A horse owner might be unable to care for or want the horse for personal or financial reasons. Changed circumstances can lead to the decision to find it a new home.

But sometimes a horse is unsaleable due to age, fitness or in the owner’s timeframe.  As a consequence, the only course is to give the horse away.   But going down the path of giving a horse away for free poses a serious risk and it is this: someone might present as very caring and sincere but harbours an intention to quickly on-sell the horse to anybody at any price.

Let me give a factual account of a matter that crossed my desk recently to demonstrate how unscrupulous and deceptive some people can be, before suggesting the best legal way to re-home a horse.

Having received prognosis of serious illness, an owner was compelled to reduce horse numbers.  One horse could not be sold in a reasonable time, so it was advertised as free to a good home.  Someone responded and sounded genuine and was allowed to take the horse away after signing a document that stipulated the horse was not to be sold through a sale yard and that, if it was ever unwanted, it must be returned to the owner.  The owner was distraught to learn soon afterwards that the horse was sold through local sale yards to a knackery.  When confronted, the recipient of the gifted horse, far from coming clean, falsely claimed that the horse was doing well and someone interstate was very interested in taking the horse as quickly as possible. When this nonsense was refuted with the facts, the fraudster painted a well rehearsed picture of being one of society’s victims. The truth of the matter was that this person effectively obtained a financial advantage by deception. Luckily, in this instance, the knackery itself turned the horse over for a quick profit and it ended up in a respected family.

The knackery was not at fault: It obtained a good title to the horse.  The person gifted the horse had a valid legal right to sell the horse to the knackery, even though that person was bound by conditions of the gift relating to future disposal of the horse. The knackery paid money for the horse without notice of those conditions and was therefore not itself bound by them.  What could the original owner have done to minimise the risk that the horse in this instance would be sold through sale yards and end up acquired by a knackery?  The same question faces anyone who requires a horse to be used or not used for a particular purpose, for example, not be jumped because of a particular injury.  How can the future of the horse be effectively controlled by the original owner when a horse is gifted out of necessity?

The solution in these cases is not to transfer legal ownership of the horse at all but rather to lease the horse, conditionally, for a lengthy period or even non-stop.  It can be made a condition that if the lessee parts with possession of the horse, or moves location, or jumps the horse, or neglects the horse (or whatever the case) the lease automatically ends and the horse must be handed back to the owner.  A lease places the owner in the best legal position to take steps to repossess the horse if any condition is broken.  The lease must be in writing and the conditions that entitle the owner to repossess the horse expressed very clearly.

The next step that is very important for the owner/lessor to take is to register his or her interest as the owner of the horse on the Personal Property Securities Register.  Registration is important to warn anyone who might deal with the lessee, like a prospective buyer, that the owner and not the lessee owns the horse.

Nowadays, whenever you buy a horse, a horse float or any other equestrian related item of value, a search of the Personal Property Securities Register must be conducted to discover if anybody has a prior existing claim to the horse or item.  Failing to search the Register offers no advantage over the owner.  In the above situation, it would be routine practice for a knackery (like any business operator dealing with goods) to search the Register to learn if anyone had an existing claim to the horse, such as the owner. Had the knackery searched the Register and discovered the fact that the seller was not the owner of the horse, it would not have purchased the horse, but if it had, it would not have obtained a good title.  Whoever bought the horse from the lessee would not be able to defend the owner’s legal right to take possession of the horse as its lawful owner.

A written lease in conjunction with registration of the owner’s title on the Personal Property Securities Register is the best path to take if a horse is to be gifted subject to conditions.  These steps will protect the owner even against innocent buyer’s who believed the lessee was the true owner and paid over money.

15 August 2017

© 2017 Michael Mackinnon, Solicitor & Independent Counsel