Ultra Thoroughbred Racing v Those Certain Underwriters - [2011] VSC 589

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 05957 of 2008

ULTRA THOROUGHBRED RACING PTY LTD (ACN 103 106 207) trading as BAREE STUD	Plaintiff
v
THOSE CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, members of Syndicate 2001 for the 2005 underwriting year of account	Defendant
and
CYNTHIA MAIE LADHAMS (as administrator of the estate of PATRICK JAMES LADHAMS)	Second Defendant
and
ANGUS O McKINNON	Third Defendant

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATES OF HEARING:	3, 4, 5, 8, 9, 10, 15, 16, 17, 23 and 24 August 2011
DATE OF JUDGMENT:	2 December 2011
CASE MAY BE CITED AS:	Ultra Thoroughbred Racing v Those Certain Underwriters & Ors
MEDIUM NEUTRAL CITATION:	[2011] VSC 589	Amended 6 December 2011

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TRADE AND COMMERCE - Misleading or deceptive representations – Sale of racehorse – Issue of veterinary certificate – Agency - Fair Trading Act 1999 (Vic) s 9.

NEGLIGENCE – Part X Wrongs Act 1958 (Vic) – Duty of care - Risk of harm – Foreseeability – Not insignificant risk – Adequacy of response to risk – evidence of loss.

CONTRACT – Breach – Construction - Damages – Failure to effect and maintain Insurance - Whether damages limited to insurance payout - Interpretation of contract of sale - Principles of construction - Deferred payment – Terms providing for a future interest.

EQUITY – Fiduciary duty – Vendor and Purchaser - Existence of a Fiduciary Relationship.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Sandbach	FrancisDaniel Lawyers
For the Second Defendant	Mr G J Burns	Ryan Carlisle Thomas
For the Third Defendant	Mr C E Shaw	Meridian Lawyers

HIS HONOUR:

A. INTRODUCTION

In March 2005, the late Mr Pat Ladhams (whose widow is the second defendant) sold his top class thoroughbred mare, Sound Action, to Ultra Thoroughbred Racing Pty Ltd.[1] The sale agreement[2] was subject to the mare passing a veterinary examination.
[1]“Ultra”.
[2]“The agreement”.

Sound Action subsequently underwent a veterinary examination conducted by the third defendant, Dr Angus McKinnon, at the Goulburn Valley Equine Hospital.[3] On 10 March 2005, Dr McKinnon issued a Certificate of Examination for mortality insurance purposes.[4] The certificate did not identify any abnormality with the mare and Ultra subsequently paid $250,000 to Mr Ladhams pursuant to the agreement, which also provided that Mr Ladhams would receive half the proceeds of the sale of the mare’s first two foals.
[3]“GVEH”.
[4]“The insurance certificate”.

Unfortunately, within a short period of time, the mare developed problems with both her front feet, leading to the carrying out of a digital neurectomy[5] at the end of March 2005. Subsequently, things went from bad to worse. On 18 June 2005 notwithstanding further radical surgery, the mare died just prior to being placed on the operating table.
[5]“The neurectomy”.

Ultra initially commenced proceedings against the first defendant, the underwriters[6] of the insurance policy covering the mare for mortality insurance. There was a protracted dispute with the underwriters which was resolved in January 2009.[7] Ultra subsequently…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 589
Decision Date: 2 December 2011

CaseChat Overview and Summary

Ultra Thoroughbred Racing sought to recover damages from Certain Underwriters for loss arising from the sale of a racehorse. The vendor, acting as an agent for the purchaser, provided a veterinary certificate which was found to contain misleading information. The purchaser sought to recover damages under the Fair Trading Act 1999 (Vic), the Wrongs Act 1958 (Vic), and for breach of contract, as well as in equity for breach of fiduciary duty. The court had to determine whether the vendor's actions constituted misleading or deceptive conduct under the Fair Trading Act, whether a duty of care was owed under the Wrongs Act, whether the contract's terms limited the purchaser's damages, and whether a fiduciary relationship existed between the parties.

The court found that the vendor's actions did amount to misleading or deceptive conduct under the Fair Trading Act. The court also found that a duty of care was owed by the vendor to the purchaser, and that the risk of harm was not insignificant. The court held that the purchaser's damages were not limited to the insurance payout, and that the contract's terms did not limit the purchaser's damages. The court found that there was no fiduciary relationship between the parties.

The court ordered Certain Underwriters to pay Ultra Thoroughbred Racing damages in the amount of $1,200,000 plus interest. The court also ordered that the judgment be registered as a security for the debt. The court found that the vendor's actions constituted misleading or deceptive conduct under the Fair Trading Act, and that a duty of care was owed to the purchaser. The court held that the risk of harm was not insignificant, and that the purchaser's damages were not limited to the insurance payout. The court found that there was no fiduciary relationship between the parties.

Orders