Wild Women Trading Co Pty Limited v Ulrich Klatte & Ors

[2007] NSWDC 23

CITATION:	Wild Women Trading Co Pty Limited v Ulrich Klatte & Ors [2007] NSWDC 23
HEARING DATE(S):	5/2/07 - 8/2/07, 12/2/07 - 15/2/07, 19 February 2007
JUDGMENT DATE:	2 March 2007
JURISDICTION:	Civil
JUDGMENT OF:	Rolfe DCJ
DECISION:	1. Stand over proceedings at 9.30am on Thursday 29 March 2007.; 2. Plaintiff to e-mail or fax to my associate written submissions plus draft Short Minutes of Order by 5pm on 7 March 2007 and to serve same on the defendants.; 3. Defendants to e-mail or fax their submissions in reply by 5pm on 19 March 2007 and to serve same on the plaintiff.; 4. Plaintiff to e-mail or fax any submissions in reply by 26 March 2007 and to serve same on the defendants.; 5. Direct the exhibits be retained in the registry until 30 April 2007.
CATCHWORDS:	Syndication of Horse - Representation that horse was a fabulous showjumping horse - Held that this was misleading and deceptive conduct when the horse only showed potential as a showjumper and that Plaintiff had relied on this misrepresentation - Pedigree documentation which contained certain incorrect information held to be misleading and deceptive conduct but that Plaintiff had not relied on it - Relief applicable when damages are not an appropriate remedy
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (NSW) District Court Act 1973
CASES CITED:	Tenji v Henneberry & Associates Pty Limited 172 ALR 679 Akron Securities Limited v Iliffe (1997) 41 NSWLR 353
PARTIES:	Wild Women Trading Co Pty Limited (Plaintiff) Ulrich Klatte (1st Defendant) Tredentay Pty Limited (2nd Defendant) Baremba Investments Pty Limited (3rd Defendant)
FILE NUMBER(S):	5428/06
COUNSEL:	G R Waugh (Plaintiff) M McCall (Defendants)

JUDGMENT

1 Cougar Wicce-Otter is the principal shareholder and director of the plaintiff, Wild Women Trading Co Pty Limited. In about 1995, Ms Wicce-Otter became interested in breeding warmblood horses. Warmblood horses are those that are used in dressage and jumping events.

2 In March 1999 the plaintiff says it entered into the joint venture agreement, referred to in paragraph 7 of the fourth amended statement of claim (filed in Court on 19/2/07), for the purchase of the warmblood horse known as Agassi. The plaintiff says the horse was to be purchased by the joint venturers from the second defendant, Tredentay Pty Limited (“Tredentay”), and would be managed by the third defendant, Baremba Investments Pty Limited (“Baremba”). Baremba operated the Belcam Stud at Biddaddaba, Queensland.

3 In accordance with these arrangements the plaintiff acquired a one-fifth share in Agassi at a cost of $50,000.

4 The plaintiff claims that the purchase of its share in Agassi resulted from discussions which Ms Wicce-Otter had in late 1998 and early 1999 with the first defendant, Ulrich Klatte (“Mr Klatte”) and Steven Tarr (“Mr Tarr”). Mr Klatte was a director and shareholder of Baremba. Mr Tarr was the principal of the car dealership known as The Elms Classic Autos Pty Ltd, one of the joint venturers.

5 The defendants admit that Mr Klatte and Mr Tarr “were representatives of Baremba, alternatively, Tredentay, by virtue of the ostensible authority for those companies” (sic) (para 2(d) of Amended Defence filed in Court on 13/2/07).

6 The plaintiff says that it would not have bought its share in Agassi but for the following misleading conduct on the part of the defendants:

a. A representation by Mr Tarr that Agassi was a fabulous showjumping horse owned by Tredentay when that statement was untrue;

b. The act of producing and showing Agassi’s pedigree documentation in circumstances where some of the information contained in it was untrue.

Issues for Determination

7 The Court has to decide

a. Given the defendants’ admission that Mr Tarr said that Agassi was a fabulous showjumping horse, whether that representation was misleading or deceptive.

b. What pedigree documentation was shown to the plaintiff.

c. Whether some of the information contained in the pedigree was untrue and, if it was, was there misleading or deceptive conduct on the part of the defendants in showing the pedigree to the plaintiff.

d. Was Mr Klatte involved in the deceptive conduct.

e. To what extent did the plaintiff rely on either the representation or the information contained in the pedigree.

f. If so, did the plaintiff suffer loss or damage.

g. If so, to what relief is the plaintiff entitled.

Background

8 After becoming interested in warmblood horses in 1995 or thereabouts, Ms Wicce-Otter started breeding them, took some riding lessons and got involved in dressage competitions.

9 Ms Wicce-Otter went to the Belcam Stud in 1995 for its annual auction and saw a lot of warmbloods. After that, she did further courses in horse training. In 1997 Ms Wicce-Otter bought her first horse from Belcam Stud. Its name was Jeanie’s Gold. The horse was in foal to Argentinus, a well recognised, successful, warmblood horse. When the colt was born it was named Argold.

10 At the time, Mr Klatte advised Ms Wicce-Otter that it was important for the plaintiff to have its horses registered in a good studbook. He advised her to register the horse with the Australian Continental Equestrian Group (“ACE”) which kept a register of Australian warmblood horses.

11 In May 1998 the plaintiff bought another warmblood horse, "Lucilla", from Belcam Stud.

12 In December 1998 the plaintiff purchased two further warmblood horses from Belcam Stud at their auction.

13 Ms Wicce-Otter first saw Agassi at the Belcam auction in 1998 when it was paraded with other stallions. Ms Wicce-Otter attended the post auction party and Mr Klatte invited her to look at Agassi while he was in the stables. Mr Klatte agreed that the plaintiff could have a free service with Agassi because of the amount it had just spent at the auction.

14 Ms Wicce-Otter said she then went to the office with Mr Klatte and he told her that Agassi was being syndicated and that he was going to introduce her to Mr Tarr. Mr Tarr would be doing the marketing for the syndication of Agassi.

15 At this time, Mr Klatte put Agassi’s pedigree documentation on the table in his office, along with the pedigree documentation relating to the horses that the plaintiff had just purchased at the auction. Ms Wicce-Otter conceded in evidence that she did nothing more than glance at the pedigrees.

16 Subsequently, Mr Klatte delivered some mares to Ms Wicce-Otter’s Byron Bay ranch. When she told him she was going to build an indoor arena, Mr Klatte showed interest, because he said he had built one himself. Mr Klatte also told Ms Wicce-Otter that Agassi had just been awarded a score of 9 out of 10 by a German assessor, Dr Ramsauer, who was visiting Australia to assess warmblood horses.

17 Ms Wicce-Otter said that during this conversation Mr Klatte referred to Mr Tarr and recommended him as a prestige car dealer from whom she might be able to purchase a BMW four-wheel drive vehicle. Mr Klatte told Ms Wicce-Otter that Mr Tarr was marketing horses for the stud and that Tarr had also purchased some horses from the stud.

18 In late December 1998 or thereabouts, Ms Wicce-Otter had a meeting at the Byron Beach Hotel café with council representatives to discuss their requirements for the indoor arena. Also present were Mr Klatte, Mr Peter Sloan, Mr Tarr and his girlfriend. I am satisfied that this was when Ms Wicce-Otter met Mr Tarr.

19 When they left the coffee shop, Ms Wicce-Otter said that Mr Klatte, Mr Tarr, his girlfriend and Mr Sloan went back to Ms Wicce-Otter’s Byron Bay property. Whilst Ms Wicce-Otter, Mr Klatte and Mr Tarr were sitting around in her office, Mr Tarr, referring to Agassi, told her she had an opportunity to “buy into this horse, that there’s another guy that had pulled out, and so if you want you can come in” (T 47.12). Mr Tarr said Agassi “was the best horse Ulrich had ever bred” (T 47.24).

20 Mr Tarr then said (T 47.40):

“Yeah, he said he was – you know, videos of him and he was a fabulous horse, he was a fabulous show-jumping horse, Mellers was going to ride him, Ramsauer had given him a 9 and he was the best thing, and he was going to market him and campaign him for the top events.”

21 Ms Wicce-Otter told Mr Tarr and Mr Klatte she was interested. She was told by Mr Klatte that Mr Mellers was a good rider. Mr Klatte also said that he had a brother living in the USA who sold a lot of horses, in particular, he said (T 48.5):

“He said that his brother, Hennik did a lot of business and he had another relative who had an airfreight business and they had a lot of networking, a lot of contacts both in Germany of course where they lived, and in the United States, and that we would have an opportunity, when we came to – we want to sell in three years time, Agassi for $500,000 after he had been campaigned, we could sell him probably in the United States with the help of Hennik.”

Mr Klatte also said that Agassi would be World Cup material and the intention was to compete him in the Olympic Games. In this respect, importantly, although Mr Wicce-Otter knew a lot about warmbloods, she said she knew nothing about showjumping.

22 Mr Tarr told Wicce-Otter that he would be taking a share in Agassi because he thought it was such a fabulous deal and so would his friend Mr Sloan, who was a plumber. Mr Tarr told Ms Wicce-Otter that the price would be $50,000 and if she went in as part of the deal she would receive 1000 straws of frozen semen which she could use for breeding her own horses.

23 Ms Wicce-Otter told Mr Tarr she was very keen and so he told her he would get a contract to her. Mr Tarr also said that Dr Ramsauer had assessed Agassi and that “he was a phenomenal jumper and – best horse he’d (sic) ever bred” (T 50.1).

24 On 24 March 1999 Ms Wicce-Otter had an assessment day at her farm and Dr Ramsauer assessed her horses. He was accompanied by Mr Klatte. During the day Mr Tarr arrived.

25 After Dr Ramsauer finished his assessments there was a discussion in Ms Wicce-Otter’s house amongst her, Mr Klatte and Mr Tarr. Mr Tarr started to talk about the joint venture contract and gave it to Ms Wicce-Otter. Ms Wicce-Otter started reading it.

26 Ms Wicce-Otter said that as she went through the contract she asked questions, including whether or not Mr Mellers was a good rider and Mr Tarr said that he was. Mr Tarr did nearly all of the talking and Mr Klatte remained in the background.

27 Ms Wicce-Otter said that when she noticed the contract was in her name, she told Mr Tarr that, on the advice of her accountant, the plaintiff was to be the purchaser and so Mr Tarr made this change to the contract in his handwriting. Ms Wicce-Otter then continued to read the contract and asked a few questions and was assured that Mr Mellers was a good rider. She also observed there was nothing in the draft document about her obtaining one thousand straws of semen and so Mr Tarr wrote that in at her request.

28 Ms Wicce-Otter was also told that Baremba and Tredentay were Mr Klatte’s companies.

29 Ms Wicce-Otter said there was only one copy of the contract which she signed after her name was crossed out and Mr Tarr wrote in the name of the plaintiff. Ms Wicce-Otter said she put her company seal on the document under her signature and wrote out a cheque which was given to Mr Tarr.

30 Before signing the joint venture document, Ms Wicce-Otter was shown a pedigree in relation to Agassi. A copy of the document which she said she was shown was admitted into evidence as exhibit M.

31 I am comfortably satisfied Ms Wicce-Otter was shown a pedigree before she signed the joint venture document and handed over her cheque. I am so satisfied because Ms Wicce-Otter was not challenged in cross-examination on this aspect of the matter. In addition, I have accepted Mr Klatte’s concession in cross-examination that it was “most likely” that the pedigree was attached (T 477.15-20). Moreover, the draft joint venture agreement (exhibit AA) and recital A to exhibit L all contained recitals that registration papers for Agassi were annexed to the agreement.

32 As noted at the beginning, therefore, the issue for determination with regard to pedigree is what documentation was shown to Ms Wicce-Otter and I will return to this question later.

33 Mr Klatte gave evidence that he was born in Germany and his family had been horse breeders for nearly 400 years. Mr Klatte came to Australia in 1984 and shortly afterwards married his wife Belinda. They were divorced in 2000.

34 Upon arrival in Australia Mr Klatte commenced his horse breeding business with Mrs Klatte. He has continued with the business since they were divorced.

35 In 1994 Mr Klatte established Australian Continental Equestrian Group Pty Limited, referred to in the evidence as “ACE Group”. The Ace Group’s business is to keep a studbook for warmblood horses in Australia. Up until that time all of Belcam Stud’s horses were registered with the Australian Warmblood Horses Association or AWHA.

36 Mr Klatte’s evidence was that he set up the ACE Group because the AWHA did not have the continuity and flexibility which allowed him to breed the horses that he wanted to breed.

37 In the early nineties Belcam Stud bought the mare known as "Benaloo Rose" from Mr Neville Rose, a Queensland horse breeder. Because Benaloo Rose had good jumping pedigree, Mr Klatte and Mrs Klatte decided to match “Benaloo Rose” up with Argentinus, which was known to be an exceptionally good, strong jumping horse. As a result of matching up Argentinus and Benaloo Rose, Agassi was born in January 1996.

38 Mr Klatte said that in the second half of 1998, when Agassi was two and a half years old, that Belcam Stud started (T 289.46):

“…free jumping him and he showed exceptional jumping talent and we decided then to keep him as a stallion and to use him as they say and at the same time also prepare him for the sport … of showjumping”.

39 Mr Klatte explained in his evidence that free jumping was simply allowing the horse, without a rider, to jump over various hurdles that had been placed around the indoor arena at Belcam Stud. He described Agassi’s efforts at free jumping as follows (T 289.57):

“ … I never saw a horse like it. It was – it’s hard to explain to a non-horse person but it would make you have goose bumps on your skin, right, it’s just for the sport, he wasn’t, wasn’t still as a fantastic jumper.”

40 Mr Klatte concluded that Agassi was a fantastic jumper by observing the horse in terms of his approach to the jumps, how he focussed, how he commenced his jump, the positioning of his legs and back whilst jumping and how he landed.

41 During the course of the annual auction at Belcam Stud in December 1998 Agassi was shown with other stallions, although he was not for sale at that stage and he was not included in the auction brochure. The horse was paraded and did some free jumping. The reason that Agassi was only allowed to do free jumping was that he was too young to have a rider at that stage.

42 Because of the number of people who attended the auction, about 1000, Mr Klatte could not remember speaking with Ms Wicce-Otter, but accepted it was quite possible that he did. Similarly, he said that if she had asked to see Agassi’s birth certificate, it would have been available for viewing in the office.

43 Around about this time Mr Klatte said he had discussed with his wife the idea of making a syndicate for Agassi. They thought it was a good idea because they would retain an interest in the horse and have access to it for breeding, as well as being able to manage the horse and ride it. They were encouraged to go ahead with the syndication by Mr Tarr, who had bought horses from Belcam Stud prior to that date.

44 Mr Tarr convinced Mr Klatte that his role in the syndicate should be to market it. Originally, the proposed members of the syndicate were to be the Klattes, Mr Tarr, Mr Sloan, Mr Mellers (who was going to ride the horse) and Mr Patrick, who was a friend of Mr Tarr. Mr Klatte said that he brought Mr Mellers into the syndicate and Mr Tarr brought in Mr Sloan and Mr Patrick.Mr Patrick, however, lost interest.

45 Draft joint venture documents were prepared by a barrister who was a family friend, Mr Oliver (exhibit AA).

46 Mr Klatte remembered going to Ms Wicce-Otter’s property at Byron Bay after attending the coffee shop or restaurant meeting that Ms Wicce-Otter gave evidence about.

47 Mr Klatte said that when he went to Ms Wicce-Otter’s property at Byron Bay, Mr Tarr was present at the meeting. Mr Klatte could not recall what was said at this meeting.

48 Mr Klatte remembered another meeting at Ms Wicce-Otter’s property when she signed the joint venture documentation. Mr Tarr was present at this meeting. Mr Klatte thought the date was 24 March 1999 and that it followed an assessment of Ms Wicce-Otter’s horses.

49 Mr Klatte was not sure whether he saw Ms Wicce-Otter sign the agreement, although that was the purpose of the meeting and Mr Tarr “wanted to collect the money” from Ms Wicce-Otter (T 300.45). Mr Klatte could not remember what was said at this meeting. In this respect I have concluded that Mr Klatte was a very honest witness.

Agreements Between the Parties

50 The final version of the plaintiff’s claim is the Fourth Amended Statement of Claim filed in Court on 19 February 2007. The final version of the defence is that headed “Amended Defence to the Third Statement of Claim” filed earlier on 13 February 2007.

51 In paragraphs 7 and 8 of its claim the plaintiff pleads that on 24 March 1999 it entered into the joint venture agreement with Baremba, The Elms Classic Autos Pty Limited, Mr Mellers and Mr and Mrs Sloan evidenced by a deed dated 12 March 1999 and at the same time Tredentay agreed to sell and the plaintiff agreed to buy a one-fifth share in Agassi for $50,000.

52 In paragraphs 4 and 5 of their defence the defendants admit that the plaintiff entered into the joint venture agreement with the third parties for the purchase of Agassi from Tredentay and that the plaintiff agreed to buy one-fifth share in Agassi for the sum of $50,000.

53 The defendants admit that Baremba was the original owner of Agassi, but transferred its interest in the horse to Tredentay and Tredentay sold the horse to each of the joint venturers. In this respect, given the concession made by Tredentay and Baremba about the ostensible authority of Mr Tarr, I am satisfied that Mr Tarr spoke on their behalf on 24 March 1999 and at the earlier meetings with Ms Wicce-Otter.

54 I accept Ms Wicce-Otter’s evidence that she signed the joint venture agreement on 24 March 1999 and that the handwritten amendments, about which she gave evidence, were made to it at that time by Mr Tarr. The original document could not be located and the best evidence of it is exhibit L, tendered by the plaintiff. An identical copy of exhibit L was tendered by the defendants as part of their tender bundle (exhibit 2.34). I am satisfied on the evidence that page 6 is the actual page signed by Ms Wicce-Otter on 24 March 1999, but that, sometime shortly thereafter, the name of the plaintiff was typed in in italics on that page and other words were added in italics on pages 1, 2, and 3, consistent with what had been agreed between the defendants and the plaintiff on 24 March 1999. When compared with exhibit AA (the draft joint venture documentation), it appears several clauses are missing from exhibit L, but the parties did not suggest anything turned on this.

Was it Misleading or Deceptive for the Defendants to represent that Agassi was a Fabulous Showjumping Horse

55 The statement made by Mr Tarr was a statement of fact, that is to say, at the time it was made, Mr Tarr asserted that Agassi was a fabulous showjumping horse. Although it was faintly suggested by counsel for the defendants, I reject the submission that the statement made by Mr Tarr connoted that the horse “would be” or had “the potential to be” a good showjumping horse.

56 I accept the plaintiff’s submission that the word “showjumping”, as an ordinary English word, carries the meaning that a horse has been jumping in shows. The Macquarie dictionary online describes the meaning of “showjumping” as “the riding of horses in competitions in order to display skill in riding over and between obstacles”. Similarly, the Oxford English Dictionary online defines showjumping as “competitive jumping on horseback over a prepared course of hurdles or show jumps …”. Although the defendant relied on the evidence of Belinda Klatte (for eg. T 258.5), Mr Klatte, Mr Mellers (exhibit 10.5), Dr Ramsauer (exhibit 11) and Mr Banny (T 365.25), this evidence did not support the fact that Agassi was a showjumping horse at the time the representations were made. Mr Klatte agreed in cross-examination that the horse had not been entered in any showjumping competitions before March 1999 (T 522.20); rather, Mr Klatte’s opinions were referable to the horse’s potential based on his observations of the free jumping done by the horse prior to 24 March 1999. Mr Klatte conceded that when the horse participated in the free jumping display at the Belcam Stud auction in December 1998, he was too young to be jumping under a rider.

57 In relation to Dr Ramsauer, first of all, based on Mr Klatte’s evidence, the assessment made by Dr Ramsauer was after 24 March 1999 and was based on the horse free jumping.

58 In the case of Mr Mellers, I am satisfied he did not begin riding Agassi until after March 1999 as is clear from Mr Klatte’s evidence (for eg. T 522.5) and Mr Mellers’ own evidence (exhibit 10 para 7).

59 Whilst Mr Banny was an honest witness, I am satisfied that his recollection as to the timing of events was inaccurate and in fact I am satisfied he was confused on this aspect of the matter. In any event, Mr Banny too only spoke in terms of Agassi’s potential as a showjumper.

60 The only objective evidence of actual showjumping results for Agassi leads me to conclude that he was not placed in competitions before 17 March 2001 (exhibit 2.153).

61 I am therefore comfortably satisfied that it was misleading for Mr Tarr to represent on behalf of the defendants that Agassi was a “fabulous showjumping horse” as at 24 March 1999 when this was not in fact the case.

Reliance

62 I am comfortably satisfied that the plaintiff was swept up by the statement made by Mr Tarr sufficiently to entice her to enter into the agreements pleaded in paragraphs 7 and 8 of the Fourth Amended Statement of Claim.

What Pedigree Documentation was Shown to the Plaintiff

63 Given that Mr Klatte conceded in cross-examination that, most likely, a pedigree was attached to the joint venture agreement when Ms Wicce-Otter signed it (T 477.15), and taking into account Ms Wicce-Otter’s evidence, I am comfortably satisfied that a pedigree document, was, in fact, shown to Ms Wicce-Otter before she signed the joint venture agreement and handed over her cheque. In coming to this conclusion I have noted the contents of recital A to the joint venture agreement (exhibit L).

64 The plaintiff pleaded that the document which is now exhibit M was the document shown to Ms Wicce-Otter. I am comfortably satisfied that exhibit M was not a copy of the pedigree shown to Ms Wicce-Otter on 24 March 1999. I am satisfied on the basis of the evidence given by Ms Koppler that the original of exhibit M was not produced until 2004: see exhibit 12. In accepting Ms Koppler’s evidence, I have also accepted Mr Klatte’s evidence that exhibit M was produced at the earliest in 2003 in reply to a request made in the proceedings (T 503.25).

65 In her evidence, Ms Wicce-Otter did not really adopt exhibit M, but she was sure that the document she was shown had the same names for the horses (T 103.15) and that she saw an Australian Stud Book number (T 55.20, T 101.45). Ms Wicce-Otter also said she saw two common seal stamps on the document (T 101.45).

66 I do not accept Ms Wicce-Otter’s evidence that she saw a document with an Australian Stud Book number on it because the ACE Group only started using Australian Stud Book numbers after a fire at Belcam Stud in November 2002 and hence, there could not have been a Stud Book number on the document shown to Ms Wicce-Otter. In addition, I am satisfied again on Mr Klatte’s evidence that the ACE Group only started using the two-stamp system after the fire in November 2002.

67 Mr Klatte’s evidence was that he obtained a copy of the original pedigree document from the Oldenburg Society in Germany to which it had been sent in 1998 or thereabouts. The document was admitted into evidence as exhibit 2.8. It was produced by the ACE Group in June 1998 (T 286.30). It has the old style font on it referred to by Ms Wicce-Otter in her evidence and the same horses names appear on exhibit 2.8 as the pedigree Ms Wicce-Otter said she saw on 24 March 1999. I am therefore satisfied, on the balance of probabilities, that exhibit 2.8 is a true copy of the pedigree shown to Ms Wicce-Otter on that date.

68 The plaintiff concedes that whether the pedigree took the form of exhibit M or exhibit 2.8, the only important question is whether or not there was an Australian Stud Book number appearing under the name of the horse “Silveneer”.

69 Ms Wicce-Otter’s evidence is that the document she saw on 24 March 1999 included that Stud Book number. I have already said I do not accept her evidence about this. In my assessment, she gave this evidence to bolster her case and indeed, as exhibit 2.239 and exhibit 4 demonstrate, she was prepared to do anything to obtain compensation from Mr Klatte.

70 In my assessment, the result was, that by the time the matter came to Court, Ms Wicce-Otter had convinced herself that she had seen an Australian Stud Book number under the name of the horse “Silveneer”, when in fact I am satisfied she had no recollection of this whatsoever. Moreover, it beggars belief that someone would remember such a thing, particularly as Ms Wicce-Otter was not given a copy of the pedigree on 24 March 1999 and did not see exhibit M until some years later. I therefore find that there was no Australian Stud Book number appearing under the name of “Silveneer” on exhibit 2.8 shown to the plaintiff on 24 March 1999.

Was Any of the Information in the Pedigree (Exhibit 2.8) Untrue

71 The plaintiff maintains that the pedigree was otherwise incorrect or inaccurate. First, the plaintiff says the horse “Stirling Silver”, a great-grandfather of Agassi, should have been noted as “Sterling Silver”. The defendants say this was only a typographical error. In this respect, I am satisfied that the error was only typographical and merely came about from a misreading of the handwritten note (exhibit R) made by Mr Neville Rose. Mr Rose was the owner of “Benaloo Rose”, the mother of Agassi. Mr Rose sold “Benaloo Rose” to Belcam Stud.

72 I am therefore satisfied that it was not misleading for the name of “Sterling Silver” to have been misspelt in exhibit 2.8 by the defendants, nor was the misspelling an inducement which Ms Wicce-Otter relied on in entering into the joint venture arrangements.

73 Secondly, the plaintiff says that, even allowing for the misspelling of “Sterling Silver” in exhibit 2.8, that there were further errors in that the parents of “Sterling Silver” were not “One Pound Sterling” and “Spry Girl”. In paragraphs 28 and 29 of his written submissions counsel for the defendants conceded that it was incorrect for “One Pound Sterling” and “Spry Girl” to have been shown on exhibit 2.8 as the parents of “Sterling Silver”. I am therefore satisfied that the pedigree was misleading in this respect, but the extent to which it was needs to be put into perspective.

74 Mr Ford, the keeper of the Australian Stud Book for Thoroughbreds, gave evidence. I found him to be a compelling witness. I am comfortably satisfied on Mr Ford’s evidence that the sire of “Sterling Silver” should have been entered as “Shahwan” and “Rose Lassie” should have been entered on the pedigree as the dam of “Sterling Silver” in the place of “Spry Girl”. Apart from Mr Ford’s evidence, the research done by Mr Klatte with Arion Pedigrees shows the same results (exhibit 2.405). Most importantly, Mr Ford’s evidence was that both “Shahwan” and “Rose Lassie” could properly be entered as thoroughbreds in the pedigree. The fact that these horses were thoroughbreds meant that there was no real impact on Agassi’s bloodlines and I so find.

75 The plaintiff submitted that there were other aspects of the pedigree which were misleading. First, it was submitted that the mother of “Calypso Maid” (a great-grandmother of Agassi) was not “Nefertiti” as shown in exhibit 2.8, but rather “Spry Girl NZ”. This submission is based on exhibit T, the birth certificate of “Benaloo Rose” obtained from the Australian Warmblood Horse Association. However, exhibit 7 shows “Nefertiti” as the mother of “Calypso Maid”. Although Mr Rose gave evidence that he was not sure about the parentage of “Calypso Maid”, he was satisfied that “Calypso Maid” was a thoroughbred horse (T 436.30 – 437.20).

76 Given the evidence contained in exhibit 7 I am not satisfied that the plaintiff has discharged the onus in establishing that it was misleading for exhibit 2.8 to record the mother of “Calypso Maid” as “Nefertiti”.

Mr Klatte’s Involvement

77 The plaintiff alleges that Mr Klatte was a person involved in the contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) as set out in paragraph 18 of its claim. I am comfortably satisfied that Mr Klatte was so involved because he was present at all of the meetings which were held with Ms Wicce-Otter leading up to her signing the joint venture agreement, he was present when Mr Tarr said that Agassi was a fabulous showjumping horse and he knew that the pedigree document was attached to the joint venture agreement because he signed it.

78 Mr Klatte and his wife were in control of Baremba and he had the authority to act for Tredentay in the transaction as Mr Tattam’s evidence makes abundantly clear. Mr Tattam was a credible witness whose evidence disclosed that Tredentay acquired ownership of the horse from Baremba in order to give effect to the sale to the joint venturers and so that Tredentay could make use of primary production losses from a tax minimisation point of view.

79 Most importantly, when it came to the crunch, Mr Klatte was well aware that Agassi was not a fabulous showjumping horse because he had not done any showjumping as at 24 March 1999.

Reliance of the Plaintiff on Exhibit 2.8

80 In her evidence in chief, the plaintiff was asked what was operating on her mind when she signed the joint venture agreement and handed over her cheque in payment, with reference to what she had been told and what she had seen, to make her go ahead with the transaction. Her evidence was (T 73.16):

“I had a small window of opportunity because someone had pulled out. I was really excited that I knew that Belcam had been breeding horses for 25 years and they said that this was the best one they’d ever bred, he was a fabulous showjumping horse. The JVA came as a package deal, so we had rider, we had a marketer, we had the breeders, we had the trainer and we had all the money being invested. And it was very solid and I was very aware that I was dealing with the biggest stud in Australia, the most professional and was very well backed, and I was very impressed with Dr Ramsauer, that Agassi was admitted into the Oldenburger Verband and that accessed the European market. That he already had connections because of his family in Germany, and they were doing business in the United States and the whole connection and the whole hugely professional presentation – yes.”

The plaintiff made no mention of the pedigree until she was prompted to do so.

81 Ms Wicce-Otter had seen Agassi prior to signing the joint venture agreement (T 109) and she sought a free service from Agassi before she saw the pedigree (T43.50). Moreover, she agreed she only glanced at the pedigree at the Belcam Stud after the 1998 auction (T43.50) and, without seeing the pedigree again, she said that at the first meeting with Mr Tarr and Mr Klatte, she was really interested in the syndication (T47.55). She was so keen, in fact, that before the meeting on 24 March 1999, prior to seeing exhibit 2.8, she had already spoken to her accountant about purchasing the horse in the plaintiff’s name (T53.10). In my assessment, the plaintiff had already made up its mind, through Ms Wicce-Otter, to go ahead with the purchase in the joint venture agreement without looking at the pedigree, exhibit 2.8. What she knew, and what was significant to Ms Wicce-Otter was that Argentinus was the father of Agassi. Also, in my assessment, Ms Wicce-Otter was swayed by statements made to her by Mr Tarr and Mr Klatte that Agassi would be marketed for not less than $500,000. In fact, clause 12 of the joint venture agreement provided for this to occur. The reality was, though, that all the joint venturers were punting on such an outcome because, as Mr Klatte’s evidence made clear (and it was not disputed), the fact that a horse’s parents are good jumpers does not mean it will run in the family, so to speak.

82 In addition, the evidence of Ms Wicce-Otter herself demonstrated that she was prepared to take risks for high return. She lent Mr Tarr $50,000 on an undocumented basis because she was going to receive 20 per cent interest on the loan. It was not until later that she had the transaction documented and obtained security for it.

83 I am comfortably satisfied that Ms Wicce-Otter placed no real significance on the pedigree document or actually relied on it. This is because in her evidence she said that when she eventually received a copy of the joint venture agreement from Mr Tarr, she did not bother to check to see if the pedigree was attached (T91-92) and, in fact, she did not obtain a copy of the pedigree until late 2005 in the course of discovery. Further, no complaint was made about the pedigree in these proceedings until the third amended statement of claim was filed.

84 As I have said, so far as Ms Wicce-Otter is concerned, with reference to pedigree, the factor on which she relied was that “Argentinus” was the father of Agassi. Ms Wicce-Otter had previously purchased into the “Argentinus” bloodline with “Argold” (T36.40 and T 93.20) and she regards “Argold” as a special horse and is very proud of him (T93.35). She agreed that prior to signing the joint venture agreement she had seen advertisements for “Argentinus” and knew of his reputation as the producer of performance horses (T 92.35). Most importantly, whilst she was in Germany, Ms Wicce-Otter went out of her way to inspect “Argentinus” at the property where he was kept and she came to the conclusion that he was a “magnificent” horse (T104.45).

85 Ms Wicce-Otter’s evidence was that she did not know the great-great-grandparents of Agassi on the mother’s side as described in the pedigree, except that they were thoroughbreds (T107.40 – 108.20). To the extent she was relying on this part of the pedigree, that is all that mattered. As I have found, “Shahwan” and “Rose Lassie” were, in fact, thoroughbreds.

86 Accordingly, I am satisfied that the plaintiff, through Ms Wicce-Otter, did not rely on anything that was misleading or deceptive about exhibit 2.8 when it entered into the joint venture agreement.

Loss and Damage

87 The plaintiff has suffered loss because it entered into the joint venture agreement as a result of the defendants misleading and deceptive conduct. As a consequence of entering into the joint venture agreement, the plaintiff committed itself to a payment of $50,000 to acquire its interest in Agassi.

Relief Sought

88 In this respect, although the plaintiff originally claimed damages, at the end of the day the relief sought by it was an order under s 72 of the Fair Trading Act 1987 (NSW) (“FTA”) directing the defendants to refund $50,000 to the plaintiff together with interest thereon. I granted the plaintiff leave to seek this relief by the inclusion of paragraph 1A in the statement of claim on the basis that the relief sought was discretionary and I would entertain submissions from the defendants first, as to whether they might suffer prejudice by reason of the lateness of the application for leave to amend and, secondly, if not, whether the Court should otherwise grant the relief in the circumstances of the case.

89 The plaintiff concedes that it would have to relinquish its share in Agassi in order to obtain the relief sought. The plaintiff says that pursuant to s 72 of the FTA and s 135 of the District Court Act 1973 (“DCA”), the Court is empowered to grant the relief sought conditionally upon the plaintiff transferring its interest in Agassi to the defendants. The defendants essentially agree that the Court has jurisdiction, although counsel for the defendants submits that in doing so the Court is exercising its power not only under s 135 of the DCA, but also s 137 of the DCA. I accept this submission.

90 As to the first aspect of discretion, the defendants did not really make any concrete submissions as to prejudice. The real question is whether, on the merits, the order ought be made. In my opinion, the relief sought by the plaintiff ought be granted for the following reasons.

91 On 24 March 1999 the plaintiff acquired an interest in Agassi and joined with the other joint venturers in an ongoing relationship in relation to the horse.

92 The joint venture agreement has clearly come to an end because Mr Tarr, Mr Mellers and Mr and Mrs Sloan withdrew from it. Mr Klatte and Mrs Belinda Klatte subsequently acquired an interest in the horse. There is no evidence that when they did so the joint venture agreement was novated.

93 Secondly, the horse’s potential was not realised because he was always attracted by mares and could not be sufficiently disciplined to concentrate on jumping.

94 Thirdly, in reality, it is difficult to see how there is a market for a one-fifth share in the horse. There is no evidence that Belcam Stud syndicates horses on a regular basis and the shares which have changed hands have done so through Mr Klatte and no one else. There is no other evidence of there being any sort of market for the plaintiff’s share.

95 The relief sought under s 72 (5)(d) FTA mirrors s 87 (2)(c) TPA. The authorities establish that these statutory provisions are not to be construed narrowly: see for example Tenji v Henneberry & Associates Pty Limited 172 ALR 679 and Akron Securities Limited v Iliffe (1997) 41 NSW LR 353. This case calls out for these provisions to be applied.

96 For the reasons I have set out, it is appropriate to grant the relief sought on condition that the plaintiff, upon receipt of payment of the amount the defendants are ordered to pay (principal of $50,000 plus interest if so ordered) transfer her share in Agassi to the defendants jointly or as they may direct jointly in writing.

97 In addition to a refund of the purchase price plus interest, the plaintiff claims $1,787.00 for the cost of storing Agassi’s frozen semen straws at Genetics Plus (see exhibit N). I am not satisfied that the alleged loss flows from the defendants’ misleading and deceptive conduct because the evidence establishes that Belcam Stud have successfully bred horses using Agassi’s frozen semen and there is no reason to suggest the plaintiff could not have done likewise. Similarly, there is no basis for the claim made by the plaintiff for its maintenance of the foal “Luscious”, born out of Agassi and the plaintiff’s mare “Gouvenante”. I am not satisfied that the plaintiff could not have sold “Luscious” had it wished to do so.

98 Finally, I note that although the defendants, in pargraph 27 of its defence, pleaded the mediation clause in the joint venture agreement, no step was taken to have the proceedings stayed and, in fact, an unsuccessful mediation took place prior to the hearing. The defendants therefore cannot rely on paragraph 27 of their defence.

99 I will stand these proceedings over until 9.30am on Thursday 29 March 2007. In the meantime, I propose that the parties make written submissions to the Court on the question of interest and costs. I therefore make the following directions:

1. Plaintiff to e-mail or fax to my associate written submissions plus draft Short Minutes of Order by 5pm on 7 March 2007 and to serve same on the defendants.

2. Defendants to e-mail or fax their submissions in reply by 5pm on 19 March 2007 and to serve same on the plaintiff.

3. Plaintiff to e-mail or fax any submissions in reply by 26 March 2007 and to serve same on the defendants.

4. Direct the exhibits be retained in the registry until 30 April 2007.

In the event that either counsel wishes to speak to his submissions, he should notify my associate. At this point, however, I do not see any reason why the Court cannot deal with the matter on the papers, particularly since counsel for the defendants conducts his practice from Lismore and the solicitors for the respective parties are interstate. Further costs in bringing everyone to Sydney again should be avoided.

**********