Plaintiff v Defendant [2011] VSC 589 | Case summary

Supreme Court of Victoria|2011-12-02|Before: J FORREST J

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.

1 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.

2 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 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.

4 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 amended its statement of claim to join Mr Ladhams and Dr McKinnon. It alleged that Mr Ladhams had engaged in false and misleading conduct by representing to Mr Buckley prior to the sale that the mare was sound in all respects - that is, for both breeding and racing. It made a similar allegation against Dr McKinnon on the basis of the insurance certificate, also alleging negligence in respect of the preparation of that certificate and the associated examination of the mare.

5 Mr Ladhams counterclaimed against Ultra, alleging breaches of the terms of the agreement to pay a further $250,000, as well as negligence and breach of fiduciary duty.

6 Essentially, Mr Ladhams asserted that the terms of the agreement provided for the payment by Ultra of $250,000 in the event of the death of the mare. Alternatively, he alleged that Ultra's reduction of the insurance cover of the mare from $500,000 to $250,000 was both in breach of the agreement as well as being negligent and in breach of a fiduciary duty owed by Ultra to Mr Ladhams. He also argued that Ultra's instruction to the veterinarian to carry out the neurectomy was negligent.

7 As will become apparent, it is important to identify precisely the case mounted by Ultra against Mr Ladhams, and for that matter against Dr McKinnon. The pleaded case is as follows:

Further or alternatively, at and prior to the execution Sale Agreement, the Second Defendant represented to the Plaintiff that Sound Action was sound in all respects.

PARTICULARS

The representations were oral and were made in discussions in or about February and March 2005 at meetings and over the telephone between the Second Defendant and Mr Sean Buckley of the Plaintiff. The substance of the representations was as alleged.

The representations were in trade or commerce and were misleading or deceptive or likely to mislead or deceive within the meaning of section 9 of the Fair Trading Act 1999 (Vic) in one or more of the following respects:

Sound Action had been prior to February 2005 under treatment for navicular disease;
Sound Action had been prior to February 2005 under treatment for lameness;

Sound Action had a previous history of navicular disease;

Sound Action had a previous history of lameness;
Sound Action had a previous history of bilateral front foot pain.

In reliance upon the aforesaid representations, the Plaintiff executed the Sale Agreement.

8 In the course of the opening, counsel for Mr Buckley confined the case against Mr Ladhams further. In response to a question from me, he accepted that the discussion and representation as to the soundness was confined to what was said by Mr Ladhams at the Oaklands Sale Complex[8] on 3 or 4 March 2005. When asked by me as to what was said about the mare's soundness, the following exchange took place:

JUDGE: Does he say anything about her soundness?

COUNSEL: Yes, he says she's sound, that the problem is one that has arisen from what he says is inadequate care on the part of the present trainer.[9]

9 Ultra's case against Mr Ladhams is therefore simple: Mr Ladhams, in conversations with Mr Buckley, at Oaklands represented to Mr Buckley that the mare was "sound in all respects". There was a good deal of evidence as to what the expression "soundness" means. I am not sure it was of great assistance as the expression is protean and depends on the particular horse, type of activity and its appearance at any given time. Ultra made it clear that for the purpose of its claim, the expression "sound in all respects" meant that the mare was able to engage in both racing and breeding. Ultra then asserts that in reliance upon the statement it entered into the agreement.

10 Mr Ladhams passed away in February of this year. I admitted into evidence under s 63 of the Evidence Act 2008 (Vic) a record of an interview of Mr Ladhams that was conducted in 2005 and an affidavit of Mr Ladhams sworn earlier this year. Mr Ladhams denies the substance of the conversation alleged to have occurred at Oaklands. He contends that he told Mr Buckley of the problems associated with the training of the mare in the past and the difficulties with her racing in the future. Mr Ladhams had no intention of racing the mare himself; he says in addition that it was well known that the mare had significant hoof problems and equally well known that he intended to retire her from racing.

11 Ultra's claim against Dr McKinnon was pleaded as follows:

Further or alternatively, the Plaintiff, pursuant to clause 9 of the Sale Agreement, caused Sound Action to be examined by the Third Defendant.

PARTICUILARS

A copy of the Sale Agreement is in the possession of the solicitors for the Plaintiff and may be inspected by prior arrangement.

On or about 11 March 2005 the Third Defendant completed the 1st Certificate of Examination in which he certified that the horse was "clinically normal and in satisfactory condition".

PARTICULARS

A copy of the 1st Certificate of Examination is in the possession of the solicitors for the Plaintiff and may be inspected by prior arrangement.

In terms of the 1st Certificate of Examination, the Third Defendant represented that Sound Action was sound in all respects.
The representations were in trade or commerce and were misleading or deceptive or likely to deceive within the meaning of section 9 of the Fair Trading Act 1999 (Vic) in one or more of the following respects:

Sound Action had been prior to February 2005 under treatment for navicular disease;
Sound Action had been prior to February 2005 under treatment for lameness;

c. Sound Action had a previous history of navicular disease;

d. Sound Action had a previous history of lameness;

e. Sound Action had a previous history of bilateral front food pain.

28A. Further or alternatively, the Third Defendant was negligent in his examination of Sound Action and his completion of the 1st Certificate of Examination in one or more of the following respects

PARTICULARS

(a) The Plaintiff repeats and adopts the particulars subjoined to paragraph 28 hereof.

(b) Failing to make inquiry as to, or seek the medical records of Sound Action at her previous treating veterinary surgeons.

(c) Failing to make inquiry as to, or see the medical history of Sound Action from her previous veterinary surgeons, in particular Dr Ian Fulton of the Colac Veterinary Clinic.

(d) Failing to make inquiry as to, or seek, the training history or racing history of Sound Action from her previous trainer (Ms Roberta McLeod) and the Second Defendant.

(e) Failing to exercise the care and skill expected of a veterinary surgeon in the circumstances.

In reliance upon the aforesaid representations of the Third Defendant, further or alternatively by reason of the Third Defendant's negligence as aforesaid, the Plaintiff did not exercise its right under clause 9 of the Sale Agreement (which right the Plaintiff would have exercised if it had known that Sound Action suffered from navicular disease, lameness or front foot pain) to treat the Sale Agreement as null and void.

PARTICULARS

A copy of the Sale Agreement is in the possession of the solicitors for the Plaintiff and may be inspected by prior arrangement.

12 The misleading and deceptive conduct claim against Dr McKinnon relates solely to his completion of the insurance certificate and the related examination on 11 March 2005. Ultra contends that the insurance certificate amounted to a representation by Dr McKinnon that the mare was sound in all respects - again this is said to mean that she was able to engage in both racing and breeding. It says that it relied upon the certificate in not exercising its option under the agreement to treat the sale as null and void in the event of the mare failing a pre-purchase veterinary examination.[10]

13 In the course of opening, counsel for Ultra confirmed that the misleading and deceptive conduct case turned solely upon the insurance certificate provided by Dr McKinnon on 11 March 2005 but contended that the certificate needed to be read in the light of all the circumstances of the mare's admission to GVEH.

14 Dr McKinnon responds that the insurance certificate means no more than what it says: that at the time of his inspection the mare was not lame. It is not, Dr McKinnon argues, meant to be anything other than a mortality insurance declaration - it was not an assessment for racing purposes and, he says, no such assessment was ever requested of him.

15 Ultra's negligence claim also turns on the certificate and the examination: the asserted inadequacies in the examination and certificate, as well as a failure by Dr McKinnon to make appropriate inquiries about the mare's history.

16 Dr McKinnon asserts that the certificate was accurate and that there was no obligation for him to make further enquiries given the nature of the certificate.

17 To understand some of the decisions made at various times during this saga, it is helpful to set out my imperfect understanding of several of the important veterinary terms used in the course of the trial:

18 Lameness is an abnormality of gait where a horse places increased (or decreased) weight when exercising, on a particular leg or legs. The abnormal leg or legs will have decreased weight placed on it; in contrast, the normal leg will take on more of the weight.

Laminitis is an inflammation of the lamini which are the sensitive tissues located under the hoof wall. The condition can result in acute lameness. It can have a variety of causes, including a disruption of the blood supply to the hoof.

Navicular syndrome or Navicular disease is a condition of the hoof. The navicular bone is located within the hood and sits adjacent to the coffin bone and is weight bearing. Adjacent to it are a number of other structures compendiously known as the navicular bursa. A description of a horse suffering from navicular disease or syndrome does not provide a precise identification of what is wrong with a horse. It may be that there is radiological evidence of damage to the navicular bone. It may also be that the area around the navicular bone has been disturbed or damaged and is productive of symptoms. It is also possible (somewhat like arthritis) that there can be damage to either the bone or the bursa with no clinical symptoms. The condition is generally not life-threatening and with reasonable care and farrier attention a broodmare will suffer no complications.

Palmer or plantar digital neurectomy is an operative procedure directed to the relief of pain in horses with signs of chronic lameness, including particularly those with navicular disease. The operation is carried out on the nerves in the hoof. The surgeon divides the nerves (with the aim of blocking out any feeling in the hoof). The procedure is one of some delicacy as the nerve is located only a millimetre away from the artery within the hoof.[11] Complications associated with the procedure are: (a) re-innervation: that is, the nerves re-attach; and (b) laminitis, which can develop after a second operation or (as is highly relevant here) injury to the accompanying blood vessels.[12]

19 Sound Action was foaled in 1999. She was unfashionably bred, yet Mr Ladhams in August 2002 had the good judgment (or perhaps the good fortune) to purchase her. Throughout her career she was trained at Birregurra by Ms Roberta Maguire.[13]

20 Sound Action had her first start at Ararat on 17 November 2002 as a three year old maiden which she won by a length and a half. Subsequently she won her next six starts, including four in the metropolitan area.[14] On 3 May 2003 at Morphettville she won the Group One Australasian Oaks by nearly three lengths. Two weeks later, she suffered her first defeat when she ran fourth, beaten 1.3 lengths, in the South Australian Oaks.

21 She had one run in the spring of 2003, a fourth in the weight-for-age Liston Stakes. Her autumn campaign of six starts resulted in a further Group One success in the Ranvet Stakes at Randwick on 20 March 2004; she had previously finished third and second, beaten half a length and 1.3 lengths behind Lonhro in the C F Orr and St George Stakes respectively. After the Ranvet she ran fourth, beaten nearly ten lengths in the BMW and had her final start in the Queen Elizabeth Stakes on 17 April in which she was beaten by nearly 14 lengths.[15]

22 After the Queen Elizabeth, the mare pulled up sore and was spelled for six to eight weeks with the idea of bringing her back in the spring. By this time she had developed symptoms of lameness in both front feet. Notwithstanding careful veterinary care, she did not race again.

23 Mr Pat Ladhams was a retired dairy farmer. He lived in Colac and had been intensely interested in racing over many years. He owned the mare, which was the subject of a nominal lease to some of his children and in-laws. However, he paid the bills, made all the decisions about the horse and followed her career and veterinary management closely. He was responsible for giving instructions in relation to the mare's racing career and it was his decision to retire her to stud. None of the other listed owners played any part in the management or in the negotiations for the sale of the mare. Sadly Mr Ladhams passed away in February of this year.

24 Mr Chris Ladhams is the son of Pat Ladhams. He accompanied his father to the Oakland sales where a meeting was held with Mr Buckley to finalise the terms of the sale.

25 Mr Sean Buckley was the managing director of Ultra. He was a relative newcomer to the racing/breeding industry. He initially purchased a controlling interest in the company which, at that time, had a stud at Macedon. He relocated the stud to Kilmore in 2004 on a property which had sophisticated training and breeding facilities. At this time there were three other directors of Ultra: Mr George, who had originally (via his company) owned the stud and remained on as a director. Mr Coleman, who was also a director of several of the Ultratune companies and had experience in racing; and Ms Gabrielle Suenza, Mr Buckley's partner at the time. Mr Buckley directed operations at the Baree stud[16] and was the driving force behind the purchase of the mare. He made the decisions in relation to the purchase of the mare and the various veterinary procedures carried out upon her.

26 Mr Terry Bolger was the farm manager at Baree. He had considerable experience in racing, initially as a jockey and then as a trainer. He reported to Mr Buckley, and with Mr Coleman, made the day to day management decisions at the stud.

27 Mr Paul Guy is an experienced bloodstock agent. He put the deal together for the sale of the mare and drew up the agreement ultimately signed by Messrs Buckley, Ladhams and Guy. Mr Guy and his wife Rebecca were the directors of Heritage Bloodstock Pty Ltd at the time of Sound Action's purchase.

28 Dr Len Fulton, a veterinary surgeon, practises at Ballarat. He is also a specialist in equine surgery and management and treated the mare between 9 August 2004 and 21 February 2005 shortly prior to her sale to Ultra.

29 Dr Angus McKinnon is a veterinary surgeon who specialises in equine reproductive management. He has been in practice at GVEH since 1998.

30 Dr Jim Vasey is also a veterinary surgeon and has been a partner with Dr McKinnon in the GVEH since its establishment in 1995. His speciality is equine surgery. He was contacted by Mr Buckley at the time of the purchase and asked to arrange examinations of the mare.

31 Drs Vasey and McKinnon are "partners" in the GVEH. It is located at Congupna, near Shepparton. In 2005, it employed between 12-15 veterinarians with 30-40 staff members.

32 Dr Sarah Jalim also worked as a veterinarian at GVEH and assisted in the lameness workup of Sound Action with Dr Vasey On 10 or 11 March 2005.

33 Ms Kate Bertoli worked as a nurse at GVEH and admitted the mare on 10 March 2009.

34 Dr Maxine Brain practices at Kilmore and was the on-call veterinary surgeon at Baree. She first treated the mare on 21 March 2005 shortly prior to the digital neurectomy being carried out at GVEH.

35 Dr Rick Redden is an American veterinary surgeon who practises in Versailles, Kentucky. He travelled to Australia and carried out radical surgery on the mare's front feet on 23 May . He returned to Australia to carry out further surgery on 18 June and was present when the mare died on the operating table. He did not give evidence at the trial.

36 Newmarket Insurance Brokers[17] were the agents for the underwriters, a Lloyd's syndicate, initially joined as the only defendant to this proceeding. Newmarket specialised in equine insurance. No representative of Newmarket or the underwriters gave evidence.

37 Three expert witnesses gave evidence at trial. Two on the veterinary management score relevant to the negligence claim against Dr McKinnon: Dr James Veneer (called by Ultra) and Professor Kannegieter (called by Dr McKinnon). In addition, an experienced thoroughbred valuer, Mr Heagney, was called by Ultra.

38 The summary which follows represents my findings of fact on mostly non-controversial matters. I shall, subsequently, deal with my findings of fact where there is dispute between the parties.

39 Towards the end of the autumn carnival in Sydney in 2004, Sound Action experienced problems with her front feet - not significant but enough to put an end to her campaign.[18] Prior to that, there had been no significant issues about her soundness. After a six week spell she was put back into work and showed consistent signs of lameness when asked to do foot work.[19]

40 Dr Fulton treated the mare from 9 August 2004 until 21 February 2005[20] and diagnosed the condition of navicular bursitis in her front feet.[21]

41 During the latter months of 2004 and January 2005, the mare was sound enough to be got ready to race. She had special treatment plates fitted. She was also being given small doses of phenylbutazone (an anti-inflammatory drug) by Ms Maguire and occasional injections of cortisone under the supervision of Dr Fulton.

42 Bone scans and x-rays did not reveal damage to the navicular bone; rather the problem, degenerate in nature, was in the structures surrounding the bone.

43 On 24 February 2005, the mare was sufficiently fit to be taken to what is colloquially known as a "jump out trial" at Geelong. She ran third but this was disappointing; and, afterwards she pulled up "average".[22] It was apparent to Ms Maguire that she could not stand a further preparation in the absence of medication.[23] Mr Ladhams, after consultation with Ms Maguire, decided that he would retire the mare from racing.

44 Over the ensuing week, articles appeared in the press concerning the mare and it became public knowledge that she may be available for sale.[24] In the Herald Sun, it was reported that her hoof problems had recurred and she might be retired. Mr Guy, the bloodstock agent, contacted Mr Buckley suggesting that the mare might be of interest to him in his new venture.

45 Mr Buckley was, indeed, interested and in the days around the end of February and early March 2005 Mr Guy pursued enquiries in relation to the purchase of the mare. He spoke to both Mr Ladhams and Ms Maguire.[25] He went to Ms Maguire's property where he inspected the mare. He subsequently prepared a draft agreement for the sale of the mare to Ultra.

46 Mr Guy also arranged for Mr Ladhams and Mr Buckley to meet at the Inglis sales complex at Oaklands to finalise the terms of the deal. What was said at that meeting on 3 March 2005 is in dispute and I shall return to it later.

47 Putting to one side what transpired at the meeting, within a few days the terms had been settled upon and the agreement was in final form.

48 On 8 March 2005, both Mr Guy and Mr Ladhams signed the agreement.[26]

49 On 9 March 2005, Mr Buckley contacted Dr Vasey. There is a dispute as to what was said on that occasion and I will return to it later. It was not in dispute however that it was arranged that the mare would be taken to GVEH and a veterinary examination undertaken.

50 On 9 March 2005, Newmarket advised Ultra that it would provide mortality cover for the mare subject to receiving a veterinary certificate.[27]

51 On 10 March 2005, and notwithstanding that Mr Buckley had not signed the agreement, the mare was collected from Mr Ladhams' property by Mr Bolger and taken directly to GVEH for a veterinary examination.[28] Mr Guy had accompanied Mr Bolger to Mr Ladhams' property and assisted in loading the mare on to the float.[29] She was fit and in good condition.[30] She was not apparently lame.[31]

52 On 11 March 2005 (and perhaps the day before), Dr Vassey conducted his lameness examination of the mare and performed a number of tests on her.

53 On the same day, Dr McKinnon examined the mare and completed the insurance certificate. Of critical importance, according to Ultra, is the answer to the question "Is the horse lame at the walk or trot" - to which the answer "no" was given.

54 In the early evening, a copy of the insurance certificate was sent by GVEH by facsimile to the Ultra head office. In turn, it was sent by facsimile to Newmarket.[32] It was subsequently forwarded to Mr Buckley.

55 On the same evening, there was a discussion by telephone between Mr Buckley and Dr Vasey concerning Dr Vasey's examination. The contents of that discussion were in dispute (to which I shall return), as were those of a discussion on the following day concerning the mare.

56 In the late afternoon or early evening, Mr Buckley signed the agreement in the presence of Mr Guy and dated it 8 March.[33] Later that evening, after the conversation with Dr Vasey, Mr Buckley authorised Mr Guy to provide Mr Ladhams with a cheque Ultra had drawn for $250,000 and a cheque for $16,500 for Mr Guy as his commission.[34]

57 On 14 March 2005, the mare was discharged from GVEH and taken by Mr Bolger to Baree.[35] On the next day, Mr Bolger observed that the mare was "a little bit proppy".[36]

58 On 22 March 2005, there were further discussions between Dr Vasey and Mr Buckley concerning the mare and her treatment (again the substance of those discussions were very much in issue).

59 On 30 March 2005, Dr Vasey performed the neurectomy at GVEH.

60 On 31 March 2005, another mortality insurance certificate dated 9 March 2005 was apparently completed by Dr Arnott, a veterinary surgeon at GVEH and forwarded by facsimile to Ultra.[37] Contrary to Dr McKinnon's certificate, the answer to the question of lameness was "yes". This certificate also noted "[h]istory of bilateral front foot pain" and "[n]ot a mortality issue".

61 On 6 April 2005, the mare was discharged from GVEH back to Baree, but upon her return she was noted to have continuing problems with her feet and on 9 May 2005 she was re-admitted to GVEH with a purulent discharge from both front feet.[38]

62 On 13 May 2005, the mare was discharged from GVEH back to Baree.

63 On 20 May 2005, the mare was re-admitted to GVEH. Her left hoof was in a shocking state. Dr Vasey could see the pedal bone and he recommended to Mr Buckley that she be euthanased.[39] Mr Buckley did not accept this advice.

64 Mr Buckley had made contact with Dr Redden in the United States who proposed further surgery to the mare's front feet.

65 Although Dr Vasey advised against the surgery, the facilities at GVEH were made available to Dr Redden who, on 23 May 2005, operated on the mare. The procedure was radical: essentially the mare's front hooves were cut off, her legs placed in casts - it being hoped the hooves would regrow. Dr Vasey assisted in the operation and the mare was discharged back to Baree on the following day.

66 The mare was kept at Baree but her condition, notwithstanding the surgery, continued to deteriorate.

67 Dr Redden, who had returned to the United States, was consulted again and agreed to return to carry out further surgery. The mare could not be moved from Baree and the operation was scheduled for 18 June 2005.

68 On 18 June, as the mare was prepared for the operation, she sustained a cardiac arrest and died.

69 Much of Ultra's case against both Mr Ladhams and Dr McKinnon turns upon my acceptance, or otherwise, of Mr Buckley's evidence. I will, in the course of my analysis of the contested factual issues, comment in detail as to a number of inconsistencies or improbabilities surrounding the evidence of Mr Buckley. I identify in particular the following matters which I have resolved adversely to Mr Buckley:

(a) Mr Buckley's denial of any knowledge of the mare suffering from navicular disease when contrasted with the evidence of Mr Guy;

(b) Mr Buckley's conversations with Dr Vasey on 11 and 12 March after he completed the lameness examination;

(c) Mr Buckley's conversation with Dr Vasey on or around 22 March concerning Dr Vasey's asserted disclosure to Mr Buckley of the mare's prior history and in particular the existence of a navicular condition;

(d) Mr Buckley's conversation with Dr Vasey at about the same time in relation to the carrying out of the digital neurectomy;

(e) Mr Buckley's determination to assert that Mr Guy was not his agent for the purpose of the purchase of Sound Action and, particularly, his answers to interrogatories on this issue; and

(f) Mr Buckley's discussion with Mr Ladhams at Oaklands.

70 The first and third matters go to a critical issue in the case, namely Mr Buckley's knowledge of the mare suffering from navicular disease. My findings[40] are consistent with Mr Buckley endeavouring to distance himself, by whatever means possible, from such knowledge. If I reject his account of these conversations I may infer that his false account of such lack of knowledge demonstrates that he had greater awareness of the condition of the mare's feet than he wished to disclose. These matters also go to his credit generally. The second matter goes to the exact nature of the advice given to Mr Buckley as a consequence of the lameness examination and the decision to proceed with the purchase of the mare (in the sense of not withdrawing from the agreement). The fourth matter, relating to the neurectomy goes to another important point - why the operation was carried out only twenty days after the purchase of the mare. The fifth matter, the nature of his relationship with Mr Guy, again reinforces the proposition that Mr Buckley is prepared to make any allegation which he perceives will support his case. Finally, his account of the discussions at Oaklands with Mr Ladhams relating to Ms Maguire also goes to an issue in the trial, namely, the reality of the mare ever returning to the racetrack and, accordingly, Mr Ladham's asserted declaration concerning her soundness.

71 I shall return to each of these matters in greater detail in due course. But suffice to say, that compendiously each of these matters (plus several others I shall advert to) mean there are many parts of Mr Buckley's evidence that I simply do not accept.

The condition of the mare prior to her sale to Ultra

72 Ms Maguire's evidence, which I accept, was that prior to puling up sore in the Queen Elizabeth Stakes the mare had experienced relatively minor episodes of lameness, which was essentially treated by a farrier working on her front feet.[41] Ms Maguire identified the problems as being related to foot abscesses in both feet.[42]

73 After the Queen Elizabeth Stakes at Randwick on 17 April 2004, the mare was spelled and brought back into work at Ms Maguire's stables at Birregurra in mid-to-late June.

74 It became clear to Ms Maguire that for the mare to have any chance of returning to racing she required expert veterinary treatment. She was taken to Dr Fulton's clinic at Ballarat on 9 August 2004 and he treated the mare until February 2005.

75 Dr Fulton diagnosed the mare as suffering from the condition of navicular bursitis and described her condition as one of "navicular syndrome". The navicular bones did not show any major abnormality, however the condition affected the tissues and structures surrounding the bone.[43] It is a difficult condition to treat if a horse is to compete at a high level in thoroughbred racing. Each of the horse's front feet can be sensitive to the jarring impact generated by the constant high velocity of the pressure of racing or working at fast pace.

76 Dr Fulton, after conducting a series of nerve blocks and bone scans, opted to treat the mare with regular doses of phenylbutazone and occasional injections of corticosteroids. He also gave advice as to appropriate farrier treatment.[44] The problem often facing racehorses with this condition is that at some point of time prior to racing it is necessary to withhold the administration of drugs as a horse must compete drug-free.

77 Despite multiple outpatient visits to Dr Fulton's clinic, the mare's preparation did not progress well. She was not handling work well, even on grass surfaces. She was sore when pushed to do pace work.[45] So in late October 2004, the mare was taken to Ballarat and admitted as an inpatient at the clinic for approximately one week.

78 After this visit, the mare returned to Ms Maguire's property and was treated with phenylbutezone and corticosteroids.[46]

79 On 2 December 2004, Dr Fulton injected the navicular bursa with long acting cortisone - a treatment designed to give the mare pain relief so she was able to be worked.[47]

80 On 21 February 2005, an injection with Kenacort (a form of cortisone) was given by Dr Fulton who described it as a "last attempt to try and maintain a level of soundness".[48]

81 The mare had improved sufficiently on this regime to run in a trial on 24 January at Geelong. She finished third but Ms Maguire described it as "average"[49] and "nowhere near what she would have expected from her". Ms Maguire's conclusion after the race was:

It was becoming apparent that even though we were able to work her on the drugs that Dr Fulton prescribed, when it actually was going to become able to race her it was not going to be able to happen.[50]

She took the view that the mare could not race again in a drug-free condition.

82 It should be noted that at the time of sale, apart from "navicular syndrome", the mare was in very good condition. She was a large, well conditioned mare and, as Ms Maguire described her at this time, as looking "fantastic".[51] Mr Bolger, when he picked up the mare from Mr Ladhams' property on 10 March 2005, described her as fine and looking healthy in the coat.[52] Mr Guy described her as having "no problems at all".[53] Neither Mr Bolger nor Mr Guy (who loaded the mare on to the float) suggested that at the time she left Mr Ladhams' property she was lame, or perhaps to put it more accurately, noticeably lame (bearing in mind that both Mr Guy and Mr Bolger had considerable bloodstock experience).

(a) the mare, by February 2005, was suffering from chronic hoof problems which resulted in Ms Maguire recommending that she be retired from racing;

(b) that otherwise she was in particularly good condition and, given her size, confirmation and performance was a very good broodmare prospect; and

Mr Ladhams' intentions in relation to the future of the mare

84 Dr Fulton had told both Ms Maguire and Mr Ladhams (who usually went to the clinic with Ms Maguire) that the mare suffered from navicular disease and that was the cause of her problems.[54]

85 After the mare's trial at Geelong, Ms Maguire advised Mr Ladhams that her preparation should be curtailed and that she should be retired to stud. Dr Fulton was also consulted and concurred with this decision.[55] Mr Ladhams accepted the advice of both the veterinary surgeon and Ms Maguire and decided to retire the mare.[56]

86 Shortly afterwards, an article was published in the Herald Sun, under the by-line of Mr Tim Habel with the following sub-title and title:

Off to the paddock: Sound Action will not race this autumn and could be retired because of recurring hoof problems.

Unsound Action flares up again.

The article referred to recurring hoof problems sidelining the mare for twelve months and Ms Maguire stating that "[s]he shuffles a bit in front. She just can't take the workload".[57]

87 I am satisfied that Mr Ladhams knew of the mare's lameness when in work and was also aware, having sought the advice of Dr Fulton, that she suffered from navicular disease.[58] I am also satisfied that Mr Ladhams after the Geelong trial took the view that the mare should be retired and that her racing career had been ended by the condition of her front feet.[59]

88 I should add that I find that Ms Maguire had known as a result of her conversations with Dr Fulton, that the mare suffered from navicular disease.[60]

Mr Buckley's knowledge of the mare's condition and in particular the existence of navicular disease

89 Mr Buckley accepted that from his reading of the press reports he was aware that the mare had pulled up lame and that there was a problem with abscesses or a stone bruise.[61] He was adamant, though, in his denial of any knowledge of a navicular condition to the point that he was "the only person in town who didn't know this because I didn't know she had a history of navicular disease".[62] He specifically denied being told by Mr Guy of any navicular issue.[63]

90 However, Mr Buckley agreed that there was considerable discussion between himself and Mr Guy before her purchase about the mare's problems, including the need for corrective shoeing, the presence of abscesses, future methods of treatment such as the water wheel, hyperbaric chamber and swimming and the condition of the Maguire's property (located in a rain belt). Indeed everything except the existence of navicular disease.[64]

91 Mr Guy obtained details of Ms Maguire via the racing calendar. He made arrangements to visit her property at Birregurra and discussed the mare (who was still stabled at Ms Maguire's property with her after carrying out an inspection of Sound Action). He described the mare as a lovely big mare who would make a good broodmare.[65]

92 Ms Maguire's evidence, which I accept, was that she explained the mare's condition in detail to Mr Guy.[66] In particular, she told him the mare had "navicular" described her treatment of the mare and gave her opinion as to what she thought would be an appropriate level of care of the mare in the future in the form of medication and corrective shoeing.[67]

From the start of my contact with the agent I told him that Sound Action had become lame during preparations for racing and that she had had "abscesses". I told him that Sound Action had been treated for lameness from navicular disease.

He thought that he had met Mr Guy three or four times and had two or three telephone discussions with him prior to the signing of the agreement.[68]

94 Mr Guy accepted that Ms Maguire had told him both of the problems with abscesses and "some navicular issues".[69] He then went to Mr Ladhams' property and discussed the sale of the mare. He confirmed that Mr Ladhams also told him of the problems with both abscesses and the navicular issues.[70]

95 On the way back to his home in Geelong, Mr Guy rang Mr Buckley. He described the conversation as follows:

I reported to Mr Buckley she was a good type of mare. She had a big frame, lots of capacity to be a good broodmare. That she wasn't perfect in front confirmation wise but was acceptable. Her feet weren't in great condition but a change of farrier might have some effect there. They had got very close to racing, she had only just pulled up sore after a trial. She was in pretty good condition - she was in good condition, the mare and mentioned that the history of foot troubles was predominantly the foot abscesses and that where she was based at Birregurra was very high rainfall and as we say you could bog a duck there. There had also been a mention of some navicular issues so if we were going to proceed that she would definitely require to get a proper veterinary examination, including x-rays to see where we stood there.[71]

96 In cross-examination he made the point, which has real force, that there was no advantage to him in concealing a disability in the mare if he wanted to build up a long term relationship[72] with Mr Buckley and Ultra.

97 Mr Guy accepted that he did not know whether Mr Buckley was aware of what navicular might mean but was adamant that he told him of that fact. He agreed that he recommended the purchase of the mare to Mr Buckley, notwithstanding the disclosure of navicular issues.[73]

98 In my view, Mr Buckley's account of his conversation with Mr Guy should be rejected. Mr Guy impressed me as a truthful and careful witness. He had been told by both Ms Maguire and Mr Ladhams of the horse's condition, including the presence of some form of navicular problem. There was no reason for him to not disclose this to Mr Buckley. There was no issue that all the other information about the mare, relating to abscesses, the condition of the property and the need for careful farrier treatment in the future, was disclosed by Mr Guy to Mr Buckley in that conversation. Why, one might ask, would he not tell Mr Buckley of that condition. On the other hand, there is a clear motivation for Mr Buckley to distance himself from such knowledge - it affects any argument that he may mount in relation to his reliance upon his discussion with Mr Ladhams and the insurance certificate as to the mare's condition.

99 Mr Buckley's knowledge of the nature of the mare's condition is also corroborated by Dr Vasey's account of his conversation with Mr Buckley around 9 April 2005 in which Mr Buckley told Dr Vasey the mare had a history of navicular disease.[74]

100 Whilst this evidence was somewhat equivocal (Dr Vasey later said he could not remember whether it was Mr Buckley or Mr Bolger who told him),[75] I think it likely that Mr Buckley was the source of this information. Mr Bolger denied any such knowledge and it leaves Mr Buckley alone as the source.

101 I am satisfied that as a result of the conversation with Mr Guy, Mr Buckley was aware that the mare had problems with her feet in the form of both abscesses and a navicular condition. I cannot be satisfied as to whether Mr Buckley had any greater knowledge as to the effect that that condition may have upon the mare, but at the very least he was aware that this was a problem from which she had suffered in the past.

102 Putting to one side the question of navicular disease, it is clear that Mr Buckley regarded the prospects of the mare ever making a return to the racetrack as remote. She was five years old; she had not raced for 12 months; she had ongoing problems with her feet and her preparation had been halted due to those problems. In answer to an interrogatory, he said as follows:

The horse was principally purchased for breeding. There was no real intention to race, however this had not been totally dismissed.[76]

103 I should deal with one other matter now. There was much argument about any inference to be drawn from an entry in GVEH's clinical records[77] concerning the first admission of the mare which read "previous history of navicular disease. Has been lame - Won 2 Group 1's".

104 Mr Ladhams and Dr McKinnon contended that the entry made in the records was, necessarily, the result of instructions given by a representative of Ultra - be it Mr Bolger who delivered the horse to GVEH or Mr Buckley by telephone.

105 Ms Bertoli, who admitted the mare, confirmed that she made a number of the entries at the commencement of the clinical records - particularly relating to the details of the ownership of the mare, but she did not make the entry in question. She had no recollection of any of the events surrounding the making of the entries in the hospital other than identifying her own writing.[78] She was, however, able to identify other handwriting in the records. In relation to the subject entry, she thought it was written by another nurse, Ms Crystal Mills.[79]

106 A number of the other entries on the page were made by Dr Jalim.[80] She recognised the subject entry as being the writing of one of the nurses at the hospital but could not nominate her identity.

107 The "lameness exam" worksheet completed during the course of Dr Vasey's lameness examination workup also referred to "navicular". Ms Bertoli thought it was also completed by Ms Mills,[81] who was not called as a witness.

108 For any inference to be drawn from the entry I would need to be satisfied, as a probability, that the entry was the result of a discussion with either Mr Buckley, or Mr Bolger.

109 Mr Bolger flatly denied that he knew anything about Sound Action suffering from navicular disease or that he ever made a statement to anyone at GVEH that she suffered from such a disease[82] - as did Mr Buckley.[83]

110 Counsel for Dr McKinnon argued that whether it was Mr Bolger or Mr Buckley who told the staff at GVEH abut the condition was immaterial - the only source of that information was Mr Buckley. That may well be a possible scenario but it ignores two matters: Mr Bolger's denial on oath that he said anything about the condition and the absence of evidence from Ms Mills who probably made the entry.

111 Absent evidence from the author of the note, I am not satisfied that I can exclude the source being someone apart from Mr Buckley who had knowledge of the problems with the mare.

112 It follows that I am not persuaded that there was any a discussion between Mr Buckley or Mr Bolger with a member of staff of GVEH which led to the entry. However, as I have already said, I accept Dr Vassey's evidence that Mr Buckley spoke to him by telephone and described the mare as suffering from navicular disease.

Mr Buckley's dealings with Mr Guy and Mr Ladhams prior to the Oaklands meeting

113 It was common ground that Mr Guy initiated contact with Mr Buckley in late February 2005 having read one of the newspaper articles. Mr Buckley said that he was contacted by Mr Guy who asked him whether he had read the paper today and then said:

There's a mare in there I think you should look at buying. It's just won a barrier trial by ten lengths and its name is Sound Action...[84]

114 Pausing here, I have difficulty accepting this account - although it is a minor matter. Sound Action had not won any trial by ten lengths; to the contrary she had run third and performed in a mediocre fashion. The report in the Herald Sun confirmed the problems with her feet. Mr Buckley accepted that he was aware of the reports to the effect that the mare had pulled up lame after the trial and that there was a mention of abscesses in the article.[85]

115 Both Mr Buckley and Mr Guy agreed that it was Mr Guy who approached Mr Buckley in relation to making enquiries as to the availability of the mare, given what had appeared in the press.[86] It was also common ground that Mr Guy kept Mr Buckley informed of developments in the negotiations with Mr Ladhams.[87] Whilst Mr Guy drew up the agreement, the terms of the deal were discussed by him with Mr Buckley as reflected by the draft agreement and the agreement.[88]

116 The meeting at Oaklands, arranged by Mr Guy, came after a number of discussions and the production of the draft agreement which had been considered by Mr Ladhams in conjunction with Mr Guy.[89] With one exception, it was agreed that the meeting took place in early March 2000.

117 It was not in issue that both Mr Ladhams and Mr Buckley discussed matters relevant to the sale of the mare during the course of their meeting. It was also not in issue that Mr Guy was initially present at the meeting. What was in hot dispute was what was said about the mare's future, also whether Mr Chris Ladhams, Mr Ladhams' son, was present at the meeting. For reasons I shall set out in a moment, although I regarded Mr Chris Ladhams as an honest witness, I cannot reconcile his evidence with that of Mr Buckley and Mr Guy as to the participants at the meeting and accordingly have put his account of the conversation to one side.

118 Mr Buckley's account, in précis, was as follows: that the meeting occurred outside the parade ring at the sales complex, that the conversation covered a number of topics, including the commission payable to Mr Guy and by whom it will be paid. Mr Ladhams told him "he hated" Ms Maguire and identified the difficulties with her training setup at Birregurra, particularly its location and its dampness and the benefits that he thought would flow from having the horse trained with better facilities such as those at Baree. Later in his evidence Mr Buckley said that Mr Ladhams had an "angry demeanour" towards Ms Maguire and was involved in a fight with her.[90]

As to the "soundness" of the mare, the following was said:

COUNSEL: Did he say to you anything about the physical condition of the horse at that time?

ANSWER: No, just that the horse had abscesses.

COUNSEL: Did he say anything to you about what had previously caused the foot problems of the horse?

ANSWER: No. He did mention one thing, the horse had had a stone bruise at one stage but I'm not sure what time that was in terms of the whole scheme of things. He mentioned stone bruise, that's all.

COUNSEL: Was there any discussion about the newspaper articles?

ANSWER: I can't recall that, to be honest with you.

COUNSEL: Did you discuss with him at the time positive racing plans as to ---?

ANSWER: Yes

COUNSEL: Could you tell his Honour what was said in relation to racing plans for the horse?

ANSWER: He just talked about racing it in the spring carnival again and I knew the horse hadn't run after it had finished sixth or seventh out of eighth in the previous year, so '04, so it had been out for a while and that does happen with horses. Horses break down and have problems or have a spell. I've horses that haven't raised [sic] for a year and come back so to me it wasn't that bad. He was very bullish on the spring carnival and he felt we had a chance as long as we had the right trainer, right conditions and right environment, that was basically what he was saying to me.[91]

Mr Buckley went on to say that he had a further telephone conversation with Mr Ladhams shortly prior to 8 March 2005 in which Mr Ladhams rang and asked whether Mr Buckley had had any other thoughts about trainers to which he replied that the deal should be completed and the mare passed the vet before they considered the question of trainers.[92]

Subsequently, the discussion turned to the question of who might train the horse in the future. On Mr Buckley's account the only outstanding item to be resolved was the payment of the commission.[93]

119 Sadly, Mr Ladhams died before being able to give evidence; however, in his affidavit sworn in February of this year, he said as follows:

On or about 3 or 4 March 2005 I was introduced to Mr Sean Buckley ("Buckley") by the Agent and I discussed with Buckley and agreed upon the further conditions of the proposed Sale Agreement to the effect that I would be paid a further $250,000 if Sound Action did not produce foals after three years. This is reflected in clause 19 of the final Sale Agreement. In that discussion at Oaklands I did not say or indicate to Buckley that she was "sound in all respects". Indeed I said to Buckley that in my view Sound Action would struggle to race again because of the pressure she put herself under during fast work preparation which would cause her to go lame, and I that thought that she was not a racing proposition. That conversation at Oaklands was the only conversation I had with Mr Buckley prior to the sale on 8 March 2005.

120 Mr Guy, who had set up the meeting, said that it took place on 4 March at a mixed bloodstock sale.[94] He described the meeting as taking place in an area between the walking ring and the café and did not recall going into the café. As far as he could remember, the only person present with Mr Ladhams was a Western District trainer, Mr Daryl Cannon. He confirmed the evidence given by Mr Buckley that he, Mr Guy, did not stay for long and he left the prospective vendor and purchaser to discuss the mare. As far as he was concerned, it was for Mr Ladhams and Mr Buckley to shape the final details of the contract.[95] His recollection of the conversation at which he was present related to the mare racing in the future and the choice of stallions;[96] As far as he was aware there was no discussion about the question of his commission as on his account this had been resolved, with Mr Buckley being responsible for it.[97] When he rejoined the two of them the discussion was as to her prospects of returning to racing with an anticipation that by July or August they would know whether she should be retired to stud.[98]

121 I accept that Mr Guy's evidence as to the meeting at Oaklands. I reject the submission that he was "hostile" to Mr Buckley, as submitted by counsel for Mr Buckley. He was an impressive and, I thought, independent witness - much of his account of his dealings with Mr Buckley and others was corroborated by other evidence.

122 I should now mention two other pieces of evidence relevant to what occurred at the Oaklands meeting. First there is the evidence of Mr Chris Ladhams. Essentially it is to this effect - that the meeting took place within the cafeteria and was between his father, Mr Guy, Mr Buckley and a female friend of Mr Buckley's.[99]

123 On Mr Chris Ladhams' account, the only matter raised by his father was that the mare was being sold as a broodmare and could not come back from her feet problems.[100] Mr Buckley did most of the talking and it related primarily to the facilities at Baree.[101]

124 My opinion at the time (which has not changed) was that Mr Ladhams endeavoured to give his evidence honestly and to the best of his ability. However, there are several major obstacles in accepting his evidence: On both Mr Guy and Mr Buckley's version, the conversation did not occur in the cafeteria; nor was there any other person present (such as the lady whom he said accompanied Mr Buckley). Further, in his father's account (by affidavit) there is no reference to Chris Ladhams being present in the discussions with Mr Buckley; moreover, Mr Ladhams' account of what was discussed differs markedly to that suggested by Mr Chris Ladhams.[102] Mr Guy could not recall seeing Mr Chris Ladhams in any conversation with Mr Ladhams or Mr Buckley.[103]

125 I have no reason to doubt that Mr Chris Ladhams accompanied his father to Oaklands and in all likelihood observed his father in the course of discussion with Mr Buckley. I am unable, however, to rely upon his evidence as to the substance of the discussions between his father and Mr Buckley given that it is at odds with the evidence of Mr Buckley and Mr Ladhams, as well as that of Mr Guy who had an immediate and direct interest in what was going on.

126 Second, there is the evidence of Mr George. He was an unimpressive witness and I have serious reservations as to whether his evidence was of any assistance on any issue in the trial. His evidence was that in February at the Premier Sale at Oaklands he had seen Mr Buckley with Mr Guy and another gentleman in discussion in the lawn area at the sales complex. Afterwards Mr Buckley told him that the other person was "the guy who owns Sound Action, Ladhams".[104]

127 The problem with Mr George's account is that the sale at which the conversations between Mr Buckley and Mr Ladhams took place was not the premier sale (which is a yearling sale) nor was it in February of that year. Mr Guy's evidence, which I accept given his knowledge of the industry and of the details concerning the sale of this mare, was that the sale was in fact a mixed sale (i.e. bloodstock of all ages) conducted on 4 March 2005.

128 I reject Mr Buckley's account that Mr Ladhams told him that he "hated" Ms Maguire. I do, however, accept Mr Guy's evidence that there was some disquiet on the part of Mr Ladhams with the conditions at Ms Maguire's property and the effect that it may have had upon the mare's feet. The suggestion of hatred is inconsistent with other evidence. If there was such enmity, then Mr Ladhams who appears to have been an independent minded man, would no doubt have removed the horse from Ms Maguire's care; in fact he continued to have at least one other horse trained by Ms Maguire both while Sound Action was in work (she was still trained by Ms Maguire when she trialled at Geelong on 24 February 200?) and after her sale.[105] On this score I accept the evidence of his son, Mr Chris Ladhams that there was no bad blood between the two, other than Mr Ladhams' desire to have his horses trained on a different property.[106] He had purchased a property close to the Colac racecourse and wanted his horses trained from there. Ms Maguire was not prepared to do so and accordingly, Mr Ladhams engaged the services of Mr Cannon. Ms Maguire also denied any enmity between herself and Mr Ladhams.[107]

129 Mr Guy's evidence that there was an apparent souring of the relationship between Mr Ladhams and Ms Maguire was merely an impression - what is clear from those who were closely involved with the Ladhams family and the mare was that Mr Ladhams would have preferred Ms Maguire to relocate closer to the Colac racecourse.[108] Understandably (given that hope springs eternal in racing), Mr Ladhams may well have thought, and said so, that a new training establishment with all its advanced facilities would assist if the mare were to have any chance of racing again - but this is light years away from a representation that to the effect that the mare was "sound in all respects"; particularly when Mr Buckley admitted that "there was no real intention to race her but this had not been totally dismissed".[109]

130 Further, Mr Buckley's account of the Oaklands meeting cannot stand with that of Mr Guy. On Mr Buckley's version, the major topic of conversation about the deal was that of Mr Guy's commission - whilst Mr Guy was not present at the discussion between Mr Ladhams and Mr Buckley, he says that this was simply not an issue;[110] it had been settled, rather the purpose was to arrange for the two to get together and finalise the deal.

131 I reject the submission made by counsel for Mr Buckley that a Jones v Dunkel[111] inference should be drawn against Mr Ladhams on the basis of his failure to call Mr Daryl Cannon, the trainer who was also present at Oaklands on the day of the conversation. It was not suggested by anyone that Mr Cannon was present at, or a witness to, the conversation and at best his evidence would be peripheral to the substantive issues in the case. In my view, one could not have expected Mr Ladhams to call Mr Cannon; moreover I doubt whether anything he could have said would have been of assistance in resolving the issues I have to determine.

132 What then of what was said at the meeting. I am satisfied that:

(a) there was a meeting between Mr Buckley and Mr Ladhams at Oaklands on 4 March at a mixed bloodstock sale;

(c) that they were introduced to each other by Mr Guy who then left the two to discuss the sale of the mare in an area outside the cafeteria;

(d) that there was discussion finalising the deal as to the foal share aspect of the agreement; and

(e) that there was a discussion between the two as to the future race prospects of the mare. This is confirmed by the terms of the sale agreement which envisages such a prospect. Although not referred to by Mr Ladhams in his affidavit, I accept Mr Guy's evidence on this issue. I conclude that there was a discussion about attempting to get the mare back to the racetrack, particularly given Mr Buckley's enthusiasm for the facilities at Baree, including the hyperbaric chamber. However, this was as far as it went.

133 As to the discussion concerning the alleged soundness of the mare and any representation to the effect that she was "sound in all respects", I am satisfied that notwithstanding that there was discussion about the mare's future racing prospects, Mr Ladhams' account that he told Mr Buckley the mare would struggle with the pressure of training because of her foot condition should be accepted. It is consistent with clause 6 of the agreement and particularly the words "should Sound Action (Aus) ever race" (emphasis added). Moreover, it is consistent with Mr Ladhams' own knowledge of the problems the mare had faced in the past.

134 I accept that there are some inconsistencies between his account given over the telephone to an investigator (tendered by Mr Ladhams).[112] However, these differences do not affect the substance of his evidence, particularly, that relating to the mare's ability to race. I should add that I have also taken into account Ultra's inability to cross-examine Mr Ladhams. Allowing for both those matters, I remain persuaded that Mr Ladhams' account of the conversation is to be preferred over that of Mr Buckley. Given what I perceive to be inaccuracies in Mr Buckley's account of the conversation and my general views as to his credit, I am not able to accept his evidence as to the discussion and particularly that relating to the future prospects of the mare. In my view, the account given by Mr Ladhams is a more probable account of what actually transpired between the two at the Oaklands meeting.

135 Finally, I should return to the alleged telephone conversation between Mr Buckley and Mr Ladhams subsequent to the meeting at Oaklands. Mr Buckley said that Mr Ladhams rang him and discussed who might train the mare.[113] Mr George, whose reliability I question, corroborated this account.[114] Mr Ladhams denies any such conversation.[115] As it transpires, I do not need to make any finding about this conversation as it was not relied upon by Mr Buckley - understandably so, as even on his account it was simply a discussion about possibilities and no more.

Mr Buckley's dealing with Dr Vasey prior to the mare's admission to the GVEH

136 Although Mr Buckley was only a relatively new player in the racing industry, he had used GVEH's services in the past, and particularly those of Dr Vasey:

He [Dr Vasey] was a man that I contacted, he was the man I spoke to with all my concerns and he was guy I communicated with at all levels. So I don't know what he did behind the scenes and who he delegated to, to get the result that I needed.[116]

whereas Dr Brain carried out "the basic run of the mill stuff".[117]

137 Mr Buckley said that on or around 9 March 2005 he contacted Dr Vasey to carry out a lameness check on the mare; Mr Buckley described his discussion with Dr Vasey as follows:

I've just bought a horse. I would like to do a veterinary exam on it, please. I would like you to do some reproductive work to make sure she can have some babies and work out some lameness issues...and I told him the horse had run a trial apparently she was having problems with abscesses and could he check out it for me please and let me know what was going to happen with her and he asked what was I buying it for and I said it was a racing and breeding proposition depending upon what comes back and he asked me whether I would be insuring it and I said I would be and I think that was about the level of the conversation.[118]

138 Before turning to Dr Vassey's account, it is appropriate now to mention the evidence given by a number of the veterinarians as to the type of veterinary examinations carried out on horses. Each of the experts agreed that a mortality insurance examination is a fairly basic type of examination involving limited observations of the horse's action and the completion of a fairly basic standard form certificate.[119] I shall return to it in more detail when considering Dr McKinnon's conduct. The next step up is a lameness examination which involves a specific series of tests with clinical examination and the use of nerve blocks to determine the level of lameness (if any) of particular horse. An example of this type of examination and its conduct is the lameness worksheet which form part of the mare's GVEH record.[120] Finally, there is a pre-purchase examination which had a comprehensive examination carried out using a detailed Equine Veterinarians Australia form.[121] The examination is not confined to lameness but is an all round detailed examination of the horse's physical condition and includes the provision of statements completed by both vendor and purchaser as to the horse's history and specifically any past history of lameness or medication.[122]

139 Dr Vasey confirmed, by reference to his hospital message book,[123] that he spoke to Mr Buckley on 9 March. However, he described a different conversation to that of Mr Buckley:

[Mr Buckley said] "I've purchased a mare by the name of Sound Action. She's done very well on the racetrack". The client's knowledge is that she has had some feet issues in the past and he would like me to assess those concerns. I then asked him, "Have you bought the horse or do you want us to do a pre-purchase examination on the horse?". He said "No, I've bought the horse, you do not need to carry out a pre-purchase exam..." the phrase "navicular disease" was mentioned... they have bought her, she had the history of navicular disease which is a feet issue, a subtle sort of foot problem. The discussion went along the lines that day the previous owners of the horse had been managing the problem, she had done well on the racetrack. I think in the history we received when she came in on the 10th that she had won two Group 1 races which is no mean feat.[124]

140 Dr Vasey said Mr Buckley's request was one to assess the subtle lameness in the feet and no more. In particular, he was not specifically asked to perform a pre-purchase examination, but rather, as he understood it, to carry out a lameness examination.

141 Although clause 9 of the agreement provided for a pre-purchase examination,[125] the contemporaneous evidence points to the arrangement being for a lameness examination, rather than a pre-purchase examination. The entry in the clinical records made by Ms Bertoli on admission of the mare refers to a "lameness exam".[126] An entry in GVEH message book asking Dr Vasey to ring Mr Buckley regarding a "lameness workup" is consistent with a lameness examination rather a pre-purchase examination being requested.[127] A diary entry also has the mare arriving on the Friday 11 March 2005 (although in fact she arrived on 10 March) and the words "Lameness w/up Baree."[128] There was no good reason for Dr Vasey to not carry out a pre-purchase examination if asked to do so. Indeed, in terms of income for the practice it was more rewarding. On Mr Buckley's own account, he did not ask specifically for a pre-purchase examination - in fact, he told Dr Vasey that he had "just bought" the mare.

142 It follows that I am satisfied that Mr Buckley's request was properly interpreted by Dr Vasey as a request for a lameness examination and it was just that examination which he performed with the assistance of Dr Jalim and a veterinary nurse.

Plaintiff v Defendant

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