Maurice Mcdonald; Laurie Pastrello; Graham Scott Thomas and David Lionel Thomas John Francis Collins; Shane Michael Moy; David Hunter White; Stanley William Lawless and Ivan Pehar v Radmon Pty Limited; William Keith Mcdonald; John Alexander Hayhoe; Richar [1986] ACTSC 115 (19 December 1986)

SUPREME COURT OF THE ACT

MAURICE McDONALD; LAURIE PASTRELLO; GRAHAM SCOTT THOMAS AND DAVID LIONEL
THOMAS
JOHN FRANCIS COLLINS; SHANE MICHAEL MOY; DAVID HUNTER WHITE; STANLEY WILLIAM
LAWLESS AND IVAN PEHAR v. RADMON PTY LIMITED; WILLIAM KEITH McDONALD; JOHN
ALEXANDER HAYHOE; RICHARD HEREWARD CHAPMAN t/as WODEN ANIMAL HOSPITAL
P. and S. NOMINEES PTY LIMITED
S.C. No. 169 of 1984
S.C. No. 206 of 1984
Racehorses

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Racehorses - Administration by veterinary surgeon of medicine containing excessive amount of selenium - Resultant toxicosis - No opportunity for intermediate analysis - Administration not negligent - Provisions of Sale of Goods Ordinance 1954 not applicable - Whether breach of common law warranty as to fitness for purpose administered - Applicability of Trade practices Act 1974, s.74 - Damages for loss of chance to win prize money and for loss of opportunity to win bets.

HEARING

CANBERRA
19:12:1986

ORDER

There be judgment for the first plaintiffs against the second defendants in the sum of $29,063.90, the first plaintiffs to be at liberty to apply that judgment may be entered against the first defendant on 7 days notice to the Commissioner for Corporate Affairs and to the second defendants.

There be judgment for the second defendants on their counterclaim in the sum of $1,492.50, this amount to be offset against the judgment in favour of the first plaintiffs against the second defendants to its full extent so that execution may issue against the second defendants in the sum of $27,571.40 only in favour of the first plaintiffs.

There be judgment for the second plaintiff in the sum of $12,400 against the second defendants.

The second defendants pay the plaintiffs' costs of and incidental to the action, those costs to be taxed.

The plaintiffs be at liberty to apply to seek orders for costs following any judgment which may be ordered against the first defendant.

S.C. No. 206 of 1984

There be judgment for the first plaintiffs against the first and second defendants in the sum of $16,091.12, the first plaintiffs to be at liberty to apply that judgment may be entered against the first defendant on 7 days notice to the Commissioner for Corporate Affairs and to the second defendants.

There be judgment for the second defendants on their counterclaim in the sum of $868.50, this amount to be offset against the judgment in favour of the first plaintiffs against the second defendants to its full extent so that execution may issue against the second defendants in the sum of $15,223.62 only in favour of the first plaintiffs.

There be judgment for the second plaintiff in the sum of $8,267 against the second defendants.

The second defendants pay the plaintiffs' costs of and incidental to the action, those costs to be taxed.

The plaintiffs be at liberty to apply to seek orders for costs following any judgment which may be ordered against the first defendant.

DECISION

These actions were heard together.

2. In the first the first plaintiffs were at all material times the joint owners of a racehorse known as "Kelcarran" while in the second they were five of the six lessees of a racehorse known as "White Ivy". In each case the second plaintiff sues in respect of an interest not shared by his co-plaintiffs.

LIABILITY

3. The first defendant was at all material times a body corporate engaged in the manufacture of veterinary products. One such product (the mixture) was sold under the name "Redlands Tying Up Mixture". Its active constituent was the trace element sodium selenite, known also as selenium. The evidence establishes that its administration at suitable intervals in appropriate quantities is beneficial to horses suffering from tying up, a condition which causes muscle soreness because of an excess of lactic acid in the muscles. Its use seems also to be indicated in other conditions of muscular soreness.

4. The mixture was originally put by the first defendant in a jar upon which appeared a list of its ingredients. Following the death of the founder of the first defendant, there was a period when the mixture was no longer used. Eventually it was put on the market again, got up in sachets. Each sachet had printed on it the same list of ingredients as had appeared on the jar. It is not suggested that there was any opportunity for any intermediate inspection of the mixture between its manufacture and administration from a sachet.

5. The second defendants are veterinary surgeons and practice in partnership in Canberra.

6. There was a third party to the action but, early in the hearing, the claim against it was, by consent, dismissed.

7. On Monday, 8 February 1982, one of the second defendants, Richard Hereward Chapman, attended at the stables of Mr Peter Staunton, a trainer who had both horses in his charge. Mr Chapman was concerned to give any veterinary treatment that was necessary to any of Mr Staunton's charges. Both horses had raced the day before at a meeting conducted by the Australian Capital Territory Racing Club Inc. On the Monday Kelcarran was showing signs of tying up while White Ivy appears to have suffered some back injury during the course of the race the day before. I will deal with this back injury further in due course. For the present, it is enough to say that Mr Chapman administered a sachet of the mixture to each of the horses. Unhappily the sachets contained about 100 times the selenium which they should have. The mixture therefore had a highly toxic effect and both horses became distressed and suffered great pain.

8. After Mr Chapman had treated them for some time, displaying, if I may say so, great devotion to his patients, he appreciated that the round the clock attention which he thought necessary could not be made available from within the resources immediately available to him. He therefore recommended that the horses be floated to the Sydney University Rural Veterinary Centre located at Camden. This was done and they came under the care of Mr Rawlinson who diagnosed their condition as toxicosis induced by an overdose of selenium. The horses were successfully treated and discharged from the Centre on 18 February 1982 to a spelling paddock at nearby Cobbitty. That paddock was chosen in case further treatment should be needed on any recurrence of signs of the horses' illness.

9. It is unnecessary to consider further the allegations said to give rise to liability in the first defendant since in action No. S.C.169 of 1984 interlocutory judgment against it for damages to be assessed was signed on 1 August 1986 and in action No. S.C.206 of 1984 interlocutory judgment was similarly signed on 15 August 1986.

10. The plaintiffs put their cases in liability generally in the same way except for one matter.

11. In the first action the first plaintiffs and the second plaintiff allege against the second defendants that:-

(a) by an oral contract (the agreement) made between

the plaintiffs and the second defendants in or
about June 1981 the second defendants as
veterinary surgeons agreed to attend and treat the
horse Kelcarran as and when required;

(b) it was an implied term of the agreement or
alternatively the second defendants warranted
that, subject to any directions received from the
plaintiffs, they would carry out such treatment
with material which would be reasonably fit for
the purpose for which it was required; but

(c) in breach of the agreement the second defendants
administered the mixture to the horse contrary to
the plaintiffs' directions and, further, the
mixture was not reasonably fit for the purpose of
being administered to the horse;

(d) further or alternatively that the second
defendants sold the mixture to the plaintiffs and
by virtue of s.19 of the Sale of Goods Ordinance
1954 there was an implied condition that it should
be of merchantable quality but it was not; and

(e) the second defendants had entered into a contract
with the plaintiffs governed by s.74 of the Trade
Practices Act 1974 and that in breach of that
contract and section the mixture was not
reasonably fit for the purpose for which it had
been supplied.

12. In the second action the plaintiffs made allegations against the second defendants corresponding to those set out in paragraphs (a) to (e) above save that there was no allegation that treatment was to be subject to the plaintiffs' directions or that the second defendants had acted contrary to the plaintiffs' direction in administering the mixture to the filly, White Ivy.

13. In fairness to Mr Chapman it should be said that no allegation of negligent treatment was made against him nor, in the circumstances, could such an allegation properly be made.

I make the following findings:-

1. That there were contracts between both sets of
plaintiffs and the second defendants that the
second defendants should attend upon and treat as
required any horses being trained by Mr Staunton
on behalf of the plaintiffs.

2. That each of Kelcarran and White Ivy was being
trained by Peter Staunton on behalf of the
plaintiffs in the first action and the plaintiffs
in the second action respectively.

3. That it was a term of the contracts that the
second defendants should supply and administer to
the horses such veterinary preparations as were
appropriate for any condition requiring treatment.

4. That the plaintiffs in the circumstances made
known sufficiently to the second defendants that
they relied upon their skill and judgment in
selecting veterinary preparations, including the
mixture, to be administered to their horses and
that therefore a common law warranty that the
mixture was reasonably fit for the purpose for
which it was administered was implied.

5. That the second defendants had no opportunity to
carry out an independent chemical analysis of the
contents of the sachet containing the mixture nor
did the plaintiffs at any time require them to or
expect that they would do so but that these
findings are irrelevant because of the warranty
referred in the last preceding finding.

6. That pursuant to the contracts the second
defendants by their partner and agent Richard
Hereward Chapman supplied and administered the
mixture to each of the horses.

7. That the second defendants entered into contracts
for the supply of services to the plaintiffs as
consumers within the meaning of s.74 of the Trade
Practices Act 1974.

8. That there was therefore an implied warranty that
the services rendered by the second defendants to
the plaintiffs would be rendered with due care and
skill and that the materials supplied in
connection with those services would be reasonably
fit for the purposes for which they were supplied.

9. That the mixture was not reasonably fit for the
purpose for which it was administered because it
contained a greatly excessive proportion of
selenium which in the circumstances had a toxic
effect.

10. That the second defendants were in breach of the
common law warranty in respect of the mixture and
were, as well, in breach of the warranty implied
under s.74 of the Trade Practices Act 1974.

11. That there was no contract between the plaintiffs
and the second defendants for the sale of the
mixture so that the provisions of s.19(1) of the
Sale of Goods Ordinance 1954 are not applicable to
the transaction.

14. Counsel for the second defendants relied upon the decision of the High Court in Helicopter Sales (Australia) Pty. Limited v. Rotor-Work Pty. Limited [1974] HCA 32; (1974) 132 CLR 1 but in my opinion the particular facts of that case make it readily distinguishable from the circumstances which I am considering.

15. The plaintiff, Maurice McDonald, gave evidence that when Mr Chapman suggested use of the mixture instead of injection of another substance which had been used previously in connection with Kelcarran's tying up problem, he said, "No way, Richard. Not at this stage. At this stage, I want the horse to continue on his normal programme. I do not want anything changed." Mr Chapman had no recollection of the use of such words by Mr McDonald.

16. I do not doubt the honesty of either man in this connection. Use of such words would have accorded with Mr McDonald's normal practice in discussing the treatment to be administered to horses in which he had an interest. I note, however, that he appears not to have protested immediately after it became obvious that the horse was sick, as a result, apparently, of the administration of the mixture, that it had been used against his express direction.

17. Then there was an odd episode where he took a sachet of the mixture from Mr Chapman's car without Mr Chapman's knowledge or authorisation. I do not consider that to have been in any way reprehensible in all the circumstances but the incident does not accord with Mr McDonald's recollection of a breach of a specific direction and he struck me as a man who would, in the circumstances, have been very likely to complain vociferously had his express direction not been complied with.

18. I am not therefore satisfied that the allegation in action number S.C. 169 of 1984 that the second defendants administered the mixture to the horse Kelcarran contrary to the plaintiffs' instructions is made out. As I have already indicated, I am not satisfied either that the claim under the Sale of Goods Ordinance 1954 is made out. Nevertheless, on the findings made above, there must be judgment for the plaintiffs in each case against the second defendants as well as against the first defendant.

DAMAGES - Action No. S.C. 169 of 1984

19. Kelcarran was a New Zealand bred gelding brought to Australia as a two year old. It won at its second start, a maiden handicap over 1600 metres, at the Queensland Gold Coast on 19 July 1980. By that stage it was obviously a late two year old. Its race record to 6 September 1982 is set out in Exhibit C which I accept as correct except in one particular. I am not satisfied that it raced on 31 January 1982. In October 1980 the horse was brought to Canberra and subsequently taken to Sydney where it was placed under the care of a well-known trainer. In Sydney it did not perform well. I am satisfied that the method of training there used was not suited to the needs of the horse. In five or six runs it had one win, over 1600 metres, on 20 September 1981. It was then returned to Canberra where, after winning one further race, it was placed in the care of Mr Peter Staunton, a well-known Canberra trainer. After that win in Canberra the horse was spelled for about two months and then put into training again. The evidence establishes that the race in which it ran on 7 February 1982 in which it was beaten by Bemboka Yacht was its first start after the spell.

20. In that race it put up an outstanding performance to come second and I am satisfied that but for the mishap on 8 February 1982 it would have entered upon its most productive period as a racehorse. Bemboka Yacht, than which it was finishing must faster in the race on 7 February 1982, beat it only narrowly and Bemboka Yacht was a racehorse of considerable quality, having won, on a protest, the Queensland Stradbroke Handicap, a major sprint race and at least 12 other races.

21. Mr Staunton estimated that while the horse was in training following the spell which it had had late in 1981 it would have started somewhere between 10 and 15 times.

22. The evidence does not establish precisely the period during which the horse was out of training following the mishap but I note that amounts of $609 for the period March/April 1982, $496 for the period ended 31 May 1982 and $649 for the period ended 30 June 1982 are claimed as training fees (Exhibit H). I assume, therefore, that the horse was put back into training by the end of March 1982. It was therefore out of training for about seven weeks and a further period of approximately nine weeks elapsed before it was trained to the point where it won a race, a point it would otherwise have reached, as I am satisfied, by not later than 21 February 1982. Effectually, therefore, it lost 14 productive weeks of racing. In those 14 weeks it was likely to have raced about seven times and I think it would probably have won four races although it may well have won more having regard to the form which it had displayed.

23. It is possible that the horse might have been successful in the Doncaster Handicap, a rich race run in Sydney at Easter each year, but I think I should take that into account as a possibility only because the quality of competition in a race such as the Doncaster is obviously very high.

24. I think it more than likely, however, that the horse would have won at least four races of a value to the winner of the order of $5,000 to $6,000. In making this estimate I have made allowance for the faint possibility that the horse might have run and gone amiss during the course of its preparation but I am satisfied that nothing in its history indicates that it was likely to do so. Following the mishap and upon its recovery it won a race on 5 June 1982 and subsequently won races on 10 July 1982, 23 August 1982 and 6 September 1982 and was, as well, placed second in another race during that period.

25. I think its record between 5 June 1982 when it came back to winning after its enforced spell following the mishap is a good indication of what might have been the result of its racing during the period from 8 February 1982 to 5 June 1982.

26. As well the horse might have been expected to win prize money in respect of minor place gettings.

27. I think that in all likelihood the horse would have won about $25,000 in the period during which the mishap prevented its racing.

28. Taking account of all the evidence including evidence generally as to other expenses which were not specified in detail, expenses such as transport fees, and making due allowance for unfavourable contingencies, I think the proper amount to award for damages for loss of opportunity to win races is $15,000.

29. The plaintiffs also claim out-of-pocket expenses as special damages. Of these $1,140 relate to training fees for the period of the preparation of the horse before the mishap.

30. I think the proper approach to the question of training fees is to find that in any event they would have been payable throughout the whole of the preparation. Accordingly the claim for lost training fees fails. In addition the claim in respect of the cost of the spell in October and November 1981 also fails since it would have been necessary in any event. In other words, the amount of damages is the amount assessed for probable winnings plus special damages attributable to the mishap less the expenses incurred in winning. On this basis the claim for freight costs, training fees, one item of $30 for veterinary fees, spelling fees, wages for trainer/manager and petrol and telephone bills amounting in all to $3,590 should be deducted from the amount of special damages claimed as payable in any event.

31. With one exception the other amounts claimed seem to me to flow reasonably as damages from the mishap. The total claimed is $3,486.50 including an amount of $1,810.10 said to be in respect of treatment rendered the horse by the second defendants.

32. Mr Chapman annexed to his answer to the twelfth interrogatory administered to him by the plaintiffs copies of the invoices in respect of treatment given the horse on 9 and 10 February 1982.

33. The second defendants have counterclaimed $960 in respect of treatment rendered the horse. The amount of the counterclaim should actually be $960.50. There is, however, no evidence concerning $58 of the amount claimed and I am not satisfied that the amount payable to the second defendants for treatment given as a result of the mishap should be more than $902.50. In any event, it makes little difference in the long run because the amount counterclaimed is to be set off against the amount claimed by the plaintiffs as payable for that treatment.

34. It seems to me that the claim for $1,810.10 has come about by the addition of the amount of $960 said to be payable in respect of Kelcarran and the sum of $850 referred to in Exhibit M as "Vet fees (Dr. R. Chapman)" in respect of the filly White Ivy. But the second defendants counterclaimed $525.50 only in respect of the treatment given White Ivy and this is supported by the relevant invoices annexed to Mr Chapman's answers to interrogatory No.12 administered to him by the plaintiffs in action No. S.C.204 of 1984.

35. I therefore reject the claim for $1,810.10 and allow for veterinary fees the sum of $902.50. That same amount will be the subject of a judgment in favour of the second defendants but the judgment will be offset against the amount awarded to the first plaintiffs.

36. The second plaintiff gave evidence that he was in the habit of betting on his horses when he thought they had good prospects. I am satisfied that he was a good judge of whether a horse was fit to win and that, on a conservative estimate, he would be prepared to wager $1,000 that a horse might win and $1,000 that a horse might be placed in any race in which he thought the horse had a reasonable prospect. I am satisfied that the likelihood was that the odds against the horse's winning any particular race were unlikely to be greater than three to one and that, accordingly, in any one race which the horse won the second plaintiff might expect to win $3,750. If the horse did not win but were placed he would be likely to sustain a small loss and regard must be had to the fact that the horse might have been unplaced in respect of any of its starts when the second plaintiff wagered upon it. I take into account, too, the fact that the more a horse wins the shorter the odds against its winning are likely to be so that the odds against it might have been reduced to two to one or even to as little as even money.

37. Doing the best I can, I think the appropriate amount to award the second plaintiff in respect of loss of the opportunity to bet on the horse is $7,500.

38. It follows that the proper amount to be awarded the first plaintiffs for damages is $17,578.90. I award interest on that amount at the rate of 14% from a median date, 15 April 1982, in a total amount of $11,485.00. There will be judgment for the first plaintiffs against the first and second defendants, therefore, for the sum of $29,063.90. There will be judgment for the second defendants on their counterclaim for $902.50 plus interest of $590 calculated in the same way, making a total of $1,492.50. This amount is to be offset against the judgment in favour of the first plaintiffs against the second defendants to its full extent so that execution may issue against the second defendants in the sum of $27,571.40 only in favour of the first plaintiffs.

39. There will be judgment for the second plaintiff in the sum of $12,400 including an interest component of $4,900 calculated in the same way. DAMAGES - Action No. S.C. 206 of 1984

40. I am satisfied that when White Ivy raced on 7 February 1982 she sustained an injury to her back and that that injury would have prevented her from racing with any success on 16 February 1982. She was a well-performed filly and her connections held high hopes that she would do well in races to be run at Warwick Farm on 27 February 1982 and in the Black Opal Stakes, a rich race worth $32,000 plus trophy to the owners of the horse that came first, $9,000 for second place, $4,500 for third place, $1,500 for fourth place plus $3,000 for the first local horse. I think on all the evidence that she would have been fit to race at Warwick Farm as planned but for the selenium poisoning from which she suffered and although she may not have won, would have been most probably placed. To judge by the particulars furnished in Exhibit M, she seems not to have been put back in training until the beginning of June 1982 so that her preparation was interrupted for approximately 14 weeks. In that period she would, had she continued in training after 8 February 1982, had no more than four to five starts. I think she would probably have won two races, perhaps more but racing is necessarily a chancy business. I note, however, that by 26 June 1982 she won a race at Canberra and thereafter in something under three months she won two races out of five. These successes and the races in which she ran may be taken as indicating that she was a sound filly.

41. I note her racing record as given in evidence and the fact that in some races she finished in front of horses which subsequently did very well indeed. I think the probabilities are that while she may not have won either the Black Opal Stakes or the Golden Slipper Stakes she would have won at least one race of the standard of the Magic Night Quality Handicap which would have returned her connections a total first prize of $15,500. In addition I think she would probably have won a race such as the Warwick Farm 1100 metre race in which it was planned that she should run on 27 February 1982.

42. I think therefore that there was a reasonable probability that she would have won something of the order of $22,000 in the period during which she was thrown out of work as a result of the mishap. I take account of the fact that she might have been spelled during part of the preparation which she was able to undergo and during which she won her first race on 26 June 1982. I think the proper conclusion is that in all the plaintiffs lost, as a matter of probability, their share of a total of $20,000 prize money. The lessees were entitled only to two-thirds of that and since only five of them are plaintiffs their total gross loss would have amounted to $11,111. From this there should be deducted an amount for training fees which I assess at $1,500 and further amounts in respect of moneys payable to trainers and jockeys in respect of wins together with incidental unspecified expenses. I accordingly reduce the amount of damages in respect of gross loss of winnings to $7,000.

43. Taking the same approach as I have in the earlier action there should be added to that charges for transport from Sydney to Mudgee (where I find it was reasonable to take the filly) and return to Canberra together with ten weeks spelling charges, veterinary fees payable to the University of Sydney and a fee payable to R.J. Rawlinson at Cobbity. In addition I allow the amount claimed on account of staff of $324 and veterinary fees payable to the second defendants in the sum of $525.50. As well, I allow veterinary fees payable following the discharge of the horse from the University of Sydney Veterinary Farm. I reject the claim on account of training fees, holding that these would have been incurred in any event as also I reject the charges claimed in respect of the six weeks spell prior to the preparation during which the poisoning occurred. These sums total $3,279.74 of which five-sixths equals $2,733.12. I allow interest on the sum of $9,733.12 from 15 April 1982 at 14% in a total of $6,359.00.

44. There will therefore be judgment for the first plaintiffs against the first and second defendants in the sum of $16,092.12. There will be judgment for the second defendants on their counterclaim against the first plaintiffs for $525.50 plus interest, calculated as before, of $343.00, a total of $868.50. This, too, is to be offset against the amount of the judgment obtained by the first plaintiffs against the second defendants only so that execution may issue in respect of that judgment in an amount of $15,223.62 only.

45. So far as the second plaintiff's claim for damages for loss of betting opportunities is concerned the evidence is sketchy but I think he would have been likely to have backed the filly in any probable win and in her losses too. She seems to have been a good but somewhat inconsistent performer. In the circumstances, doing the best I can on the evidence available to me, I estimate the second plaintiff's loss in respect of betting at $5,000. To that sum I add interest calculated as before totalling $3,267.00.

46. There will therefore be judgment for the second plaintiff in action No. S.C. 206 of 1984 in an amount of $8,267.00.