cutting for 15 years. He competes at the top level in both campdrafting and cutting and has won a lot of major events in both. He said that some traits that are good for campdrafting are not good for cutting and vice versa. Campdrafting horses need to be quicker. They also have to be soft enough to slow down quickly. Some cutting horses cross over into cutting and do well. But the fact you do well in cutting does not mean you will be good at campdrafting. Mr Miles was not cross-examined.

C. VALUATION EVIDENCE

The parties called 2 expert witnesses to give their opinions of the market value of Moore Metal. The plaintiff called Mr Rich and the defendants called Mr Inglis.
Most of Mr Rich’s affidavits and reports were ruled inadmissible. As such, he did not give any evidence of Moore Metal’s market value.
Two reports of Mr Inglis were provided to the Court: the first dated 21 December 2023, and a second dated 19 February 2024.
In his first report, Mr Inglis expressed the opinion that immediately before the accident “relying only on information available as at 26 May 2018, the value of the horse would have been at most $60,000” and that “(t)he most recent information available since 26 May 2018 confirms my original opinion”. In his second report, Mr Inglis revised this figure to $40,000.
In his first report, read with his second report, Mr Inglis expressed the opinion that “the value of Moore Metal immediately after the injury depends largely on the injuries suffered, most likely in the range of $10,000- $20,000”. He said that “Assuming the correctness of the evidence given on behalf of the plaintiffs, I would value the horse at $10,000.” and “Assuming the correctness of the evidence given on behalf of the defendants, I would value the horse at $20,000”.
In his second report, Mr Inglis expressed the opinion that “Once Moore Metal had recovered as best as he could in the months following the injury after treatment from Dr Pedrana and his prognosis was known and his capacity to collect as confirmed, I would consider his value would increase up to around $30,000.”.
As Mr Inglis sought to give his opinion of the market value of Moore Metal it is relevant to understand what that is.
The concept of market value was considered recently by the High Court, in Williams v Toyota Motor Corporation Australia Limited [2024] HCA 38 in the context of motor vehicles. Gageler CJ, Gordon, Steward, Gleeson and Beech-Jones JJ said at [57] that “Market value is assessed by reference to the price that a purchaser would have paid at the relevant date to a vendor, both of whom are willing but not anxious to trade, with all circumstances subsequently arising ignored.”, citing Spencer v The Commonwealth (1907) 5 CLR 418 at 440-441. Jagot J described what Isaacs J said there as the classic formulation of the common law’s conception of “market value” in Australia (Williams at [195]).
In Spencer v The Commonwealth, Isaacs J said this at 440-441:

“All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”

After setting out that passage in full, Jagot J said (Williams at [196]):

“Even this classic statement of principle, if read literally, is inaccurate, however. For example, it has never been that "all" circumstances subsequently arising are to be ignored in determining market value. Subject to any applicable contrary prescription, it has always been open to a valuer (judicial or otherwise) to have regard to sales after the date of valuation if those sales are "comparable". This is a logical necessity. For example, the best comparable sale may be a sale that occurs the day after the date of valuation.”

I do not accept Mr Inglis’ opinions of the market value at various times for the following reasons.
The first and most critical reason is that I am not satisfied that Mr Inglis followed his own professed methodology.
Both in his written reports and in his oral evidence Mr Inglis stated that the appropriate method to use, and the one he was applying, was what he called a “comparative sales approach, taking into account performance, type and breeding”. He described this method at paragraphs 19 to 32 of his first report.
At paragraph 19 he said:

“The appropriate methodology for valuing a cutting horse is effectively a comparative sales approach, taking into account performance, type and breeding. The quality of the horse is a contributing factor. While there is no formal restriction on what method is to be used, my experience is that this is the industry standard approach. That involves looking at what prices horses are achieving in the market and comparing those horses to the horse being valued based on a range of relevant factors.

Mr Inglis then identified and described the range of relevant factors or “aspects” in paragraphs 21 and 23 to 31. They were gender, age, breeding, performance, performance of offspring, type, trainer, public perception, and colour to some extent.
Applying this methodology, one would expect Mr Inglis to have identified what prices particular horses had achieved in the market (in other words the price they had sold for), then to have compared those particular horses with Moore Metal by reference to the relevant factors he described, and then to have determined whether those sales were comparative (or comparable).
It is not apparent, either from the face of his reports or from his oral evidence, that Mr Inglis did so.
Mr Inglis expressed his opinion about the market value of Moore Metal immediately prior to the accident (at most $60,000) at paragraph 33 of his first report. In the following paragraphs (34 to 49) he set out his reasons for coming to that view. It is arguable that in parts of paragraph 34 he attempted to follow that methodology because he referred to the sale of a number of horses and the prices paid for them, describing some of their attributes, but not expressly comparing them with Moore Metal’s attributes. However, from paragraphs 35 to 49 Mr Inglis surveyed or offered commentary on the aspects of Moore Metal almost exclusively. To the extent that he made comparisons with other horses, they may, in a very general sense, go to what might be considered to be, perhaps, the market generally. But in those paragraphs Mr Inglis did not make any direct comparisons between Moore Metal and other specific horses that might be of the type that he called horses achieving sales in the market. The lack of comparison with other horses is even more starkly apparent in paragraphs 51 through to 57 where Mr Inglis discussed what he referred to as to further pieces of information about Moore Metal which led him to confirm his original opinion of value (paragraph 51).
In his oral evidence, Mr Inglis agreed that his method required him to compare horses that had been sold against Moore Metal. He confirmed that in his first report the comparable horses he used were the ones mentioned in paragraphs 34(b), all sold in 2018, and Metallic Cat, referred to in paragraph 34(d) and sold in 2020. When asked specifically about the horses sold in 2018 and whether he had compared each one with Moore Metal by reference to the relevant factors or “aspects” he had identified earlier, Mr Inglis was unable to supply any detail. In fact it became clear that Mr Inglis had only considered those factors or aspects in relation to Moore Metal, and not the other horses at all. He considered that he knew Moore Metal “much better than I know those five”. He explained that he included the horses mentioned in paragraph 34.b. to give the court the feel for or an idea about the market generally at that time, which he said was very depressed because of the continuing drought.
In his second report, Mr Inglis revised his opinion about the market value of Moore Metal immediately prior to the accident (not been worth more than $40,000), without referring to any comparable sales at all. Assuming that it may have been permissible for Mr Inglis to revise his opinion based on his own analysis and perception of Moore Metal’s “fertility” and “stifle issue”, he still did not identify any prices comparable horses had achieved in the market.
In his second report, when giving reasons for his opinion about the value of Moore Metal immediately after the accident, Mr Inglis again did not refer to any specific comparable sales. He said he based his opinion largely on his experience in the thoroughbred world. He said he had seen cases where injured horses had been sold, without identifying those horses, when they had been sold, at what price and in what circumstances. He said that between 2018 and 2022 he knew of injured thoroughbred horses selling for between $7,000 and $85,000. Again, he did not identify those horses, when they had been sold and in what circumstances. He offered the opinion that Moore Metal when injured would have been on the lower end of this range but he believed the market would “give him some benefit of the doubt given he was a Futurity winner”. He then gave a range of between $10,000 and $20,000, depending on the seriousness of the injury and the likely recovery prospects. Mr Inglis had explained in his first report that thoroughbred horses are racehorses and were different to pleasure horses, which covered all other kinds of horses ridden for pleasure including cutting horses and campdrafting horses. He did not explain why or how the range of selling prices for injured thoroughbred horses related to comparable sales or even a range of sales for injured cutting horses or campdrafting horses. Perhaps the lack of reference to comparable sales is explained by Mr Inglis’ statement in his second report that “it would have been difficult to sell Moore Metal immediately after the accident” and his oral evidence that “it would be very difficult to sell him”.
In his second report, when offering the opinion that once Moore Metal had recovered, his value would increase up to around $30,000, again Mr Inglis made no reference to comparable sales.
My other reasons for not accepting Mr Inglis’ opinion of the market value of Moore Metal at various times are:

85.1 In his first report, Mr Inglis stated that his view of the value of the horse would have been at most $60,000 as at 26 May 2018 immediately prior to the accident “relying only on information available as at 26 May 2018”. It turns out that Mr Inglis did not mean that literally, because in cross-examination he explained that his opinion was based on all of the information available to him up to the time he prepared his report (21 December 2023). This can also be seen by reading the report itself, it makes reference to many events that occurred after 26 May 2018. To paraphrase Issacs J in Spencer v The Commonwealth, the facts existing on 26 May 2018 are the only relevant facts in arriving at a market value as at that date, all circumstances subsequently arising are to be ignored or disregarded. Although, as Jagot J said, a comparable sale occurring shortly afterwards may be taken into account. It follows that Mr Inglis took into account a number of “facts” which he ought to have ignored or disregarded. I have put the word facts in quotes because except for paragraphs 33 and 50, the balance of Mr Inglis’s first report was admitted to proof of his reasoning processes and not as to the proof of the facts he states in the report. Mr Inglis appears to have placed a great deal of significance on many of these “facts”– for example, his detailed reference to his analysis of Moore Metal’s subsequent breeding and offspring (at paragraphs 51 to 58).
85.2 The further information Mr Inglis referred to in his second report when revising his opinion of the market value of Moore Metal down to $40,000 as at 26 May 2018 falls into the same category. Mr Inglis makes reference to “facts” occurring after the date of valuation, which he should have ignored or disregarded. These relate to Moore Metal’s so-called fertility and stifle issue.
85.3 In cross-examination Mr Inglis revealed that before writing his report he had consulted 2 other people in the industry about what they thought the value of Moore Metal might have been. He did not refer to having done so in his report. He named the people in his evidence. One of them was Mr Leitch, a witness in the proceedings who was not a valuer. No doubt Mr Inglis consulted the other persons with good intentions and in good faith, however the fact that he has done so does place a cloud over his evidence.
85.4 Whilst Mr Inglis stated in his first report that you cannot value a horse effectively, properly or accurately without inspecting it, he acknowledged in cross-examination that he had not inspected Moore Metal.

D. THE DAMAGES CLAIMED BY THE PLAINTIFF AND THE DEFENDANTS’ RESPONSE IN OUTLINE

The plaintiff’s claim

The plaintiff puts its claim for damages in the alternative.
It’s primary claim is based on the loss of a chance. It says that it has lost the opportunity (or perhaps has a reduced chance or opportunity) to earn income from “Moore Metal” in two ways:

87.1 by winning prize money in cutting and campdrafting competitions; and
87.2 by earning servicing fees as a breeding stallion.

This claim is quantified in a report by Mr Nguyen, a forensic accountant.
Based on Mr Nguyen’s assessment of lost income from servicing fees and allowing for a “buffer” for lost prize money, the sum claimed is $314,272.71 (closing submissions paragraph 136).
In the alternative, the first plaintiff claims for past and future veterinary and related expenses and a “buffer” on account of the diminution in market value of Moore Metal. The sum claimed is “in the vicinity of $135,000”.

Mr and Mrs Smith’s response

Mr and Mrs Smith’s response was comprehensively detailed. The following is by way of summary only.
In relation to both ways the plaintiff puts its claim, Mr and Mrs Smith assert that the plaintiff failed to mitigate its loss by not having Moore Metal euthanised in the days after the accident or by not selling him subsequently.
In relation to the loss of chance claim based on Mr Nguyen’s report, Mr and Mrs Smith say:

93.1 First, the plaintiff is not entitled to pursue it because it has not been pleaded.
93.2 Secondly, loss of a chance is not an appropriate or available method to apply in assessing the plaintiff’s loss, as a matter of legal principle. They say the proper measure for the plaintiff’s loss is the diminution in market value of Moore Metal; that the market value is determined by comparable sales; and that the potential earnings are reflected in the market value of a chattel and should not be considered separately, based on the decision of the House of Lords in Liesboch Dredger v Edison SS [1933] AC 449.
93.3 Thirdly, if one is applying the loss of chance cases, no commercial benefit has been lost because the plaintiff was not making a profit from Moore Metal before the accident.
93.4 Fourthly, the facts underlying Mr Nguyen’s assumptions have not been proved, or there are defects in Mr Nguyen’s reasoning. For example, Mr Nguyen has used the servicing revenue from the plaintiff’s financial statements, which Mr Jones agreed in cross-examination was overstated.

E.THE APPLICABLE LEGAL PRINCIPLES

Reported cases involving claims for damages for injuries to horses are few and far between, particularly in Australia.
This makes it is necessary to go into general legal principles in a little more detail than might otherwise be the case.
By admitting liability, the defendants have accepted that they are liable to the plaintiff, as owner of Moore Metal, to compensate the plaintiff for the loss (if any) it has suffered as a result of the injuries sustained by Moore Metal in the accident. By admitting liability, the defendants accept that they are liable in negligence for breach of a duty of care owed to the plaintiff, in contract for breach of a similar duty owed under a contract with the plaintiff, and as bailees for reward.
Claims against bailees are commonly framed in contract or tort or both and may lead to an award of damages calculated without reference to any special principle of bailment: N Palmer, Palmer on Bailment (3^rd edition, 2009, Sweet & Maxwell) at 37–002. That is the case here, neither party submitted that any special principle applied to the assessment of damages because the defendants were bailees for reward.

General legal principles

The basic principle underlying the assessment of damages for breach of contract and for breach of duty of care is the same. According to the High Court, the settled principle governing the assessment of compensatory damages, whether in actions in tort (which includes negligence) or contract, “is that the injured party should receive compensation in the sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed”: Haines v Bendall (1991) 172 CLR 60 at 63 per Mason CJ, Dawson, Toohey & Gaudron JJ; Brennan J agreeing at 73. Compensation is the cardinal concept and the plaintiff cannot recover more than he or she has lost: Haines at 63.
In law, horses are considered to be chattels or personal property of the owner. See for example, Bell v Thompson (1934) 34 SR 431 at 439 per Jordan CJ (Street J agreeing). It is necessary therefore to see how damages are assessed in relation to damage to chattels. Most of the principles about the assessment of damages in relation to chattels have been worked out in relation to damage to ships, and more recently in relation to cars, but they apply to any damaged chattel: Diamond v Lovell [2002] 1 AC 384 at 406 per Lord Hobhouse, cited with approval by the High Court in Arsalan v Rixon (2021) 274 CLR 606 at [18]. The same point is made in J Edelman, McGregor on Damages (22^nd edition, 2024, Thomson Reuters), where the principles are discussed in great detail in Chapter 38. In The Kingsway [1918] P 344 at 356 Pickford LJ said, in words that seem particularly apt for the present case, “… there is no special measure of damages applicable to a ship different from the measure of damages applicable to any other chattel. The nature of the thing damaged may give rise to more difficult questions in the assessment of damages, but it does not change the assessment in any way.”.
Where a plaintiff’s chattel is damaged as a result of the negligence of a defendant, the plaintiff will generally be entitled to damages for the costs of repair and for consequential loss: Arsalan v Rixon (2021) 274 CLR 606, per the Court (Kiefel CJ, Gageler, Keane, Edelman and Steward JJ) at [18]. This is the normal measure of loss: Talacko v Talacko (2021) 272 CLR 478, per the Court at [45].
If, despite the repairs having been undertaken, the evidence justifies a finding that the market value of the chattel is less than before the damage was done, a plaintiff will be entitled to the diminution in market value in addition to the costs of repair: McGregor on Damages at 38-003, giving as examples Payton v Brooks [1974] RTR 169, [1974] 1 Lloyd’s Rep 241 a decision of the English Court of Appeal, and The Georgiana v The Anglican (1873) 21 WR 280, an Irish decision of Townsend J sitting in Admiralty. In Payton v Brooks a car was fully and “excellently” repaired and there was no issue that the owner was entitled to the full cost of repairs. The issue before the Court of Appeal was whether or not, despite the repairs, the car had a lesser market value as a result of being involved in a collision, which would entitle the owner to additional damages. Having heard from 3 witnesses, the trial judge held that there was no diminution in market value after the repairs were completed. This was a question of fact that the Court of Appeal did not disturb. Nevertheless all 3 members of the court were of the view that damages of the type claimed by the owner could be allowed as a matter of principle. Roskill LJ said that “In a case where the evidence justifies a finding that there has been, on top of the cost of repairs, some diminution in market value – or, to put the point another way, justifies the conclusion that the loss to the plaintiff has not been fully compensated by the receipt of the cost of complete and adequate repairs, because of a resultant diminution in market value – I can see no reason why the plaintiff should be deprived of recovery under that head of damage also”, although His Honour added a word of caution that it was essential in such a case for appropriate evidence to be called to prove diminution in value. In The Georgiana a yacht had been run into and sunk by the defendants’ steamer, the Anglican. Notwithstanding the large expenditure incurred on repairs, the yacht remained “strained; neither the deck nor the whole is staunch as before – the yacht is more leaky as a vessel; less comfortable as a habitation. It may well be doubted whether she can ever be thoroughly restored”. Townsend J accepted expert evidence before him that the yacht’s marketable value had been depreciated by some £300 which his Honour allowed in addition to the cost of repairs.
The cost of repair must be reasonable, both in that the work must be necessary and the charges must not be extravagant: McGregor on Damages at 38-006.
Damages for consequential loss can include damages for loss of profits: McGregor on Damages at 5-054. According to McGregor on Damages, the case law about loss of profits of profit earning chattels developed entirely around ships and damage to ships, and where other than ships are concerned authority is sparse, virtually non-existent: at 38-032 and 38-041. As regards ships, usually the loss of profits are allowed for “the time during which the vessel is laid up under repair in addition to the cost of repair themselves”, but this is just the application of a wider principle where the question is “what is the use which the shipowner would, but for the accident, have had of his ship, and what (excluding the element of uncertain and speculative and special profits) the shipowner, but for the accident, would have earned by the use of her”: The Argentino (1889) 14 App Cas 519, quoted in The Kingsway at 356.
This same general point was made by the High Court in Arsalan, at [18]: “An assessment of consequential loss always requires the identification of the manner in which the loss of use of a chattel has adversely affected the plaintiff.”.
Whilst the basic underlying principle is the same, the analysis in McGregor on Damages draws a clear distinction between cases where a chattel is damaged (which I have been referring to) and cases where a chattel is destroyed. When the chattels or goods have been destroyed “The normal measure is the market value of the goods destroyed at the time and place of destruction.”: McGregor on Damages at 38-065. According to McGregor on Damages, one of the leading modern cases confirming this is the decision of the House of Lords in Liesbosch Dredger v SS Edison [1933] AC 449. After stating the normal measure, McGregor on Damages immediately goes on to say that “In the ship collision cases, it has always been said that the owners of the lost ship are entitled to restitutio in integrum”. What this means was explained by Lord Wright in Liesbosch Dredger at 459: “It is not questioned that when a vessel is lost by collision due to the sole negligence of the wrongdoing vessel the owners of the former vessel are entitled to what is called restitutio in integrum, which means that they should recover such a sum as will replace them, so far as can be done by compensation in money, in the same position as if the loss had not been inflicted on them, subject to the rules of law as to remoteness of damage.”. His Lordship went on to say (at 460) that “The respondents’ tortious act involved the physical loss of the dredger; that loss must somehow be reduced to terms of money”. And (at 462), “the damages must be assessed as if the appellants had been able to go into the market and buy a dredger to replace the Liesbosch”.
Whilst the basic underlying principle is the same, the separate discussion and analysis in McGregor on Damages of the cases concerning chattels that are damaged and chattels that are destroyed indicates that the two different situations give rise to different considerations in the application of the general principle. The difference is significant in the present case because Mr and Mrs Smith cited and relied upon a number of cases where the chattel had been destroyed, or in the case of horses, killed, as opposed to damaged or injured.

Mitigation

Mr and Mrs Smith assert that the plaintiff failed to mitigate its loss.

McGregor on Damages (at paragraphs 10–002 to 10–006) explains that mitigation concerns avoiding of the consequences of the wrong, whether tort or breach of contract, and that there are 3 different although closely interrelated rules relating to it. The first and most important rule is that the claimant must take all reasonable steps to mitigate their loss consequent upon the defendant’s wrong and cannot recover damages for any such loss which they failed, through unreasonable action or inaction, to avoid. The second rule is the corollary of the first. It is that where the claimant does take reasonable steps to mitigate the loss to them consequent upon the defendant’s wrong, they can recover for loss incurred in so doing; this is so even though the resulting damage is in the event greater than it would have been had the mitigating steps not been taken. The third rule is that the claimant cannot generally recover for avoided loss. Where the claimant takes steps before or after the wrong, or a third party takes steps, that avoid the loss, then this reduces the recoverable loss. The most common scenario is where the claimant takes ordinary or reasonably necessary steps to mitigate the loss to them and those steps are successful. Then, the defendant is entitled to the benefit accruing from the claimant’s action and is liable only for the loss as lessened.
Whether a loss is avoidable by reasonable action on the part of the claimant is a question of fact, not law: McGregor on Damages at paragraph 10–016.
McGregor on Damages explains that often expenditure is made in order to keep the damage within reasonable bounds. Examples are where money is laid out in acquiring or hiring a substitute where the claimant’s property is damaged, destroyed or misappropriated; or where medical expenses are incurred to ameliorate the claimant’s physical injury caused by the defendant. Incurring of expenses such as these may be considered as examples of steps taken in mitigation of damage. See paragraphs 5–059 and 5–060.
In Arsalan the High Court said at [32] (omitting citations): “Where a plaintiff acts in an attempt to reduce a loss, the onus shifts to the defendant to show that the acts actually taken by the plaintiff were unreasonable acts of mitigation. Unless the plaintiff’s actions are shown to be unreasonable, costs that are incurred in an attempt to mitigate loss caused by wrongdoing become, themselves, a head of damage that can be recovered. Even if the costs incurred by the plaintiff are greater than the loss that was attempted to be mitigated, those costs will be recoverable other than to the extent that they are shown to be unreasonable.”.

Loss of a commercial opportunity

The plaintiff makes a claim for loss of profits.
A claim for loss of profits would represent a claim for damages for the loss of a chance or the deprivation of a commercial opportunity. As such, whether the deprivation occurred by reason of breach of contract or tort, damages must be assessed in accordance with the principles stated in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.
In Sellars the majority (Mason CJ, Dawson, Toohey and Gaudron JJ) said at 350 (omitting footnotes):

“In Malec v J. C. Hutton Pty. Ltd. (1990) 169 CLR 638, this Court drew a distinction between, on the one hand, proof of historical facts — what has happened — and, on the other hand, proof of future possibilities and past hypothetical situations. The civil standard of proof applies to the first category but not to the second, particularly when it is necessary to determine future possibilities and past hypothetical situations for the purpose of assessing damages.
In Malec, Deane, Gaudron and McHugh JJ explained the way in which the matter is to be approached in these terms:
‘If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. … But unless the chance is so low as to be regarded as speculative — say less than 1 per cent — or so high as to be practically certain — say over 99 per cent — the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability.’”

Later in the same judgment, the majority said at 355 (italics in the original):

“Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s. 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustainedng ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.”

These principles were considered by the High Court in 2016, in Badenach v Calvert (2016) 257 CLR 440. French CJ, Kiefel & Keane JJ said at [39]-[41] (omitting citations):

“[39] … An opportunity will be of value where there is a substantial, and not a merely speculative, prospect that a benefit will be acquired or a detriment avoided.
[40] It remains necessary to prove, to the usual standard, that there was a substantial prospect of a beneficial outcome. This requires evidence of what would have been done if the opportunity had been afforded. The respondent has not established that there is a substantial prospect that the client would have chosen to undertake the inter vivos transactions. Therefore, the respondent has not proven that there was any loss of a valuable opportunity.
[41] The onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance that the outcome would be favourable, or even by a finding that there was a substantial chance of such an outcome. The onus is only discharged where a plaintiff can prove that it was more probable than not that they would have received a valuable opportunity. …”

The principles were considered by the High Court again in 2020, in Berry v CCL Security Pty Ltd (2020) 271 CLR 151. Bell , Keane and Nette JJ said (at [32]) that it was held in Sellars:

“… that, where a claimant established on the balance of probabilities that misleading or deceptive conduct contrary to s 52 of the TPA caused the claimant the loss of a commercial opportunity of some value (not being a negligible value), the value of that lost opportunity was to be ascertained by reference to hypotheses and possibilities which, though they were speculative and therefore not capable of proof on the balance of probabilities, could be evaluated as a matter of informed estimation.”

Subsequently, their Honours said (at [35]):

“But, as has been seen (75), previous decisions of this Court concerning the recovery of damages for lost commercial opportunities – regardless of whether they are commercial opportunities to earn an extension or renewal of a contract, as in Amann Aviation, or to negotiate a new contract, as in Sellars, or even to institute proceedings for the recovery of damages, as in Malec – have held that, once it is established on the balance of probabilities that the defendant’s wrong caused the loss of opportunity, the value of the loss falls to be determined (and discounted) according to the assessed degree of likelihood that, assuming the claimant had been able to exploit the opportunity, it might not have resulted in all of the gain that was hoped for.”

Their Honours summarised the relevant principles again (at [36]) by reference to a claim for damages for misleading or deceptive conduct:

“The established authority of this Court governing the assessment of damages under s 82 of the TPA for the loss of a commercial opportunity caused by misleading or deceptive conduct contrary to s 52 of the TPA is relevantly as laid down in Sellars. Where a claimant establishes on the balance of probabilities that misleading or deceptive conduct contrary to s 52 has caused the loss of a commercial opportunity of some value (not being a negligible value), the value of the lost opportunity is to be ascertained by reference to hypotheses and possibilities which, though they may not be capable of proof on the balance of probabilities, are to be evaluated as a matter of informed estimation.”

Causation – Civil Liability Act 2002

The provisions in Part 1A of the Civil Liability Act 2002 about proof of causation apply to these proceedings. That is because they concern a claim for damages for economic loss resulting from a failure to exercise due care and skill (s.5A, read with s.5 definitions).
The relevant provisions are s.5D and s.5E, considered by the High Court in Wallace v Kam (2013) 250 CLR 375.
A determination in accordance with s.5D(1)(a) that negligence was a necessary condition of the occurrence of harm is entirely factual, turning on proof by the plaintiff of relevant facts on the balance of probabilities in accordance with s 5E. This involves nothing more or less than the application of a "but for" test of causation. That is to say, a determination in accordance with s.5D(1)(a) that negligence was a necessary condition of the occurrence of harm is nothing more or less than a determination on the balance of probabilities that the harm that in fact occurred would not have occurred absent the negligence. (Wallace v Kam at [14] and [16]).
The question under s.5D(1)(b) is whether “it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability)”, and in answering that question “the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party” (s.5D(4)). This raises a normative question (Wallace v Kam at [11]).
In a case falling within an established class, the normative question posed by s.5D(1)(b) is properly answered by a court through the application of precedent. In a novel case, however, s.5D(4) makes it incumbent on a court answering the normative question posed by s.5D(1)(b) explicitly to consider and to explain in terms of legal policy whether or not, and if so why, responsibility for the harm should be imposed on the negligent party. What is required in such a case is the identification and articulation of an evaluative judgment by reference to "the purposes and policy of the relevant part of the law". (Wallace v Kam at [22] and [23]). One such policy is that liability for breach of a duty to exercise reasonable care and skill to avoid foreseeable harm does not extend beyond harm that was foreseeable at the time of breach (Wallace v Kam at [24] and [26]).

F. CREDIBILITY OF WITNESSES

Counsel for Mr and Mrs Smith submitted that Mr Jones was not a credible or reliable witness.
I do not accept the submission that Mr Jones was not a credible witness.
When Mr Jones gave his oral evidence, he was very courteous, attentive to the question and direct in his response. He made appropriate concessions without hesitation. For example, he readily conceded that the revenue figures in the plaintiffs’ financial statements were the correct ones instead of the figures set out in his affidavit.
My impression was that he was making every effort to give honest and accurate evidence to the Court to the best of his ability.
The submission that Mr Jones was not a reliable witness seems to be based largely on concessions he made during cross-examination of the type I just mentioned.
I do not accept the submission that his evidence was generally unreliable, if that is in fact the submission that was made.
In any event, I must test Mr Jones’s evidence, and the evidence of all the other witnesses, against any contemporaneous materials, objectively established facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118, per Gleeson CJ, Gummow & Kirby JJ at [31].

G. DID THE PLAINTIFF FAIL TO MITIGATE ITS LOSS?

As I mentioned earlier, in relation to both ways the plaintiff puts its claim, Mr and Mrs Smith assert that the plaintiff failed to mitigate its loss by not having Moore Metal euthanised in the days after the accident or by not selling him subsequently.

The defendants’ submissions about the failure to euthanise

The defendants submitted that the decision taken by Mr Jones not to euthanise Moore Metal was entirely uncommercial and unreasonable. They submitted that it was done out of a sentimental desire to keep Moore Metal and/or continue to own a horse that Mr Jones liked in the sport that he liked. The defendant submitted that it was contrary to medical advice and in the circumstances where, clearly, no thought was given to the costs involved, let alone any careful or considered cost-benefit analysis having been conducted.

Evidence about consideration or advisability of euthanasia

(a) Dr Pedrana

In his report of 12 February 2024, Dr Pedrana said:

“The accident and subsequent injury to Moore Metal occurred on 26 May 2018.
I attended the accident site and rendered first-aid treatment to Moore Metal. The injury was extensive and potentially life-threatening however the horse was treated aggressively given that he was a stallion and reputed to be a highly competitive horse with future breeding prospects.
This was based on conversations with various persons and later confirmed in discussion the following day (Sunday, 27 May 2018) following the arrival of the owner of Moore Metal, Robert Jones, to Dubbo Equine Hospital.
I discussed the likely costs with Robert Jones and of course the option of euthanasia was briefly discussed however at that stage this latter option was quickly rejected. Robert Jones was counselled on the possibility of septic arthritis and/or tendon sheath infection developing in the pastern joint and that this disease process and the attendant possibility of laminitis in the right forefoot would provide compelling evidence to justify euthanasia.
The likely costs of our initial veterinary attendance were discussed, however the ongoing costs were not able to be estimated.”

In his oral evidence Dr Pedrana said that he told Mr Jones the injury was so severe that he could euthanise Moore Metal should he wish to do so. He agreed that it was a matter for Mr Jones “to choose”. Dr Pedrana agreed that it was his professional opinion at the time based on what he knew of the injury that even if Moore Metal did recover “he would never be a functioning competitive horse again”, and that he conveyed his opinion to Mr Jones. He said that over the period of time he treated Moore Metal, he had frequent discussions with Mr Jones. Dr Pedrana gave evidence that: “There were frequent phone call discussions, and I can't recall when. I know that he paid a further visit on one or two occasions subsequent to that. I just can't recall those, but certainly we had a very detailed discussion, and he came into my home at the time, which is adjacent to the Equine Hospital, and we talked at length about the likely prospects for the horse and where we'd go. And really, it was just going to be treated as everything presented at the time to see whether we could retrieve the horse to give him future breeding potential, given that he was not going to be competitive.” (T203).
It was not put to Dr Pedrana in cross-examination by counsel for the defendants that he should have advised Mr Jones to euthanise Moore Metal following the accident or that it was unreasonable for Mr Jones to have chosen not to.
None of the other veterinary surgeons who gave evidence suggested that Moore Metal should have been euthanised following the accident.

(b) Mr Jones

In his affidavit evidence, Mr Jones said:

138.1 In the weeks following the accident, he decided it would be better to see if Moore Metal could be rehabilitated rather than having him put down. He said that during this time he sought advice from Dr Pedrana as to whether Moore Metal had a chance to recover from his injuries and possibly make a return to competition. He said that Dr Pedrana said to him “the open wound is a critical issue in regards to allowing it to close on its own accord without any possibility of infection. Infection could lead to a major complication and the possibly of the horse being put down.".
138.2 When Moore Metal had been moved to WestVETS in Queensland he asked Dr Low for his advice as to whether there was any possibility that Moore Metal “will ever be able to compete and breed again” and Dr Low told him “he will never compete again but shouldn’t have a problem with breeding if he is managed correctly and there hasn’t been any further damage around his testicular region”.
138.3 After receiving advice from both Dr Pedrana and Dr Low as to whether Moore Metal could live a normal life and possibly continue his future in breeding, he decided that it was worthwhile incurring the expense of having Moore Metal rehabilitated to his best possible state.
138.4 After he had received reports from Dr Pedrana (3 September 2018), the University of Queensland (27 February 2019), Dr Low (28 March 2019) and Dr Ian Fulton (1 April 2020 & 25 May 2020) the hopes he had for Moore Metal returning to competition were “significantly diminished”.

In cross-examination:

139.1 Mr Jones readily conceded that even in his emotional state after the injury, he was motivated by the fact that he had put a lot of money into Moore Metal prior to the accident. He denied that he was concerned at points in time after that, that in selling Moore Metal he would not be able to recoup that investment.
139.2 He said the first time he received advice from a veterinary expert that Moore Metal was never going to compete again was when he received Dr Low’s report of 28 March 2019.
139.3 He conceded that after receiving Dr Fulton’s second report (of 25 May 2020) he accepted the advice that Moore Metal would not return to competition. Still, even then, he maintained a “hope” that Moore Metal would return to competition - “you always hope”.

It was not put to Mr Jones in cross-examination that he should have euthanised Moore Metal after the accident or that he acted unreasonably in not doing so.

My analysis

I do not accept the defendants’ submission that the plaintiff (or Mr Jones) acted contrary to medical advice in not having Moore Metal euthanised in the days following the accident. That is not borne out by the evidence I have just summarised. At no stage was Mr Jones given advice that he should euthanise Moore Metal.
I do not accept the defendants’ submission that no thought was given to the costs involved in keeping Moore Metal alive and treating his injuries. According to Dr Pedrana, whose evidence on this was unchallenged, he discussed the likely costs with Mr Jones the day after the accident. Thereafter they had frequent discussions either on the telephone or in person. Those discussions were on occasion “very detailed” and “occurred at length about the likely prospects for the horse and where we'd go”.

My conclusions

I would be prepared to accept that it is reasonably likely that but for the accident, had Moore Metal continued to compete in cutting horse events he was likely to have won the additional $8,786 needed to gain entry into the National Cutting Horse Association Hall of Fame.
I come to that view based on his past performance, that is to say his actual winnings up to the time of the accident, and the fact that he would have had just short of another 3 years in which to achieve it. It would be a relatively small sum compared to his past prize money, although I recognise that the vast bulk of that ($75,000) came from winning the one event in his first year. The personal observations of the trainers and riders add little if any relevant evidence to this issue. None of them suggested that Moore Motal was unlikely to win any more prize money at all. I place no weight on Mr Inglis’ analysis of Moore Metal’s past performances and his opinion that Moore Metal was a failed cutting horse because these parts of his report were only admitted as proof of his reasoning, and not as proof of the truth of what he said. That is also why his analysis was unchallenged in cross-examination.
However, accepting that Moore Metal was likely to have gained entry into the National Cutting Horse Hall of Fame only gets the plaintiff a small part of the way to demonstrating that the accident caused the loss of a commercial opportunity which had some value (not being a negligible value).
The plaintiff presented no direct evidence to demonstrate how or why entry into the Hall of Fame, or for that matter continuing to compete, winning prize money in cutting events and then campdrafting would have translated into the ability to charge a higher breeding service fee and to sell more services.
If past experience showed that there was a correlation between entry into the Hall of Fame, continuing to compete and winning prize money, and charging higher breeding service fees and selling more services, then one would have expected that the plaintiff could have called evidence about that.
The defendants justifiably submit that there was no evidence, whether expert or lay, that Hall of Fame status would have affected Moore Metal’s breeding numbers and fee per service or that higher price prize money would have led to more demand. I accept there no direct evidence on those matters.
In effect the plaintiff asks the court to infer that entry into the Hall of Fame, and continuing to compete, winning prize money in cutting events and then campdrafting would have made Moore Metal a more desirable and in demand stallion translating into the commercial opportunity for the plaintiff to supply more of Moore Metal’s breeding services at a higher fee per service.
At this stage it is not necessary for the plaintiff to establish that entry into the Hall of Fame and so on would have led to a 38% increase in the service fee and in the number of services, or any lesser percentage. But it is necessary for the plaintiff to prove on the balance of probabilities that entry into the Hall of Fame and so on would have provided a commercial opportunity which had some value (not being a negligible value).
I am not satisfied that the plaintiff has established this on the evidence before me.
I am therefore not satisfied that the plaintiff has proved on the balance of probabilities that it has sustained some loss or damage, by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value).
That conclusion is reason enough not to accept the plaintiff’s primary claim based upon Mr Nguyen’s Scenario 6.
However there are some other reasons why I would not accept Mr Nguyen’s Scenario 6:

198.1 Mr Nguyen’s discount rate reflects what he described as the “opportunity cost of capital”, or the return that an investor could expect from investing in assets of equivalent risk. In taking into account the degree of uncertainty associated with assuming that, had the accident not occurred, Moore Metal would have been able to increase the number of services and rate per service, Mr Nguyen took the view that the degree of uncertainty could be appropriately addressed by applying a high discount rate typically adopted by private equity investors when making high risk investments. He said these discount rates typically ranged between 20% to 30% based on a study concerning private equity investments in the range of $1 million of $5 million.
198.2 In my view it is not appropriate to select a discount rate, or more correctly to assign a degree of probability, by reference to the behaviour of private equity investors when making high risk investments. In theory, a “discount” of 30% would equate to a 70% probability of success. The number is not important for present purposes. What needs to be assessed, however, is the prospects of success of the commercial opportunity under consideration – in this case the commercial opportunity of Moore Metal becoming a more desirable and in demand stallion, reflecting in a higher number of breeding services at higher service fees - not some other commercial opportunity. In my view it would not be appropriate to select a degree of probability in the way Mr Nguyen has, and it would be a matter for the court to do so. It is not necessary for me to undertake that task bearing in mind that the plaintiff’s primary claim has fallen at the first hurdle.
198.3 I accept the defendants’ submissions that the service fee revenue figures used by Mr Nguyen were wrong and overstated having regard to the concessions made by Mr Jones in cross-examination. It would be necessary to recalculate using the correct figures.

Loss of prize money based on Mr Nguyen’s report

I have already explained that Mr Nguyen’s assessment of damages for loss of prize money is based on the assumption he was asked to make that “e. But for the accident and resultant injury, Moore Metal’s probable lifetime prize money earnings for cutting events would have been $105,104.77, being the average prize money of three comparable horses, One Roan Peptos, Seligman Spin and One Stylish Pepto.”.
This assumption was not proved in the evidence. There was no proof that the 3 named horses were comparable to Moore Metal. Nor was there proof of their earnings in prize money.
It follows that I cannot accept Mr Nguyen’s assessment based as it is on accepting the truth of his assumption.
As I understand it, the plaintiff’s submission that the sum of $60,000 should be allowed as a buffer for loss of prize money was also based on Mr Nguyen’s assessment, which was in turn based on the assumption I have just mentioned. As I understand it, a “buffer” amount was suggested in order to take account of the fact that, as stated by Mr Nguyen in his report, his raw figure of $92,564 represented the loss in prize money “before any additional discount is applied for any vicissitudes that the court may consider applicable”. I would also add that it represented a figure which had not been adjusted for the probability of winning that prize money. Perhaps that is what Mr Nguyen meant by vicissitudes. In any event, it follows that the “buffer” proposed by the plaintiff is also based on accepting the truth of the assumption Mr Nguyen was asked to make. The plaintiff did not point to any other evidence or rationale for allowing the proposed buffer.
In the circumstances, I do not consider it appropriate, on the evidence before me, to allow a buffer for lost prize money in the sum suggested or at all.

My conclusions about the plaintiff’s primary claim

It follows that for the above reasons I do not accept the primary basis upon which the plaintiff puts its claim.
I proceed to consider the alternative basis put forward by the plaintiff.

I. THE PLAINTIFF’S ALTERNATIVE CLAIM BASED ON INCURRED AND FUTURE EXPENSES AND LOSS OF VALUE

The plaintiff put forward its alternative claim if the court did not accept Mr Nguyen’s analysis, or was not satisfied the assumptions he made had been established. In this alternative it claims damages for past and future veterinary and related expenses and a sum on account of the diminution in market value of Moore Metal.

Claim for past and future expenses

These expenses are said to relate to the past and future cost of treating Moore Metal as a consequence of the injuries he received in the accident. A large component of these costs concern the costs of veterinary treatment received and anticipated to be provided going forward. Another component relates to the cost of special farriering, something touched on in the veterinary reports I referred to earlier. Another component relates to the cost of providing drugs or medications.
As I have already mentioned, the plaintiff submits that these expenses or costs can be aptly described as the costs of repair, consequential loss or costs of mitigating loss. The plaintiff submits that its actions to incur and continue incurring these expenses were entirely reasonable in circumstances where it has allowed Moore Metal to continue to breed, and earn substantial revenue.
The past and future veterinary costs were the subject of evidence by Dr Major (called as an expert witness by the plaintiff) and Dr Jacobs (called as an expert witness by the defendants). Neither Dr Major nor Dr Jacobs had examined Moore Metal and both gave their evidence based on a review of various reports, invoices and other documents. They were able to agree on much of their evidence. Dr Fulton (called by the plaintiff) also gave some evidence on the subject.

Past expenses

The past costs were set out in a “Schedule of Past Veterinary Costs” which became part of Exhibit 11. By reference to that Schedule:

210.1 Dr Major and Dr Jacobs agreed that for the period 26 May 2018 to 29 February 2024 the justifiable and necessary injury related expenses incurred came to a total of $46,713.49.
210.2 Dr Major and Dr Jacobs also agreed that for the same period farrier expenses of $15,169.55 actually incurred were high but were justifiable and within expectation. These were expenses that were incurred and associated with the application of modified shoes to Moore Metal. According to Dr Jacobs “it’s very important that, in cases such as this, that the corrective and appropriate farriering is undertaken”.
210.3 A number of “ancillary” expenses totalling $4,418.75 were set out in the schedule. Of these, the parties focused their attention on the use of 4CYTE gel (making up $3,740.80 of the total) and Ulcershield ($424). Speaking generally in describing the “ancillary” expense column, Dr Jacobs said that these were expenses that were incurred and justifiable but not necessary.

Concerning 4CYTE gel specifically, in his report Dr Jacobs said that it is a treatment for arthritis which in his opinion has minimal or no effect for a case such as this and it seemed to him that these treatments are largely unnecessary. In his oral evidence he explained that it reduces the inflammation in the affected joints. Dr Major agreed with Dr Jacobs’ categorisation of 4CYTE gel as an “ancillary” expense, adding that it was not directly related injury and its management. In Dr Major’s opinion, it had obviously been prescribed in good faith. In his oral evidence Dr Jacobs explained that some veterinarians would prescribe the use of 4CYTE gel in order to try to improve the condition of the horse on the basis that it may help. However, in his opinion based on scientific evidence associated with its use, it would have minimal or no effect on the outcome for the case. Dr Jacobs did not cavil with Dr Majors’ expression of opinion that it had been prescribed in good faith.

In the minutes of their conclave meeting of 11 April 2024 (Exhibit 12) Dr Major and Dr Jacobs recorded that they agreed that neither of them would have included 4CYTE gel as part of the treatment for this horse, however it is used by many respected colleagues and has some positive therapeutic actions.

Concerning Ulcershield specifically, Dr Jacobs explained that it is required to treat gastric ulcers in horses, and it improves the horse’s appetite. He said that it had largely been used when Moore Metal was at Dr Pedrana’s hospital and it may well have been used because Moore Metal was not eating adequately. Dr Jacobs said he would use the drug in that situation. Dr Major said that it is a fairly common practice to place hospitalised animals on the treatment as a preventative measure.

The plaintiff submitted that whilst the respective experts would not describe the expenses for 4CYTE gel and Ulcershield as necessary, they were reasonably incurred and related to the injury suffered in the accident.

The defendant submitted that these were additional and unnecessary costs. The defendant submitted that the plaintiff had no regard to cost of treatment and had the plaintiff been more cost-conscious and asked the veterinarians to focus only on treatment that was necessary, they are costs that would not have been incurred. The defendant submitted that the costs were too remote to be recoverable.

In my view the test is one of reasonableness. Whilst Dr Major and Dr Jacobs may not have used for 4CYTE gel themselves in the circumstances, their evidence was that it was used by many respected colleagues and has some positive therapeutic actions. It was reasonable for the plaintiff and Mr Jones to have relied upon the good judgment and training of Dr Pedrana and Dr Low, particularly in circumstances where they were treating Moore Metal with good success. In my view the expense of using 4CYTE gel was reasonably incurred and ought to be allowed. The same would apply to the use of Ulcershield, particularly given the evidence of Dr Major that is a fairly common practice.

The plaintiff also sought as a past expense the cost of transporting Moore Metal from Dr Pedrana’s hospital in Dubbo to WestVETS Equine Hospital & Equine Reproductive Centre at Marburg in Queensland. There is no dispute about the amount – it was $715.
The plaintiff referred to the oral evidence of Dr Major who said that Moore Metal probably would not have made that journey had he not been recuperating from an injury. Dr Major said that Moore Metal would certainly have been transported, but not that particular trip.
The defendants submitted that Moore Metal was transferred to commence breeding and that such transportation would have been required in any event (whether from the defendants’ property or Dubbo Equine Hospital) in order to commence breeding.
Mr Jones gave unchallenged evidence in his affidavit that Moore Metal was transported to WestVETS “to continue with treatment and so he could be closer to University of Queensland for future MRI scans to ascertain the damage to his ligament and tendons”. That is consistent with the ongoing treatment referred to in the veterinary reports after Moore Metal was taken to Queensland.
Having regard to Dr Majors’ and Mr Jones’ evidence in particular, in my view the transportation of Moore Metal from one equine hospital to another was a cost reasonably incurred and arose from the injury suffered in the accident.
The total of the above past costs or expenses is $67,016.79.
The plaintiff submitted that an amount should be deducted from that sum to account for expenses which would have been incurred in any event but for the accident, “whether the appropriate counterfactual is a breeding stallion or a breeding and competing stallion”.
Evidence about the costs that would have been incurred in any event on the assumption that there was no accident and Moore Metal had continued to compete, or that he was only to stand at stud and not compete was given by Dr Jacobs (for the defendants) and Dr Fulton (for the plaintiff).
The plaintiff submitted that unless the damages award accounts for the fact that Moore Metal lost the opportunity to earn more prize money and higher breeding rights, the appropriate counterfactual is a breeding stallion.
The defendants submitted that this cannot be correct in circumstances where it was never Mr Jones intention that Moore Metal be a breeding stallion. The defendant submitted that Mr Jones intention was always to compete with Moore Metal and it was only later that he turned his attention to focus only on breeding.
Insofar as the defendant raises questions of the plaintiff’s (or Mr Jones’) intentions. It is clear that prior to the accident the plaintiff intended that Moore Metal would both compete and provide breeding services. That changed as a result of the accident. After the accident Moore Metal was no longer able to compete, but he has been able to provide breeding services.
In my view it is appropriate to deduct a sum to take account of the expenses that the plaintiff would have incurred in using Moore Metal as a breeding stallion but for the accident, as opposed to those expenses which may have been incurred in breeding and competing because:

222.1 Over the period during which the expenses have been incurred Moore Metal has not competed, but has only been used by the plaintiff to provide breeding services. There is no need to hypothesise about those events.
222.2 In the events that have happened the expenses have been incurred, in effect, to allow Moore Metal to continue to provide breeding services, not to compete.
222.3 But for the accident, had Moore Metal been providing breeding services (which in fact it had been) the plaintiff would have been incurring some expense to allow that to occur. It is appropriate to make an allowance for those expenses because the plaintiff would have incurred them anyway but for the accident.

As I understand it, it is common ground that the figure to allow is the equivalent of $1,115 per annum or $3.05 per day. Dr Jacobs explained in his supplementary report of 13 February 2025 (paragraph 35 to 39 ) that this represented the annual veterinary and farrier costs for a stallion standing at stud (i.e. for breeding). Dr Fulton agreed that the expenses stated by Dr Jacobs were reasonable.
The plaintiff submitted that over the relevant period (26 May 2018 to 29 February 2024 or 2,105 days) the allowance would be $6,420.25.
On that basis, I allow the plaintiff $60,696.54 for past expenses excluding interest. This is made up of the total past costs or expenses of $67,016.79 less the allowance of $6,420.25.
Before going to the plaintiff’s claim in relation to future expenses it is necessary to address the question of Moore Metal’s life expectancy.

Life expectancy

Based on Dr Major’s evidence, counsel for the plaintiff submitted that Moore Metal would continue to provide breeding services to age 20 and that he could live to age 30.
Counsel for the defendants submitted that the evidence as to life expectancy of Moore Metal is not clear. Counsel submitted that Dr Major said that some horses “can” (not are likely to) live up to 30 years but their athletic ability and soundness and fertility drops off after 20 years and that he also said a number of horses die of illness or misadventure or become athletically unsound but that this number is “not quantified, and would vary considerably with breed and usage”. Counsel submitted that there is therefore no evidence as to how long Moore Metal will live or be able to keep performing.
What does the evidence say?
In his report of 9 August 2023, Dr Major addressed the likely lifespan of Moore Metal. He said that without this injury it would be reasonable to expect Moore Metal to participate in the sport of campdrafting to the age of 20 years. Some horses may live on up to 30 years or more, but their athletic ability and soundness, as well as fertility, drop off after 20 years. A number of horses die of illness or misadventure before this time or become athletically unsound. This number, to Dr Major’s knowledge, is not quantified and would vary considerably with breed and usage. Having regard to Moore Metal’s injuries and recovery and assuming that Moore Metal had good libido and serving capacity on a breeding mount, and that he exhibits good serving capacity and fertility, Dr Major expected no limitation in Moore Metal’s breeding capacity as long as he maintained sufficient comfort and soundness to serve the breeding mount. If he became severely lame in one or both front legs it would severely impair the process of semen collection, and hence his breeding rate. Earlier in his report Dr Major had said that he considered it highly likely that pastern joint arthrodesis will be required in the future. In this procedure the joint is fused, for relief of pain and instability. Having regard to that high likelihood of requiring surgery particular, Dr Major expressed the final conclusion that Moore Metal was unlikely to reach the expected productive age of 20 years, and his breeding career will most likely be reduced, both in demand and duration.

By the time of the hearing it was no longer the case that it was highly likely that pastern joint arthrodesis will be required in the future. Dr Jacobs, Dr Fulton and Dr Major all agreed at the hearing that the pastern joint has effectively fused such that a surgical arthrodesis is very unlikely to be necessary.
In his oral evidence, Dr Jacobs said that there were very few risks for Moore Metal going forward beyond the natural, being the fact that he has a recovering deep flexor tendon laceration and fused pastern. He said that “(h)orses in this situation can be completely okay but still have evidence of lameness, and they can live a full and complete life”.
In his report of 13 February 2024, Dr Jacobs had expressed the opinion that “Moore Metal will be able to continue to stand as a breeding stallion with routine ongoing care taking into account the requirement to continue with farrier work as indicated by Dr Fulton”. Dr Fulton agreed with this in his report of 4 March 2024.
When asked in oral evidence if he agreed with this, Dr Major said:

“Look, all I can really say is that the horse has been functioning quite well under the existing conditions of management for some time now, and it would be hoped that he would continue for - into the foreseeable future. I guess my point is this. Having been a veterinarian in equine practice for 40 years, one's heart gets broken from unexpected causes from time to time. I think this horse has a higher risk of a premature end to his career than a horse that had no injury. And his injury can't make his career any longer, it can only make it shorter. So he may well ..(not transcribable)..what Dr Jacobs and Dr Fulton have suggested, and live out his life as a stallion. But I believe there is a higher risk than - of the normal undamaged horse getting that far.”

When pressed, Dr Major said that he agreed with Dr Jacobs opinion, but with the qualifications he had just offered (which I have set out above) and also in his supplementary report. The supplementary report Dr Major was referring to was his report of 5 March 2024. The thrust of what he said there was the same.

My finding on life expectancy

Based on that evidence, I find that it is likely Moore Metal will continue to be able to provide breeding services until the age of 20 and live to the age of 30. The concerns or qualifications expressed by Dr Major in my view would fall within what might be called the usual vicissitudes of life for a horse. Those vicissitudes are taken into account by applying a percentage discount to the overall allowance for the future or ongoing expenses. I will apply that discount in due course. On the plaintiff’s submissions, it has allowed for those vicissitudes (or imponderable factors) in its calculation of a buffer.

Future expenses

The plaintiff broke down its claim for the future into 2 periods. The first period was until the cessation of breeding at age 20, a period of 9 years. The second period was for the next 10 years to age 30.
For the first period the plaintiff claimed ongoing costs for 3 items:

238.1 Phenylbutazone: at $2 per day for 9 years, which equated to $730 per year and a total of $6,570 over 9 years.
238.2 Corrective shoeing: 12 times per year at a cost of $300 each time, which equated to $3600 per annum and a total of $32,400 over 9 years.
238.3 X-ray investigations: 3 times a year at a cost of $450 each time, which equated to $1350 per year and a total of $12,150 over 9 years.

For the first period, the plaintiff also claimed as a fourth item an allowance for an increased risk of a one-off cost for euthanasia and disposal, at a cost of $5,000.
The total of all 4 items, the plaintiff submitted, represented its claim for future expenses over the first nine-year period; that total being $56,120. The plaintiff also recognised that an allowance should be made for the costs that the plaintiff would have incurred in any event but for the accident, being the figure of $1,115 per annum allowed in respect of the past expenses for the annual veterinary and farrier costs for a stallion standing at stud (or breeding). It submitted that the appropriate allowance was $10,035, being the annual figure multiplied over 9 years. Deducting one from the other, the plaintiff submitted that the net future expenses claim until the anticipated end of Moore Metal’s breeding career at age 20 was $46,085.
Because this part of the claim related to the future, the plaintiff acknowledged that it should be discounted for its present value and what it described as the imponderable factors that necessarily call for a discount, such as the possibility of the earlier demise of Moore Metal. Rather than undertake that exercise in a mathematical way, the plaintiff submitted that it would instead be appropriate to allow for this head of damage by way of a buffer. The amount suggested was $37,500.
For the second period, the plaintiff submitted that the same costs would be incurred beyond 20 years of age, and an award of damages should be made on account of the expected life of Moore Metal to 30 years of age. It submitted that it was appropriate to allow a further amount on a buffer basis for this additional period. The additional amount suggested was $10,000.
The defendants submitted that the plaintiff’s claim for ongoing veterinary fees into the future cannot be advanced. They submitted that the plaintiff had cited no authority for the proposition that a defendant’s duty of care extends to liability for damages to an indeterminate and ongoing claim for ongoing costs associated with a chattel. They submitted that there was no basis of on which the defendant should be held liable for an indeterminate claim for the maintenance of Moore Metal.
In my view it is important to recognise that the claim relates to the ongoing expense of 3 particular items. The ongoing need for 2 of those items is undisputed, and in fact deemed as essential, on the veterinary evidence – that is the need for corrective shoeing and the related cost of x-rays. Further, there is no issue that the need for them has arisen from the injuries sustained in the accident.
The position in relation to the 3^rd item, the phenylbutazone, is different. Dr Major described it as like giving a human an aspirin. Dr Jacobs’ opinion was that it was not required. Dr Major said “we really can’t predict that into the future”.

A check on the plaintiff’s suggested buffers

Although the plaintiff has broken down the future into 2 separate periods, it submits that the same expenses will continue to be incurred as a result of the injuries sustained in the accident.
That conclusion is consistent with the veterinary expert evidence. In their oral evidence when being asked by counsel for Mr and Mrs Smith about the ongoing expense of corrective shoeing (number 3 in the table in Exhibit 11), Dr Major said that he and Dr Jacobs agreed that corrective shoeing “It’s essential, we agree on that”, and Dr Jacobs did not say otherwise. Dr Major added “He will continue to need a specially crafted shoe, probably for the rest of his career. Right. So as an additional expense, he will need shoeing.”. In his report of 9 August 2023, Dr Majors stated that “It is highly likely that the horse will require ongoing veterinary care and farriery expenses, a(s) the leg will never regain normal function.”. In his report of 22 December 2023, Dr Jacobs said there would be ongoing additional costs of corrective shoeing. As I understand it, there was no issue that the need for corrective shoeing would not continue past the time Moore Metal stops providing breeding services. Further, as I understand it, there was no issue that the continuing need for X-rays was directly related to application of corrective shoeing.
It follows that the claimed expenses for the first 3 items are claimed to be recurring expenses into the future over a 19 year period.
The usual way to arrive at an appropriate sum to allow for future recurring expenses would be to convert the annual total to an average weekly amount, apply the relevant multiplier for the present value of $1 per week for the number of years, and then deduct a percentage to allow for vicissitudes or uncertainty.
Adopting that method, the weekly sum would be $87.79, calculated as follows:

(a) Phenylbutazone

$730 p.a.

(b) Corrective shoeing

$3,600 p.a.

(c) X-rays

$1,350 p.a.

$5,680 p.a.

Less

Allowance for expenses that would have been incurred in any event

$1,115 p.a.

Total

$4,565 p.a.

Divided by 52 weeks

$87.79 per week

The multiplier on the 3% tables for 19 years is 758.6. On the 5% tables, it is 646.2.
In personal injuries cases it is usual to apply a 15% discount for vicissitudes. Whilst this is not a personal injuries case, that usual percentage discount for humans does provide some guidance. In light of the evidence of Dr Major, in my view it would be appropriate to apply a discount of 20% for vicissitudes.
Using the 3% tables with a discount of 20%, the figure to allow would be $53,277, calculated as follows: $87.79 x 758.6 = $66,597 x 0.8 = $53,277.
Using the 5% tables with a discount of 20%, the figure to allow would be $45,383, calculated as follows: $87.79 x 646.2 = $56,729 x 0.8 = $45,383.
Making the same calculations without allowing for Phenylbutazone ($730 p.a.), the result on the 3% tables would be $44,799, and on the 5% tables it would be $38,150.
In written submissions, the plaintiff suggested that the discount rate is set at 5% because of s.14 of the Civil Liability Act 2002. That section is in Part 2 of the Act which “applies to and in respect of an award of personal injury damages” (s.11A). This is not an award of personal injury damages and in my view s.14 does not apply.

My conclusion about future expenses

It can be seen that if one allows for Phenylbutazone the calculations I have just set out lie closely either side of the total buffer ($37,500 plus $10,000) suggested by the plaintiff.
In my view it is not appropriate to allow for the expense of using Phenylbutazone into the future.
Whilst the calculations I have set out produce an air of mathematical precision, arriving at an appropriate amount is not a precisely calibrated exercise.
In all the circumstances, in my view it is appropriate to adopt the amount proposed by the plaintiff but to make an adjustment downwards to account for the Phenylbutazone.
On that basis I allow the sum of $42,000 for future expenses.

Claim for a sum on account of the diminution in market value of Moore Metal

The plaintiff also claims a “buffer” on account of the diminution in market value of Moore Metal. The suggested figure is around $100,000.
I addressed the valuation evidence before the court earlier. In the end, there is no expert evidence of the market value, or diminution in market value, of Moore Metal.
The plaintiff submitted that $100,000 was an appropriate figure based on the evidence of Mr Inglis about the horse Metallic Storm, at paragarph 34.d. of his report of 21 December 2023. Mr Inglis said there: “In 2018, a horse named Metallic Storm ran second in the Futurity. This result was particularly significant because he was trained by a non pro and was narrowly beaten by top trainer Todd Graham. The perception with this performance was, if he had been with a top professional trainer would the result have been reversed. Metallic Storm is by Metallic Cat and is from a very good mare, Oaks Chime (second in the Warwick Gold Cup Australia's most prestigious campdraft event). He was sold in 2020 for $100,000 having been passed in at auction at $75,000.”. This evidence was not admitted as proof of the facts stated, but only as proof of Mr Inglis’ reasoning.
In his oral evidence:

265.1 Mr Inglis said Metallic Storm was a “very, very close comparison” to Moore Metal (T503:49).
265.2 Mr Inglis said that Metallic Storm as “the closest comparable sale (he) could find” (T509:6).
265.3 Mr Inglis said that in comparing the 2 horses: “He's nearly - you'd nearly think they were - they're incredibly closely bred. Both by the same horse, and both out of champion campdraft mares. And their results were very similar.” (T509:15).

Counsel for the plaintiff did not articulate a basis in principle for allowing damages for diminution in value in addition to damages for past and future expenses.
However in my view it would be consistent with general principle identified in McGregor on Damages about undertaking repairs to damaged chattels by reference to Payton v Brooks and The Georgiana v The Anglican. The general principle stated in McGregor on Damages is that if despite the repairs having been undertaken, the evidence justifies a finding that the market value of the chattel is less than before the damage was done, a plaintiff will be entitled to the diminution in market value in addition to the costs of repair. See paragraph 101 of these reasons
There is no doubt that Moore Metal was not able to be fully “repaired”. He has been unable to return to competition and his breeding services must be obtained with the use of a phantom mare. According to the expert veterinary evidence that is unlikely to change. I would infer that as a result his market value is less than before the damage was done.
I do not accept the plaintiff’s submission, based as it is on Mr Inglis’ evidence about Metallic Storm which was admitted for a limited purpose.
Doing the best I can on the evidence before me I assess Moore Metal’s diminution in value at $20,000 and I allow the plaintiff that sum in addition to damages for past and future expenses.

J. Proceeds of insurance

It was common ground that if damages are allowed for past veterinary expenses, and allowance should be made for $44,564.29 received from the proceeds of insurance.

K. Summary of damages payable

By way of summary, I have allowed:

(a)

Past expenses (paragraph 225)

$60,696.54

(b)

Future expenses (paragraph 261)

$42,000.00

(c)

Diminution in value (paragraph 270)

$20,000.00

$122,696.54

Less

(d)

Insurance proceeds (paragraph 271)

$44,564.29

TOTAL

$78,132.25

The first plaintiff is entitled to judgment against Mr and Mrs Smith in that amount.

L. Costs

Costs should follow the event.
I will therefore order that Mr and Mrs Smith pay the first plaintiffs’ costs.

M. Orders

I make the following orders:

Judgment in favour of the first plaintiff against the defendants in the sum of $78,132.25.

Defendants to pay the first plaintiff’s costs.

**********

Decision last updated: 14 March 2025

Medium Neutral Citation:	Robert H Jones Investments Pty Ltd v Smith [2025] NSWDC 58
Hearing dates:	8 – 12 April 2024 16 – 17 April 2024 29 April 2024 (closing submissions)
Date of orders:	14 March 2025
Decision date:	14 March 2025
Jurisdiction:	Civil
Before:	Waugh SC DCJ
Decision:	(1) Judgment in favour of the first plaintiff against the defendants in the sum of $78,132.25. (2) Defendants to pay the first plaintiff’s costs.
Catchwords:	DAMAGES - FOR BREACH OF DUTY OF CARE, CONTRACT AND BAILMENT - Injury to a horse - Valuation of a chattel - Loss of a commercial opportunity - Mitigation
Legislation Cited:	s5A, s5D, s5E, s14 Civil Liability Act 2002
Cases Cited:	Arsalan v Rixon (2021) 274 CLR 606 Badenach v Calvert (2016) 257 CLR 440 Bell v Thompson (1934) 34 SR 431 Berry v CCL Security Pty Ltd (2020) 271 CLR 151 Diamond v Lovell [2002] 1 AC 384 Fox v Percy (2003) 214 CLR 118 Liesbosch Dredger v SS Edison [1933] AC 449 Payton v Brooks [1974] RTR 169, [1974] 1 Lloyd’s Rep 241 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Spencer v The Commonwealth (1907) 5 CLR 418 Talacko v Talacko (2021) 272 CLR 478 The Georgiana v The Anglican (1873) 21 WR 280 The Kingsway [1918] P 344 Wallace v Kam (2013) 250 CLR 375 Williams v Toyota Motor Corporation Australia Limited [2024] HCA 38
Texts Cited:	McGregor on Damages (22nd edition, 2024, Thomson Reuters) Palmer on Bailment (3rd edition, 2009, Sweet & Maxwell)
Category:	Principal judgment
Parties:	Robert H Jones Investments Pty Ltd (First Plaintiff) Lineloc Pty Limited (Second Plaintiff) Trent Jonathan Smith (First Defendant) Claudia Smith (Second Defendant)
Representation:	Counsel: Mr J Simpkins (Plaintiff) Mr M Kalyk (Defendant) Solicitors: Koffels Solicitors & Barristers (Plaintiff) Murphy Lawyers Inc (Defendant)
File Number(s):	22/171851
Publication restriction:	Nil

(a) Phenylbutazone	$730 p.a.
(b) Corrective shoeing	$3,600 p.a.
(c) X-rays	$1,350 p.a.
$5,680 p.a.
Less Allowance for expenses that would have been incurred in any event	$1,115 p.a.
Total	$4,565 p.a.
Divided by 52 weeks	$87.79 per week

(a)	Past expenses (paragraph 225)	$60,696.54
(b)	Future expenses (paragraph 261)	$42,000.00
(c)	Diminution in value (paragraph 270)	$20,000.00
$122,696.54
Less (d)	Insurance proceeds (paragraph 271)	$44,564.29
TOTAL	$78,132.25