If a horse behaves badly or dangerously for its new owner within a short time after purchase, the owner will probably think that the seller is to blame and liable therefore to refund the purchase money. This view can be held even if a pre-purchase inspection occurred to trial the temperament and rideability of the horse.  But in private horse sales, when the seller does not sell the horse in the course of a business of dealing in horses, the seller’s response is usually to the effect ‘I didn’t do anything wrong. Buyer beware.’

In private sales, there is no law that renders the seller strictly liable for the buyer’s problems with a new horse.  Fault must rest with the seller on some legal basis to justify a refund claim or a claim for compensation.  Regrettably, there are still too few horse sales that are documented. As a result, the obvious starting point for a lawyer to determine the seller’s liability, namely a sale in writing, is non-existent. Perhaps this indifference towards documenting the sale is explicable by a myth believed by buyers who are new to the horse world or inexperienced at buying horses, that the seller has a general legal duty to disclose upfront any problems with the horse, so the protection of a written sale agreement is unnecessary.  The seller must of course answer truthfully any question by the buyer about the horse, or risk liability for making a false statement (misrepresentation).  But misrepresentation is one thing; non-communication about a problem is another. The issue is whether in private sales, the law imposes a general duty on the seller to make known to the prospective buyer a behaviour (nuisance or bad behaviour or a vice) or a health issue (an acute, chronic, permanent or terminal injury, illness or disease) that would have been relevant to the buyer in his or her deliberation to buy the horse.

The importance of this issue derives from the fact that the seller’s knowledge of the horse is superior to the buyer’s, whose knowledge must be gleaned from communications with the seller and usually a brief personal inspection of the horse. The buyer’s informational disadvantage and the fact that in the domain of private sales there is an onus on the buyer to be aware, are factors which make the issue so relevant to horse buyers.

The relationship between a private horse seller and buyer is not established in the law of Australia as one where a legal duty is automatically imposed on the seller to exercise reasonable care and skill in selling the horse. The relationship is not like that between a medical doctor and patient (amongst other special relationships) where the law has established a legal principle that every doctor owes a legal duty to exercise reasonable care and skill towards the patient.

As a consequence, in every case of a private horse sale, the buyer must prove a number of things before a court will hold that a duty of reasonable care and skill was owed in that specific instance.  Firstly, the risk of harm was foreseeable (that is a risk of which the seller knew or ought to have known); second, the risk was not insignificant; and third, a reasonable person in the seller’s position would have taken precautions against the risk (ie disclosure). The concept of harm includes physical harm that the buyer (or any rider or handler of the horse) or the horse itself might sustain post purchase along with consequential costs.  It also includes, and this is important, economic loss being the diminution in value of the horse as a result of the problem or fault with it. In the absence of any physical injury to persons or the horse itself, the buyer’s grievance is that the horse was not worth what was paid for it, or even nothing at all. In other words, the risk of harm is that the buyer “does their dough.”

The touchstone of the implication of a duty of care in any given horse sale where the buyer feels aggrieved will be the nature and seriousness of the seller’s omission that is complained of.  Suffice it to say, there is a broad spectrum of possible omissions: the very serious (for example, failure to disclose the horse is a chronic head shaker due to an existing diagnosis of trigeminal nerve abnormality that foreseeabley impacts the utility and therefore value of the horse) to the minor (for example, failure to disclose the horse is troublesome to load at times which may not affect value at all).  Identifying the nature and cause of the problem is critical to an evaluation of the risk of harm to the buyer which ought to have been foreseeable.

The circumstances surrounding the sale of the horse will also aid assessment of whether the risk of the buyer losing money was foreseeable. The buyer’s expressed purpose for the horse, his or her riding skill and confidence and the extent of any veterinary examination are some factors relevant to foreseeability.

A successful negligence claim requires proof of not only a duty of care owed to the buyer (being the threshold issue that is addressed above) but also breach of that duty and loss occasioned by the breach. It is also common for negligence claims to be defended on the basis of contributory negligence, that it so say, the buyer negligently failing to protect his or her own self-interest and therefore at fault totally or to some degree.

Moral outrage that a seller should have withheld relevant information does not provide any basis at all for a legal claim against the seller. That outrage must be filtered through legal criteria of to decide if non-disclosure potentially amounted to a legal wrong under the law of negligence. A lawyer must undertake this task after examining the facts of the sale.

Avenues of redress against sellers who do the wrong thing normally entail an allegation of pre-sale misrepresentation or a breach of the terms of the sale.  If those avenues are not available, however, the possibility of a claim for negligent breach of duty might be investigated. But it is hard to see how such a claim would be warranted except where seriously important information about the horse was not disclosed by the seller which any reasonable person would have made known to the buyer.

16 August 2018

© 2018 Michael Mackinnon, Solicitor & Independent Counsel