This article is from the November 2020 Horse Deals magazine.
There are at least two situations that I can think of where ownership of a horse might be an issue. Firstly, where the owner hands over the horse to someone who then claims, usually months or years later, to have been gifted the horse and is therefore the new owner. The new owner claims that he or she has looked after the horse as if it were his or her own, paid for veterinary care and that the old owner never showed concern for the horse since parting with possession. Not infrequently, older horses or horses unsuited to the owner are given to someone on a verbal understanding that the horse will be returned. But a valuable horse can also be trained and competed by a serious amateur or professional rider who acquires it in the belief that by reason of friendship or sponsorship, he or she has acquired full or part ownership of the horse. Second, where a person interested in buying a horse prudently asks the seller, ‘Do you own the horse?’ and wants evidence of it before parting with the purchase money. The response might be ‘No, I am selling for Wendy Citizen’, in which case not only is proof of Wendy’s ownership of the horse called for, but the seller’s authority to sell the horse on behalf of Wendy.
The expression “possession is nine-tenths of the law” does not resolve the issue of ownership. Outwardly someone with possession of a horse has a strong legal claim to it. Lawful possession of a horse (whatever the circumstances in which possession came about) is a legal right defensible against everyone except the true legal owner. But possession of itself is not legal proof of ownership and it is incorrect to assume otherwise.
It is also important to acknowledge that in Australia there is no system of registration of ownership of horses as there is with land under the Torrens system of land registration. If you search a land title in Australia and it records Wendy Citizen as the registered owner, then the State guarantees that Wendy is the legal owner. There is certainty and efficiency around establishing legal ownership of interests in land thanks to the Torrens systems. But there is no such system for horses, and a National Horse Traceability Register, which is currently under consideration by the States and Territories, will not move in that direction.
It is even more important to understand that a certificate of registration of a horse with a breed or competition society is not a guarantee of legal ownership. Take the ‘Application for Horse Registration’ of the affiliate members of Equestrian Australia as an example. The person seeking registration must expressly acknowledge the following: “I/We understand the EA Horse Registration is not legal proof of Ownership, but is for the purpose of Registration/Identification to compete”. Registration of a horse with Equestrian Australia does not amount to certification of legal ownership of the horse concerned. The information in the Application about the ownership of the horse to be registered is for the affairs of Equestrian Australia only. The same is true of all competition and breed societies who justifiably disclaim any role in verifying and validating legal ownership of horses in their records.
The general rule is that the owner of a horse is the person who bred or paid for it. If the horse is for sale, then the seller ought to be able to establish he or she bred or paid for it. The buyer should question the seller to obtain this information and documentary substantiation if there is doubt. In every case, the buyer must at least obtain from the seller a documented warranty that he or she is the owner and entitled to sell the horse free of any adverse claims or interests. If the seller is an agent of the owner, then the buyer should obtain these warranties directly from the owner. If it emerges that the seller was gifted the horse in the past, inquiries should be made of the person who it is claimed gifted the horse to verify the intention to gift the horse.
A dispute between the owner and someone who claims to have been gifted the horse always raises vexed factual issues which the law must resolve before applying the law of gifts. The outcome of these sorts of disputes is uncertain and costly in legal fees. The person to whom it is proposed to gift the horse should ask the owner to confirm the gift in writing, or at least confirm this to the owner in writing. Even more important is for the owner to confirm in writing that the horse is on loan to be returned when requested, and it is not intended to gift the horse. These are such easy steps to take over SMS, email or other communications platforms like Facebook Messenger that will avoid worry and expense.
While there is no system of registration of ownership of horses, there is now a register to record interests in horses. It is called the Personal Property Securities Register. This register is applicable to all types of property except land. An online search of the register will discover if anyone has a ‘security interest’ over the horse, such that the interest would take priority over anyone else claiming the horse, such as a later buyer. People who might register a security interest over a horse are: an owner of the horse who leases it for an indefinite term or a term of two years or more; an owner who sells and releases the horse but retains legal ownership until the purchase price is paid in full; and a financier who might have lent money on the security of the horse. A horse owner who proposes to give a horse to someone under a loan arrangement should register his or her ownership claim on the register. Anyone proposing to buy a horse should also search the register.
14 October 2020
© 2020 Michael Mackinnon,
Solicitor & Independent Counsel
©Michael Mackinnon • Solicitor & Independent Counsel • Horseforce.com.au
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